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. 

The only source of knowledge is experience

This week has been a good week to take off, shame I didn't! The markets have been very subdued with some volatile moves, especially today with the EU payment to UK farmers where the British Pound rallied. This week was probably the toughest week I've had in a while, purely because I've been working from my desktop and obviously wanting to trade. I had to go back to my old tactics of sticking a post stick note on my screen saying: 'We get paid to be disciplined; not by the hour'. I was also heavily influenced by my involvement in a trader talk group where there are many intra-day traders. I put in more effort this week in staying disciplined than I did in the gym! I digress, we all know the obstacles we face as traders but not many have solutions to them.

When most traders lose money or don't follow a strategy through, they return to the path of learning more and increasing their knowledge. Some of my traders who I mentor have done exactly this. After not trading for a while due to quiet markets, pressures start forming.....how am I going to hit my target? How am I going to pay the bills, etc.... So what do they do? They forget about their mentor's (me!) years of experience and try and go it alone. They start spending hours a day learning about Elliott Wave Theory, Gann Theory, Cycle theory, Candlesticks, joining forums to find new strategies, etc and are essentially trying to find the holy grail!

Fortunately, I have studied all of the above, do I use all of the above? No. Last night, I met with my network of market technicians from the Society of Technical Analysts at the LSE who are a mix between institutional market technicians and private traders. They all specialised in one field.....some only traded Elliott Wave theory, some spent most of their time analysing and understanding Gann theory, however, most just kept it simple. We all came into agreement that you have to find something that resonates with you, no matter what it is, and go with that. For that will be the simplest method for you to implement on a daily basis, allowing you to focus on the more important aspect of trader psychology.

My own view is that the only source of knowledge in trading is experience. Most successful people in life have a mentor that inspires and motivates you, holds you accountable, challenge your thinking to make you understand it in your own psyche, provide new ideas and help you achieve your goals. This is vastly different from a coach, a mentor has been there and done it and you are their to learn from their experience. I have been fortunate enough to mentor some dedicated and hard working individuals for some time now. It is remarkable what one can achieve on a personalised basis. Being around the right peer group is essential, or to not have one at all if there is no one like minded!

Experience counts for everything.

As Bruce Lee said: "I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times"

Best,

Jitan

This week's watchlist

Hi Traders,

Here are some potential currency pairs I'll be watching this week. This is just the SELECTION criteria, our execution will depend on our trading strategy and so on.

These include AUDNZD, CADCHF, GBPUSD and EURUSD.

Good luck

Today's trade setup - AUDCHF and still EURAUD, EURCAD,

Morning folks!

After a great Arsenal result here's some potentials I'm looking at:

EURAUD/EURCAD - already in off the daily bar setups, however, once and if starts trending in our favour will look to capitalise intra-day as could be a long phase 1

AUDCHF - annotations are on the chart below but we have a low test bar/hammer false breakout, 3rd touch trend line from August 2011 lows, 61.8% Fibonacci retracement, RSI/Stochs diverging. There are various ways to enter this trade - off the daily low test bar, off the intra-day higher high and higher lows, etc....follow your rules!

Happy trading!

Potential Trade Setup tonight...

Hi Traders! After some much appreciated feedback from you here is a potential trade I am looking at this evening: EURAUD. Why? Look at the chart :)

SELECTION: Price has retraced to a five touch trend line from 2011 highs, the 61.8% retracement from May's high to August's low and the 200dma

TIMING: RSI divergence is showing us that the buyers are potentially exhausted allowing room for sellers to enter the market and we have a clear ring high/high test bar setup

MANAGEMENT: Given previous phase 1 cycle lengths lasted 3 months and that the beginning of phase 2 in Feb/Aug 2012 came off the 1.618 retracement this trade clearly has some room to continue its overall downtrend

Today's trade setups

Hi Traders,

Here are two trades I am in and have orders to get me in: (more details to follow)

EURCAD: Short
NYMEX Crude Oil: Short

Friday wrap...

