Many of my posts have focused on the mindset and psychology of trading. My belief is, this is more important than the strategies you use. In this post we are focusing on a master of making money, Robert Kiyosaki.
Three key points that I personally took away from some of Roberts comments are listed below.
1. Taxes - You can never be rich if you are paying too much taxes, it is one of the big reasons I love spread betting. I don't need to declare this to the tax man!
2. He is always thinking about money - I have been focused, on trying to install this type of mindset now for about 5 years, my friends find me thoroughly annoying. But why do I do this? Simply to ensure my mind and more importantly, my sub conscious is not sabotaging my attempt to make money.
3. Passive income from his property - One great point about trading that some people fail to do, is take money out and re-invest some of the profits. Why? Trading is a strange thing; some people believe that you should continue to compound your winnings and make more money.
This can be a recipe for disaster; there have been some instances when winning traders have lost all there money, mainly due to greed and the high of winning. If you are a successful trader? I HIGHLY RECOMMEND that you take some of your winnings out and re-invest into property etc!
This weekend, I will be attending the beginner’s rolling stocks course with Marcus De Maria. I am adding the strategy to my trading; this is because the risk reward ratio is so good.
Trades can last for a week but the percentage gains are huge compared to risk reward. It’s like a top up, on my trading portfolio. I will post some pictures from the event!
To Your Trading Success!
New I Phone 4 G
Monday, 8 February 2010
Tuesday, 2 February 2010
Weekend Analysis: A Path To Forex Profits
Weekend Analysis: A Path To Forex Profits
Finally, the reason for undertaking a weekend analysis is to build a routine preparation method that will help to build a trading plan in the area in which you are focusing so you can establish the necessary mindset for the upcoming week. A good analysis is how you can "psych" yourself up for the oncoming trading activity. (Check out 9 Tricks Of the Successful Trader for more.)
Preparing for the WeekSince this is a forex article, the emphasis is on the necessary preparation for trading forex during the coming week. But the preparatory steps can also be used and are helpful if you trade stocks, bonds or commodities. It's important to remember that none of the markets are actually separate, or trade in a vacuum. All the markets are interdependent, so that in a global economy the purchase of bonds, equities, goods and services all have an effect on the levels of supply and demand for currencies. Therefore, the price levels of the various currencies will vary when money flows around the world as investment searches for the highest and safest yields. (For a background, see our Forex Tutorial.)
Understand the Drivers
The art of successful trading is partly due to an understanding of the current relationships between markets and the reasons that these relationships exist. It is important to understand the causative factors that are in play at the moment. Remember, though, that these relationships can and do change over time. Once you have a grasp on the existing relationships, then a study of price charts and the statements of the pundits, insiders, brokers and news services can be either reinforcing or ignored depending on your particular reading of the circumstances.
For example, a stock market recovery could be explained by investors who are anticipating an economic recovery. These investors believe that companies will have improved earnings and, therefore, greater valuations in the future. Hence they believe that now is a good time to buy! Or it can be that speculation, based on a flood of liquidity, is fueling momentum and that good old greed is pushing prices higher and higher until all players are on board so that the selling can begin.
A weekend analysis should be a basis for an understanding of the circumstances currently in play. These are the true fundamentals. Therefore the first question to ask is, why? Why are these things happening? What are the drivers behind the market actions?
Technical Drivers
Many technical analysts believe that patterns or certain price levels on charts can also be the drivers of trader behavior. They believe that so many traders are watching for these patterns that they become self-fulfilling prophecies. There has long been a debate, for example, whether a Fibonacci level is a number that is a measurement of some natural force or whether it is valid just because so many people watch for the number to occur and then trade accordingly. Whatever the reason, there are certain patterns and levels that will trigger trader action. (For more, see Can Technical Analysis Be Called A Self-Fulfilling Prophecy?)
The News
The news also fuels actions. Traders wait for the news releases to confirm or deny their hypotheses and then enter or exit their trades. If these news releases occur at certain technical levels then they attract even more trader activity and can increase the odds of a successful trade. Not every news release is always valid for timing a trade. Those releases that occur at specific chart confluences can have a more dramatic effect on the volatility of the market and will provide better trading opportunities. (To learn more, see Trading On News Releases.)
