Daily FX | Dynamic Trader Blog

GBPCAD Convergence

A very good morning to all you dynamic traders today. What a good day yesterday was for shorting. Of course if you were caught on the long side of certain currencies it would probably be a day you would rather forget. Either way, many more opportunities will become available so do not get complacent or disheartened.

Yesterday 1.2 trillion dollars was wiped off the Dow Jones which is almost the daily traded amount on the forex market - the worlds largest market. I might add the amount of the decline yesterday is larger than the bailout figure. Makes you wonder if the bailout will benefit the markets in the long term. American's are frightened for their futures with what is going on here in the U.S. Anyone thinking we are oversold and are in a buying zone based on the indices and stocks having moved down so much are wrong! We are not in a buying area although as Javid's forex blog suggests we could have a relief rally this is not a buy zone. This is where the dumb money start to lose their trading accounts so if you trade stocks or indices then think again before buying into stocks on anything more than a day trade basis.

Watch oil as it is looking bearish. We could see oil fall down substantially if it does not manage to bid above major resistance levels. You can see the chart on Javid's Daily FX.

Below is a weekly chart of the GBPCAD which has broken through it's previous low but it could be a fake breakout. As present the price is just below the figure with a convergence. If you perform your analysis as shown on the webinars to find an entry then use a different time frame. The chart is showing signs of a bounce but if it continues it's breakdown and travels further down then we can take the short selling opportunity  otherwise. Wait for the signal.

You can read Javid's forex analysis here.

Yesterday we drove from Atlantic City to New Your City and went up to the top of the Empire State Building. For anyone who has not already gone to the top and is going to in the future, I highly recommend getting an Express pass. It is not really promoted so you will need to tell a staff member you want an Express pass and that gives you free passage without the queuing and waiting. It is just over double the amount though and the regular price is $18. Some people were waiting for almost 2 hours where a we were taken to the top in less than 15 minutes and you get priority when coming back down again.

Good trading...

Anne Chapman
Currency Analyst

Chart courtesy of Advanced Get. Powered by eSignal.

Bailout Could Be A Window Of Opportunity

Greetings from Atlantic City dynamic traders.

As you may know form our other forex blog that we have been away for a while which is the main reason I have been unable to update the Dynamic Trader Blog recently. We will be back in just over a weeks time I think so will then start to update more frequently.

In the mean time I am going to update the site with some pictures of our trip to the U.S. We Started in Boston then headed over to Bretton Woods followed by the Geneva Lakes then Niagara Falls before now heading over to Atlantic City. After this we will go to New York before travelling back to Boston and then UK. So far we have travelled over 1200 miles and until yesterday we had good weather.

Below are a few pictures we have taken.

    * Room where the Bretton Woods agreement took place.
    * Moose over looking the entrance at Mount Washington
    * Niagara Falls from the Canadian side
    * View from top of Prudential building in Boston

While we have been here in the U.S all we have seen on tv, heard on radio and read in the papers is the 700 Billion Dollar bailout. Javid was telling me he thought this might not be enough to bailout the U.S economy and showed me some technical analysis to confirm that. Of course we wont know if the bailout is a success until afterwards and this all depends on what the reaction is by Wall St. and Main St. once the details becomes available but you do have to think that it might not be enough. The U.S debt is massive and growing day by day. Ths U.S debt to China alone is forecasted to be 500 Billion. It seems the majority of U.S public do not seem at all comfortable with this bailout and if the trust is not there then lending will be minimized which will only serve to increase the reality that we are in a recession.

It will be interesting to see the currency pairs reaction after the bailout details become available. The Euro Dollar Advanced Get daily chart below shows area of support and resistance. Focus primarily on the black horizontal lines more immediately and look for BOB's. Please be aware the moving average is clustered with fib 50% which is a previous doji resistance from November 23rd 2007 (not shown on the Advanced Get chart below).

It will be worth watching the Euro Dollar and Dollar Yen as well as the Dollar Index this week.

Good trading...

Anne Chapman
Currency Analyst

Dollar Strength and Crude Weakness

Good morning dynamic traders. During a conversation about the correlation between the Dollar Index and Crude Oil I have decided to post the chart of both for you all to see how they relate to each other.

Crude oil is the red close line and Dollar index is the black close line. You can use this inversely especially as crude oil plays a big part in the markets over the last few years and undoubtedly years to come.

Read Javid's forex blog.

Good trading...

Anne Chapman
Currency Analyst

Double Deviation Strategy

Good morning dynamic traders.

Since the purchase of our new car I have not had a chance to update this site very much and soon we will be going to Monte Carlo for a holiday so I will try and maintain some updates for you all in the mean time.

Our Double Deviation has shown over 1000 pips porfits in the last 24 hours. The reality is you would not have taken each trade unless you were system trading perhaps but taking just one of the trades would have made an easy 80 pips. Most of you dynamic traders would have taken 2 or 3 trades and with the latter would have made 240 pips at least.

Javid's forex analysis is at Daily FX.

The snapshot below shows the results.

Good trading...

Anne Chapman
Forex Analyst

Traders Pitfall

Here are some reasons why I think traders fail in the forex markets. Aim to be a dynamic trader and learn from your mistakes. The most common mistakes are listed below.

