Hi All,
Now is the time to talk about brokers. I have seen many articles on how big cheats our brokers are, what all they do to take our money and all that. But i did not trust any of these articles. I thought that all these articles were rants of people who lost a lot in trading. I firmly believed that trading depends only on us and how we handle it. But over the last one or two weeks i have also started believing these things.
I do not have experience with lot of brokers. I have had only 2 or 3 brokers over the last 5 years. Since i am going to talk about them, i would not want to name them. Everyone knows that during times of news releases, the brokers suddenly increase the pip spreads. They advertise that their pip spreads are the lowest and all that but without warning they increase the spreads during news catching the traders unawares.
This is the simplest part cos this is something that we expect. Another worse thing is what is called as stop hunting. The brokers look for where people have placed their stops and then make sure that the prices move to take out the majority of the stops even though the actual price would be different. In case of mini accounts and people with no stop losses, they make sure that they move the price so the the account gets closed out. It happened about 2 weeks before for me when my stop loss was hit by one pip (the low for the day according to the broker was 1 pip less than the SL for my long) though the other brokers had much higher lows for that day. You cannot do anything about this. The best way is to have good money management.
Next is the new concept of 'At best' prices. Till a few weeks back, my broker used to give me the price for which i clicked but if the market is volatile and the price moves, he simply throws a message saying that he cant get the price for me and so does not take or close the trade. Lately, my broker has launched a new option called 'At Best' price where he says that if he is not able to get the price for which i clicked, he would get me the next best available price. Theoratically, i have both the options of either choosing to get the price shown or choose the 'at best' option. But i find that always, when i click to buy or sell at the price shown on the screen, it always says that the price has moved (even though i can clearly see that the price remains the same for the next 10 seconds even after the message that the price has moved is shown). When i enquired with the broker about this, he asks me to choose 'at best' option for all trades. In other words, even though i have both options and even though the 'at best' option is something to be used only under highly volatile conbditions, i am indirectly forced to choose the 'at best' option for all my trades.
What does the broker get by me choosing the 'at best' option? Lets say, that my broker says that the spread for GBPJPY is 7 pips...so he takes around 7 pips as charges for every trade of mine. By forcing me to choose the 'at best' option, it means that he can give me any price which in turn means that he can charge me extra 2-3 pips and i can do nothing about it. When the price on screen shows 239.10 and i am forced to choose 'at best' option, he can give the lot at a price of 239.13 and i can do nothing about it. This way the broker makes extra 2-3 pips from every trade.
These are some of the ways brokers make money and i am sure that there are other ways as well. The best way to win against this is to have good money management, have enough money to sustain even huge losses and not try to act too smart or cute. Remember that there are always people who are way smarter and way powerful than us.
Happy Trading!!
Saturday, June 16, 2007
Friday, June 15, 2007
Some random thoughts..
So, finally we have got an answer for the short term direction for the crosses today. With the BOJ deciding to keep that rates unchanged and with the accompanying statements, no one seems too bothered abt the carry trades for now which means that the crosses will keep rising in the short term. So wait for dips, have a look at the fibos, S and R and then buy on dips. Thats the strategy for now for the crosses.
GBPUSD seems to be in a very tight range for the past 2 days which means that it is getting ready for a breakout in either direction sometime soon. With a lot of news getting released from the USA in the next 3-4 hrs, i think we should be having a short term direction for this pair as well. So with that, we will be having a short term direction for all the major pairs by the end of today.
I hope that all of those who visit this blog and who trade live have a trading system in place. It is very important that you have a good trading system in place so that you are successful on a consistent basis. Lack of a trading system may not affect you initially but as time goes on, it will lead to huge losses. As specified before in one of my articles, developing a trading system is quite easy and straightforward.
Throw in some indicators and look for patterns. For me, trading systems are purely about pattern recognition. The better patterns that you see and the better you are at seeing patterns, the more successful you will be. Take any trading system and you will see that it always comes down to the recognition of one pattern or the other. Once u have decided on a good trading system, be disciplined and have enough patience to make sure that you stick to the system at all costs. Good trading is all about money management and discipline. We decide our fate. We decide our success. No one else.
Happy Trading!!
GBPUSD seems to be in a very tight range for the past 2 days which means that it is getting ready for a breakout in either direction sometime soon. With a lot of news getting released from the USA in the next 3-4 hrs, i think we should be having a short term direction for this pair as well. So with that, we will be having a short term direction for all the major pairs by the end of today.
