Sunday, November 15, 2009

Moving On…

Hi guys.

So it seems that my work and study life is catching up on me again. I will still be trading Forex but will not be updating this site too frequently, if not at all.

There are several Forex trading styles but all have their disadvantages. For long-term trading, stability is there, but then it is often quite hard to find the right time to take profit, fearing that the market will go faster our way, and if we were to hold on to the trade, we would have obtained even more. Short-term trading like swings or scalping will let us take out the cash that we profit but then these types of trades are more vulnerable to random market noise compared to long-term position trading.

With that said, I still think that I have not found my optimum trading style and I need to finish up work and college. So I will not be updating this Forex Journal much. But for now, you guys can enjoy the ajax forex charts:

Forex Chart powered by CMS Forex

Monday, July 27, 2009

EURAUD Long Candlestick!

July 27 2009. A funny and bizarre day. EURAUD showed strange movements. EURO was going down a bit. And then it was going down and down and then the candlesticks showed some rejection. Bulls were starting to win and I thought it was not going to beat the secondary support from far away.

Later on, a massive super long bear candle appeared.

Very strange and bizarre but it was on the 11th hour and the drop was sharp. Was it a market event? Well I am too lazy to check. But this drop won me 100 pips. Hehe.

Cost of Opening Trades

Do you think opening and closing Forex Trades are painless? Well, I mean you can just click on Buy or Sell, enter the amount in units or lots, and then enter stop loss or take profit values and then click SUBMIT, right? It doesn’t cost you a dime.

Well, think again. When you click submit, you will have lost money in the form of spread. If you take notice, you would realize that there is a buy and sell price for every market pair. So if you Buy, the broker opens your trade at the buy price and the difference between the Buy and Sell prices would be the spread. That difference costs you money and that is what you will be paying to the broker!

So generally, if you scalp a lot, you will be paying the spread many times to the broker in a day. But if you play position trades or daily trades, or do not open and close trades that frequently, you do not need to spend as much money trading.

Wednesday, July 15, 2009

USDCAD Breakout

USDCAD is currently having a breakout! It was rising but then it slowed down. And it was counter-trending for many days, but now it is July 15, 2009 and wham. Let’s see. Canada has been experiencing a downtime for the whole of last month but things cleared up and everything seems OK and stable. Then USD started fluctuating again and that explains the counter-trend.

This can be related with the spring effect. When you press a spring hard between your fingers, it will start to compress and store inertia energy until it can take no more and then when you release, it the spring makes a big jump! And it seems like USDCAD jumped downward. July 14 was about a decrease of 200 pips. Wow.

Thursday, July 9, 2009

RSI - A Big Help in Trend Trading

Recently, I have been paying a lot of attention to a simple but powerful indicator - the RSI, also known as the Relative Strength Index. This indicator shows you whether the current trend of the market is powerful or not.

As you may already know, trading ranging markets maybe dangerous although profitable. But most of the time, only those very experienced and full-time traders can successfully trade ranging markets. People like me who go to college and have other commitments cannot continuously watch the markets to scrap pips from the ranging markets and therefore, prefer to trade during trends.

But the problem is to find out whether the trend is strong enough to trade. I find that the SMA 21 indicator can help a lot, but the RSI is simply easier and faster to use. My system for using the RSI is simple. I just see what the RSI value is, on a daily chart (D1). If it is 60 and above, the market is going up. Below 40, it is going down. In between, I won’t trade. So I just take a glance at the RSI figure and if it starts with a 4 or 5, I will skip to the next pair. Trading when RSI is at the extremes - in my case above 60 or below 40 - greatly increases winning probability.