Here is a recapped on week 9th-13th of January 2012 of the Forex Market This week have proven that both Fundamental and Technical trading does not really make a success in Forex. Experience is still the most essential knowledge and individual's equipped skills to survive the volatility and dramas in the Forex Market. I believed a high number of Retail Traders have either made a huge earning through lucky spots or succumbed to their own lack of experience in the Forex Market, especially when it gets more Dramatic each day ever since the Euro Debt Crisis Issues got highlighted that have caused a global fear in trading, especially to those trading shorter time frame and period, and high leverages due to the sudden changes of trend during the release of each news and data.
Forex Bar Chart of 9-13th January 2012
In Summary, there was 2 double bottom on a test at 1.2660 Zone on 10 and 11 January 2012. And it ended with the anticipated triple Bottom on Friday the 13th!@ 1.2626, penetrating even lower. There was a lot of speculation and volatility this week for EUR/USD especially during London opening towards London Closing, and some rally seen on Asian market hours.
Some surprises changes to the correlation of pairs
Commonly, most traders in the market have believed and anticipated that EUR/USD, AUD/USD, NZD/USD, GBP/USD and USD/CHF are mainly the major against USD greenback; and they would normally move in the similar direction and trend on each Bull and Bear periods. However, it seemed that NZD/USD the kiwi have seems to break off this ties from the volatility of EUR/USD relationship, while AUD/USD is not as affected as before. It may be due to that most market liquidity are focused into EUR/USD or elsewhere, or NZD and AUD no longer trend at this factor.
Here is what i have analyzed from NZD and AUD from the past weeks
If you are looking to trade AUD/USD, it is tied closely with AUD/JPY. And AUD/JPY is more volatile and active compared to the boring USD/JPY that seemed to take years to crawl or climb. AUD/USD as seemed is strongly tied to AUS200 indice. Once the indice is bullish or bearish, it tagged accordingly along with it; while kiwi is also semi-affected. AUD/USD have gained strength against greenback recently with Kiwi brother. Despite bearish technical datas and fundamental news, it moved at a bullish trend against the greenback very quickly even mere drops in very short time frame. This is due to AUD and Kiwi having more stable and reliable ratings on their currency; from their technical data output that are more positive going along these few days and past week. While major indices are have a bull run along with commodities surge; especially with Gold and Silver this week. AUD and NZD moved along with this bullish trend against the greenback. While during a bearish period on EUR/USD, aud and nzd only dropped slightly but very quickly regained its bull momentum on each fundamental and technical release. Anyway to note, a strong and bullish gold and silver means a temporary drop in USD demand.
How to identify this spot?
Please refer to Forexpros to view moving averages and indicators, and indices futures. If you are looking to trade AUD/JPY and AUD/USD; they normally moves in the same direction. AUD/USD and AUD/JPY should trade with technical datas, because indices are more responsive to technical release. You should also check on all tools you have available and often work with on MetaTrader 4/5.
Lets returned to our main focus, EUR/USD
Commonly, EUR/USD along side with AUD/USD will experience a slight drop before or after New York closing time. That is normally the best period to BUY IN if it is near its weekly/daily LOW, do not attempt to buy at daily high! Market would normally react to a further drop at first during sydney opening. Preferably after new york closing, then you should place a market order, to avoid paying the swap/interest. While its stabilizing and rejecting from its support or bearing pin bars in the 1hr/4hr time frame, it will indicate a time to BUY IN for 50/100 pips run.
Here is my experience sharing of how to trade the market (TOP SECRET FOREX TRADING)
If you decided to trade in either AUD/USD or EUR/USD or together on this two hot favorites. Do not attempt to lump in an investment volume that you intend to trade. Either if you are scalping or trending, trade the market through this method (I would use this if my capital investment volume are higher :), that's how top fund managers are manipulating the market, killing all noobs and retail traders) For example, your intended lot size that you are planning to invest is 1.0 . You should play this out; never ever locked yourself in just a unit/direction. You may try this in your trade set up. But firstly! You need to identify the trend! and the technical data along the week that may affect your set up.
