Show me the Forex money, 5

HAPPY HALLOWEEN !!!!

Show me the Forex money, 4

...cont'd from yesterday...

If you’re ready to give Forex a try, Kathy’s book describes strategies for both technical traders and fundamental traders. Some of the technical trading strategies with cute names include Fading the Double Zeros, Waiting For the Real Deal, Inside Day Breakout, The Fader, The Channel Strategy, and Perfect Order.

Included in Kathy’s description of fundamental style strategies are the Leveraged Carry Trade, Macroeconomic Events, Bond Spreads, Risk Reversals, and Interventions.

Day Trading the Currency Market: Technical and Fundamental Strategies To Profit from Market Swings (Wiley Trading)

...cont'd tomorrow

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Show me the Forex money, 3

...cont'd from yesterday...

In her book Day Trading the Currency Market: Technical and Fundamental Strategies To Profit from Market Swings (Wiley Trading), Kathy Lien mentions a study she did on what time of day the Forex markets have the biggest range of price movement. In terms of the Eastern Time Zone, from 7a.m. to 4 a.m. the biggest price range occurs in GBP/JPY, GBP/CHF, and USD/JPY. Then from 2 a.m. to 12 a.m. GBP/CHF, GBP/JPY, USD/CHF, and GBP/USD. Then from 8 a.m. to 5 p.m. GBP/CHF, GBP/JPY, USD/CHF, and GBP/USD. In the overlapping US/Europe session, which is also the most active one in Forex, the biggest movers are GBP/CHF, GBP/JPY, and USD/CHF. Finally, in the overlapping Europe/Asia session, there are no big movers but among the currency pairs studied in that period, biggest movers are GBP/JPY, GBP/USD, and USD/CHF.

Big movers = big potential profits in short period of time.

...cont'd tomorrow

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Show me the Forex money, 2

...cont'd from yesterday...

In her book Day Trading the Currency Market: Technical and Fundamental Strategies To Profit from Market Swings (Wiley Trading), Kathy Lien reports that she studied the effects of certain Economic Reports on the first 20 minutes of trading after the release of such reports. She says that for the year 2004, the following are the biggest price movers within 20 minutes of the report being released (listed in order from greatest movers to lesser movers): Unemployment (nonfarm payroll), Interest rates (FOMC), Trade Balance, Inflation (CPI), Retail Sales, GDP, Current Accounts, Durable Goods and Foreign Purchase of US Treasuries. She says that while some traders stand aside ahead of and immediately after the release of such reports, other traders use such reports to participate in big market movements.

...cont'd tomorrow

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Show me the Forex money, 1

Kathy Lien makes a case for switching to trading Forex currency trading from trading futures, stocks and bonds. It’s in her book Day Trading the Currency Market: Technical and Fundamental Strategies To Profit from Market Swings (Wiley Trading)

She says that compared to futures and equities, Forex offers 24-hour trading, no special rules for or against short selling, no rules providing for suspension of trading due to volatility, cheaper transaction costs, less slippage and execution errors, as well as higher leverage.

...cont'd tomorrow

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Back October 27, 2008

Gone 'till October 27, 2008.

Are we there (the bottom) yet? Part 4

...cont'd from yesterday...

Looking at prior lows, I notice that price of the S&P in October is almost at the lows seen in 2002-3, but that there is considerable distance to the even lower lows of 1996 or before that the congestion bars at the 1994 low. In any event, there isn’t yet any Head and Shoulder, Triangle or Double/Triple Bottom yet, which means that the market is not going to be headed upwards any time soon. The market is likely to just either go sideways for many more months or go further down for many more months.

...back in two weeks, October 27, 2008...

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Are we there (the bottom) yet? Part 3

...cont'd from yesterday...

Some of the price patterns to watch for as indications of a bottom include:

Head and Shoulder Bottom;

Symmetrical Triangle;

Ascending Triangle;

Rectangle inclduing a Doulbe Bottom or Triple Bottom (the crash of 2000 ended in 2002with a Double Bottom, although it could be argued that the 2000 crash didn’t end until 2003 with a Triple Bottom starting in 2002 and ending in 2003).

...cont'd tomorrow

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Are we there (the bottom) yet? Part 2

...cont'd from yesterday...

For the answer, I turn to the classic book by Robert Edwards and John Magee, Technical Analysis of Stock Trends

Edwards and Magee say that except for the One-Day Reversal pattern, all other price pattern indications of a bottom take more time than one day to form. Even the One-Day Reversal, according to Edwards and Magee, does not imply much of an immediate move in the opposite direction (from down to up).

...cont'd tomorrow

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Are we there (the bottom) yet?

Robert Prechter has some advice on what to do when the stock market reaches a bottom indicating that the collapse is over. That advice is in chapter 34 of his book Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression, Expanded and Updated Edition

So the question is, are there any signs of a bottom yet?

...cont'd tomorrow

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Impulsive trading, 5

...cont'd discussion about impulsive trading...

Don’t like discipline? Use something more powerful. See my article Replace Discipline

...back next week...

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Impulsive trading, 4

...cont'd discussion about impulsive trading...

Here’s another idea for preventing yourself from blowing up your account through impulsive trading. Setup a simulation trading account where your trades are based on live data (not delayed data). Brokers who offer these include Interactive Brokers and Tradestation. You can channel your urge to do impulsive trades into the simulated account whenever you feel an urge to enter such unaurthorized trades. That’s based on the same reasoning as quitting smoking by using an alternative to cigarettes whenever you get the urge.

...cont'd tomorrow...

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Impulsive trading, 3

...cont'd discussion about impulsive trading...

Here’s two ideas for avoiding impulsive trading.

During trading hours, avoid information about trading except for information in your own Trading Plan. Don’t watch TV financial news shows during trading hours. Don’t read any books or web articles about trading during trading hours. Don’t drop in on any trading chat rooms during trading hours. Just read your own Trading Plan if you want or need to take in any information about trading during trading hours.

During trading hours, avoid looking at your Profit-Loss Account Information. Both the sight of a profit and the sight of a loss might motivate you to take trades not mentioned in your Trading Plan. Profits might give you the idea that you can “afford” to take risks not planned for in your Trading Plan. Losses might give you the idea that you have to take unplanned risks to get a chance to make profits to cover the losses.

...cont'd tomorrow...

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Impulsive trading, 2

...cont'd discussion about impulsive trading...

Clarify exactly what patterns you are want to authorized yourself to trade. Write it down on a piece of paper. Scrutinize your written description. Clarify subjective descriptions (such as what you mean by “large” or by “small” using quantified measurement units). Edit and re-edit your written description to make it more and more specific with each draft until you can’t get any more specific.

Your final version should be a description that anyone can follow consistently every time. That way you’ll know when you are about to trade impulsively. The basis of decision is this: anything that is not as described in your written description is an impulsive trade.

...cont'd tomorrow...

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Impulsive trading, 1

One of the most effective ways to ruin your account is by entering into trades you later "know" that you should not have entered but at the moment seemed like the thing to do. You just couldn't help yourself. Something had taken over your body and you just went ahead and did it. That describes impulsive trading.

This week's blog articles will be about how to overcome impulsive trading.

...cont'd tomorrow...

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