MARKET NEWS

After the disastrous US employment numbers released last week (96k actual vs 126k expected) the market priced in a further round of quantitative easing with the US Dollar dumped across the board. As expected the market began the first part of the week in a range as all eyes were focused on the German Constitutional ruling court on the legality of the ESM. A negative decision on this would have been disastrous for the already embattled single currency. Therefore, with the market expecting a positive decision and the pricing in of QE3 due to Ben Bernanke's previous FOMC comments, the risk on sentiment for the week was relatively clear and the intra-day traders have faired very well in recent weeks. The US Federal Reserve's FOMC actions were classed as very aggressive as they introduced QE3, $40B per month on MBS with no limit, a cut in 2013 GDP forecast and potential rate hikes in 2013. Gold rallied strongly on the news as the S&P 500 reached 4 year highs of 1460 and USDCAD reached 13 month lows. EURCHF also saw some welcome movement as SNB Chairman Jordan talked up the EURCHF peg.

TOP TRADES OF THE PAST WEEK (mainly intra-day due to high news announcements)

1. AUDUSD - Pivot Bounce Long 10.09.2012 After bouncing off its daily 38.2% retracement level from June's low to August's high, this pair rallied strongly as the search for yield continued on a backdrop of a weak US Dollar. Simply trading off the daily pivot point with a stop below S1 and target just below R1 resulted in + 1.5%

2. NZDUSD - Pivot Bounce Long 11.09.2012 The commodity rally continued as inflation fears set in due to QE3. However, price action has been relatively clear and showing a very strong trend. Trading as above resulted in +1%

3. USDSGD - Consolidation Break Short 11.09.2012 Continuing with the sell off in the US Dollar, this pair trended aggressively as investors shunned a weaker dollar. This pair consolidated in a 50 pip range before breaking out in the direction of the trend. This breakout resulted in +2%

4. GBPUSD - Pivot Bounce Long 10.09.2012 As investors shun the Euro for the British Pound this pair has been trending upwards for the past four weeks. Trading pullbacks to levels of support faired well for traders, as this trade resulted in 1.5%

5. S&P500 - Fib/Divergence Long 11.09.2012 Price retraced to the 38.2% Fib level and diverged on several oscillators. Trading the inside bar as a price action confirmation resulted in +4%

EFFECT OF THE NEWS LOOKING FORWARD

With most of the key news announcements out the way, attention now turns to Greece, Spain and Italy and whether or not they will ask for a bailout and seek the aid the ECB has already put in place (the ESFS bond buying scheme). Price action will be key as markets and macro players position themselves for the last quarter of the year. Commodities will be strongly looked at as they have had the most aggressive moves in recent weeks. Seasonal patterns may also come into the forefront as demand for Gold and Oil increase as the Western hemisphere prepares for the Christmas and New Year period. Australian Dollar will be one to watch in coming weeks, as well as EURNZD and EURAUD as deleveraging takes place. Watch the volume on the rising equity markets as it could be a precursor to a potentially volatile  period as US elections get more aggressive towards their primary in November. As always follow price action as a leading indicator. 

Best,

Jitan

Friday wrap....(slightly early!)

Hi traders. As I'm off to the US tomorrow here is my round up of the week:

MARKET NEWS

 

The first day of the week experienced light trading volumes due to a mixture of factors. Whilst the US and Canadian public holiday aided in the range based day, most of low volume was due to a fairly choppy session at the end of the prior week. The Jackson Hole summit produced a string of volatility which started early in London trading as the USD was dumped across the board. Most traders analysing the speech concluded a firmly dovish stance. Predictably markets stayed range based as traders waited for details from ECB President Mario Draghi's speech at the ECB press conference on Thursday. The US ISM Manufacturing data and Non-Farm Payroll were also closely being watched. However, on Wednesday the Euro rallied 100 pips after media reports suggested that the European Central Bank may buy unlimited amounts of short-term government debt to ease the Eurozone's financial crisis. Traders and investors alike have been expecting ECB President Mario Draghi to unveil the bond buying scheme at Thursday's meeting but details were clearly leaked early on. This expectation was clearly priced in as the Euro has been grinding higher the past month supporting the economic theory of 'efficient markets'. Precious metals also experienced volatile price action as it has been the pure QE3 play. As the market fears another round of Fed quantitative easing due to poor US data, gold rallies and vice versa. In Asia, the Australian Dollar found some relief from its one month straight sell off due to positive employment data as well as investment bank reports circulating that Australia is not in a mining bubble. This short covering was also buoyed by the rise in Gold due to Australia's status as the biggest exporter of the yellow metal.

