The Art of Diversification

The comic says it all..... :)

Turtle Trading System and Pyramiding

Many people who had been looking at trading strategies would have probably come across "The Complete Turtle Trader" Book by Michael Covel. I came across an online article which describes the system in good detail. Do check it out.

But what I thought was more important or valuable was understanding the various components of the system that makes it a good one. And these are fundamental concepts that can (and should) be present in all systems:

1. Markets – What to buy or sell
2. Position Sizing – How much to buy or sell
3. Entries – When to buy or sell
4. Stops – When to get out of a losing position
5. Exits – When to get out of a winning position
6. Tactics – How to buy or sell

A good strategy minimally has Entries, Stops and Exits. And a good strategy should help you to identify good (i.e. low-risk) trading opportunities with good risk-reward ratios.

A good money management plan tells you the maximum amount you can to buy and sell each time. (Note: That doesn't mean that you should trade the maximum amount each time.)

But what I think I'm missing (and perhaps many other people too) from my strategy is a concrete, well-thought and written out plan for scaling in and out of the markets for a specific trade idea.

Allow me to illustrate what I'm talking about. In my earlier posts on EURUSD, I indicated that I was gong long at 1.26 if it reached that level before rallying. Prices did eventually rally, with lots of whipsawing. While I did scale in and out of the markets, taking profits for smaller rallies, and re-entering on retracements, I didn't quite put it down on writing exactly how much I should scale in and out each time. Meaning... it was done pretty intuitively.

I was reading some of Van Tharp's materials, and am now thinking of how I can enhance my existing strategy (based on EW) to maximise profits and minimise risk. One of the ways mentioned was pyramiding, and some of the guidelines were:

a) Never add to a losing position (known as averaging down)
b) Add only when your trades are profiting, and if adding doesn't increase your potential losses.

There is one danger to pyramiding. One is that it builds up a significant position at the end of the trade, that a reversal can result in wiping out a significant portion of the trade that you had taken some time to build. Imagine building a position for 2 weeks, only to see your profits wipped out in 2 days!

I believe that there's some value in adding a pyramiding strategy to the existing one, but I think there are some finer points to understand, and that I should be able to quantify the potential gains and lossess before this becomes an integrated part of my strategy.

P.S. I'm still short on EURUSD, and am somewhat cringing that prices are still holding around 1.337 level. Markets had been moving sideways (although through a rather wide range), and seems to be waiting for some significant news next week. One of it would be the Fed rates announcement on Tue (actually, its Wed 3.15am Singapore Time). Good luck for your trading!

EURUSD Review (12 Dec 08)

The markets are moving swiftly this period.... and here I thought that December would be slow or slower .

Yesterday I said that I exited at 1.3, and am looking to short around 1.32-1.34. Prices rallied quickly after I exited (Sigh), and hit 1.34. I'm currently shorting EURUSD.

Meanwhile, I'd like to borrow what Elliott Wave Internation's article on 9 Dec:
"Remember, Elliott wave impulses do not overlap, while corrections do. Would you say that the latest EURUSD rally looks impulsive or corrective?"

"At this moment it's all about risk management. We believe a turn is underway, and that risk is defined and limited relative to reward."

I'm short right now... and keeping my fingers crossed. This is despite
a) People appear to recognise the trend as upwards now. (People also thought that it was downwards when price was at 1.26 levels).
b) ECB hinting and halting rate cuts
c) People think Fed may cut rates to ZERO.

Again.... Fingers still crossed.

EURUSD Review (11 Dec 08)

Here's a short updated on my previous forecast.


Previously, I mentioned that EURUSD could be traded both ways, short around 1.32 or long around 1.26. Prices dipped to around 1.2560 and I took the opportunity to go Long. Prices have since made a beautiful run up to 1.3000 where there appears to be resistance.


My original profit level is around 1.32 level, which is around the level that I intended to short. Price has broken the resistance level of 1.300 and appears to stay above that level at the point of this entry. Staying above that level might mean further upside, but the rally appears to be losing some strength.

Looking at the 1 hour chart, the candlesticks appear to be forming long upper-wicks. Showing that some selling pressure is mounting. Prices are above 1.3 level which appears to be a fairly significant S&R level. But also take note that MACD is showing a divergence right now.

