Heikin Ashi - Daily chart analysis!19/01
We have yet another day of choppy trading with no real direction. Yet its good news as we will soon be seeing the market moving sooner than later. With really important news releases today, This coule be the day.
Daily Chart :
Charts showing weakness and aroon indicator also showing lot of weakness. MACD sloping down and this could be signalling a short here. However I would still like to err on the side of caution and wait for the markets to show the direction before I put in the trade rather than be caught on the wrong foot.
We will look for a short at 1.7570 with a stop about 50pips and profit open.
On the long side we will look at 1.7725 with stop below 50pips and profit open.
Let the news decide the direction and then lets jump in. Its still a toss of a coin, but slightly favoured to go lower.
Heikin Ashi - daily chart and hourly chart analysis!18/01
I for one have never been too fond of indicators and have strived to minimise the paralysis by analysis. But I think a new view is not too bad an idea. I am presenting here a new chart with 2 indicators which are : 1) Donchian channel
2) Aroon indicator.
The channel is good to know where I can expect natural resistance or support and good profit taking areas. Aroon indicator is a good trend indicator and with heikin ashi gives me more reason to stay in the trend. Sometimes when I trade intraday, I happen to get a very good entry, with heikin ashi but the first sign of retracement, and I am ready to bail out, thereby missing out on a good move. So I hope that these 2 will help me stay in a trend and raise the overall profatibility of each day.
Yesterday was another day of indecision as the GBP is still in a sideways range move.
However this is exactly the days that we should be looking forward to as the explosion moves arise from these range bound markets. So we can expect a good large move to be coming anytime soon. Going by the charts, I think we are headed to the downside for quite some time now. Prices are going down after reaching the top of the channel and aroon indicator is showing weakness to. The time that Aroon crosses, we can push our positions as the bottom of the channel is about 450pips lower.
Intraday Chart :
Pretty much in a range still and we will try and pick small trends and bail out with a small profit.
Heikin Ashi - hourly chart analysis!17/01
We have had cable moving lower. Heikin Ashi still indicating a bull run. Intraday chart we might find support at 1.7638 and a break of that should take the cable lower. On the upside, 1.7688 is resistence and a break above that we should see prices trying to break 1.7800 which looks quite possible.
There is some news concerning the GBP today and we will see this move the markets.
Back to trading!
I have taken a haitus for last couple of days as I was held up with a few things. Meanwhile the cable seems to have made quite good trend on friday and today. I will be back again tomorrow to my dailyblog. Cable has broken to the upside and we are still on a bull run.
I expect this to be a minor retracement and I think we will be able to grab quite a few good moves this coming weeks.
1.7805 looks like the next probable traget where we will either get a double top or just wait for a trend continuation.
Heikin Ashi - daily chart and hourly chart analysis! 12/01
We seemed to have got our target of 50pips yesterday, quite easily I must say as the news at 09.30GMT from BOE providing the impetus for a 50pips move within an hours time. Now thats What I mean by Turbocharged trading. But during the NY session, it seems to have recovered everything. Anyone trading both sessions would have been quite pleased to gather quite a few pips.
Daily Chart :
Heikin ashi daily chart seems to be at a crossroads and I dont see any real bullish or bearish move. Infact as posted yesterday, we will have to see a further break of yesterdays low to confirm a longer term move. Also keep a good watch to see if the cable can break on the upside above 1.7724.
Intraday chart :
We seem to be back into the volatility mode and thats good news for daytraders. With last 2 days prior seeing range bound movement, I am sure lots of people would be only glad to gather all the profits they can.
Prior LO, we have made a swing high and it seems we will again see another day of bearish move, if we see it breaking the 1.7628 swing point.
On the uppderside ofcourse we need to break 1.7700 for a further bullish move.
But I am bearish till NY open. As usual, we will go for a 40-50pips move. on break of either point.
Heikin Ashi - daily chart and hourly chart analysis! 11/01
I am sure many people got sucked in to buying and selling trying to make a few pips. It was in a sideways range and with small bursts of trends emerging, only to collapse.
I lost a few pips ...45pips to be exact and then recover about 22pips later on in the NY session.