 

TOP 5 TRADES OF THE PAST WEEK

 

1. NZDUSD - Pivot Bounce Short 04.09.2012 Trading the bearish trend, simply waiting for a pullback to intra-day levels of resistance has worked very well in recent weeks. This trade was further supported by the 60m 50ema. +2%

 

2. EURNZD - Low Test Long 05.09.2012 This pair has been rallying aggressively the past month. After four 60m low test bars during the Asian session, this pair was poised for a strong move to the upside. Simply trading off the low test in the London session resulted in +2%

 

3. GBPAUD - Pivot Bounce Long 04.09.2012 Tracking the sell off in commodity currencies, this pair as been rallying strongly as investors shy away from Europe and look to invest into the stronger UK. This pair low tested on the 60m 50ema on the European open and resulted in +2%

 

4. GBPNZD - Pivot Bounce Long 04.09.2012 Staying with the theme of the commodity sell off, this market has been highly correlated to GBPAUD. Trading the pivot bounce resulted in +1.5%

 

5. AUDCAD - Pivot Bounce Short 04.09.2012 As the Australian Dollar has been dumped the rise in Oil prices has made AUDCAD a strong pair to trade. The daily pivot resistance level was further supported by the 60m 50ema and resulted in +1.5%

 

EFFECT OF THE NEWS LOOKING FORWARD

 

All eyes are now on the Fed's FOMC statement and economic projections on Thursday as well as the German ruling court announcement. The Fed's actions will typically be priced in from the Non Farm Payroll figures, so analyse and follow price action. Intraday traders be careful of volatility around these news announcements. Thursday also has an Italian 10-year bond auction which depending on results could shed some light on which country may ask for a bailout first. However, with the Fed speaking later in the day, it will have to be a big disappointment or surprise to have any effect. The SNB Monetray Policy Announcement could also be fairly interesting as their view on further diversification to help keep the 1.2500 peg to Euro could affect the markets as traders sit on their positions. In any case follow what the chart is telling you to do, rather than what you think should happen.  

ECB details leaked....

The euro rallied 100 pips after media reports suggested that the European Central Bank may buy unlimited amounts of short-term government debt to ease the Eurozone's financial crisis. Traders and investors alike have been expecting ECB President Mario Draghi to unveil the bond buying scheme at tomorrow's policy meeting, this was clearly the case as Euro has been grinding higher the past month. Given the economic theory of 'efficient markets' - everything is priced in. 

However, it is important to realise we still have NFP this Friday, the QE3 and German ruling court decision next week. Expect volatile markets but follow price action as a leading indicator. 

My favoured pairs to be watching over this period are the currencies where I expect a short covering squeeze on any surprise news announcement. These include EURCAD, EURAUD, EURNZD and to an extent EURUSD. Gold is also one to watch closely but be careful of volatility. 

Good luck!

FX Watchlist & Update

The end of week trading session proved to be quite choppy due to the Jackson Hole summit. The volatility started early in London trading as the USD was dumped across the board. Most traders analysing the speech concluded a firmly dovish stance. Gold has been the best pure QE3 play and is now an interesting chart coming into mid-September. All eyes on 13 September where a final decision is due depending on this week's data. I'm personally wary of entering end of day trades in week one and two of September due to a raft of central bank announcements, the QE3 decision on 13 September, the German ruling court decision on the ESM on 12 September and the recent downgrade of Catalonia to junk status. Looks set to be a volatile September. I will try to keep you posted on any trades I am close to entering but am currently flat until the market sentiment is more clear. 