I've since exited my trades around 1.3, and am looking for shorting opportunities around 1.32 to 1.34 levels. If prices retrace first, there may be some opportunities to go long, but it depends on how prices unfold.

My main method is via price action using Elliott Waves and Fibonacci. From time to time though, I'll also look at other indicators. One of which is the COT or Committment of Traders Chart. You'll notice that I've added a widget at the bottom of the blog which provides some COT charts for those interested. For the purpose of this post, I've saved the screen-shot :

Basically there is a divergence on both EUR and the USD Index. For EUR, commercial traders are going long, and for USD they are going short. Expected net result is for EURUSD to rally. Prices have already risen somewhat, and its possible for them to rally further. But do take note that such divergence does not usually last for very long. Looking at the above charts, you can see that extreme position are not held for long, and can often swing to the other end. That being said, I'm not an expert on COT Charts, but would focus on price action more than such indicators.

That's it for now. Good luck for your trading!

Trend Following Funds in Singapore

I never knew that we had fund managers in Singapore who trade technically, and more specifically, are trend traders. I'm not sure if they are a mutual fund or a hedge fund, because from what I understand, mutual funds cannot take short positions, and hedge funds require you to be a high network individual before you can trade.

The fund house is called superfund and you can watch an embedded video below. Seems like an interesting fund, doesn't it. But I'd much rather manage my own trades given the time and opportunity of course. :)

New Feature - Chatroom!

I've just added another cool new feature! All the way at the bottom of the page, I've added a chatroom. So all readers can participate in a live chat, and I'll be there from time to time to see if anyone would like to chat.

I'm piloting this to see if it is useful. Do leave me your comments! :)

Currency Trader Magazine (Dec 2008)

The December Issue of Currency Trader Magazine is out. Click here to download.

Prechter’s FREE 10-Page Market Letter: Be One of the Few the Government Hasn’t Fooled

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EURUSD Forecast (30 Nov 08)

Here's a follow up on my post on 18 Nov 08.



Prices have spiked up above 1.2856 without first breaking 1.2400, invalidating the diagonal pattern. So the entry was never hit. The alternate wave count I have for this is a WXY count.


There are two ways to trade this.

On the larger degree, it is now completing its wave Y and overall direction is downwards. We can enter a short at around 1.3200, but I think price is likely to go beyond 1.3300. Regardless of where you place your entry, stop Loss is at 1.3540 based on EW. I've decided to place mine a little higher at 1.3700. Target is 1.2400 for now.

On the smaller degree, it has either completed its wave b (at 61.8% retracement) or will proceed to move downwards. An entry at the 78.9% retracement level will give better risk-reward ratio. Stoploss as is at the previous low, I've placed it at 1.2400.

In short:

Possible trades:
Entry Limit (Short) : 1.3200 / 1.3300
Stop Loss : 1.3700 / 1.3540
Take Profit : 1.2400

Entry Limit (Long) : 1.2680 / 1.2600
Stop Loss : 1.2400
Take Profit : 1.3200 / 1.3300

What do you think?

EURUSD Forecast (18 Nov 08)

Its been sometime since I looked at the charts. Couldn't resist and decided to look at one of the charts today - EURUSD. It would be better if I looked at some of the other charts too... but will make do for EURUSD for now.

Daily Chart













Counting from the significant top in July 08, looks like we are in the process of a wave 5 (or wave 5 might have completed). The swings on the daily are somewhat too huge for my trading appetite, so I'll look at the 4 hour chart.

4 Hour Chart













I'm counting the move as a possible diagonal for a wave v. My set-up as follows:

Entry (Long) : 1.2400
Stop Loss : 1.2100
Take Profit 1 : 1.2850
Take Profit 2 : 1.3200

1.2400 is a fairly good area to go long for a few reasons:
1. It is a support level
2. It is a psychological support level (whole number)
3. As a wave e, it is 61.8% the length of wave c.

Once again, this is based on a quick analysis, and not as thorough as I normally like it to be. Since I'm looking at this as a diagonal, a break below 1.2400 is normal, but a break below 1.2100 invalidates the wave count for a diagonal.

That's it for now. Good luck with your trading!