Its a trading cliche that the trend is your friend and most trading systems are based around the trend following systems. Its said that the trends last only about 20% of the time and the rest is spent in sideways range bound movement. If 80% is spent in range bound, non trending market, it only makes sense that you should not be trading the trending system in a non trending market. The real question comes is how can you distinguish a non trending market and a trending market. I believe that indicators do provide the answer. However what it does not answer is when has the market really begun to trend out of a sideways market.
The real holy grail system in my opinion is those which are flexible enough to exploit a non trending as well as a trending market.
I will try and give my version of a trending and non trending market and maybe we can exploit them to make profit in both kinds of markets.
I have plotted a EMA 20,8 and 5 period on the chart. If you look closely they seem to be bunched up indicating that there is no real direction. The longer 20EMA is as close as horizontal as it can be. However the additional confirmation is the MACD signal lines, lying flat along the zero line. I was amazed how I kept loosing pips trying to trade in the direction of the market. What I should have been doing instead is to trade countertrend.
Here is my setup for a non trending market as described above :
Plot a Bollinger Band with default settings. Identify that the MACD is neutralized. Wait for prices to reach the bottom or top of the BB and trade it counter trend. If it touches the top of BB, sell and vice versa. You will be amazed how accurate and really good this setup is. The 20EMA acts like a magnet for the prices. You can easily scalp 30-50pips even in a range bound market.
Daily Chart Analysis :
Prices have formed a swing high and with 2 days of prices failing to reach higher, there is definitely bearish mood to the markets. Sell short with a SL of 1.7700. First Target is 1.7500 and if reached , next move for 100pips is in order.
Intraday Charts :
Again looking bearish, we might prices move lower through the day. A breakout of prices below 1.7600 is good for 40-60pips.
On the upside, a break of 1.7700 is bullish again. But I think it will take some very good news to move it so high.
We do have some news affecting the GBP, predominant among them is the BOE meet.
Heikin Ashi - daily chart and hourly chart analysis!
Yesterday was excruciating to say the least. Even though I got a trade on the short side at the break of 1.7674, the move lasted for a very short time and no real clear trend emerging from it. I could not manage more than a 10pips early before the volatility saw my position exit with a loss. I kept out of the market as I could not see any real direction and prices fluctuating about the 20EMA.
Daily chart Analysis:
Heikin ashi still indicating that there might be some bullishness left. We seem to have made a swing high with one down day . Swing trader might have to wait for a red candle to sell short.
Intraday :
At present there seems to be no real direction in the morning preceding the london open.
However we may have some opportunities to book about 25 pips with the break of the swing points as folows:
Long position on the break of 1.7680 with a 40pip stop. Exit for 25 -40pips.
Short position : Break of 1.7626 with stop 40pips. Exit for 25-40pips.
We do have some news today and could see it move the markets. We might see a trend emerge out of this.
Heikin Ashi - daily chart and hourly chart analysis!
Daily Chart:
Well, last week has been very exciting for the cable as its been gaining higher ground. Heikin Ashi Daily chart is very bullish with the last friday NFP news moving it much higher. There is no immediate resistence till 1.7805 where I suspect there might be possibility of a double top, this price being broken we are looking for another 100pip move.
Hourly Chart:
A few hours before London Open, prices are very close to breaking the highs made on friday and if this is broken we might see prices following the same course as mentioned in the daily chart.
On the lower side as I have marked on the chart, there is some support at 1.7675 which if broken is weakness and good for about 40-50pips minimum.
MACD is in positive territory.
News : There is hardly any news on the Eur front and this should be a strictly Technical day.
Weekend thoughts!
Weekend has always been a time for introspection and poring over charts, learning from past mistakes and fine tuning. Its no point having the best designed car if it does not have the engines. It comes down to working on all aspects of trading. Like a 3 legged chair which cannot stand if one of the legs is broken, I am still working on the "3 Legs of trading".
Method, money management and psychology. And though I do have the method and moneymanagement, psychology seems to be one of the biggest hurdles in trading. It is no surprise that when you are beaten or down with a couple of bad trades, your decision making suffers. And thats an understatement. I am having the "traders blindness", having a bias for the day as noted in one of my earlier posts. I had such a bearish bias for the day and I could not distinguish when an uptrend had begun and failed to pull the trigger at the opportunate moment. It did not result in a loss, but I missed out on making atleast 70pips. We as humans are programmed to be good at things, not losing. Unfortunately losing is a fact of trading and then sooner we deal with it the better. To learn to trade better, you need to have an open mind on both sides. Afterall, it does not matter what your bias is,, all that matters is being in on a trend and making money.