Setting Up a Trading PlanBy doing a weekend analysis, a trader can prepare for the coming week and, depending on the type of trading he or she likes to do, such as scalping the news, or trading the five minute charts or waiting for a swing trade setup, he or she will have a blueprint to guide his trading. The old adage of "plan your trade – and trade your plan," is sage advice.
Chart the IndexesIt is helpful for a trader to chart the important indexes for each market on a longer time frame. This exercise can help a trader to determine relationships between markets and whether a movement in one market is inverse or in concert with the other.
 |
| Figure 1 |
| Source: netdania.com |
As you can see in Figure 1, there is an inverse relationship between gold and the dollar. As gold goes down in price, the dollar increases and vice a versa.
For example, in 2009, gold was being driven to record highs. Was this move in response to the perception that paper money was debasing so rapidly that there was a need to return to the hard metal as a store of value? Or was this the result of cheap dollars fueling a commodities boom? Or both? Could the speculators be promoting the gold hedge concept to attract dollars from
Main Street
Now that we know that gold has an inverse relationship with the dollar, we can ask ourselves what will happen if gold sells off, or what would happen to gold if the dollar appreciates? We would expect an appreciating dollar to reduce the price of gold. Could we also expect a sell off in gold to have an impact on the dollar? Probably not, because many other commodities, stocks and bonds all impact the dollar, not only gold. (Learn more in Using Technical Analysis In The Gold Markets.)
So let us then turn to the dollar index chart to try and determine if there is a potential trade set-up. In this instance we note that the dollar has traded down to a level of 75.00, which is at the 127.8 extension of the previous upswing. It is also trading at a 78% retracement of the swing from March, 2008 through November, 2009.
This indicates a potentially strong resistance level for the dollar.
| Figure 2 |
| Source: netdania.com |
The dollar index should bounce off of the 78% retracement from the low of March 2008 to the high of April 2009. At this level it is worth listening closely to the pundits as to how they explain why the dollar should start increasing in value against other currencies, especially in the light of the consensus at the time that the dollar was likely to weaken against the basket of currencies due to the threat of future inflation. At these levels it is worth watching the news and listening to the experts to garner clues as to what the sentiment is. If the markets are going to turn, sentiment will start to shift in favor of the turn and a trader can capitalize on this fact. Is There a Consensus in Other Markets?By charting other instruments on the same weekly or even monthly basis, we can gain a perspective of whether or not the markets are reaching a turning point consensus. Then we can take advantage of the consensus to enter a trade in an instrument that will be affected by the turn. For example, dollar yen indicates an oversold position with talk in the market place that the BOJ could intervene to weaken the yen. Japanese exports are affected because of the strong yen. Without any weakening of the yen, a Japanese recovery was likely to be impaired. (Learn more in The U.S. Dollar And The Yen: An Interesting Partnership.)
Gold Chart Provides Interesting PerspectiveThe gold chart indicates that a level is being reached at which many traders could take profits. A cheap dollar has fueled a gold rally. The dollar has enabled a carry trade in gold, but at some point there will be profit taking and I would look to a Fibonacci level to time a sell off. (Check out Taking The Magic Out Of Fibonacci Numbers for more.)
 |
| Figure 3 |
| Source: netdania.com |
To find a currency trade for the coming week, a look at whether the USDJPY indicates that there is support at around the 85 level. At the double bottom around 85.00 it would be worth placing an order in the market to go long the USDJPY with a stop at say 84.50. Since there was no sure fire way of knowing whether the USDJPY will trade lower than 84.00, one had to enter a trade with a tight stop and wait and see. If you get stopped out, wait for the appropriate signal on a shorter-term chart to take the trade again.