Daily High - 1.2870, Daily Low- 1.2650
(Rally situation) Buy 0.1 @ 1.2650 , TP: 1.2710. .SL @ 1.2590 Buy 0.1 @ 1.2650, TP: 1.2680. SL @ 1.2590 Buy 0.1 @ 1.2650, TP: 1.2800. SL @ 1.2590 Buy 0.1 @ 1.2650, TP: 1.2750. SL @ 1.2590 Buy 0.1 @ 1.2650, TP: 1.2780. SL @ 1.2590 Inversely
(In between periods and retracement/Fall)
Sell 0.1 @ 1.2870, TP: 1.2650. Sell 0.1 @ 1.2690, TP: 1.2679. Sell 0.1 @ 1.2710, TP: 1.2690. Sell 0.1 @ 1.2720, TP: 1.2705. Sell 0.1 @ 1.2820, TP: 1.2720.
The bulls normally set in after it break its resistance along side with bullish technical datas release. Do not be caught in between the NOISE! (STEP OUT). The above is just a trade set up, you may put execute in your pending/market order. Try Fibonacci Calculator and you will get the retracement level on each LOW and HIGH. Set it accordingly to your risk and profits appetite. You should also check pivot on majors, if it break resistance level 3 on a fluctuating 5-20 range or the monotone trading hours during Asia time before sydney/tokyo closing and London Opening, would normally signal for a BULL RUN. Especially when market hours opened for London, where indices are more active and responsive. 2. Scenario two Daily High - 1.2870, Daily Low- 1.2650 (Less volatile/Less Liquid situation) Find the centre pivot in each session, preferably during tokyo opening hours.Or even New york mid session after London market is closed. It will probably crossed 1.2690 zone by then or reached there. We are looking for a Pivot level, of both resistance 1 and support 1, of a fluctuating pip/ consolidation market NOT a trending market. Buy 0.1@ 1.2690, TP: 1.2705 Sell 0.1 @ 1.2710, Tp: 1.2695 Buy 0.1 @ 1.2695, TP: 1.2709 Sell 0.1 @ 1.2715, TP: 1.2702 Buy 0.1@ 1.2702, TP: 1.2715. Total: 15+15+14+13+13 = 70 pips. Instead of playing a unit investment of buying it up or selling it down, and get caught in between, play along with both buy and sell. You will get up with these decent pips very quickly in a consolidation market towards a daily trend, identify through the 30mins time frame or 1hour. You should do this at reverse method from high to low, but take note of your market hours! Most experienced trader will normally look at longer time frame, the 1hr, 4hrs and daily chart. Because they would commonly enter the market on confirmed signals and pin bar indicators, this is a trending which is more reliable. This shown graph is a 4hr time frame and price action will be more easily spotted. Because of the EURO DEBT CRISIS having a long term effect; this is how i recommend trading to be done! Take opportunity @ sell level (Look out at the rejection of resistance pin bar, would signify a change of trending as seen at 1.2867 zone), this is a psychology aspect of trading. Some people are comfortable of selling, some are buying. But in the crisis, selling is more preferred, while BUYING seemed to be a RISK because of fundamental issues. Target to enter, when the market are at its highest! Separate the few resistance level, if the first resistance level is hit, entered it but exit quickly too. The 2nd resistance level hit, would normally signify a 3rd resistance level test. Try to avoid entering trade before London Market hours when its monotone, buying is preferred, and selling should be avoid before London Market (From my experience and test on a number of weeks on this pattern on LIVE TRADING) Daily High - 1.2870, Daily Low- 1.2650 (weekly basis) For example, when the bull gets it ways, it crossed its first 1.2700 psychological level, it will normally post to cross its 1.2710 level, before dropping in the fluctuation. However, when its crossed its 1.2720 level of resistance towards a test to 1.2730 from the 80 pips Low earlier, it will normally pose a signal to JUMP another 50 pips; which we normally witness in a SPIKE within minutes they would normally jump. This is what i believed, because most STOP losses :D :D :D were already hit, and liquid flows into the market, and many orders set up to BUY UP during resistance break out! That explained for the surge on each direction. But this is strongly adventurous in trading, why is it so?
If it jumped from 1.2730 to 1.2780 within minutes, it also posed a threat to reversal of dropping at the same rate. For instance, when its trading at 1.2850 period, and dropped back to support level after its daily high and peak level. when it crossed near 1.2790 zone, 10-16 pips from the earlier surge from 1.2730 to 1.2780. It will also signify an opportunity to drop! from 1.2780 back to 1.2730 period within minutes :D again. Because there was no build up or build down on this level. ( You get the picture :D?)
