Chart of the Day - Page 11

harrington6447 · #**151** (**permalink**) 01-15-2009, 11:30 AM

Thanks Tom for the advice. I have just requested my mini account be changed to a micro. Tom I notice on daily fx trading signals that for the last 2 or 3 months the percentages of wins on the breakout, range, and momentum trades is quite a bit lower than before. Is this an indication that it has become tougher over the last couple months? I notice also that the prices are moving at a snails pace compared to 3 months ago as well. Why?

Thomas Long · #**152** (**permalink**) 01-15-2009, 12:47 PM

Quote:

Originally Posted by harrington6447

Thanks Tom for the advice. I have just requested my mini account be changed to a micro. Tom I notice on daily fx trading signals that for the last 2 or 3 months the percentages of wins on the breakout, range, and momentum trades is quite a bit lower than before. Is this an indication that it has become tougher over the last couple months? I notice also that the prices are moving at a snails pace compared to 3 months ago as well. Why?

I would think that since most of the markets seem directionless, trading is more difficult. Volatility is cyclical with periods of high volatility followed by periods of low volatility. The experienced trader first identifies the market environment and then chooses an appropriate strategy. Sometimes the strategy is to stand aside until volatility picks back up again. I would think that range trading is better now than trend trading.

Thomas Long · #**153** (**permalink**) 01-15-2009, 03:15 PM

Quietly...and I do mean quietly, the NZD/JPY has moved down to a multi-year low today. That would certainly qualify this pair as being in a downtrend. But once again because of the low volatility, I think the safer play is to wait for the market to move down to a new low before initiating a new sell position. Protective stops should be above resistance with profit target set as twice the risk.

JForex · #**154** (**permalink**) 01-15-2009, 04:18 PM

Hi Tom,

Can you point me to anything you wrote on fine tuning entries after identifying potential pairs like the NZDJPY?

By the time an important Support level is broken, the Stochs becomes oversold, and price moves back into the range. Then basically I am riding the wrong move.

Wide stops are becoming the number one cause of my losses, because small overshoots above stops are closing me out with huge losses.

Can you do a writeup on how to fine tune entries and stops?

Thanks,
JForex.

Thomas Long · #**155** (**permalink**) 01-16-2009, 09:04 AM

Quote:

Originally Posted by JForex

Hi Tom,

Can you point me to anything you wrote on fine tuning entries after identifying potential pairs like the NZDJPY?

By the time an important Support level is broken, the Stochs becomes oversold, and price moves back into the range. Then basically I am riding the wrong move.

Wide stops are becoming the number one cause of my losses, because small overshoots above stops are closing me out with huge losses.

Can you do a writeup on how to fine tune entries and stops?

Thanks,
JForex.

Here is a five part series on how I identify and take advantage of a trading opportunity:

Lesson 1: Chart of the Day

Lesson 2: Chart of the Day

Lesson 3: Chart of the Day

Lesson 4: Chart of the Day

Lesson 5: Chart of the Day

Thomas Long · #**156** (**permalink**) 01-16-2009, 09:07 AM

Quote:

Originally Posted by danna

HELLO EVERYONE, MY NAME IS DANNA I`M A PSYCHOLOGIST AND I WANT TO KNOW MORE ABOUT FOREX TO GET INTO THIS BUSINESS, CAN SOMEONE WITH EXPERIENCE HELP ME?

In my opinion, the best place to start is in the DailyFX Power Course. It is designed to introduce FX trading to both new traders and experienced traders who are new to FX. Here is more:

http://www.fxpowercourse.com/how-it-works.html

12Make$ · #**157** (**permalink**) 01-16-2009, 10:36 AM

Quote:

Originally Posted by Thomas Long

Quietly...and I do mean quietly, the NZD/JPY has moved down to a multi-year low today. That would certainly qualify this pair as being in a downtrend. But once again because of the low volatility, I think the safer play is to wait for the market to move down to a new low before initiating a new sell position. Protective stops should be above resistance with profit target set as twice the risk.

Tom, I would have thought that you would be looking to buy, not sell. Besides being lower than it has been in years, I see a double bottom, and each of the last two peaks is higher that the previous. Also, the last peak (if it has even peaked yet) is as high a previous valley in the downtrend. Or would it make sense to do both and wait to see where the market goes?