I hope that all of those who visit this blog and who trade live have a trading system in place. It is very important that you have a good trading system in place so that you are successful on a consistent basis. Lack of a trading system may not affect you initially but as time goes on, it will lead to huge losses. As specified before in one of my articles, developing a trading system is quite easy and straightforward.
Throw in some indicators and look for patterns. For me, trading systems are purely about pattern recognition. The better patterns that you see and the better you are at seeing patterns, the more successful you will be. Take any trading system and you will see that it always comes down to the recognition of one pattern or the other. Once u have decided on a good trading system, be disciplined and have enough patience to make sure that you stick to the system at all costs. Good trading is all about money management and discipline. We decide our fate. We decide our success. No one else.
Happy Trading!!
Thursday, June 14, 2007
All the pairs seem to be moving in very tight ranges in the Asian session so far. I suppose they are all waiting for the rate statement from Japan and also the press meet after that. But with a huge amount of data to be realeased from USA later on today, expect lot of volatility as the day wears on. All the crosses seem to be in a confused state of mind not knowing where to go. The statements from Japan would hopefully provide a direction.Below are the supports and resistances for the JPY crosses for today:-
USDJPY - Important support at 122.60. If that is broken, next support is at 122.26 which is a very strong support and the final major support is at 121.85. On the topside, the resistance is at 122.85 and then at 123.20. USDJPY has not moved much from where it was yesterday and so the S and R remains the same.
EURJPY - Important support at 163.30. If that is broken, next support is at 162.55 and the final major support is at 161.80. On the topside, the resistance is at 163.80 and then at 164.25.
GBPJPY - Important support at 242.20. If that is broken, next support is at 241.75 and the final major support is at 241.05. On the topside, the resistance is at 242.80 and then a major resistance at 243.15.
Happy Trading !!!
USDJPY - Important support at 122.60. If that is broken, next support is at 122.26 which is a very strong support and the final major support is at 121.85. On the topside, the resistance is at 122.85 and then at 123.20. USDJPY has not moved much from where it was yesterday and so the S and R remains the same.
EURJPY - Important support at 163.30. If that is broken, next support is at 162.55 and the final major support is at 161.80. On the topside, the resistance is at 163.80 and then at 164.25.
GBPJPY - Important support at 242.20. If that is broken, next support is at 241.75 and the final major support is at 241.05. On the topside, the resistance is at 242.80 and then a major resistance at 243.15.
Happy Trading !!!
Two out of two....Good going so far...
Hi,
Yesterday i had said that EURJPY would go up and it did by about 90-100 pips....now my system says that GBPUSD would go down slowly...lets see...
Pls dont take these calls and trade them yet...I am still in the testing phase and so far have got 2 trades correct out of two. Need to test atleast for 10 trades before we could come to a conclusion...Moreover, I can lose if my system is wrong..I dont want others to lose as well...
Yesterday i had said that EURJPY would go up and it did by about 90-100 pips....now my system says that GBPUSD would go down slowly...lets see...
Pls dont take these calls and trade them yet...I am still in the testing phase and so far have got 2 trades correct out of two. Need to test atleast for 10 trades before we could come to a conclusion...Moreover, I can lose if my system is wrong..I dont want others to lose as well...
Swing and Range Trading
Range trading is process of taking out a few pips of every small move in the price of a share or currency. This works best in a ranging directionless market where the price moves up and down without knowing where to go. It is in such a ranging market that the supports and resistances work very well. The idea behind range trading is to buy (or sell) near a support(or a resistance), wait for it to move up(or down) after hitting the support (or resistance) and thus get a few pips out of this move.
In a ranging market, there will be atleast 3-4 such signals per day per pair. Assuming that you make 5 pips out of every such move, u make 20 pips per pair per day which is pretty good. But what is most important in range trading and something which leads to many traders going broke is the stop loss. Before entering a trade, the trader has to decide whether he is going to range trade or swing trade. The mistake that most traders do is that they start off a trade with the intention of doing a range trade but when it breaks the support(or the resistance), they begin to treat it like a swing trade when actually there is no swing at all.
For thos who don know what swing trade is, it is just a bigger version of range trade where the traders look for 60-100 pip moves, use charts with greater time frames etc. These people lookout for fundamentals(more than what the range traders do), look out for much bigger and stronger supports and resistances and then take a trade hoping to get atleast 60-100 pips out of it...Swing traders get signals maybe once in 1 or 2 days per pair and so they need a greater amount of patience.
