Forex: Thursday, April 22

Shinken I had an ephifany last night during my philosopher's walk, this was the first time that I've done a forecast of what the next days chart COULD look like.

For the EUR/USD I was thinking that we'd get another downward move of 1/2 to 2/3 the legnth of yesterdays move, then a rebound to yesterday's high.

I'm waiting for a pullback, for a double bottom, before entering long.

It was way downward this morning; I have been sitting on a trade since yesterday. It lost 60 pips at one point but has since returned to where it is now up 3 pips, woohoo:-) I could have had my money in something that would have made a better profit but I sat and waited. I had to really as I didn't feel the sudden drop was valid and I have a  substantial portion of my account invested there.

I managed to get out for a 20 pip profit, it took far too long.

"I have been sitting on a trade since yesterday. "

The times that I've done that! Congrats on the 20 pips!

Are you setting stops and targes with your orders? Are you trading with a funded account?

You seem to be doing so much better than I am, I need some tips on how I can improve my trading.

I am still trading a demo account until 1 May. As to the compliment; thanks though unfounded ;-) I am trying to take a complete approach to the market; ie both technical and fundamental. I think that is the key if you look at many of the top traders. With the size of the forex market I think it takes enough time to filter information for anybody to take advantage of it.

Have you managed to read 'The Investment Biker' by Jim Rogers yet? That is the mindset with which I want to approach trading. He looks at a situation in one place and weaves a tapestry of cause and effect, action and reaction. Another book that is also worth looking at is 'If its raining in Brazil, Buy Starbucks' by Philip Navarro.

Your technical understanding seems quite sound, what else are you using to enter and exit trades? I like to think of what fair value generally is; if I can ascertain that I can work in a fairly tight range. If the market deviates too far from that value I see an opportunity. Again, fair value is a subjective thing but then this is a subjective market:-)

The graphs document a history of where the underlying asset has been; from there, based on probability, we (or our software) make a decision as to where it is going next. The meat of the story, I believe, cannot be found in the charts. I state this by virtue of the fact that charts are reactive. They are there solely to document the whims of the participants in the market.

"what else are you using to enter and exit trades?"

Strictly technical, though I'd like to learn enough about fundementals to know what reports are comming out and what a positive or negative effect the report might have on price.

This market is so different than the Nasdaq index (NQ) that I'm lost looking for indicators. For example - I would look for 30 minute inside bars to play a break out the legnth of the outside bar in the NQ, with a stop on the other side of the outside bar and a target 1 outside bar away. In Forex a break of an inside bar will often reverse direction and hit my stop, momentum plays don't work for my setups.

I haven't read those books, though I plan on reading them this summer. I'm working 12+ hour days, 7 days a week until May - our income tax season runs from mid February until April 30 each year. I'm not even making much progress with "The Master Swing Trader", I'm so tired at night I'm passing out around 10:30.

Are you using stops and targets or do you let the market play out until you're convinced that your prediction is wrong?

I'm not sure about even using stops in this market.

On a plus side I'm more determined to become a profitable trader each day. Each loosing trade makes me want to study the markets and books more.

"For the EUR/USD I was thinking that we'd get another downward move of 1/2 to 2/3 the legnth of yesterdays move, then a rebound to yesterday's high. I'm waiting for a pullback, for a double bottom, before entering long. "

My ephifany was correct but I didn't get an entry.

I THINK we'll get a bounce downward off yesterdays high, if we do I'll look for a failure on a second try on the high and go short, looking for a bounce off todays low.

I will definitely watch that trade. I think your logic is good; however, I do think that the EUR is going to have a run against the USD in the next week or so. We will se if that pans out:-) 

As to the stops and t/ps, only when I am away from my desk. I have a fair idea of what range I think it should be trading in, I just need to work on my time-frames. I am still exiting many trades too early and missing the meat of the move.

What fundementals are you using to come to your conclusions?

I've NEVER looked at fundementals and I think it's high time I did.

Thanks.

One of my favorite books is "Trader Vic" by Victor Sperando. Vic did a study of trends - determining the legnth of trends, pull backs, etc. From the study he got an intuitive feel for how far trends would go and when the pull backs would come.

I plan on doing the same type of study in forex in May.

Short GBP/USD 1.7681 looking for run into the 1.7590 level. Stop is at 1.7725.

Yankee are you still short? You've got a great stop, hopefully it'll hold if the market goes that high.

What criteria did you use to make your trade? Fundementals? Technicals?