“Now, ask yourself, is the trend going up, down, or sideways? Once you have your answer, the wisdom of the market will have revealed itself to you, and you’ll know how to trade over the next month. If your view is unclear, step aside from trading for the moment. You’ll only ever make money if you can clearly spot a trend.” – Louise Bedford


This is an update on some of the movements on the markets and what I’m doing about them, plus my losses and profits. The analyses are based on 4-hour charts, looking at the trend. My preferred leverage is 1:100 and my position size is 0.01 lots for each $2000. The risk per trade stands at 0.5%. The Stops are my life insurance policy. I use the Price Behavior rules for strategic decisions and customized indicators for tactical entries. I believe that a ‘buy’ signal that fails is a ‘sell’ signal; and a ‘sell’ signal that fails is a ‘buy’ signal. I open primary positions with a risk-to-reward of 1:6, riding the trend until the target is hit or I’m stopped out. The value of patience will forever be emphasized. As long as I stick to my rules and keep my risk low, I’m immune to fear.

It’s widely known in this industry that majority of retail traders are not successful. A determinant factor of any successful strategy is sensible risk and money management measures. Through an elaborate system of diversification and systematic position sizing, it’ll be possible for trading accounts to remain in the positive territory over the long term. And this is where the discipline of each trader’s personality is required.

Below is the summary of some of my trading activities this week.


Primary Trend: Bearish

There was a serious breakout on this pair. This was a formidable threat to the bearish outlook, but the bearish outlook is still valid. Only a sustained northbound price movement could render this invalid. My last trade was exited at breakeven.


Primary trend: Bullish

At the beginning of this week, the market gapped down, only to reverse the same day this happened. It’s possible that this renewed bullish strength could be halted if the USD gains any remarkable strength. That’s why I always enter with 0.5% stop – total risk guaranteed on the trade, whereas my last trade on the pair was successful.


Primary trend: Bullish

It seems the strength of the EUR has little effect on the CAD, yet the trend remains bullish. It may make sense to sell near a good supply level and buy near a good demand level, but there may soon be a protracted directional breakout.


Primary trend: Bullish

Here, buying the dips and selling the rallies may be the best options, or better, one may buy a pullback in the direction of the prevailing bias (as the price action currently confirms). I’d be looking for a nice entry price, after which I’d enter with stingy money management.


Primary trend: Bearish

The bearish trend still holds in the face of the present turbulent market. The price, though threatening to go up, is quoted below the SMA50 and SMA 200. The ADX 20 level is below 30, suggesting that the current price movement is not that strong. The -DI is above the +DI, but it’s pointing downwards.


Primary trend: Bearish

This instrument has been going up since the beginning of this week. If this new move continues next week, the bearish outlook would be rendered invalid, and traders would do well to look for buying opportunities. If not, the bearish trend would resume. The main tool of technical analysis is neither the pencil nor the computer. It is your brain!

Order: Sell

Entry date: June 16, 2011

Entry price: 85.47

Stop loss: 86.47

Trailing stop: 85.47

Take profit: 79.51

Exit date: N/A

Exit price: N/A

Status: Open

Profit/loss: 102 pips

Conclusion: One of the most important challenges to any trader is being on the right side of the market. Yet better odds are on the side of a trend follower. The principles of trend-following strategies have been successfully used by many private traders and institutions. In the end, although, it’s a discretionary trader with his common sense who would execute the strategy.

The article is ended with the quotes below:

1. “Don’t be naive. They want your money, everybody wants your money. This is why FOREX is a battlefield – if you do not make profit, then profit is made by someone else…” – Sive Morten

2. “YOU are the most important factor in your trading success!

You create the results you want.” – Dr. Van K. Tharp

Your questions and opinions are highly welcome.

Thank you.

With best regards,

Azeez Mustapha

Forex Signals Strategist, Funds Manager &Coach

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