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
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
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.
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
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.
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.
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.
Chart patterns are quite often the first introudction new traders have to the financial markets. This brings a degree of familiarity and a comfort level to the trader. Triangles, rectangles, wedges, channels, double bottoms and tops, head and shoulders and many more are the first glimpse of what trading charts contain. Chart patterns are an excellent way to learn the markets and trust the movements in the markets and identifying perhaps the direction of the market and areas of reversal.
Fundamental traders may disagree with what I am about to say below but I strongly believe that many times news is already factored into the price. Price contains a lot of information and in most cases more than most traders actually realize.
As a dynamic trader I am always willing to go with the flow of the market. That means I will follow the trend of a market unless I have very good reason not to. Trend following holds the most advantages and price within a trend gives excellent indications. Many traders will fail to follow a trend and decide to fight the trend to make small amounts of profits for massive amounts of stress.
If you follow the trend, chart patterns, support / resistance then your trading is on it's way to being profitable.
Over the years I have seen Javid develop some excellent strategies for identifying trends and I use to aid me in my trades but trend direction is probably the hardest to identify. Next week I will share a basic strategy to identify trends.
Click here for today's forex analysis.
Daily Pivot Points can be found here.
Good trading
FX Analyst
Anne Chapman
Previously we discussed the internet selling trading strategies in profusion. As long as their is a need and belief for becoming rich overnight on the markets the selling of strategies will continue. Now I am going to show you the best strategy you will ever need to make money from the markets.
I have been investing in the stock market for nearly 20 years. I had bought shares and held on to them for years. I have even had shares handed down to me and continued to hold them. Like many investors, I used the buy and hold strategy. This works well in a bull market but does not work in a bear market. So, after the markets changed to a bear market in 2000 I felt my perfect strategy was losing me money at which point I needed to learn why.
Me and Javid attended a stock market weekend training course soon after the bear market began and I quickly realized I did not know anything at all as far as trading was concerned. I fooled myself in believing that because I made good money from my buy and hold strategy that I knew all I needed to know from a trading perspective.
After doing the course I looked at the markets in a different light. I knew more but I also knew I didnt know enough. Javid decided to attend further courses both in the UK and USA and had 4 seperate mentors. After almost 18 months and courses and mentoring, creating and testing strategies, learning trading software packages and trading platforms Javid started making money from the markets. Javid mentored me and showed me how to make money from the markets too. I began to think this is quite simple but was nervous at the thought of this actually working consistently. In fact I was making more money from trading then being employed but refused to leave my job in case these strategies stopped working. One day Javid convinced me to hand in my resignation which I did and I am very happy to say it was the best decision regarding employment I have ever made.
So, now that I was no longer employed I had to build upon my experience on the markets and became a full time trader. I called upon Javid for further education and strategies and the mental approach I should take towards trading. This took a while for me to grasp and the cool mental approach was not easy for me but I learned the process Javid showed me and removed much of the emotion I had from my trading. Now that my mental approach had been worked on, my trading style had to be identified.
So, why don't I buy a pdf for $97 or a pre built black box strategy for $15,000 off the internet and just use it to make money? The reason is many trading pdf's for sale on the internet are produced by clever thinking marketeers. They can entice you to buy almost anything because that is their job. They market products but many of them are not traders, they are full time marketeers! A black box strategy throwing up buy and sell signals without a valid reason is similar to driving a car without brakes. Our left brain needs answers and not understanding buy and sell signals is disastrous long term for trading.
With all that said what strategy do I use? From the mentoring Javid may have given some of you reading this forex post and webinars you may have attended, one of Javid's favourite trading method is breakout and breakdowns. This is exactly what I look for and so do the majority of professional technical traders around the world. At the end of the day the markets come down to support and resistance levels. A support level breached signals further weakness where as a resistance level broken signals further strength. It really is as simple as that. This is the best strategy you will ever need as far as technicals are concerned. It has been tried and tested for many many years and it is what works. Looking for breaks of support and resistance levels gives you directions. What needs to be added to these breaks is confirmations and filters. Adding these confirmations and filters will remove some fake breakouts.