Coming back to the mistake made by range traders, they should remember that for range trading, the stop loss should be as minimum as required. When you are looking to make only 5-10 pips out of every signal, the SL should also be corresponding less (maximum 20 pips). Take the trade near the support or resistance and if the trade goes against you and breaks the support or resistance, just come out of it. Accept the fact that you have got it wrong and come out of it. Most range traders get into a trade planning to take 5-10 pips out of it and when they see the trade going against them, they wait and wait and keep seeing the position continue to go against them and after 100 pips loss, they realise their mistake and come out.
Just imagine this. In range trading, if you get 10 pips out of every signal and your SL is 100 pips, it means that you can afford to have only 1 loss out of every 11 trades that you make for you to make a profit. This means that you need to be successful more than 90% of the time which is next to impossible especially in range trading.
So take positions close to supports and resistances and when the trade goes against you and breaks the support and resistance, just accept the fact and come out as soon as possible.
In swing trading, you could afford to have much larger stop losses. As discussed in my article on this blog sometime back, the size of the SL would depend on the pair and also the direction of the trade. Trades in the direction of the trend can afford to have much larger SL than trades made against the trend.
For those who want to know more about SL, please refer my article on this blog which I had posted about SL sometime back.
Happy Trading!!!
In a ranging market, there will be atleast 3-4 such signals per day per pair. Assuming that you make 5 pips out of every such move, u make 20 pips per pair per day which is pretty good. But what is most important in range trading and something which leads to many traders going broke is the stop loss. Before entering a trade, the trader has to decide whether he is going to range trade or swing trade. The mistake that most traders do is that they start off a trade with the intention of doing a range trade but when it breaks the support(or the resistance), they begin to treat it like a swing trade when actually there is no swing at all.
For thos who don know what swing trade is, it is just a bigger version of range trade where the traders look for 60-100 pip moves, use charts with greater time frames etc. These people lookout for fundamentals(more than what the range traders do), look out for much bigger and stronger supports and resistances and then take a trade hoping to get atleast 60-100 pips out of it...Swing traders get signals maybe once in 1 or 2 days per pair and so they need a greater amount of patience.
Coming back to the mistake made by range traders, they should remember that for range trading, the stop loss should be as minimum as required. When you are looking to make only 5-10 pips out of every signal, the SL should also be corresponding less (maximum 20 pips). Take the trade near the support or resistance and if the trade goes against you and breaks the support or resistance, just come out of it. Accept the fact that you have got it wrong and come out of it. Most range traders get into a trade planning to take 5-10 pips out of it and when they see the trade going against them, they wait and wait and keep seeing the position continue to go against them and after 100 pips loss, they realise their mistake and come out.
Just imagine this. In range trading, if you get 10 pips out of every signal and your SL is 100 pips, it means that you can afford to have only 1 loss out of every 11 trades that you make for you to make a profit. This means that you need to be successful more than 90% of the time which is next to impossible especially in range trading.
So take positions close to supports and resistances and when the trade goes against you and breaks the support and resistance, just accept the fact and come out as soon as possible.
In swing trading, you could afford to have much larger stop losses. As discussed in my article on this blog sometime back, the size of the SL would depend on the pair and also the direction of the trade. Trades in the direction of the trend can afford to have much larger SL than trades made against the trend.
For those who want to know more about SL, please refer my article on this blog which I had posted about SL sometime back.
Happy Trading!!!
Wednesday, June 13, 2007
Supports and resistances for June 14, 2007
Good big up moves in all of the crosses yesterday. The most suprising move was from the EURJPY which i had predicted in my posts at forexfactory. I believe today will be an up day as well though USDJPY seems to have risen too much and so might be due for some correction.Below are the supports and resistances for the JPY crosses for today:-
USDJPY - Important support at 122.60. If that is broken, next support is at 122.26 which is a very strong support and the final major support is at 121.85. On the topside, the resistance is at 122.85 and then at 123.20.
EURJPY - Important support at 162.70. If that is broken, next support is at 162.25 and the final major support is at 161.70. On the topside, the resistance is at 163.40 and then at 163.85.
GBPJPY - Important support at 241.50. If that is broken, next support is at 240.70 and the final major support is at 239.92. On the topside, the resistance is at 242.20 and then a major resistance at 242.85.