Trades I'm in: 

EURNZD long and NZDUSD short.....managing these trades from a while back

Trades I'm looking at: 

AUDUSD/Gold Long (seasonal bias is bullish mid-September). We obviously have to bear in mind the horrible data that keeps coming out of China that has been weighing on AUD the past month. This also coincides with EURAUD/GBPAUD short positions due to strong rallies. 

DJIA/Stock Indices short.....seasonal bias is short due to US election year and we have a potential Dow Theory sell signal (will post during the week).

FX charts with explanations:

Friday wrap...

MARKET NEWS

 

The week opened without much a theme across the markets. With London closed and the US calendar filled with only fourth-tier data, EUR/USD was held in a 40 pip range at the beginning of the week. The week didn't get any better for the greenback and its counterparts as traders take a breather before the Jackson Hole summit to ascertain the Fed's stance on additional quantitative easing. Interestingly, Draghi has cancelled several meetings in the coming week so all eyes will now be on US data. USDCAD experienced some volatile swings as the effect of Hurricane Isaac took its toll on the Oil markets, as well as comments from the summit stating '[they] are watching the Oil markets closely'. The drop in US consumer confidence to 60.6 from 66.6 had no real effect, neither did the upwards revision of US Q2 GDP to 1.7% from 1.5%. The real action was in the commodity currencies as traders looked to bank profits from the previous rally on a string of negative comments coming out from Australia. Chatter about the end of the mining boom and the collapse in iron ore prices all effected the Australian Dollar and New Zealand Dollar. Also the heavy overweight shorts on EURAUD will be short covering on any type of hint that Spain will be bailed out which may lead to the AUD being dumped. The Italian bond auction went relatively well as yields fell back in Spain and Italy, however, so close to the end of the week the market preferred to stay range based while these key news announcements are released.

 

TOP TRADES OF THE PAST WEEK

 

1. GBPUSD - Ascending Triangle Retest Long 28.08.2012 Cable broke out of its ascending triangle and retraced back to support at 1.5770. Trading the higher low double low test bar off the support level resulted in +2%

 

2. USDCAD - Inside Bar Breakout Long 29.08.2012 USDCAD double bottomed off the horizontal level at 0.9850. The inside bar provided the entry for this trade which is still running, up +0.5%

 

3. NZDUSD - Pivot Bounce Short 29.08.2012 This pair is in an aggressive trend down and trading intra-day levels of resistance has provided some decent trading opportunities. Selling on the pivot retracement with the previous days low and 50ema resulted in +1.5%

  

5. GBPNZD - Pivot Bounce Long 29.08.2012 Capitalising on the sell off in the NZD, trading the bounce of the pivot with a stop protected by the 50ema just below S1 resulted in +1.5%

 

EFFECT OF THE NEWS LOOKING FORWARD

 

Price Action from the Jackson Hole summit will be key to trends going forward. Look towards Gold as some direction for the US Dollar. Fed Chairman Ben Bernanke is known for his dovish stance and eventually many are forecasting another wave of QE will come, in which case the US Dollar will most likely fall and Gold rally. If some clearer action on the ECB ESFS bond buying scheme is released then we could see some aggressive US Dollar selling. Seasonally, Gold has a bullish run mid-September due to various religious festivals and the run up to Christmas so we could see an aggressive rally depending on the outcome of the Jackson Hole summit and/or September 13 FOMC statement.

What does Rocky and a Trader have in common? A real rags to riches story....

The market has settled down slightly as we approach the Jackson Hole summit where traders are looking for key decisions surrounding QE3 from Ben Bernanke. Interestingly, Draghi was due to speak at the summit but has cancelled so all eyes will be the USD and Gold. If there is no hint of QE3 then expect USD longs to recoup some ground.

Trade update: Still long on EURNZD from 3rd August, still long on Cable and short NZDUSD! Have also entered USDCAD long on the double bottom inside bar.