Through my trading journey, I have met a lot of genuine people who truly have helped me in becoming a better trader. We have discussed and tried so many different aspects of trading and it has proved invaluable to me over time.
One of them has been kind enough to read my posts and willing to contribute here on this blog about Fibonacci SuperKluster. Though I have been intrigued by the SK levels as they are popularly called, due to lack or proper study, I have to rely on other people to "spell it out for me". I will try and get the charts on the SK as early as possible and ask him to contribute a little on this topic.
Thanks, 4xtech, looking forward to your charts and post.
NonFarm Payroll!
I am posting this as a update on the daytrading. It was slow as expected in the morning session.
However, things did not work out as expected due to news. I should have put in the orders above the high and low of yesterday so as to make full use of the news related move. These moves are often highly volatile and its absolutely necessary to be positioned prior the news.
But I was not online at news time and all I can do is to sit and watch.
This post is a reminder of what the NFP can do to the market. about 100pips in 30mins. Now isnt that every fx traders dream.
Random thoughts!
I usually go back to my books when I get time and there is so much knowledge to be gathered from all those who have been there before us. Market Wizards has so much to offer. Here I would like to put down a few lines from an interview with Richard Dennis who is one of the legendry traders. He turned a meager stake of 400$ to 200million $ in his trading career. If that was not enough, He trained a group of students from different walks of life to trade very successfully.
Here is parts of that interview which I have randomly picked :
Q : You mentioned that before you developed a mechanical trading system, you paid close attention to the trading process. Did you keep a log of what you did, right and wrong or was it a matter of memory.
R.Dennis: Yes, I would write down observations and think about them. I thought about everything I was doing.
Q : Is that something you would advise other traders to do to improve - that is , keep track of what they are doing right and what they are doing wrong?
R.D: Sure. The trading experience is so intense that there is natural tendency to avoid thinking about it once the day is over. I am that way when things are working. But when they are not its spurs me to want to think about what I am doing and how I might do better. When things go bad traders shouldnt stick their head in the sand and just hope it gets better.
About trading when you hit a loss : When you have a destabilizing loss, get out and go take a nap or do something to take you mind off. Your decision making process is affected and its best to come back next day with a fresh perspective .
Party just might be over!
Well, I could not make an update after the NY open as I posted in my earlier post that markets were in a sideways range. There were some opportunities but I thought it better to sit this one out rather than chase prices. With nothing more to do, I spent the time trying to demo the trades and yes, safe to say I was loosing again and again. Not that I was unaware that it was futile but I was trying to see if I can capture few pips with a scalping type of a trade. I guess scalping is not my cuppa tea. I dont like hectic keyboard punching ,staring at the screen trading.
Anyway, back to the daily charts for a long term perspective,, we have seen a swing high being made at around 1.7619 and yesterday there was a weakness in the bulls. Heikin Ashi has not yet indicated a reversal and so its better to wait if you are a conservative swing trader. However, if you are aggressive, you can take a short around 1.7540 area with a SL at 1.7624.
Exit keeping at 1:2 ratio, about 170 pips on the safe side. I will be updating if required and if I can see further weakness. If you see a red candle on daily chart, you can adjust the profit target much further as the retracement is over and its time to look on the short side again.
Intraday trading : Leaning to the short side primarily and a break of yesterdays lows at 1.7485 ,
indicative of bearish run. On the long side again , a break of yesterdays high at 1.7587 indicates change in a market direction to long side.
Targets are about 40-50pips.
Well, the party just might be over. We shall see as the day progresses
Update on daytrade!
Its not been a clean trending day and has been checquered by very volatile movement. There was no doubt a downtrend day developing and although I did get an entry at 1.7543, I could not hold on long to my position. Again I broke one of my cardinal trading rules of not letting a winner turn into a loser. However, I think I did pretty good in closing a losing position with a -12pips. The irony is just as I closed my position, the cable went down to 1.7485 as I had initially anticipated. However, I am down with a loss for the day even after doing a good analysis of the market. Well, it comes down to nerves again and not getting paralysed in the face of a loss.