Lets hope for a good day for the longs today..
Happy Trading !!!
USDJPY - Important support at 122.60. If that is broken, next support is at 122.26 which is a very strong support and the final major support is at 121.85. On the topside, the resistance is at 122.85 and then at 123.20.
EURJPY - Important support at 162.70. If that is broken, next support is at 162.25 and the final major support is at 161.70. On the topside, the resistance is at 163.40 and then at 163.85.
GBPJPY - Important support at 241.50. If that is broken, next support is at 240.70 and the final major support is at 239.92. On the topside, the resistance is at 242.20 and then a major resistance at 242.85.
Lets hope for a good day for the longs today..
Happy Trading !!!
June 13, 2007 - Day so far
Hi All,
Glad to inform you guys that the first test of my system has proved successful and as predicted, the GBPJPY did move up by 100 pips from 239.10....Lets see how things go though. I should not be talking too much about it lest the jinx of over publicised trading systems catches up with this one too...
The USDJPY finally broke through many resistances and has moved to a 5 year high. It was consolidating for so many days and finally broke through today. With lot of strong news coming out of USA, it should augur well for this pair. All this news seem to be affecting the EURJPY though and it seems that this pair is taking the brunt of it.
But as all pairs, this pair too has to come back and lets just wait patiently for it to come back. The GBPJPY also seems to be moving up slowly and steadily. It is not running up in support of the longs as it used to but it is having a slow and steady rise. If you watch the daily lows for this, you can see that for the past 2-3 days, it is always having a higher low as well as a higher daily high. Lets see how all this pans out.
I am going to stick my neck out and say that USDJPY would continue higher as also GBPJPY for the next 2 days. How high and how far this would come true is anyones guess. Just my feel for the market. EURJPY is going to struggle but it has to come back sometime.
My friend Tony had posted a comment on how useful ranging is for the scalpers. I had specified that ranging is boring and i guess he did not like that. But as i said, for me, who depends on swing trades, ranging is boring but good trading is boring. So i would take good, ranging trade anytime. I would like to discuss about ranging, scalping and swing trades. But thats for another day.
Happy Trading!!
Glad to inform you guys that the first test of my system has proved successful and as predicted, the GBPJPY did move up by 100 pips from 239.10....Lets see how things go though. I should not be talking too much about it lest the jinx of over publicised trading systems catches up with this one too...
The USDJPY finally broke through many resistances and has moved to a 5 year high. It was consolidating for so many days and finally broke through today. With lot of strong news coming out of USA, it should augur well for this pair. All this news seem to be affecting the EURJPY though and it seems that this pair is taking the brunt of it.
But as all pairs, this pair too has to come back and lets just wait patiently for it to come back. The GBPJPY also seems to be moving up slowly and steadily. It is not running up in support of the longs as it used to but it is having a slow and steady rise. If you watch the daily lows for this, you can see that for the past 2-3 days, it is always having a higher low as well as a higher daily high. Lets see how all this pans out.
I am going to stick my neck out and say that USDJPY would continue higher as also GBPJPY for the next 2 days. How high and how far this would come true is anyones guess. Just my feel for the market. EURJPY is going to struggle but it has to come back sometime.
My friend Tony had posted a comment on how useful ranging is for the scalpers. I had specified that ranging is boring and i guess he did not like that. But as i said, for me, who depends on swing trades, ranging is boring but good trading is boring. So i would take good, ranging trade anytime. I would like to discuss about ranging, scalping and swing trades. But thats for another day.
Happy Trading!!
Tuesday, June 12, 2007
Good volatility to begin the day today. As pointed out yesterday, my sytstem showed that there would be a strong 100 pip up move in the GBPJPY it did go to 240.85....I feel that it might move up some more today as well. But lot of important news releasing today and so it is better to watch out. One very important thing to note is the huge divergence between EURJPY and GBPJPY with one pair being strong and the other pair being very weak. So long, both these pairs were trading very close to each other and following each other but now we have this divergence. A sign of changing market dynamics!! Below are the supports and resistances for the JPY crosses for today:-
USDJPY - Important support at 121.5. If that is broken, next support is at 121.10 which is a very strong support and the final major support is at 120.70. On the topside, the resistance is at 121.88 and then at 122.10. The supports and resistances have been staying the same for the past 2 days as the pair is ranging a lot.