The chart below, Figure 4, which depicts the USDJPY, is a monthly showing a double bottom. The currency was also trading down to a 161.8 extension of the wave marked with a blue line. This adds to the possibility that there would be a strong buying action of dollars against the yen at that level.
 |
| Figure 4 |
| Source: netdania.com |
 |
| Figure 5 |
| Source: netdania.com |
On the weekly chart of the USDJPY, Figure 5, we can see a triple bottom. Our analysis and radar is now heightened to a long USDJPY trade, which we can take on a shorter time frame, depending on our personal preferences. The longer-term charts are suggesting a possible bounce as the dollar strengthens, gold weakens and the dollar gains against the yen.
 |
| Figure 6 |
A trade could have been taken on the four-hour chart. In this case there is a 400 pip move to the upside. This was a high odds trade and easy to detect. Not every trade is so obvious! If the move has already occurred, then the question is whether to chase the trade or not. Of course there are trading systems that buy on pullbacks into the trend and so on. Each trader has to determine his own methodology and test it over a period of time to determine the expectancy of the system. Consistency is what counts.
(To learn more, read Devising A Medium-Term Forex Trading System.)
To Trade or Not to TradeThere is a much higher chance of a successful trade if one can find turning points on the longer time frames, then switch down to a shorter frame to fine-tune an entry. The first trade can be at the exact Fibonacci level or double bottom as indicated on the longer term chart, and if this fails then a second opportunity will often occur on a pullback or test of the support level.
Look for the low hanging fruit and be patient. Patience, discipline and preparation will set you apart from traders who simply trade on the fly without any preparation. (For more tips, read The Most Reliable Indicator You've Never Heard Of.)
by Selwyn Gishen,
Wednesday, 20 January 2010
Forex Trading Diary 20th Jan 2010
Quick update on the week so far, I lost another 30 pips yesterday and made back 20 pips. When you trade, it is advisable, that you you close and open your computer in the morning so there are no hiccups! I didn't, and lost connection when I was recovering my 30 pips lost.
My god you should have seen the panic on my face when I realized I had lost connection. Then the computer crashed...As Alex Ferguson would say it was bum squeaking time! It proved my lucky day and after 10 mins of panic, I logged back in and still had the opportunity to take 20 pips.
I was in profit by over 30 pips at one stage! After a year and a bit of trading the school boy errors have not been completely eliminated!
This morning I have taken a conservative 12 pips with the rest of the day to go. The new strategy I am testing has so far been 85% accurate and I think its time I started using it! But here is my morning trade so far, when you see the chart you will notice there was far more available. A retraction of the high in the last couple of days!
Another problem this week has been the major movements on the forex pairs from 12 midnight to 2. From what I can gather, this is being created by the Chinese. I don't see announcements for them on forex factory too often. But it has meant movement has been less when the market opens at 7am!
To Your Trading Success!
My god you should have seen the panic on my face when I realized I had lost connection. Then the computer crashed...As Alex Ferguson would say it was bum squeaking time! It proved my lucky day and after 10 mins of panic, I logged back in and still had the opportunity to take 20 pips.
I was in profit by over 30 pips at one stage! After a year and a bit of trading the school boy errors have not been completely eliminated!
This morning I have taken a conservative 12 pips with the rest of the day to go. The new strategy I am testing has so far been 85% accurate and I think its time I started using it! But here is my morning trade so far, when you see the chart you will notice there was far more available. A retraction of the high in the last couple of days!
Date: 20 JAN 2010
Reference: DIAAAAAEZSZ6VAF
Size: Buy to close
Open Level: 16286
Market: Spot FX GBP/USD 20 JAN 2010
Level: 16274
Reference: DIAAAAAEZSZ6VAF
Size: Buy to close
Open Level: 16286
Market: Spot FX GBP/USD 20 JAN 2010
Level: 16274
Another problem this week has been the major movements on the forex pairs from 12 midnight to 2. From what I can gather, this is being created by the Chinese. I don't see announcements for them on forex factory too often. But it has meant movement has been less when the market opens at 7am!
To Your Trading Success!
Monday, 18 January 2010
Forex Trading Diary Mon 18th 2010
Lets hope this week is far better than last week! I ended up 40 pips down...Not good, having said that I think it was one of the few weeks, that I have not really been focused. The other problem is the continued channeling of cable.
Getting pips is proving difficult due to lack of volatility in the morning and small range breaks. Last week I noticed that more breakouts occurred between 2 - 4pm around when the yanks started trading.
