The most profitable environments across all the markets are trends, either bullish or bearish. Since 2016, the trends have been very much in stocks with UK stocks such as Boohoo and Burford Capital and US stocks such as NVIDIA and Boeing handing out excellent profit in this most recent bull run.
Forex, in comparison, has been notorioulsy difficult to trade, with the market remaining largely range bound. This is why it is essential for trades to move to where the money and the trends are as opposed to building attachments. Attachments bring emotions to them which is the undoing of many traders.
The EURUSD is a perfect example of this. We last traded the EURUSD back in 2014/2015 when price fell 3000 pips in a year from 1.4000 to 1.1000. This was a bear trend that handed out excellent profit through holding positions and compounding into winning trades.
Since March of 2015, the EURUSD had been range bound and is a time when ideally traders want to be standing aside and seek else where for simpler profits i.e. the stock market.
The start of 2018 showed signs of interest as the EURUD broke out of consolidation and met our criteria to place a long trade. As long term traders, we use the monthly, weekly and daily timeframes to build our bias.
Monthly - Price trading above the high of the previous calander year for a bullish bias or below the low for a bearish bias.
Weekly - Price trading above the 50SMA and the 200SMA for a bullish bias or below both for a bearish bias.
Daily - Price trading above the 50SMA and the 200SMA for a bullish bias or below both for a bearish bias.
We then look for a breakout or a pullback as an entry point on the daily time frame. We use END OF DAY prices to confirm entry points to avoid intraday fakeouts. Trading very much involves an element of patience and is a key skill to good trading. Patience is handsomely rewarded.
It was on the 12th of January this year that price broke and closed outside of an area of consolidation which dated back to September of last year. This offered an entry point on a bullish breakout which we duly took. Our criteria across all three timeframes was met as stated above.
Monthly - Price tradign above the igh of 2017
Weekly - Price trading above the 50SMA and 200SMA.
Daily - Price trading above the 50SMA and 200SMA.
Price has since been slow and sluggish which is disappointing as we would like to have seen a linear trend present itself and momentum to the upside.
Instead, price moved into profit but then reversed and is now back at the entry point.
I have drawn in the key levels of support that I would like to see price remain above. Ideally we want to see price bounce back to the upside and clear the drawn in resistance levels and trend towards the next key level of 1.3000. Round numbers act as psychological levels that price gravitates towards.
As trend traders, round numbers help with letting winning positions run and using trailing stop losses as opposed to setting take profit levels. This then allows for compounding into winning trades which returns exponential profit.
Good trading is very much in line with the expression "cut your losers short, let your winners run".
If price starts breaking through support levels, particularly the round number of 1.2000 and the daily 200SMA, then I will look to exit my trade with a loss of no more than 2%.
This is now very much a waiting game to see what price dictates. It is far simpler than trying to predict. Let the market show her cards and react accordingly.
Smart trading!
Forex, in comparison, has been notorioulsy difficult to trade, with the market remaining largely range bound. This is why it is essential for trades to move to where the money and the trends are as opposed to building attachments. Attachments bring emotions to them which is the undoing of many traders.
The EURUSD is a perfect example of this. We last traded the EURUSD back in 2014/2015 when price fell 3000 pips in a year from 1.4000 to 1.1000. This was a bear trend that handed out excellent profit through holding positions and compounding into winning trades.
Since March of 2015, the EURUSD had been range bound and is a time when ideally traders want to be standing aside and seek else where for simpler profits i.e. the stock market.
The start of 2018 showed signs of interest as the EURUD broke out of consolidation and met our criteria to place a long trade. As long term traders, we use the monthly, weekly and daily timeframes to build our bias.
Monthly - Price trading above the high of the previous calander year for a bullish bias or below the low for a bearish bias.
Weekly - Price trading above the 50SMA and the 200SMA for a bullish bias or below both for a bearish bias.
Daily - Price trading above the 50SMA and the 200SMA for a bullish bias or below both for a bearish bias.
We then look for a breakout or a pullback as an entry point on the daily time frame. We use END OF DAY prices to confirm entry points to avoid intraday fakeouts. Trading very much involves an element of patience and is a key skill to good trading. Patience is handsomely rewarded.
It was on the 12th of January this year that price broke and closed outside of an area of consolidation which dated back to September of last year. This offered an entry point on a bullish breakout which we duly took. Our criteria across all three timeframes was met as stated above.
Monthly - Price tradign above the igh of 2017
Weekly - Price trading above the 50SMA and 200SMA.
Daily - Price trading above the 50SMA and 200SMA.
Price has since been slow and sluggish which is disappointing as we would like to have seen a linear trend present itself and momentum to the upside.
Instead, price moved into profit but then reversed and is now back at the entry point.
I have drawn in the key levels of support that I would like to see price remain above. Ideally we want to see price bounce back to the upside and clear the drawn in resistance levels and trend towards the next key level of 1.3000. Round numbers act as psychological levels that price gravitates towards.
As trend traders, round numbers help with letting winning positions run and using trailing stop losses as opposed to setting take profit levels. This then allows for compounding into winning trades which returns exponential profit.
Good trading is very much in line with the expression "cut your losers short, let your winners run".
If price starts breaking through support levels, particularly the round number of 1.2000 and the daily 200SMA, then I will look to exit my trade with a loss of no more than 2%.
This is now very much a waiting game to see what price dictates. It is far simpler than trying to predict. Let the market show her cards and react accordingly.
Smart trading!
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