I will update a bit later again after the NY open and try and regain some of my losses. However, I think we might have a really volatile and sideways range bound market for the rest of the day.
I have to pick up another trade today.
MACD Divergence!
Ok, As I expected, the MACD divergence has really setup and is ready to kick in. I will be looking on the short side today and we just might see a retracement to the previous days of hectic uptrends. A position after LO is prudent thing to do.
First area of support is 1.7474 which if broken , we could see GBP loosing all its gain from previous 2-3 days.
On the upside we could see new highs being made at break of 1.7621 as it gains new ground after breaking yesterdays high. But MACD is showing a divergence which I think could lead the cable into a negative territory today.
Keep your eyes glued to the screen.
Second ripple in a cup of tea!
I had to get the risk warning and disclaimer out of the way. People do rash and sometimes foolish things when it comes to money. Speculation attracts them by hordes. Its the nature of the business.
Why are some traders very successful and others fail miserably?
Is it very high intelligence or some superior system that allows traders to profit?
Do you look forward to mondays?
Just some of the questions that anyone needs to ask themselves honestly before attempting a full time trading.
Ofcourse the answer to the second question is that it does not take superior intelligence.
To be a good trader in Forex markets, all you need is average intelligence, curious mind and undying enthusiasm to learn. There are a few books I have found very enlightning to my own trading.
Long Term secrets to short term trading by- Larry Williams
The trading game - Ryan Jones
The Market Wizards and New Market Wizards - Jack Schwager
Trading in the Zone - Mark Douglas
There are plenty of websites that offer very good information on trading , a few are :
www.clearstation.com ( not forex, but stock trading)
www.investopedia.com ( everything you wanted to know about trading forex, stocks, futures,options)
www.tradingnaked.com ( go to the library, they have tons of free stuff)
www.moneytec.com ( my favourite site, meet forex traders, share and learn forex)
For those who are starting out and want to demo trade, make sure that you download the free version of Metatrader, which is what I use. Extremely user friendly and versatile software.
I am yet to see a good forex blog with practical trading tips, but I will keep searching.
Ok, as I write this, I am almost done for the day, the divergence on the GBP just might materialize.
We are so careless with our demo account and yet we manage to multiply the account but when it comes to real trading account, its just not the same. The most important trait in trading is patience to wait for trades. Practice patience,patience and patience.
Risk Warning and Disclaimer!
RISK WARNING
Foreign exchange transactions carry a high degree of risk and any transaction involving currencies is exposed to, among other things, changes in a country's political condition, economic climate, acts of nature - all of which may substantially affect the price or availability of a given currency.
Speculative trading in the foreign exchange market is a challenging prospect where above average returns are accessible to those with the experience and knowledge to assume above average risk. You must therefore carefully consider your investment objectives, level of experience and appetite for such risk prior to entering this market. Most importantly, do not invest money that you are not in a position to lose.
Disclaimer :
I do not assume responsibility for any loss that you may incur due to the material presented here. Please apply due diligence before you trade.
Daytrades!
Ok, here is my update on the charts and my daytrades for today. Yesterday, as i mentioned that I did manage to gather a few pips. The reversal at LO was pretty nice and gave a run of 200pips intraday. I was expecting the prices to go higher after a brief retracement which happened prior to LO. At LO there was a nice reversal and I got in at 1.7510. I had a good run of 45 pips before my ISP began to give trouble and hence there was some panic for sometime. But just as I got the connection back, the cable was truly underway and I exited at 1.7595. There is a MACD divergence developing and if that materializes, we shall see a good fall.
Everyone had their take on the next leg of the upmove. But my rule is take what the market gives you. With the projections by any method, you tend to get a bit carried away and truly cannot make out if the market is turning or if it is a small retracement. Thats the difference between a profit and loss.
A golden rule for all daytraders, is never let a winner turn into a loser. If your profit is realizing about 25pips, move the S/L to breakeven and then you are on a free trade.. Its dangerous to let the profit run against you into a negative once it has turned about 25pips positive. Maybe the trend is not so strong as you had anticipated. I have noticed that if it turns back from a 25pip profit, it most likely is sure to go down further before turning up. So you can effectively get back in at a better price.
