Trades looking good for now

On Monday, I checked the charts and I found out that Fiber's low on Friday was 1.3620, 20 pips away from my target of 1.3600. So I decided to jump in.

Cable hit a support level at 2.02. I entered a long position there as well.

I have a bit of problem. I really wanted to pyramid because this is the best time to pyramid, but I'm out of margin. This is what I hate about Oanda. 1:50 leverage is too damn low. The ideal leverage for me is 1:100.

Let's see how the trades turn out today.

Ahah, I screwed up

I was supposed to enter a buy limit order at 1.3790 .. not 1.3770 ... Fiber just touched 1.3770 yesterday and moved down hitting my stop loss at 1.3720 today during European open. Boo hoo!

Woot Fiber is under correction.

I lost some money there. Stop loss was hit at 1.3790. The Fiber suddenly crashed 100 pips, down to 1.3700 yesterday.
I was bullish at that time and thanks to risk management, it doesn't hurt much. Whatever you do in this business, make sure you never break your risk management rules. My guts is telling me the market will go down further to 3600 perhaps.

The next plan is to buy at 1.3770 or 1.3600.

Why not short ? I rarely short a bull market. I lose money each time I do that. LOL. Just sticking to what works for me.

Not much action on Monday.

There isn't much to talk about Fiber. The price retraced a little bit before it hit the support level at 1.3790 for the third time. I choose to do nothing for now.

To quote Jesse Livermore :-

"It is never your thinking that makes big money, it's the sitting."

Fiber is looking good

Fiber penetrated the resistance at 1.3830, moved down a little bit to hit a support at 1.3810 before finishing at 1.3822. Fiber is looking good with support levels that keep increasing and a broken resistance. 1.4000 is pretty much in sight.

Let's hope for another bull-run next week.

Welcome Mr Cable.

From now on, I'll be following Cable as well. The cable is exhibiting interesting attributes. I'm hoping to get a buy signal for Cable in 2-3 weeks. I'm aiming to buy between 2.01 - 2.02.

In case you are wondering why GBP/USD is called cable, here's the story. Many years ago, the banks traded GBP/USD using the most advanced communication technology at that time, the cable.

On the other hand, EUR/USD is probably called Fiber because fiber-optics is today's latest technology. LOL

Look at this spectacular Cable bull-run. I bet a lot of people made millions from this alone.

Fiber's positioning for an upside breakout ?

From the chart, Fiber attempted to break through the resistance of 1.3830 but failed. However the support levels seem to be increasing from 1.3750 to 1.3790. In my POV, Fiber is forming a support level near 1.3800, which is an important psychological support. This could be a sign of an imminent upside breakout (remember the triangles pattern?). It's a good idea to enter a position.

Currently, I have a long position @ 1.3800. As usual, I could be wrong.

Seems like Bernanke's speech is not helping USD.

My buy limit @ 1.3800 was triggered. Seems like 1.3750 is indeed a very strong support for Fiber. If nothing else is going to cool the bull-train down, we can expect Fiber to hit 1.4000 very soon. This is a good time to pyramid.

Let's see how Fiber's going to behave today.

Oops lost some money there.

My Stop Loss at 1.3765 got hit. I lost some money there.
For now, I'm gonna wait for Bernanke speech. I have new pending orders in place.


1.3750 seems like a nice support.

Buy Limit @ 1.3800
Buy Limit @ 1.3700

Let's see what Bernanke has for us tonight. Cheers.

Which timeframe to trade ?

Let's talk about selecting a timeframe to trade.

Generally, to make successful trades, a trader must follow these rules

1. Know the current direction of the trend and assume it will continue.
2. Place the trade in the direction of that trend.
3. Exit the trade to make profit.
   

No matter what timeframe you choose, if you can do these in the timeframe of choice, you'll most likely profit.

So how do I choose a good timeframe? Let's do a simple observation. Open your favorite pair (mine is EURUSD aka Fiber). Look at the 5 mins, 30 mins, 1 hour and Daily charts. Try to find a long trend (slope around 45 degree) in each of the timeframes. You will notice that :

• the duration of any bull run is increasing as the timeframe increases, meaning a bull run in Daily charts is much longer than the bull run in 5 mins charts.

The pictures below use 45 degree trends. You can use any degree higher than 30 that you like. Don't worry about the pips in those trends. To make profits you must worry about the trend first.