Currency strategist Keith Miller on the currency markets

Currency Trader Magazine (Nov 2008)

The newest issue of the magazine is now available. Click here to download.

Mind Games for Trading

One of my colleagues once conducted an informal creativity session as part of a qualification he is studying for. And there was one mind-trick that I found particularly interesting. Its much easier to experience it, than it is to explain it. Take some time to actually do the exercise and don't read past what you are supposed to do. So here goes.

For the first part of the exercise: For 2 minutes, think about as many ways you can use a paperclip. e.g. Ear-rings, hook...etc. See how many you can come up with.

Now, do not proceed until you have taken 2 minutes to do the first part.

For the second part of the exercise: For 2 minutes, think about as many was you can about what a paperclip cannot be used for.

What happened? If you were like me and many others, you would have found many other ways you could use the paperclip for! Interesting isn't it?

I'm going to apply this little negation technique to trading, and actually, its not really new to the trading world. Many of us look for reasons to trade, and many times our mind distorts our reality, and we "see" things that aren't really there. Sometimes, we end up fabricating what we want to see. And admitted so... that's also a challenge I face.

So if we apply the little negation technique, what happens? The negation technique can be used to eliminate some of these badly thought-through trades. Instead of looking for reasons to trade, look for reasons not to. If you can find 3-5 reasons not to trade, then perhaps its more prudent not to. If you can't find any reasons not to trade, then perhaps there you have a good opportunity.

Another way some people do it is to list the reasons to trade, and reasons not to trade. Then depending on which side has more reasons, decide if its a good opportunity to trade.

Of course, when it comes to trading, its a different environment from brainstorming. In trading, you have much less time to react. Weigh your options for too long, and you made find that the window of opportunity has already closed. Nonetheless, its sometimes a useful mental exercise to go through to keep ourselves in check.

What do you think?

What type of trader are you?

Mac1 from Singapore Forex Forums shared this Tharp Trader Test which is very interesting. Do check it out if you have the time.

My results are below. :)

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Planning Trader

You tend to be decisive and to the point. You'll quickly assume leadership when it is called for by the circumstances around you. You have the ability to quickly develop and implement trading systems to meet your needs. You can easily spot logical inefficiencies in the market and take advantage of them, especially if you are pointed in the right direction.

You enjoy long-term planning and goal setting and seem to enjoy learning, expanding your knowledge and staying well-informed. Consequently, you should have no problem developing a sound business plan for trading successfully.

You are excellent at planning in advance especially when you have specific trading goals in mind. You are good at keeping both your short term and long term objectives in mind during the planning process. You like to be effective and efficient and will quickly abandon procedures that do not help you to accomplish your goals. Your dislike for repetition in error will probably help you with trading, because uncovering and fixing any mistakes that you make is an important task of trading.

You are probably quite career focused. Thus, if your current focus is on trading, it's probably because you've had a major disappointment or frustration with your initial career of choice. However, you need to be careful with trading/investing because it tends to be a solitary activity and you love to organize others and pass on your knowledge.

Nevertheless, you tend to have the three important qualities that we look for in top traders. Thus, if you apply yourself, develop a business plan for trading/investing, and really work to understand what trading success is all about, you have the potential to be hugely successful.

Trading Strengths

1. Originality and drive; willingness to follow your ideas through to completion.
2. Quickly see patterns and possibilities, with the ability to rapidly hypothesize and generate low risk trading ideas.
3. You could probably generate a trading business plan and trading systems quite easily and naturally.

Trading Challenges

1. Probably so logical that you don't recognize when emotions are causing you to self-destruct.
2. Your willingness to take action based on rapid insights may result in premature actions, which may create tension with your risk management system especially if you really believe in your rapid insights.
3. You may be susceptible to the loss trap. Therefore you may not honor your stops because you want to be right about your trades.
4. May become bored with routine systems, even if they are performing to standard, and seek excitement to "stay in the game."
   

Example Trader Ed Seykota Ed Seykota is an MIT graduate who became one of the first computerized trend followers in the 1960s. Ed also really understood position sizing and used it to accomplish his objectives in trading. I cannot imagine a bigger edge - it's like going back in time with today's technology. But when I met Ed in 1990 all of his software was written in assembly language. Ed might easily be called the Bill Gates of trading. And Bill Gates, if he were a trader, would be a fine example of a planning trader.