Thomas Long · #**158** (**permalink**) 01-16-2009, 11:16 AM

Quote:

Originally Posted by 12Make$

Tom, I would have thought that you would be looking to buy, not sell. Besides being lower than it has been in years, I see a double bottom, and each of the last two peaks is higher that the previous. Also, the last peak (if it has even peaked yet) is as high a previous valley in the downtrend. Or would it make sense to do both and wait to see where the market goes?

Every time the market moves to a new high, there will be a time that it looks like a potential double top. Every time the market moves down to a new low, there will be a time that it looks like a potential double bottom. In reality though, there are not that many actual double tops or double bottoms. The NZD/JPY may move up from here, but a multi-year low suggests that it hasn't really happened in a couple of years and I wouldn't want to risk real money betting that this time is different. Trading with the trend is an edge that we do not want to give to the trader taking the other side of our trade. Let the other trader try to pick tops and bottoms. They will be right every once in a while, but trend traders will be right more often.

JForex · #**159** (**permalink**) 01-19-2009, 12:33 AM

Quote:

Originally Posted by Thomas Long

Here is a five part series on how I identify and take advantage of a trading opportunity:

Lesson 1: http://www.learncurrencytrading.com/...tml#post164600

Lesson 2: http://www.learncurrencytrading.com/...tml#post165858

Lesson 3: http://www.learncurrencytrading.com/...tml#post168892

Lesson 4: http://www.learncurrencytrading.com/...tml#post171159

Lesson 5: http://www.learncurrencytrading.com/...tml#post173515

Thanks Tom. But the links dont work. Can you please recheck?

Thomas Long · #**160** (**permalink**) 01-19-2009, 09:54 AM

Quote:

Originally Posted by JForex

Thanks Tom. But the links dont work. Can you please recheck?

The links in my original post have now been updated for the new DailyFX forum format.

Thomas Long · #**161** (**permalink**) 01-21-2009, 02:59 PM

I wanted to post a monthly chart of the GBP/JPY to note the significance of what is happening in the market, particularly to the GBP. If you notice, we are at new 30+ year lows on this pair. Calling this a strong downtrend seems almost comical, but in fact we should be looking for selling opportunities on this pair. The GBP is in trouble and these charts are the best way to see that.

Thomas Long · #**162** (**permalink**) 01-22-2009, 01:05 PM

One more look at the GBP/JPY, this time on the 4-hour chart. We can see this market bounced up off of the multi-decade low from yesterday. The trend is still down though which means we should be looking for selling opportunities. Aggressive traders can look for a place here off of the lows to sell, while more conservative traders can sell a new low if the market does move down. As usual, we recommend using a 1:2 risk:reward ratio on this potential trade where you look for two pips in profit potential for every pip risked.

KP FX Trader · #**163** (**permalink**) 01-22-2009, 05:06 PM

Hi Tom,

You say the more conservative approach is waiting for the breakout to a new low. If the stop is placed above resistance, than this would be the more aggressive play wouldn't it? Selling up towards resistance offering the lower risk/higher reward. I suppose you mean placing a stop just inside support after the breakout is the more conservative play. Please clarify my thinking on this. Thanks!

Thomas Long · #**164** (**permalink**) 01-23-2009, 09:49 AM

Quote:

Originally Posted by KP FX Trader

Hi Tom,

You say the more conservative approach is waiting for the breakout to a new low. If the stop is placed above resistance, than this would be the more aggressive play wouldn't it? Selling up towards resistance offering the lower risk/higher reward. I suppose you mean placing a stop just inside support after the breakout is the more conservative play. Please clarify my thinking on this. Thanks!

You determine the risk on the trade. It is based on the number of lots you open and the number of pips between your entry and stop. If I sell on a move down through support, I will place my stop above resistance to allow for a move against me. But I still only risk 5% of my account balance on the trade whether that is a 500 pip stop or a 50 pip stop. I still look for twice that in profit potential on the trade. I also may use the hourly chart to find closer resistance, but if you place your stop just above support after having sold on a move down through support, the chance of getting stopped out is good. These markets need room to breathe and close stops do not allow for that.

Thomas Long · #**165** (**permalink**) 01-23-2009, 11:30 AM

Another look at the GBP, this time paired up with the USD. Even though I think the JPY is currently stronger than the USD, the GBP/USD is still weak enough to justify our attention. Selling on a move down through the support with a stop above resistance would be a solid setup. I am showing the hourly chart as the move up off of the lows are easier to see. Profit target should twice risk for our 1:2 risk:reward ratio.