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Tag Archives: analysis

Equities Selling Off, Yen Weakness, Ozzy Dollar Down.

Equities have been selling off strongly this week and we have seen dollar strength. This has put a lot of pressure on Ozzy Dollar, which has fallen more than 150 pips in the last 2 days.

The Yen has also been very weak on the back of talk of further monetary easing, but Euro has been surprisingly resilient. We have made a bit of money on Euro Yen this week, and we have also had a good run on Euro dollar.

Here are the trades we took Yesterday.

First trade of the day was Euro Yen Long at 10113 up to 10174 for 61 pips.
Second trade was Cable long at 15855 up to 15875 for 20 pips.
Third trade of the day EJ short at 10122 down to 10102 for 20 pips. That trade initially moved against us, and i did consider closing it at one point, but decided to hold on and our analysis proved to be correct as it came back down for 20 pips profit.

Here are the trades we took today.

First trade of the day was Euro dollar long at 12721 up to 12781 for 60 pips. We actually opened that trade yesterday but closed it today.

Next trade of the day was AUD long at 10318 up to 10333 for 15 pips.

We also had another Euro long trade that i closed for 13 pips.

We just missed another AUD long by 1 pip which would currently be in around 22 pips profit. 🙁

We are having a decent week so far, and i am hoping for more pips tomorrow.

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How To Enter A Forex Trade. Don’t Chase Trades

Don’t chase trades.

This is a good tip for you if you are struggling, don’t chase trades. The pros do not chase trades. When you start chasing a trade you pay more to get into the trade, and you tend to get out at the wrong time as you are trading emotionally. Set up your trade in advance so you are ready to go when the price comes to your entry, you can then trade with less emotion, and you are more likely to exit the trade at the right time, as your head is clear of emotion.

Emotional traders have a real hard time making consistent profits from Forex trading. You have to trade as mechanically as you can. If you see a set up you take it, its as simple as that. Don’t force trades either. If a set up is not there don’t trade. I have seen a few good trades pass me by in the last couple of days as i have been busy with other stuff, and i have been itching to take a trade, but i just compose myself and be patient and wait for the right trade to come along.

Some Forex traders will take 20 or 30 trades per day. This in my opinion is just gambling, you can’t possibly have 20 or 30 good set ups per day. This type of trading is very stressful and can be very costly. I much prefer a laid back approach to trading.

The correct way to enter a trade in my opinion is to do your analysis, set up your trade and wait to get filled. Jumping into a trade because you think you are missing something will cost you big time. You may get lucky and jump on a good trade, but long term you will lose with this style of trading. Also when you are in your trade try to manage it correctly and try and find a logical exit for the trade rather than just going for 10 pips, or 20 pips. If you can find a logical exit at 14 pips take it. 4 extra pips can add up to a lot of money over the course of a week.

Fundamental Analysis V Technical Analysis

This is a big point of conflict for a lot of Forex traders. Do you follow the news, which is fundamental analysis, or do you follow the charts, which is technical analysis.

If you have a background in trading and investing in shares, then you will probably be very comfortable with fundamental analysis. Its very easy to get hold of fundamental information for a company, and therefore, easier to make a decision to invest, based on how good a company looks fundamentally. But there are so many variables to fundamental analysis of currencies, it is not very easy to trade currencies based solely on that. If Ben Bernanke gets out of the wrong side of bed, it can affect the price of the dollar. Yes this is an extreme example, but you get the idea. Some traders only trade on fundamentals, and would not thank you for a moving average or a trend line, but i am not one of them. I am purely a technical trader, and 90% of my trading decisions are based on charts rather than news. I do pay attention to the news, as this can affect my decision to enter or exit a trade.

For example, if i know that there is market moving news about to be released, i will generally not enter a trade, or i will close out of a trade if i am already in one. The reason for this is the fact that the market can move very erratically when news is released, and the technical analysis aspect generally goes out of the window when that happens.

I do pay attention to the fundamentals of currencies, as its in my interests to do so. For example, its seems like forever that the Euro has been fundamentally weak, and although i have taken many short term long positions on Euro Dollar, i would be very reluctant to invest heavily in a long term long position on Euro, because the majority of traders are shorting it, so i would be bucking the trend. Bucking the trend is not always a bad thing, but in the case of the Euro i have a bearish bias, as do most traders, so opening large long positions in Euro Dollar is not a good idea in my opinion.

Fundamental analysis and technical analysis are both time based indicators, but technical analysis is much more flexible in my opinion as it can be applied on a much shorter time frame. For example you can trade technicals on a 1 minute chart, but you cant really trade fundamentals that way. Fundamentals are generally traded over a longer time frame, weeks to months rather than days. As i am a day trader technical analysis gives me far more flexibility than fundies, and are by far my favorite way to trade.