So, when you next look at a chart, identify the support / resistance levels. If price moves beyond these levels then include a filter to add credibility of this move. Finally confirm the breakout / breakdown with some confluence of events. Now you have a full working strategy. This is what I use in addition to others but this alone when perfected can make a good income for any educated trader. To a non educated trader this may seem like rocket science but to those Javid has mentored and trained this shoud be much easier to create.
Good trading.
FX Analyst
Anne Chapman
Selling forex strategies on the internet is a big market. Many new strategies are created daily and sold on the internet to traders looking for the holy grail. As long as their is always uneducated traders their is always a market to produce strategies to sell. So is this a good or a bad thing?
As most of us are aware, 95% of traders will consistently lose money. Only 5% make profits and these are generally the eduacted traders. Every day we have numerous emails asking about what indicator / strategy / software we use. Let me be very clear about this, without the compulsive forex education, any indicator, strategy or software you use will not help you make money on the forex markets. Further more, without the forex education no strategy sold on the internet will make you consistent profits. A big win here and there is not trading, it is gambling and is destined for major losses.
So, if forex education is so important why does Google have 366,000 forex strategies listed? Surely knowing even the best strategy out there is useless without the education and having experienced the markets and emotions that go with it? The answer is simple. The uneducated will always look for the quick fix and have no idea what it takes to be a trader. It's exactly because of this reason that there is an abundance of strategies for sale on the internet. Don't be fooled, no matter how good you are told a strategy for sale is (and most are not as good as they may seem), the best strategies are the simplest and I am going to share with you the simplest and probably one of the best type of technical strategies for the forex market tomorrow.
Good trading.
FX Analyst
Anne Chapman
In the last post we discussed what a parallel strategy was. Today I would like to discuss the inverse strategy.
The inverse strategy is a little more complex to the parallel strategy as it requires trades moving in opposite directions. So, what is required for this to work is the base and counter currencies on the first pair to be directly opposite to the second pair. Let's take a look at some examples of that.
In all three of the above examples, the first pair has the Dollar as the counter currency and the second pair has the Dollar as the base currency. So if the Euro strengthens against the Dollar then we will generally see the Dollar weaken against the Swissy.
The parallel and inverse strategies can be easily identifed almost every morning on the Dynamic Trader Forex Toolkit under the Daily Pivot Points.
Read more daily forex analysis here.
Good trading.
FX Analyst
Anne Chapman
Many of us use parallel strategies without knbowing we are and others use it as part of a trading plan. So what is a parallel strategy?
This is by far one of the easiest trading strategies to implement and follow. It requires a technical or fundamental set up and at Dynamic Trader we favour technical set ups. The set up has to be on two pairs that tend to move in the same direction. An exaqmple of that is the Euro v Dollar and Pound v Dollar. Both the Euro and Pound are the base currencies against the Dollar and both the Euro and Pound behave in similar fashions.
As Javid teaches this method on his forex mentoring courses, taking a position on the Euro Dollar based on a set up and taking the same position on the Pound Dollar with similar set up is referreed to as a parallel position and so the name Parallel Strategy.
The Parallel Strategy is a basic strategy but we will require good points for entry and stop as per usual and as always must have good money management.
Some suggestions for you to use the Parallel Strategy on are listed below:
The above listed pairs and crosses are suggestions for the Parallel Strategy but any two currencies pairs or crosses you find are similar in their behaviour can be used.
You can read daily forex analysis at www.fxcps.com
Enjoy the weekend and also the start of the Premier League football season.
Below are today's forex daily pivots created by Dynamic Trader Toolkit.
FX Analyst
Anne Chapman
Traders should never assume they know all they need to know to trade the markets. A successful trader is always learning and evolving and never stops trying. Some traders think once they have a strategy they like they just need to use that all the time. The markets are dynamic and a static trader is unlikely to make a succesful trader.
Below I have listed some simple rules every dynamic trader should have implemented in their trading plan.
This is not a complete list of trading rules but certainly is a starting point. Add to the above list and create your own trading plan which you should follow without deviation.