A ripple in a cup of Tea!
It looks like a pretty day out here. More so even when you have had a good run in the markets.
Just a few thoughts about life an trading in general.
"Most people are on the world, not in it--have no conscious sympathy or relationship to anything about them-- undiffused, separate, and rigidly alone like marbles of polished stone, touching, but separate." - John MuirHow true.
Here is an excerpt from an interview with Larry Hite from The Market Wizards :
Risk is a no-fooling around game, it does not allow for mistakes. If you do not manage the risk, eventually they will carry you out.There are really 4 kinds or trades or bets. Most people think that a losing trade was bad bet. Thats absolutely wrong. You can lose money even on a good bet. If the odds on a bet are 50/50 and the payoff is 2$ versus a 1$ risk, thats a good bet even if you lose. The important thing is that if you do enough of those trades, eventually you will have to come out ahead.
May the trend be with you!
Well, I am here to update my last post and I am truly astounded. Cable was like a raging fire and broken the 1.7500 level too. I have still kept my position open and will be closing it shortly before the london open. Intraday, I see GBP giving back some of its gains and a small retracement is in order. At this point I dont have any update on an entry price. But those of you who may have already exited will have to wait for a better entry today.
The 1.7500 has also been broken and as of yet the next level of resistence is quite way off. We just might have picked a good bottom here. I see prices going higher as per the daily charts.
Lets count :
Entry 02/01/06 @ 1.7220
Exit 04/01/06 @ 1.7500
Profit for the month : 280pips
180 pips and still counting!
Ok, I must admit, I am mighty glad. Things look pretty promising. As I had anticipated, there was a retracement to the 1.7250 area right after the LO. I got shaken out but managed to recover a few pips in the Eur session. Cable bottomed out at 1.7250. The 50 and 100 areas are real supp/resistence numbers. And after that as I write this blog the cable is rocketing upwards towards the moon. Or as close, around 1.7390 area. I anticipate the cable going higher next couple of days. We shall see. 1.7400 is our target profit zone and we can cash in there. After that we might be getting a retracement soon enough to start taking long positions again.
I am still struggling with taking a larger position, but I just need more confidence with my calls. One pip at a time.
I happened to chance on a beautiful quote, which I think I need to read more often :
Far better it is to dare mighty things, to win glorious triumphs, even though checkered by failure, than to take rank with those poor spirits who neither enjoy much nor suffer much, because they live in the gray twilight that knows not victory nor defeat.
Ok, guys, for all you guys who happened to be going along with me and taken positions at 1.7220, congratulations, you have made about 180 pips and still counting. The run is still not over. I think there is still juice left and you can punch about another 100pips more. So, keep counting.
P.S on yesterdays trades!
Well, prices seemed to have broken the 1.7300 as expected even before the London open. Its put in quite a range already and trend looks strong. I expect some retracement intraday as is usual at london open. But the heikin ashi daily chart has given a green candle indicative of a change in trend. It is time to look on the long side.
PoPs Recommendation :Keep a watch and expect the prices to break the 1.7400 levels by today or tommorow. If you are long at 1.7220, move the SL to 1.1782. As price breaks the 1.7400 level,,move SL to 1.7250.
We aim to take a profit at about 1.7420 where we will achieve a risk/reward of 1:2 which is a good trade. Well, some of you might be even more aggresive and can try and go for 50 extra pips.
First things first!
Well, I wont be trading today. I am still adjusting and rebuilding this blog so that I have a more better content to present to anyone who might stroll down here. Its asking for too much since its just been 4 posts since I started and I dont think I am going to be ranking high on blog search engines.
So what I plan to do is to give my thoughts on the days trading based on daily charts for anyone who may not have time to sit and trade the Fx markets. Also for any of those who plan on daytrading and could do with additional thoughts at the end of the day, I will try and summarize my daytrades. I will be daytrading the GBP/USD exclusively but might sometime wander into trading orbit of the Euro.
I will share my thoughts on the daily chart here today. As I write this blog, looking at the daily charts, The trend has been very bearish on the daily chart. However, the last trading day of 2005 has shown some weakness from the bears.