EURJPY - Important support at 161.70. If that is broken, next support is at 161.45 and the final major support is at 161.10. On the topside, the resistance is at 162.10 and then at 162.50.
GBPJPY - Important support at 239.80. If that is broken, next support is at 239.10 and the final major support is at 238.42. On the topside, the resistance is at 240.70 and then a major resistance at 241.25.
Lets hope for a good day for the longs today..
Happy Trading !!!
USDJPY - Important support at 121.5. If that is broken, next support is at 121.10 which is a very strong support and the final major support is at 120.70. On the topside, the resistance is at 121.88 and then at 122.10. The supports and resistances have been staying the same for the past 2 days as the pair is ranging a lot.
EURJPY - Important support at 161.70. If that is broken, next support is at 161.45 and the final major support is at 161.10. On the topside, the resistance is at 162.10 and then at 162.50.
GBPJPY - Important support at 239.80. If that is broken, next support is at 239.10 and the final major support is at 238.42. On the topside, the resistance is at 240.70 and then a major resistance at 241.25.
Lets hope for a good day for the longs today..
Happy Trading !!!
1000 and counting...
Hi all,
I am very glad to inform you all that so far, 1000 people have visited this blog. The 1000th visitor came in just about an hour ago. Considering that today is only the 9th day since i started this blog and apart from my signature at forexfactory, i have in no way advertised this site anywhere, i think i can feel elated by this achievment.
This has been made possible by all your continued support. I wish that you people would continue to support this blog and also spread the word around so that this could be a nice , one of a kind, blog on the net visited by a huge number of people.
I am also glad to inform you all that today i have launched my new trading system on a 4H chart and so far the result is good. By this trading system, it shows that the GBPJPY is getting ready for a 100 pip up move over the next 2 days or so. Lets see how this pans out. This system has already given me 50 pips in the first trade and so even if the pair does not move up, i guess i am safe.
As for today, another boring and ranging day as the crosses are caught up between a strong resistance and support and there is no new trigger to make the market move in any direction. Loads of data are to be released over the next few days and lets see how the week pans out.
Happy Trading!!
Edit: For those who might jump to conclusions that i am talking about trading system and all that cos i want to sell it or anything of that stuff, pls be assured that there is nothing of that sort. If i feel like sharing my system, i will surely do it for free only. No idea to share it at this point as it is in the testing phase. I am saying this as i have seen many threads in forums and other places start as knowledge sharing stuff and then slowly lure people into buying trading systems. None of this will happen here. You can be assured of that..
I am very glad to inform you all that so far, 1000 people have visited this blog. The 1000th visitor came in just about an hour ago. Considering that today is only the 9th day since i started this blog and apart from my signature at forexfactory, i have in no way advertised this site anywhere, i think i can feel elated by this achievment.
This has been made possible by all your continued support. I wish that you people would continue to support this blog and also spread the word around so that this could be a nice , one of a kind, blog on the net visited by a huge number of people.
I am also glad to inform you all that today i have launched my new trading system on a 4H chart and so far the result is good. By this trading system, it shows that the GBPJPY is getting ready for a 100 pip up move over the next 2 days or so. Lets see how this pans out. This system has already given me 50 pips in the first trade and so even if the pair does not move up, i guess i am safe.
As for today, another boring and ranging day as the crosses are caught up between a strong resistance and support and there is no new trigger to make the market move in any direction. Loads of data are to be released over the next few days and lets see how the week pans out.
Happy Trading!!
Edit: For those who might jump to conclusions that i am talking about trading system and all that cos i want to sell it or anything of that stuff, pls be assured that there is nothing of that sort. If i feel like sharing my system, i will surely do it for free only. No idea to share it at this point as it is in the testing phase. I am saying this as i have seen many threads in forums and other places start as knowledge sharing stuff and then slowly lure people into buying trading systems. None of this will happen here. You can be assured of that..
Trading systems and Market Dynamics
Most traders, sucessful and otherwise, have some trading system. How successful the trading system is would depend on the market dynamics. If you study the trading systems, we will find that many trading systems depend a lot on the indicators. For me, trading systems and studying of the markets and trading is all about pattern recognition. Take any indicator or any study about trading and you will see that in the background, it is only pattern recognition.