I also followed a few forums and looked at some expert analysis, and none of them are very clear on direction. The question is are we out of recession? Has the dollar recovery began and faded away? I am not sure anybody is any wiser than you or me?!
Because I am focusing less on the other currency, I am a bit out of touch with the slower moving pairs. In addition, I have two new strategy's on my plate which I am testing at the moment. At the end of the week I celebrated my day of birth, I had an interesting weekend!
Onto this morning, Happy Martin Luther King Day if you are from the US and reading this blog. Because of this the Americans are on holiday today. For all my complaining, cable gave signs for a slow long trend this morning.
No yanks later to stir the market did not worry me too much on volatility. The Americans are normally not awake anyway at this time of the morning. My only concern was a small possibility that no over night US news could keep volatility low.
It proved correct and it was a slow march up this morning. I entered the trade after it broke the pivot, I should have been in earlier but wanted more certainty. 16332 and exit at resistance 50 level, It so happens I got out way too early, had I used a trailing stop loss I could have easily taken 60 - 80 pips .
After last weeks performance money in the bank is whats required. I took the 20 pips and very happy with them too! Cant leave without touching on the horrific earthquake in Haiti, they have many peoples thoughts and well being with them at this time.
To Your Trading Success!
Getting pips is proving difficult due to lack of volatility in the morning and small range breaks. Last week I noticed that more breakouts occurred between 2 - 4pm around when the yanks started trading.
I also followed a few forums and looked at some expert analysis, and none of them are very clear on direction. The question is are we out of recession? Has the dollar recovery began and faded away? I am not sure anybody is any wiser than you or me?!
Because I am focusing less on the other currency, I am a bit out of touch with the slower moving pairs. In addition, I have two new strategy's on my plate which I am testing at the moment. At the end of the week I celebrated my day of birth, I had an interesting weekend!
Onto this morning, Happy Martin Luther King Day if you are from the US and reading this blog. Because of this the Americans are on holiday today. For all my complaining, cable gave signs for a slow long trend this morning.
No yanks later to stir the market did not worry me too much on volatility. The Americans are normally not awake anyway at this time of the morning. My only concern was a small possibility that no over night US news could keep volatility low.
It proved correct and it was a slow march up this morning. I entered the trade after it broke the pivot, I should have been in earlier but wanted more certainty. 16332 and exit at resistance 50 level, It so happens I got out way too early, had I used a trailing stop loss I could have easily taken 60 - 80 pips .
After last weeks performance money in the bank is whats required. I took the 20 pips and very happy with them too! Cant leave without touching on the horrific earthquake in Haiti, they have many peoples thoughts and well being with them at this time.
Wednesday, 13 January 2010
Forex Trading Diary 12th Jan 2010
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Back to trading for 2010, a long extended break after the festive period, then spent a week tarting up the blog. If you are a regular reader let me know what you think.
The volatility is back in the market but less bigger trends at the moment. I have adjusted my trading style for this period as I felt I had one two many losses for my liking as we ran up to Christmas. It has been said that you need three strategy to be a successful trader.
3. Breakout Strategy - Classic and essential, my personnel favourite.
Review of my trades before Christmas showed me I was missing points because I was holding on for far too long. I then decided to get out at breakeven if the trade started going against me. But this created far too many breakeven trades.
Interesting day on Monday, due to lack of time I did not take any screen shots. But pulled off broker numbers so you can look at the trades on your own charts.
Not shown on the below chart was a pivot around my entry point, without it my trade looks a bit random!
I have now added two additional indicators to my trading, stochastics and the ma 100. I have used the ma 100 in my previous days of trading oil. Added to the the ma21 or ma20 it gives a great indication of the trend or non trend!
Stochastic is to complement the Macd. The Macd indicator was created in the 1960s, and some believe its out of date? I have had great success with it, but feel in a channeling market, that stochastics will support my desicions better!
The volatility is back in the market but less bigger trends at the moment. I have adjusted my trading style for this period as I felt I had one two many losses for my liking as we ran up to Christmas. It has been said that you need three strategy to be a successful trader.
