We Can Not Overstate How Epic The Coming Week Is Going To Be

An interesting read to know what's happening in the week ahead: http://www.businessinsider.com/hurricane-sandy-presidential-campaign-and-economic-data-2012-10

Will update you with my watchlist during the week as some interesting setups in the US markets.

Happy trading!

It's all about the Canadian Dollar

Sorry for the late post but am currently away exploring Europe :)

I haven't got anything major on my watchlist but am just managing the AUDCAD trade I have scaled out of (7% banked on the first move, 4% banked on the second move and 2% banked on the third move - all in previous posts!). Whilst the we were right on the strength of AUDCAD and on the sell off of Global Indices, it's all about how much we make when we are right and how much we lose when we're wrong! Personally, I scaled some of my Dow short position but then got stopped on break even. Then I was kicking myself as I missed the doji bar trade 18 October but I'm sure they'll be other opportunities (I have to keep telling myself that!).

I will post more on the run up to the US elections as am looking for certain things to happen before initiating a position.

However, it's all about the Canadian Dollar as it was dumped on bad M&A activity which damaged the foreign investment climate in Canada. All eyes will be on the Bank of Canada tomorrow and their rate decision. Whilst their economy is growing and are in a position to increase rates, they have to tread carefully with the weakness in global growth. However, positive news in China is fuelling a risk rally today.

Happy trading!

October Trade updates (+15%) and the problem with retail traders...

Hi traders. After a long weekend away in the beautiful Peak District it's great to see some of our trades have finally moved.

AUDCAD is currently up 2% (assuming 1% risk here and moving forward) and I have just added in again on the higher low at a smaller percentage risk.

Gold short finally shook a leg and broke out of its range as commodities took a hammering yesterday and was up around 2%. I've taken some profits off the table as it reached September's low, the rest will be trailed on the daily.

Silver has moved as Gold did. I previously mentioned if you are trading both to spread your risk as highly correlated.

Dow Jones Industrials was up around 3%, my stop is at break even and I've taken some profit of the table as price retraced to the previous 4 year highs. The NASDAQ, S&P500 have also diverged on various indicators suggesting a rally.

Now, for the problem with retail traders and their mentality. Last month's trades that I posted produced a 20% return (risking 1%), so far in October the trades I've posted have made around 15%. Obviously, not everyone will have traded those as different markets and not managed them in the same way. There is a big difference between ANALYSING and TRADING. Analysis has no money on the table and is emotionless which is why returns always sound fantastic. However, trading brings emotion as you're now dealing with your hard earned capital. Whilst I have strict management techniques I close trades early. Sometimes it is the right decision, sometimes it isn't. The fact is I need to give myself a reward and pat myself on the back for all the hard work and dedication I put in. For me, that's banking some money so I leave the month positive. Is it right or wrong? Who cares! We're here to make money remember!! You have to know yourself and adapt to it. Too often in life we are controlled by external influences which leads to irrational decision making.

One thing I've learnt in trading is that you cannot be too prescriptive. Well, at least this fits with my own personality. The markets change so you have to have a breadth of knowledge and tools so you too can change with the market.

Remember the key is not whether you are right or wrong but:

'how much money you make when you're right and how much you lose when you're wrong' 

Oh and the problem with retail traders is this: Through the trade ideas that I've posted they've returned a decent amount of reward to risk. I know some of my mentees and traders have been catching these moves, on their own analysis which is even better. What you'll notice is the low frequency of trades for the past couple of months. However, I still get messages from people who send me their trade ideas which is fine. I reply asking 'why are you looking to trade more, why not just stick to the style I've taught you?' Their reply: 'oh because I haven't found many trading opportunities'. Most of you can see where I am going with this.....why are you trading? To make money or to just trade?

My philosophy in trading is find a style that suits you, it could be high frequency or low frequency - it doesn't matter. Once you find what you are comfortable with then increase your risk per trade rather than trying to get into more and more trades. This is what I have found works for the majority of currently successful and profitable trades I have mentored over the years.

Happy trading!

What Successful People Do In The First Hour Of Their Work Day

Hi traders!