1.7127 Swing Lo having been made a couple of days back seems to be holding strong as a support and having failed to break that, coupled with the ZZ indicator we seem to have made a short term low, we might just be seeing a short term retracement.
Heikin Ashi indicates a short reversal with the previous candle showing a top and bottom shadow. For the aggressive trader who might want to exploit this, you can entry with a long position around 1.7220 with a stop of 1.7122 ( 5 pips below the swing low). For the more conservative trader, wait for another day to get confirmation from Heikin Ashi chart with a Green candle.
MACD is yet to cross which will just give more strength to the longs.
Critical resistence area is 1.7300 and 1.7407. As each resistence is broken, the heikin ashi will have already signalled a bullish move confrmed by the MACD crossover.
Support is very strong at 1.7127 and that area broken will signal a strong bearish movement.
Keep the charts simple and analysis even simpler!
I like things simple. As noted in my earlier posts, I have thrown out most of the indicators and used what I am comfortable with ( I will come to my charts shortly).
I am a rebel at heart and I cannot take anything if I have not questioned it .and investigated it thoroughly. Ofcourse its of no use to me if I cannot understand it. I religiously keep a log of my trades in excel and it helps me evaluate my trades. I think most people keep a log of trades with the basic minumum of the usual entries/exits and the P/L column. I have added another additional column which is for my Psychological temperment during the trade. Emotional control is the buzzword and I think it might have its use.
I have done a google search on the less used HeikinAshi charts and lesser used Zig Zag indicator. I can understand why there is hardly any information on either of the two. The answer ofcourse is in the human need for something complicated. It applies more to the traders.Maybe its the need to make trading highly intellectual or trying to find comfort in the indicators themselves hoping that they somehow provide some kinda predictions on the further movement of the price. I do not write this because I am sitting on a high pedestal having conquered the markets and I am in the process of being featured in the next installment of The Market Wizards.
But traders seem to try and see things into price movement and hang on to every wiggle of the indicator. I keep hearing traders using terms such as resistence and supports, divergences and any number of other terms with such convictions as though they have seen the future. It gives a false sense of security and arrogance that one has finally conquered the markets. Another myopic view is trying to guess the outcome of the days movement. I have been guilty of the same and to disastrous results. I will be coming short if I dont mention the traders tendency of trying to pick tops and bottoms.
I have been guilty of all the above and its no wonder that I was struggling and believe me its a tough climb out from that pit.
Ok, lets keep it simple. I am a daytrader. I am looking for trends to make a few pips. Ok when I say few pips, I dont mean 10pips. I keep a safe stoploss as identified by the market, trade in direction of the trend and safeguard my profits and never compromise on my stoploss.
My risk/reward ratio is 1:1 or 1:2 as given by markets. Never let a winner turn into a loser.
I try and avoid paralysis by anlysis and hence I will stick to no more than 3 indicators.
The recipe : Zig Zag indicator and Heikin Ashi charts.Why these two indicators?? Ok, maybe the chart will explain better. I trade the GBP/USD exclusively as its the most volatile and it can really move!!! Its not nicknamed the "Beast" for nothing. If you are very new to trading, tread with extreme caution. And those with some experience and sense of adventure, try the "beast" for turbo charged trading. There simply isnt anything quite like it.
Lets see a Hourly chart from the year end trading. Stare intensely at it and compare it with your normal candlestick chart. Do you see an difference, I bet you do. The trends are easier to identify and the ZZ indicator, simply pointing out to you the turning points on an intraday chart.
More on the trading later.
The Year ahead
Hello 2006! Its crunch time. January and I think I am finally ready to start making some real money.
I am in the million dollar race. Far cry from where I am and a really lofty ambition. But then why aspire if not for lofty ambitions. Human endeavor has always been about the biggest, best, richest and all the "est" you can think of. There really is no heroism in climbing a sand dune when you can conquer the Himalayas. My New Year resolution is my never ending stubbornness in not being a part of the crowd. I want to stand out, I refuse to be mediocre and I am not going to live a life of quiet desperation.
"Be not afraid of failing, but of not trying enough"
The Trading Game
The New Market Wizards
Market Wizards
The Trading Zone
Short term trading Secrets