Alright ladies and gentlemen, please refer to Rule 1 above. Since, you must assume the trend to continue, which timeframe will enhance the accuracy of your assumption? You are right, it's the Daily charts. The trends in Daily charts are longer and stronger than trends in lower timeframes. You have ample time to jump into the market. Still remember "the trend is your friend" ? A stronger friend is even better, don't you think ? :)

This is why scalping is very difficult for newbies. The trend is too short and many times, when newbies enter the trade, the trend has reversed.

Trading Update

Woot I just checked the trades. Seems like my Stop Loss at 1.3760 got hit. It's alright because I have made quite a profit. It's around 30% increase in equity.

So what's next ? There seems to be a resistance at 1.3800. What do I do now?
I want to enter a trade, but I'm not sure if this pair is going to retrace a little bit (down to 1.3600-1.3700) before resuming it's bullish run up to 1.4000. Maybe the price will not retrace and go straight up to 1.4000.

What do I do now ? At times like this, it's a good idea to put a market limit order. Where do I put it? Let's see.

If the market is going to resume it's bull run, it will have to penetrate the resistance level 1.3800 right ? So that's what I'm gonna do. I will put a pending buy order at 1.3815. Slightly higher just in case of unwanted market noises.

If the market retrace, I will try to enter at 1.3700. That's also a pending market order.

Trade :
Buy Limit at 1.3815. Stop Loss - 1.3765

My Reply at ForexFactory

This is what I replied in a thread at ForexFactory.

//////

I have several solution to the issue you brought up. These solutions is for long-term traders using Daily charts to trade.

Quote:

However, it should be mathematically self-evident that “cut losses short, let profits run” only works to the extent that markets trend.

Just pick a market that the Daily charts show a strong trend e.g EURUSD.

Quote:

Think about it logically: if (hypothetically) prices trended indefinitely, then it wouldn’t matter when you entered, as long as you hold on for as long as possible, you will profit.

All trend will finish sooner or later. Solution, trade long-term because long-term trend continues for years like EURUSD.

Quote:

But if/when the probability of reversal (e.g. at support/resistance) exceeds the probability of trend continuation – if/where this can be approximately calculated – then the “cut losses short, let profits run” maxim breaks down. This will happen repeatedly during sideways price movement.

This is the time where entry and trail stop is crucial. With good execution, you will be able to cut losses short, but since the market is sideways, you cant let profits run simply because the market doesnt let you to. Just be happy and stick to your plan (buy, trail stop,buy trail stop) until one day the trend resumes. You dont have to make money everyday. Patience.

Quote:

So the question becomes: does your chosen currency pair “trend” sufficiently, in your chosen timeframe, consistently enough, to allow you to overcome costs? If so, you will profit overall; if not, your account balance will fall.

Hence the beauty of trading long-term (daily charts). You can hibernate for 3 months and the trend is still there. LOL.

A little bit about my method

I'd like to share with you the basics of my trading method.

1) Trade the right market

• How do you know if that market is the right one for you ?
  Open up your charts (Daily timeframe). The market must be clearly trending up or down.
• To see the trend, look at the bars, if the left-hand side is lower than right-hand side, that's a bullish market. Vice versa for bearish market.
  

2) Once the trend is identified (bull or bear), plot the psychological price levels. Why is this level so important ?

3) Look for price levels where

• Resistance turn to support or vice versa
• 50% retracement from a major bull/bear run.

4) Buy at support or sell at resistance level. Use pending market order.

5) When the order is triggered, use trailing stops. 50 pips is good for EUR/USD.

6) Never ever trade against the trend. If the trend in daily charts is bull, never short the market.

The above is the snapshot of EUR/USD. Why do I trade this pair? It's because the market trends beautifully. The long-term trend is bullish.

The current positions in EUR/USD

Greetings everyone. This is the first time I posted on this blog. From now on, I'm going to post every trading decision that I make. The above is my current positions for Fiber.

Thanks to trailing stops, I have secured some profits. I'm expecting for the market to have another bull run on Monday or Tuesday. I'm aiming for 1.4000. Once the price reaches this level, I'm expecting a correction down to level 1.3600.

Let's see how it turns out next week.

By the way, below is my post (nick Luqmanz) at ForexFactory.com

4000-4100 is my target for this bullish phase before Fiber goes into corrective phase down to level 3600. How soon it will touch level 4000 is beyond my estimation.
Some profits have been secured with the trailing stops so I will just let the market feeds me as much as it wants.

A pending order at 3800 was triggered. This position is just half of the normal size.

Hmm for this Monday or Tuesday, I'm expecting another bull run. In my opinion price failed to close above 3800 because traders dislike having position over the weekend.

As usual ... I can be wrong but one thing for sure being wrong this time doesnt hurt thanks to trailing stops.