Here are 5 Things dynamic traders should not use:
It is easy to get caught up in the emotions of a trade or after having a bad loss and wanting to take revenge on the market. Feeling angry after a loss, letting greed take over in a trade or fear of losing money is all part of trading and something each and everyone of us hasnexperienced. Learning to deal with these is what is known as dynamic trading.
Every good trader will keep good records. Make sure you have organized an up to date records of your trades. This is a big part of evolving and your best form of learning.
FX Analyst
Anne Chapman
A week of heavy news events are almost complete and the Dollar seems to have come out of it smelling of roses. Interest rate decisions by four central banks have come and gone without any surprise. A rate increase seems less likely for the coming months based on fundamentals and the Fed's current tone.
The credit market is far from normal levels but the Fed's actions seems to have improved public confidence and perception.
The recent Dollar strength is showing the confidence but the Dollar Index doesn't quite confirm that just yet on the weekly outlook. The weekly Dollar Index chart is below.
Javid's forex analysis can be found here.
Have a great weekend.
FX Analyst
Anne Chapman
Chart courtesy of Advanced Get. Data provided by eSignal.
Dynamic traders, there are a lot of trading systems available today and most of them will tell you how fantastic their system is and the abundance of profits that can be made by using it with very little money to start off with. What quite often is not mentioned is the over leveraging that is required on the traders account and as a result the serious risk the trader will assume. For this reason, all of you who have been mentored by my partner Javid Shaik should know and use the Dynamic Trader Forex Toolkit prior to every trade.
Most newbie traders assume the entry point is critical and the most important factor to a good winning trade and identifying a top or a bottom is the key to successful trading. This is as far from the truth as is a system being able to turn $300 into $3,000,000 in 3 months. A good entry point is always a good starting point but it is not the most important point.
Most new traders never focus on what is important because it never occurs to them or more likely they have never been educated in it. What every trader should be aware of and use is money management.
Money management quite often seems boring to new traders because they are looking for big profits all of the time. A dynamic trader will only take trades that have a set up then apply money management so as to not potentially blow their trading account in just a few trades.
Losses are a part of trading and a string of losses should not diminsh you account so much so that you don't have anymore money remaining to trade with. This is what 95% of traders face and go through a cycle of depositing more money in their trading account, over risking and losing the money from their account.
To be a profitable trader it may suprise you to know you only have to be right 50% of the time. After a few winning trades some traders may feel infallible and begin to think that every trade will come as easy as the last one and over trade as well as over risk. Don't fall victim to this mindset and always remember to follow the rules.
Ensure you use our Forex Toolkit spreadsheet to help you with your money management to lock in profits but more importantly not to risk too much on each trade.
Read Javid's analysis at Dynamic Trader FXCPS.
Forex Analyst
Anne Chapman
Below is the automatically generated daily pivots from the toolkit.
Today I am going to share the secrets to becoming a successful dynamic trader.
Hello Dynamic Traders and welcome to a fun packed week of forex trading. It is Monday morning and the markets are open with the GBPUSD sliding and USDJPY climbing. Lots of news out this week and rate decisions are the main focus for traders. News, news, news and it is easy to get caught up on what news to watch out for and what to ignore. I am not going to go through the fundamentals as I trade based mainly of technicals but be in no doubt, majority of the time the news is already factored in to the price and for this reason I am a technical trader. I am aware and do pay attention to news items though and stay out during the hot zones.
So, the secret to successful trading. Well, most traders starting off assume it is having an indicator that is never wrong and they go in search of this elusive indicator. Others think it is a 100% accurate strategy and they go off in search of this strategy. Well, it is neither of these. In fact the points that make what we call a dynamic trader are listed below.
Mix the above with good forex education, add a rule based trading plan and throw in a trading log and you have a recipe to become a dynamic trader. Sound too simple to be true to some of you? Right now, some of you reading this will go off and spend thousands on a black box system or a flashing green and red light telling you when to buy and sell software or a fee paying tip service. How you decide to progress is your choice but the end result will be the time tested points above to become a good trader and that has not changed since 1792 when the NYSE was formed by 24 stock brokers and merchants.