Conspiracy and planned movements
This week seemed like a roller coaster to alot of traders out there, especially if they are going for LONG and hoping to retrace back certain level some targeted 1.29 some even 1.30 which was ridiculous, and refusal to TP early due to their greeds for more gains ( which is rather unhealthy for long term trading ).
You see, its easy to gain profits and pips, but its hard to retain it and grow it @ Long term; if you are retail trader and easily affected by your own emotions and gambling behavior
. Most top notch traders would normally TP a few times on each trades, and do their math so that their green pips are more than their red pips!. Which explained for their taking profits ratio over win and losses and their stop losses set.
I would not recommend early stop losses to be placed in a volatile period. If the market is bearish in overall, than you should place stop loss @ your own comfortable level if you are going for a LONG when its already NEAR ITS WEEKLY/DAILY HIGH, and the overall fundamental and technical ain't support its further growth. However, if you enter in between the market which we normally labelled as NOISE because of the 1 min, 5min,15 min PIN BARS; setting stop losses for this if you are selling will be stupid! :) because what goes up must comes down in a overall bearish week/month. Please check your margins and margin level. I recommend it to be 1000% for margin level when you trade, this is the near the safe zone for both psychology and long term trading. On thursday, we saw a surge from 1.2710 zone into 1.2820 zone and up to 1.2870 from the poor USA technical Datas, and good fundamental news from the market regards to Spanish bonds and such. This caused GOLD, and indices to pump up to its record high again while we witnessed S&P 500 hitting 1300 level Dow to 12400, and German and France back to 6200 and 3200 respectively. Which is why major pairs like AUD and NZD are getting a bull run. BUT EUR/USD the opposite due to its debt crisis. If German and France dropped to 5900 and 2900 zone, which they are heading pretty soon; the correlation for EUR/USD will dropped even further into the first support @ 1.25 and 1.20 and 1.15 subsequently.
Here is what may come true; indices are high up for the start of the year, it was purposely done so, to push up the value of stocks; but the next moment which is coming pretty soon ahead, is witnessing a plunge to the hell! As what market players also do to EARN MASSIVE PROFITS. They only need to do this twice a year :D, to rip all those gambling/retail trader's money to their own pockets.
The law of polarity states, one point someone is better, next point that someone is poorer; if you want to escape this law, then you must know when you stay out, when to change, as change is constant :).
If you are planning to invest and not TRADE like a career, you should enter the market at low risk and smaller lot size. And you will witnessed growth :). If Banks or investment payout that 0.5% - 9% per annum, i don't see why Forex Investment cannot do the same or even better? We are talking about return of investment in high capital volume. So if we are looking at a ROI of 25% Per week from a start up of 1000USD. THIS IS POSSIBLE IN FOREX, Lets Visualize this amount of return of investment.
Week 1: 1250, week 2: 1562.5, week 3: 1953.125 , Week 4: 2441.40 - First Month. Week 5: 3051.75, Week 6: 3814.68, Week 7: 4768.35, Week 8: 5960.43 - Second Month. With just a capital sum of 1000USD you can easily hit target @ 5960.43 which is approximately near 6 folds of returns, if you planned your investment target at a weekly basis.
What most trader failed at is that they expect to BET and GAMBLE 1000 at per SHOT of trading and buy/selling a particular UNIT, hoping by end of each trade they win that 1000 at their leverage indicated. Especially those in 1:200, 1:400. You only need a 25pips
in the direction you have purchased to win that 1000USD
within a short time, can be minutes/seconds to hour if you have high leverage. BUT THIS IS NOT INVESTING, THIS IS PLAYING A 50:50 LUCK ON A BIG/SMALL GAME either you SPOT ON or you get SHOT ON.
This method is no difference from gambling, and you will develop a lot of psychology problem
in trading, and is very unhealthy as you will only pour more and more money into the market without realizing that you have had already LOST TOO MUCH.