The first hour of the day is very important, whether you are a trader or not. It is the time where you see everything clearly, get one real thing done and have a focus. Everyone has a different routine and it is important you find your own but also take a step back to analyse is it productive and useful. When I first started trading in the morning before work, I would set my alarm for 5am, roll over and turn my laptop on to check the markets and fall back to sleep if nothing was happening. Whilst this seemed ok at the time, it was not productive at all as I would be prone to making trading errors. Typically, I wouldn't be able to sleep after that and would then feel a bit lethargic the rest of the day, especially if you are just looking at a screen all day!

Fortunately, many years ago my brother gave me a life changing book on the Tibetan Art of Positive Thinking and it had certain rituals or routines to start your day. Interestingly, it is actually very similar to Tony Robbins' 'Hour of Power' which involves light exercise, motivational incantations, thinking of everything you are grateful for: in yourself, friend and family, career, etc and then visualising everything you want in your life as if you had it today. The most drive and successful people I know today follow one of Robbins' plan. 

So what do I do in the morning? I love going for a morning run (6am before the markets open!) as when I cross anyone of the London bridges close to me it just has the most inspiring and motivating view. That's the way I want to start my day, as anything is achievable after that. When I don't run in the mornings I take some time to go over my dreams, ambitions and goals which is actually the very reason I am waking up in the morning! I also visualise where I want to be as a trader, entrepreneur and the impact I want to have as a philanthropist. These are the things that are important to me (long gone are the days where I picture myself playing the drums in front of thousands of people, although I've still kept the hobby up). Once I've done this my day is set as I know what I am trading, I know what I am looking for and what I need to do to make money. Simple, it's a process but not a boring, mundane one. It's exciting and inspiring as I do what I love. If you are one of those who wakes up every morning because you have to and not because you want to, then honestly you need to look at your life as something probably needs to change. 

I'll leave to consider the following and make an attempt every morning at what the late Apple CEO Steve Jobs told a graduating class at Stanford to do: 

"When I was 17, I read a quote that went something like: "If you live each day as if it was your last, someday you'll most certainly be right." It made an impression on me, and since then, for the past 33 years, I have looked in the mirror every morning and asked myself: "If today were the last day of my life, would I want to do what I am about to do today?" And whenever the answer has been "No" for too many days in a row, I know I need to change something."

Full text can be found here: http://news.stanford.edu/news/2005/june15/jobs-061505.html There's also a video on YouTube that is very popular. 

Find what you love; have a purpose and begin to turn ambition into achievement. Have a great day!

Today's trades and setups; a good day overall...

Hi Traders. Sorry for the late post but have been busy trading all day as well as working on some exciting new projects that will benefit you all.

I'm trying my best to send out some intra-day trade ideas but in the meantime most of my long time followers should already have taken the same trades!

Below are 2 intra-day trades I took today and one end of day.

Current trades: Gold, Dow Jones have both triggered

A lot of the AUD pairs are suggesting a pull up so have to be careful on which one to take. I have elected for AUDCAD as I currently have a bearish view on Stock Indices and Commodities. Therefore, this may drive down weaker demand for Oil and hence effect the Canadian Dollar. As this is risk off, the pairing also benefits from a stronger US Dollar.

Trades:

EURUSD Short - Following on from the Doji put in on Friday, price retraced to the 38.2% Fib retracement level with the daily pivot point. Price diverged the whole move up in the Asian session showing weakness

DJIA Short - Head and Shoulders and Descending Triangle pattern following on from Daily resistance

AUDCAD Long - Horizontal, 1.618 Fib ext and RSI/Stoch diverging on Daily/Weekly

All charts below with annotations:

Precious Metals Short; Indices Short...market breadth warning signs

Is this the end of the precious metals run? Well it is certainly due some type of retracement. Seasonally, October is a bearish period for Silver and Gold. Precious metals across the board have ranged over the past few weeks at levels of resistance with market breadth indicators showing a slow down.

We also have the Dow Jones Industrial Average losing momentum just before its all time highs. The triple top with a weak rally and a seasonally bearish period for the beginning of October (stocks tend to rally the closer we get to the US elections in November), all present a potential shorting opportunity.

FX to follow!

Friday wrap...