Take elliot waves for example. We try to find patterns in the chart and then base our entry and exits on how these patterns work out. We try and interpret these patterns as waves. Likewise, with fibos as well. We basically look out for highs and lows and try to find patterns and match them and use them for fibos. As these depend a lot on the patterns, which are in turn dependent on subjectivity, we find that many people interpret these waves and patterns in different ways and this is the reason why , though many people might follow elliot and fibos, their results from this vary a lot.
Trading systems which depend on indicators also depend on pattern matching. Just throw in 2 or 3 indicators into the chart and watch it. Say throw in 12 ema, 20 sma and 10 macd or whatever. All that you have to do is look for patterns. If 70% of the time, you find that when 12 ema crosses 20 ema, the price goes up, then you have a trading system. So all that you need to do is throw in some indicators, qweak the parameters and watch for patterns. If you are able to find a pattern by which price rises or falls 70% of the time when the pattern occurs, then you have a good trading system. Sometimes, the trading system may not be so straightforward. You need to consider news, whipsaws and all that.
So now when you have a trading system which works 70% of the time, are you settled for life? No...Why? This is due to the market dynamics. The market is never constant. It keeps changing its character. So what might work today may not work tomorrow. One of the major market dynamics is the correlation between pairs. Lot of people would tell you that EURUSD and USDCHF are highly correlated. When one rises, the other goes down. But when i started out trading, the correlation between these 2 pairs was huge. If one pair went up, you could bet your house that the other would go down and you could also pinpoint how much it would drop down by a great degree. For eg., if EURUSD went up by 10 pips, you could pinpoint and say that USDCHF would drop by , say 15 pips. But now, predicting the correlation between these 2 pairs is not so easy nor can it be done so accurately. Each pair has slowly started to have its own characteristics.
Likewise with the JPY crosses as well. A good example can be seen even now. For a long time, you could see that all JPY crosses moved together. If USDJPY is near its high, so would the other crosses. But you can see now that though USDJPY is near its high, EURJPY and GBPJPY are nowhere near it. This does not mean that they are not correlated. They are but the extent of correlation is becoming lesser.
Likewise, the volatility of the pairs also changes over time. Some pairs which had a daily range of 40-50 pips now have a range of 70-80 pips and the opposite is true as well.
This is just one example of changing market dynamics. So with the market changing so much over time, our trading systems also need to change and adapt to the changed market scenario. Thats why trading systems which used to work greatly a couple of years back do not work so well now. So be careful in choosing your trading system and once you have done that, keep following your systems closely to find out the time when their effectiveness becomes less and at those times, tweak it to make it more effective or move on to another trading system.
Happy Trading!!!
Take elliot waves for example. We try to find patterns in the chart and then base our entry and exits on how these patterns work out. We try and interpret these patterns as waves. Likewise, with fibos as well. We basically look out for highs and lows and try to find patterns and match them and use them for fibos. As these depend a lot on the patterns, which are in turn dependent on subjectivity, we find that many people interpret these waves and patterns in different ways and this is the reason why , though many people might follow elliot and fibos, their results from this vary a lot.
Trading systems which depend on indicators also depend on pattern matching. Just throw in 2 or 3 indicators into the chart and watch it. Say throw in 12 ema, 20 sma and 10 macd or whatever. All that you have to do is look for patterns. If 70% of the time, you find that when 12 ema crosses 20 ema, the price goes up, then you have a trading system. So all that you need to do is throw in some indicators, qweak the parameters and watch for patterns. If you are able to find a pattern by which price rises or falls 70% of the time when the pattern occurs, then you have a good trading system. Sometimes, the trading system may not be so straightforward. You need to consider news, whipsaws and all that.
So now when you have a trading system which works 70% of the time, are you settled for life? No...Why? This is due to the market dynamics. The market is never constant. It keeps changing its character. So what might work today may not work tomorrow. One of the major market dynamics is the correlation between pairs. Lot of people would tell you that EURUSD and USDCHF are highly correlated. When one rises, the other goes down. But when i started out trading, the correlation between these 2 pairs was huge. If one pair went up, you could bet your house that the other would go down and you could also pinpoint how much it would drop down by a great degree. For eg., if EURUSD went up by 10 pips, you could pinpoint and say that USDCHF would drop by , say 15 pips. But now, predicting the correlation between these 2 pairs is not so easy nor can it be done so accurately. Each pair has slowly started to have its own characteristics.