What worries them on friday? Its all planned! The unemployment claims which is one of the most important factor in technical trading pumped EUR/USD up to a high of 150 pips growth, as market favors a retrace/demand for a weak EUR to be temporary higher :DD. While Fitch at the same time, indicated that FRANCE will not be downgraded yet. While friday, the talks on greece default and uncertainty with creditor issues posed a very negative impact to the market and along side with S&P rumours of downgrading a number of EURO countries, especially major market concerns of FRANCE. If GERMANY do get downgraded in near future, it will sparks a DROP and possible euro break up to come pretty soon, and the whole financial system will be in a HUGE MESS. Especially the Forex market, where everyone will be shorting like NP; and BANKS to head for bankrupt; where unemployments will be another major issue. I will be laughing at all HEDGE FUNDS MANAGER, of how much they are LOSING because its simply CRASHED. And there GOES to all investment capital that was taken from Insurance and some assets that the banks bet on. You see all these bonds selling are nonsensical, if greece do force its creditor to take a huge haircut and default on its payment. This means that whatever earlier promised returns and yields will not be guaranteed! Why would any idiots wants to lend a 1.20 and promised to return at 1.80; while later on keep going back at its words to 1.50 and lower? You get the picture of how and what the EURO ZONE crisis is all about? All these bonds and lending are not going to work. The restructuring should start from internal, from its own political stability, market confidence, and its workers being productive and not taking high pay. All these strikes, unions and internal chaos will only pushed its problem to deeper hole. Not lending more money to banks, companies or giving its people all the payout. The country should looked into re-financing its tourist sector, making it more cheaper, affordable and safer; a stability within to encourage foreigners to visit the country which in turn pushed their GDP higher. This will create cash inflow into the country and creates jobs. While those whom cannot find jobs in their own country should source for opportunities elsewhere; go into the south east Asia region for those graduates whom had a hard time finding jobs; when earned money return the money back to their country; isn't this what THE INDIANS AND CHINESE HAVE BEEN DOING? With the downgrade to same level with the greenback and lower, this year 2012 will be a fantastic and progressive year for the USD to grow against all its counterparts. USD will be the world's most treasured currency yet again, until such time when YUAN manage to take over :) in 20 years time? The high unemployment rates in EURO Zone is a huge problem, low unemployment = more claims and rely on government, defaults on credits/bankruptcy, Lower GDP output, and not able to support the value of EURO Dollar. In the end, Germany is just trying to support its useless neighbours; other than france. If we looked into individual's euro country, of its taxes, median income, unemployment rate , ageing population and high standard of living; with a higher difference between poor and the rich gap. The Euro is heading for the great depression again back in 1930s! And i won't be surprised, there will be another World WAR 3 to come, to crash the financial system and to rebuild it :). 2012 NUCLEAR WARFARE AND WORLD END AS Conspired? With USA having no end of harassment to IRAN or even North Korea, and sanctions imposed recently, won't be surprised there will be many factors leading to surging of OIL and possible war breakout in 2012.
Trading as a career/Investment
Most Fund Managers normally enter the market at its highest, or at its lowest. And they try to avoid the noise in between, especially if they are Fund Managing lower risk assets for clients. There was one peak at between september 2011 to October 2011, where market peaked near 1.4150 zone. That was the best time to SELL in, some random dramas and fundamental factors affected it to pose gains from EURO Leader LAME talks.I will say its a conspiracy for those to make money :), market makers. Most already knew that 1.20 is coming its way in 2012 early quarter, why would it jump up to 1.4000 zone? Simply only to stop those liquid into the market and sell at the best PRICE. Those entering in 1.4000 zone should have had planned a long trades to 1.30 and 1.20 or even 1.10 zone. Low risk should be executed, just a pity for those Binary options Traders in example; eToro. Long Term trades normally favors in Metatrader at least. Binary and trading system like eToro of locking funds in a locked margin is not recommended and healthy for traders/professional. ....
Here is an interesting article by Nial Fuller - (My Secret Trading Weapon) – The Most Important Ingredient to Trading Success
- Patient Forex traders make money faster than impatient traders
- Allow your trading edge to work in your favor by employing patience
- Patient traders know exactly what they are looking for in the markets
- Patience is critical before, during, and after a trade
- Learn to enjoy and embrace being a patient trade
This was what i have applied to survive this week's roller coaster, and taught me even to be more careful of fundamental and technical issues. But still patience! is one of the most needed personality in traders in order for them to success in the long run.
ENDS HERE, looking for investment opportunities? refer to here or here
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