The markets have been fairly subdued in the first week of the last quarter. Whilst the week was full of key central bank news announcements, nothing provided a catalyst for any sharp movements as most action from global central banks has already been enacted. However, the surprise news announcements came from the Reserve Bank of Australia and their 25bps rate cut from 3.5% to 3.25%. This weighed heavily on the Australia Dollar and the Euro benefited due to the deleveraging in the cross rates such as EURAUD. It remains to be seen whether the follow through will continue and mainly depends on news coming from China. The next major news announcements were the US ADP (162k actual vs 145k expected) and ISM numbers (55.1 actual vs 53.2 expected) which both came out of positive. However, even though it is Non-Farm payroll week, the most important economic numbers of the year the market has focused their attention on the Fed's policy of more QE3. This along with a raft of public holidays in China and Germany are a few reasons of the low volatility this week. The Canadian Dollar also posted better Ivey PMI (60.4 actual vs 59.2 expected) which can be fairly volatile but led to an increased hawkish stance amongst traders; subsequently CAD rallied amongst its counterparts. USDCAD fell victim to this move as it fell 74 pips in US trading.

The main focus moving forward will be whether Spain requests a bailout before the end of the year. The opening to the last quarter of the year can be fairly quiet as macros reconsider and reallocate positions. Look for price action as a leading indicator as the market is currently dealing with a mixed economic climate.

Surprise RBA rate cut, risk on or off now?

The surprise RBA rate cut from 3.5% to 3.25% weighed heavily on the Australian Dollar. This had a large impact on cross trades, as the AUD was dumped across the board. All eyes are now on today's ADP, Thursday's ISM services and Friday's NFP. Personally, I'm flat until I can see how to position myself for the last quarter. Of course, we always follow price action first and foremost but all this has been telling us for the past week is the market is going sideways. With ongoing fears surrounding China, Greece's Troika deal and whether or not Spain will ask for a bailout and the Fed's QE3 programme the economic climate is somewhat mixed. Most hedge funds have been reported to be flat whilst a theme presents itself. In fact 70% posted a loss last month. It's a good thing you read these posts and understand capital preservation and the reasons it is important. To name a few: compounding, psychology and reward:risk ratios.

It's important to remember we're at the beginning of the month and we still have 3 weeks of trading to go! Stay disciplined.

Of course, if any trades come off interest I shall let you know. In the meantime, for intra-day traders it's just about looking at previous day's highs and lows as levels of support and resistance.

Good luck!

Best September Trading Opportunities +17%

As the market works out the macro direction for the last quarter of the year, here's a list of the best trading opportunities in September. I know some of you capitalised on some of these moves so well done; I did blog about most of them! :) They totalled +17% for September, bear in mind you may have taken other losing/winning trades, etc. I even missed two of these trading opportunities, even though they met my rules perfectly, as I was away in the States. Let's hope October presents similar opportunities. 

NZDUSD Long 05.09.2012 – The buyers tested the upper resistance level twice suggesting a possible breakthrough to the upside. The first possible retracement to the 38.2% retracement of the year long wedge supported a case for buyers to come into the market. The RSI divergence and low tested bar confirmed this. If traded on the daily timeframe this trade resulted in +6%, if traded on the 4hour timeframe this resulted in +8%

AUDUSD Long 05.09.2012 – Clear momentum ring low trade as price double bottomed with July’s low and the 38.2% Fib retracement from June’s low to August’s swing high. The Stochastic divergence also confirmed the closing price divergence in the recent 8 bar range. If traded on the daily timeframe this trade resulted in +3.5%, if traded on the 4hour timeframe this resulted in +6%

NYMEX Crude Oil Short 14.09.2012 – Many factors led to the potential short trade at $98, including: false breakout from August’s high and 61.8% retracement, RSI and Stochastic divergence, shooting star candle bar/high test bar and a seasonal bias to go short mid-September. Depending on the management of this trade, a stop could be at +2% or you may have exited on the support level 100dsma which resulted in +6%

Exxon Mobil Long 04.09.2012 – This Dow Jones Industrial Average stock is in a strong uptrend. Waiting for the pullback to the 50dma, the low test bar false breakout, RSI and Stochastic divergence confirmed the bullish bias which resulted in +3.5%

Past results are not indicative of future performance. Trading leveraged products such as FX and CFDs carries a high level of risk and is not suitable for everyone. You should seek professional financial advice before trading and investing.