Likewise with the JPY crosses as well. A good example can be seen even now. For a long time, you could see that all JPY crosses moved together. If USDJPY is near its high, so would the other crosses. But you can see now that though USDJPY is near its high, EURJPY and GBPJPY are nowhere near it. This does not mean that they are not correlated. They are but the extent of correlation is becoming lesser.
Likewise, the volatility of the pairs also changes over time. Some pairs which had a daily range of 40-50 pips now have a range of 70-80 pips and the opposite is true as well.
This is just one example of changing market dynamics. So with the market changing so much over time, our trading systems also need to change and adapt to the changed market scenario. Thats why trading systems which used to work greatly a couple of years back do not work so well now. So be careful in choosing your trading system and once you have done that, keep following your systems closely to find out the time when their effectiveness becomes less and at those times, tweak it to make it more effective or move on to another trading system.
Happy Trading!!!
Monday, June 11, 2007
Supports and Resistances for June 12, 2007
Very boring day it was yesterday. The market was ranging throughout looking for some direction. The crosses were caught between very strong support and resistances and they could not move out of it. So when it becomes ranging, the market becomes boring. But as some experts say, making money is a very boring business.Lets see whether the market breaks out of the range today.Below are the supports and resistances for the JPY crosses for today:-
USDJPY - Important support at 121.5. If that is broken, next support is at 121.10 which is a very strong support and the final major support is at 120.70. On the topside, the resistance is at 121.88 and then at 122.10.
EURJPY - Important support at 162.50. If that is broken, next support is at 162.25 and the final major support is at 161.80. On the topside, the resistance is at 162.90 and then at 163.30.
GBPJPY - Important support at 239.10. If that is broken, next support is at 238.85 and the final major support is at 238.42. On the topside, the resistance is at 240.10 and then a major resistance at 240.65.
Lets hope for a good day for the longs today..
Happy Trading !!!
USDJPY - Important support at 121.5. If that is broken, next support is at 121.10 which is a very strong support and the final major support is at 120.70. On the topside, the resistance is at 121.88 and then at 122.10.
EURJPY - Important support at 162.50. If that is broken, next support is at 162.25 and the final major support is at 161.80. On the topside, the resistance is at 162.90 and then at 163.30.
GBPJPY - Important support at 239.10. If that is broken, next support is at 238.85 and the final major support is at 238.42. On the topside, the resistance is at 240.10 and then a major resistance at 240.65.
Lets hope for a good day for the longs today..
Happy Trading !!!
Been a bit busy...some thoughts on the crosses...
Hi all,
Have been a bit busy over the past 2 days with some of my friends coming over the weekend. So had an extended time off. The normal updates will be back from tomorrow. I dont think i missed much cos GBPJPY and the other crosses dropped a bit as expected and they are still wandering around (as of this writing) not knowing what to do.
I feel that the crosses will drop some more before they resume their journey upwards. No specific fundamental reason behind it but it is just a feeling for me for the market and also a bit from the charts as well. I expected the crosses (especially GBPJPY) to fall following the British CPI but that has not happened so far.
My previous article on fibos set me thinking on the lines of the fibo and i have started working on a strategy or system, whichever way u want to call it, that bases itself on both the fibos and elliott waves as well. This strategy is still in only the testing phase and i will let u guys in on it if i find that it works.
I am also looking to expand my trading horzions to other volatile pairs but just waiting to get a grip on them as well. Since it is only the euro session as of this writing, nothing much unexpected has happened so far but lets see how the day pans out.
Happy Trading!!
Have been a bit busy over the past 2 days with some of my friends coming over the weekend. So had an extended time off. The normal updates will be back from tomorrow. I dont think i missed much cos GBPJPY and the other crosses dropped a bit as expected and they are still wandering around (as of this writing) not knowing what to do.
I feel that the crosses will drop some more before they resume their journey upwards. No specific fundamental reason behind it but it is just a feeling for me for the market and also a bit from the charts as well. I expected the crosses (especially GBPJPY) to fall following the British CPI but that has not happened so far.
My previous article on fibos set me thinking on the lines of the fibo and i have started working on a strategy or system, whichever way u want to call it, that bases itself on both the fibos and elliott waves as well. This strategy is still in only the testing phase and i will let u guys in on it if i find that it works.
I am also looking to expand my trading horzions to other volatile pairs but just waiting to get a grip on them as well. Since it is only the euro session as of this writing, nothing much unexpected has happened so far but lets see how the day pans out.
Happy Trading!!
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