Whilst the markets sort themselves out towards the end of the month I wanted to share an incredible story with you. It is a reminder to everyone that no matter what circumstances you may find yourself in, there is always a way to turn things around if you're committed. I've known about this persons life story for a while and it is one of the most motivating and inspirational stories I know off. It shows how anyone can achieve their dreams with incredible belief and perseverance. The story is of Sylvester Stallone, the Hollywood actor best known for Rocky. The perception to most people is that actors live a glamorous lifestyle and life is easy, which is partly true. However, their journey to that level is one of the hardest there is. I know actors and the sacrifices they make to achieve their dreams are just incredible. Trading is no different. The perception of a trader is a life of financial freedom, which again is partly true once you have earned it and worked for it. Everyone's life can be amazing if they are willing to make a small sacrifice for longer term rewards. This story inspires me every time I read it and I want to share it with you all. Feel free to comment or share any other inspiring stories:

The Sylvester Stallone story is a true rags to riches tale. He rose from an almost impossible situation to the fame and fortune that he now enjoys.

Stallone attended school in Philadelphia where he first started acting. He then spent two years instructing at the American college of Switzerland in Geneva. When he arrived back in the United States he became a drama major at the University of Miami where he also started to write. He left before graduating and moved to New York to pursue his acting career. He auditioned for almost every casting agent in town with no success. He decided to turn more towards writing and started to write screenplays while waiting for his acting career to take off.

His first break was in 1974, the lead in "The Lords of Flatbush". He also received his first writing credit for additional dialogue on this film. Despite this small break he struggled to build momentum. He kept auditioning with one rejection after the next. He started writing more screenplays and received similar rejection.

Stallone had run out of money and was living in a desperate situation. He could barely even feed his family. Then one day he was walking through the streets of New York and he wandered into the library to keep warm. He started reading books from writers such as Tolstoy which gave him an extra edge in his writing.

However, he was in desperate need to get work but wouldn't take an average job as he knew he wanted to be an actor and that was it. He resorted to things like selling his wife's jewellery!

Whilst sitting at home watching a fight between Weppner and Ali, where the underdog Weppner was getting slaughtered but kept getting back up, did he find his inspiration for Rocky. He wrote for over 24 hours straight and had written the entire script to Rocky.

He tried to sell the screenplay to many producers with rejection after rejection. This went on for months and he ended up so poor he had to sell his best friend, his dog. Stallone waited outside of a local liquor store asking everyone if they wanted to buy his dog. Someone eventually bought it for $50.

He persevered with trying to sell the story and eventually someone loved it and agreed to buy it. However, Stallone wanted to play the part of Rocky. They declined and told him he was a writer not an actor. Stallone disagreed and told them he was an actor. Despite how broke he was, he declined their offer of over $100,000. Weeks later they contacted him with an even higher offer but Stallone still insisted that he play Rocky. Once again they declined. The offer kept rising as they were desperate to buy the film without him playing the part of Rocky. The price eventually reached $400,000 and he still declined. He believed he was an actor and there was absolutely no compromise.

Eventually, they offered Stallone $25,000 (from $400,000!) just in case he was an acting flop and the film didn't do well. He accepted and the first thing he did was go back to the liquor store to buy back his dog. He waited three days for the guy to come by. He offered the guy $150 to buy back the dog, the man declined. However, Stallone kept pursing his goal and eventually ended up paying $15,000 and giving a part in the film to get his dog back, who is also in the film.

What happened with the Rocky film? It won an Academy Award for best picture in 1976 and went on to create a successful franchise with four other films in the series. At the awards ceremony Stallone read out all the rejection slips from those who said the film would be sappy, predictable and a film that no one would want to watch.

This just goes to show that we all have the resources needed to overcome any obstacle and achieve any aim we have in life, no matter what your age, background, colour or gender is.

Anything is possible. Our imagination combined with persistence and direction will ensure we can all live the life we dream to. Just ask Sylvester Stallone, he knew his outcome and persisted; now he is living his dream.