1. Strategy for a trending market - This is great for huge points especially using a trailing stop loss.
2. Strategy for a channeling or oscillating market - For low volatility periods and indecision times.
Review of my trades before Christmas showed me I was missing points because I was holding on for far too long. I then decided to get out at breakeven if the trade started going against me. But this created far too many breakeven trades.
Interesting day on Monday, due to lack of time I did not take any screen shots. But pulled off broker numbers so you can look at the trades on your own charts.
Date: 11 JAN 2010
Reference: DIAAAAAEWMSUUAC
Size: Sell to close
Open Level: 16117.2
Market: Spot FX GBP/USD 11 JAN 2010
Level: 16126.8
Reference: DIAAAAAEWMSUUAC
Size: Sell to close
Open Level: 16117.2
Market: Spot FX GBP/USD 11 JAN 2010
Level: 16126.8
Date: 11 JAN 2010
Reference: DIAAAAAEWNKHAAL
Size: Sell to close
Open Level: 16115.1
Market: Spot FX GBP/USD 11 JAN 2010
Level: 16134.4
Tuesday was a good day of strong trading, but it was three trades for a total of 34 pips. Very unusual for me, but great that the adjustment is working.Reference: DIAAAAAEWNKHAAL
Size: Sell to close
Open Level: 16115.1
Market: Spot FX GBP/USD 11 JAN 2010
Level: 16134.4
Not shown on the below chart was a pivot around my entry point, without it my trade looks a bit random!
I have now added two additional indicators to my trading, stochastics and the ma 100. I have used the ma 100 in my previous days of trading oil. Added to the the ma21 or ma20 it gives a great indication of the trend or non trend!
Stochastic is to complement the Macd. The Macd indicator was created in the 1960s, and some believe its out of date? I have had great success with it, but feel in a channeling market, that stochastics will support my desicions better!
To Your Trading Success!
Tuesday, 29 December 2009
Forex Pivot Point Trading!
Click here for a free stock market DVD
Happy New Year! Well just a couple of days short. I have found a couple of great videos on using pivots on forex trades.I have touched on pivot points before in a previous blog post. It continues to be used more and more as a strategy to identify great trades on forex pairs.
I currently use a great pivot strategy that is very consistent. The more I learn about them the better I will be at identifying better trades.
They work in trending markets as well as channeling markets, and the videos are better than the previous blog post on pivots.For a day trader pivot points are essential for identifying strong resistance and supports. Note, the amount of times he mentions discipline and money management in the first video.
So three great videos on pivot points and the use of them. The first video is split into two, and will give you a good understanding of the fundamentals, entry's and exits. The third is a bit more detailed and if you have used pivots before? Then maybe you jump to that video. It has a strategy which is easy to pick up!
The third video is one of the best explanations I have seen of pivot points, nine minutes of great information, and I encourage you to take notes. If you do come across a pivot strategy and want more info, or would like to use them in your trading Click here for a free stock market DVD
Pivots are as discussed a very strong indicator, the amount of growing company's that are using them as trading strategy's is an example of its importance. They also work well with other indicators, to give you even more secure entry's in your forex trading!
Happy New Year! Well just a couple of days short. I have found a couple of great videos on using pivots on forex trades.I have touched on pivot points before in a previous blog post. It continues to be used more and more as a strategy to identify great trades on forex pairs.
I currently use a great pivot strategy that is very consistent. The more I learn about them the better I will be at identifying better trades.
They work in trending markets as well as channeling markets, and the videos are better than the previous blog post on pivots.For a day trader pivot points are essential for identifying strong resistance and supports. Note, the amount of times he mentions discipline and money management in the first video.
So three great videos on pivot points and the use of them. The first video is split into two, and will give you a good understanding of the fundamentals, entry's and exits. The third is a bit more detailed and if you have used pivots before? Then maybe you jump to that video. It has a strategy which is easy to pick up!
The third video is one of the best explanations I have seen of pivot points, nine minutes of great information, and I encourage you to take notes. If you do come across a pivot strategy and want more info, or would like to use them in your trading Click here for a free stock market DVD
Pivots are as discussed a very strong indicator, the amount of growing company's that are using them as trading strategy's is an example of its importance. They also work well with other indicators, to give you even more secure entry's in your forex trading!