I am lucky as I had Javid mentor me and that saved me a lot of time, effort and mistakes. If you are fed up of losing trades after losing trades and never seem to have any form of profitable consistency then start to develop your own trading plan. If you have never had forex education then visit here often and I will share some helpful advice and information. More importantly though, get yourself the trading education required to become a trader if you truly want to make a success in this field.
Good trading.
Forex Analyst
Anne Chapman
Welcome Dynamic Traders,
The South African Rand has been on a smooth decline since June 13th 2008 and has broken through the institutional moving average without so much as a pullback. The big figure could prevent further move downwards otherwise 6700 and 6400 zones will provide the support.
Yesterday's GDP recation was short lived mainly due to the attention focussing on today's Non Farm Payroll. The consensus for NFP is -75k. It will be a very interesting day as we have UK PMI, NFP, Unemployment Rate and ISM.
I have not opened any new positions this morning and am managing my current trades.
See you on Monday.
For more FX analysis click here.
Good trading.
Forex Analyst
Anne Chapman
Good morning dynamic traders.
From the large number of emails we get at Dynamic Trader asking us which indicators we use and what are the best ones is one of the most common questions. Most new traders are always in search of the holy grail and especially of the one indicator that is always right that tells you when to buy and sell making you lots of money with very little or no work at all. The truth is no indicator like that exists!
The most common trading indicators are Moving Averages, RSI, MACD and Stochastics. These are the ones you will commonly see on most traders charts and on ours too. A common misconception is that the more indicators displayed on a chart the better the analysis will be. Filling the chart area with numerous indicators is only going ot lead to paralysis of analysis.
Keep your chart space fairly simply and clear and don't get tied down with what the indicators are saying all the time. Indicators are meant for confirmation only and relying on them heavily will not provide accuracy in your trading. Price is the most important aspect of trading and leads the indicators.
Some typical settings traders use for the common indicators are listed below.
Moving Average - 50 or 100 or 200 EMA
RSI - 14
MACD - 12,26,9
Stochastics - 8,3,3 or 14,3,3
Again, please use indicators to confirm what you already gleaned from the charts. Concentrating on indicators and then price is a very blinkered form of trading.
More forex analysis here
Good trading.
Forex Analyst
Anne Chapman
What makes a Dynamic Trader?
A Dynamic Trader first and foremost has the ability to detach themselves from the market emotionally. An emotional resilience is undoubtedly the biggest advantage when trading the markets. The markets consist of human emotions and also over 90% of losing traders (mainly as a result of emotion and lack of education). Detaching emotions from trading is 75% towards a successful Dynamic Trader.
In addition a constant desire to improve is essential. A Dynamic Trader as the name suggests does not and cannot remain static and needs to be able to adapt to the ever changing market conditions.
The Dynamic Trader does not look to chase markets or incorporate heavy risks into trading but uses a structured rule based form of trading which involves discipline and intellignece.
Dynamic Traders look for high probability set ups with the odds stacked in their favour as opposed to trade and pray. Many traders hold on to losing positions and pray that price goes back in the direction they are trading in. This is a recipe for disaster and Dynamic Traders always cut their losses quickly giving them the ability to trade tomorrow.
A traders approach is very important which is why new traders should aim to become Dynamic Traders.
Visit our Dynamic Traders Forex Blog for daily updates and training webinars.
Contact me for Tradestation offer
Forex Analyst
Anne Chapman
A trading diary is an essential element of trading yet one many traders decide to bypass. Every trader should keep track of their trades to identify why and how they took the trade and why and how they exited the trade. Below is a list of information a traders log should contain.
Our trading diary contains more information than the above stated but if you currently do not log your trades then this is a starting point for your own personal traders journal.
Once you have a months trades documented in your trading diary then you should start with analyzing the trades and work out where you can improve your forex trading. This is a very important exercise and well worth taking the time out to do as it will be one of the best ways to improve your trading approach.
You can learn more about forex trading by signing up to our FREE lesson newsletters at www.fxcps.com
Good trading.