1. Only trade intra day. This works for seasoned traders but rarely for new traders.
2. Black box systems. This will inevitably lead you to leave the trading enviroment when you trust in a non descript trading method and continuously fail.
3. Always trying to predict the market. No one can predict the markets but we can make educated assumptions.
4. News trading. Trading is a risky business anyway and trading the news is like driving while wearing a blindfold.
5. No trading plan. We need rules to follow everyday and even more so with trading.
6. Managing a trade. Most people do not know how to manage a trade. This is very important and every trade should be managed.
7. Subjectivity. Traders need to remove as much of the subjectivity in order to use clear cut and precise methods. This is why we define our trading as mechanical because we aim to use rules for mechanical entires and exits.
8. Chasing trades. Missing a big move and rushing into the next is pure emotional trading and is unlikely to provide consistant profits.
9. Lack of discipline. You need to follow your own rules all the time.
10. Over trading. This is common especially after a series of winning trades.

The above are just some common mistakes I can think of as to why traders may fail. If any apply to you then you will need to work on avoiding these pitfalls in the future.

We have Non Farm Payroll tomorrow so the next update will be Monday morning.

Until then, good dynamic trading.

Anne Chapman

Conservative Forex Strategy

Morning forex traders. Speaking with Javid yesterday I understand I would like to give congratulations to Bijal for doing so well with our Double Deviation strategy.

Today I have decided to give you a conservative reversal entry. I have chosen the GBPJPY as it is at the support level to demonstrate this. If the GBPJPY reverses then you can go in to the trade early with aggressive strategies as Javid has demonstrated previously on the forex webinars. Using a more conservative and longer term method (well, at least until the next cat 2 or cat 3) we will ignore a minor reversal. Two reasons for perhaps ignoring this is one it is against the current trend and two it could be a breather before it produces a continuation.

So, filtering out this minor bounce and determining it is more likely to be a reversal we need to add a couple of things. The first would be support level in a downtrend (resistance in an uptrend) to identify zones of reversal. The second would be Regression Trend Channel with Pearsons turned on. If price now closes above the Regression Trend Channel blue line then we will use an entry method (with filter) to enter this trade and manage it using one of the methods shown on our mentoring webinars.

The software used in my charts is Advanced Get. If you would like to buy Advanced Get then feel free to contact me. You can learn more about AdvancedGet here.

More forex analysis here.

Good dynamic trading.

FX Analyst
Anne Chapman

Advanced Get GBPJPY Chart

Simple Forex Strategy

Here is a really simple forex strategy you can use, ammend or add to.

Trading although not easy is fairly straight forward and for that reason strategies should be too. There is no reason to over complicate trading yet most people do just that. Below are a few points to remember when analyzing charts.

• Where is the major trend?
• Where is the minor trend?
• Where is the support?
• Where is the resistance?

Knowing the above will help you to decide which position you should take on the market. Some traders have many fancy methods of identifying trends. Some use mathmatic calculations while others use astrological calculations.

Tip. Try using the most common of indicators that does not require you to take out a calculator or a telescope to identify a trend. Moving average is one such indicator.

The chart at the bottom of this post shows shorting opportunities through compounding. It is not essential to compound as far as this strategy is concerned but it would be good to remember to follow the trend especially one as good as this.

This is how we work out this trade was a good trend. On this AUDUSD chart we have two moving averages but they are not shown. When the moving average crossed over providing a dead cross we have preperation for a short position. This is indicated with the blue arrow. A short position should not be taken at this stage as it is only an indication to get ready for a possible short. It is only when the red arrow indicating to open short on the chart do we take out a short position. Now of course you are probably thinking why do we short here? Below are the reasons.

• Moving averages provided a dead cross for preparation to short.
• The previous bar to P1 closed below the previous support S1.
• Following bar broke the P1 low and triggered a short entry.
• Two bars prior to P2 closed below S2 support.
• P2 triggered a short entry as it traded lower than the bar that closed below S2.

You can see from the chart the same happend on the next position. Each of these positions could be compounded or if you missed an earlier entry then P2 or P3 provided another point of entry.

Let's talk for a moment about the dead cross. A dead cross is when the faster moving average crosses below the slower moving average. In this case the two moving averages used was the 10 and 20 ema's. When the 10 crossed below the 20 it was our signal to get ready. I have refrained from showing the moving averages as they are secondary and now as important as the support levels.

Why did we not take a trade when the dead cross appeared? The reason is moving averages are great trend indicators but provide many whipsaws when a trend is not in place. If we have a dead cross we need further confirmation and with this strategy this was provided by supports being breached.

So why did we not trade short when we had the dead cross and support breach? The reason for not taking a short the moment the market breaks the support is quite often the market gives us a fake breakout and then does a reersal as many of you seasoned traders will know. We need further confirmation and this is provided by a close beyond the support and then a break beyond the low of the bar that closed below the support.

So the moving averages gave us our first indication, the close beyond the support gave the second indication. The confirmation to pull the trigger came when price traded through the low of the bar that closed lower than the support level.

The moving averages used are nothing magical and you can use any two settings you prefer. The one thing we have not discussed is the stop loss and how to apply it. In most cases the positioning of the stop loss is far more important than where the entry of the trade is. Stop loss explanation goes way beyond the scope of a post on this blog and it is something that Javid discusses on his mentoring sessions and webinars. However, in short a good place for stop losses are beyond support and resistance levels.

This strategy like many of the others I use was created by Javid Shaik. It is simple and effective but requires discipline and patience and very good trade management.

Read more daily forex analysis at Javid's forex blog.

Good trading.

Below is the Aussie Dollar chart courtesy of Advanced Get.