Thursday, 24 December 2009
2010 Here You Come!
Merry Christmas all, the festive period has kept me busy and I have had very little time to update my blog. Trading officially ended on the 18th of December due to the lack of volatility in the markets after this period. In time honored tradition my brain in the last week in particular, has switched to festive season mode. But more importantly the master plan for 2010!
Whatever has happened to you that is negative in 2009 forget about it! Whatever has happened to you in 2009 that is positive, hold, focus and make it bigger! I caught up with twitter queen Milli Ponce this week and we discussed many topics including our love for reading. Two books that we talked about in particular were the Celestine prophecy and also the Alchemist by Paul Coelho.
Both books are story's but have a real value to life. In short one is the journey a person takes to find riches (The Alchemist) and If I had to describe the Celestine Prophecy I would say it was a combination of Think and Grow Rich and the secret. Honestly there are really no problems that any human has faced that somebody else has not faced before you. Humans are repetitive and everything is a repeat of that repetition!
What makes a person different is there ability to deal with challenges and more importantly how you choose to live your life i.e ATTITUDE. My blog was inspired through the fact that after 6 months of trading and loosing it dawned on me that I was fighting myself. Win that battle and I would win at trading. From that point on the charts and screens have looked very different.
Yet again it proved to me that no matter what you are doing in life you are responsible for what happens (Both good and Bad). While the difference between 2010 and 2009 is actually one day this can be and should be used to motivate yourself for your next journey in life.
In my discussions with Milli we also talked about Will Smith. To become the highest paid actor in Hollywood Is incredible. If you had gone back 20 years and said that a black man would be the highest paid actor grossing over 100 million on each of his last eight films...People would call you mad and probably throw you in Jail.
The video below is 9 minutes of short clips... but I encourage you to watch it all. It is an example of what can be achieved with the correct mindset!
Remember belief mixed with actions creates results and change only comes from you! I leave you with my favourite quote form Albert Einstein:
What will you change to get ahead in 2010? I start trading again from Jan the 4th when volatility is back in the market. Until then I wish you all a fantastic Christmas and the best year ever in 2010.
To Your Trading Success in 2010
Whatever has happened to you that is negative in 2009 forget about it! Whatever has happened to you in 2009 that is positive, hold, focus and make it bigger! I caught up with twitter queen Milli Ponce this week and we discussed many topics including our love for reading. Two books that we talked about in particular were the Celestine prophecy and also the Alchemist by Paul Coelho.
Both books are story's but have a real value to life. In short one is the journey a person takes to find riches (The Alchemist) and If I had to describe the Celestine Prophecy I would say it was a combination of Think and Grow Rich and the secret. Honestly there are really no problems that any human has faced that somebody else has not faced before you. Humans are repetitive and everything is a repeat of that repetition!
What makes a person different is there ability to deal with challenges and more importantly how you choose to live your life i.e ATTITUDE. My blog was inspired through the fact that after 6 months of trading and loosing it dawned on me that I was fighting myself. Win that battle and I would win at trading. From that point on the charts and screens have looked very different.
Yet again it proved to me that no matter what you are doing in life you are responsible for what happens (Both good and Bad). While the difference between 2010 and 2009 is actually one day this can be and should be used to motivate yourself for your next journey in life.
In my discussions with Milli we also talked about Will Smith. To become the highest paid actor in Hollywood Is incredible. If you had gone back 20 years and said that a black man would be the highest paid actor grossing over 100 million on each of his last eight films...People would call you mad and probably throw you in Jail.
The video below is 9 minutes of short clips... but I encourage you to watch it all. It is an example of what can be achieved with the correct mindset!
Remember belief mixed with actions creates results and change only comes from you! I leave you with my favourite quote form Albert Einstein:
Insanity: doing the same thing over and over again and expecting different results.
What will you change to get ahead in 2010? I start trading again from Jan the 4th when volatility is back in the market. Until then I wish you all a fantastic Christmas and the best year ever in 2010.
To Your Trading Success in 2010
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