Has Cash Been King for the Past 10 Years?

If you're like most investors, you've been nearly brainwashed with conventional market "wisdom" that stocks are the best way to grow your portfolio.

You would be crazy not to have your money in the markets, right?

But when markets drop, as we've seen in this credit crisis, it's amazing how quickly the story changes.

Steve Hochberg and Pete Kendall, editors of Elliott Wave International's Financial Forecast, challenged the notion of stocks' superiority years before this latest downturn.

Learn how cash has been king – and will remain so – far longer than the latest news headlines may have you believe in this free excerpt from Elliott Wave International's Credit Crisis Survival Kit.

Elliott Wave International has also made the full Credit Crisis Survival Kit available free for a limited time. In addition to this excerpt, it contains 14 other articles, reports, and videos that reveal how to survive and prosper during the credit crisis. Visit EWI to download the kit, free.

Cash's Invisible Reign Made Visible

[excerpted from Elliott Wave Financial Forecast, August 2008]

With respect to cash and its status as the preeminent financial asset, however, we are starting to wonder if investors will ever come around to our point of view, which, as we explained in the March special section, is that there are times when "the phrase 'focus on the long term' means "get out and wait.'" As we also pointed out, the last eight years are clearly one of these times, as cash has outperformed all three major stock averages over this period. A July 3 USA Today article shows how this outlook is actually becoming more farsighted as the bear market intensifies:

3-month Treasuries Beat

S&P 500 for past 10 Years

The article says, "Investors who bought stocks for the long run are finding out just how long the long run can be." But the farther back in time cash's dominance stretches and the rockier the stock market gets, the farther investors seem to move from ever taking anything off the table. After stating that "there can be times, long times, when stocks won't beat T-bills," a professor and popular buy-and-hold advocate is cited as "optimistic that the next 10 years will be better than the past decade." In March EWFF stated, "Cash will continue to outperform until stocks are no longer fashionable." There is no sign that such a condition is even close to happening.

It's somewhat amazing that cash is not capturing anyone's fancy because a tremendous society-wide thirst for cash is spreading fast. "In a deflation," the Elliott Wave Financial Forecast has stated, "Rule No. 1 is to unload everything that isn't nailed down. Rule No. 2 is to sell whatever
everything remaining is nailed to." The banking system is surely deflating, because, echoing Elliott Wave Financial Forecast's wording again, "Desperate American Banks Are Selling Everything That Isn't Nailed Down." SunTrust is selling its stock in Coca-Cola, an asset the bank held for 90 years. Merrill Lynch sold its founding stake in Bloomberg as well as various other subsidiaries.

Meanwhile, "Americans are selling prized possessions online and at flea markets at alarming rates." Pawnshops and auction sites are booming. At Craigslist.org, the number of for-sale listings soared 70% in eight months. This fits with our review of Craigslist's prospects when it was getting started in 2005: "This is just the set-up phase. Once the global garage sale really gets rolling, truly astounding volumes of dirt-cheap goods will be available on-line and
elsewhere." The global garage sale is on. The chart of the U.S. savings rate shows that the bull market in cash has come to life.

A 30-year downtrend in savings rates ended at minus 2.3% in August 2005. In May 2008, the savings rate skyrocketed to 5%. This jolt may be somewhat overstated due to the arrival of the government's stimulus checks, but the burst should be the start of a critical new mindset among consumers. When the government showered the economy with $600 checks, many did something they never would have thought of through most of the bull market: They put the money in the bank, which is exactly what the administration did not want. In fact, federal, state and local governments are desperate for the tax revenue that a little ripple-effect spending would have generated.

According to the National Conference of State Legislatures, states must close a $40 billion shortfall in the current fiscal year. "The problem today is that tax revenue is vanishing," says a story about the sudden appearance of the worst fiscal crisis in New York since 1975. Even cities like East Hampton, New York, where someone paid $103 million for an oceanfront house last year, are out of money. "Nobody understands how it happened," says one resident. The pages of this newsletter show otherwise. If we are right, a deflationary decline is depleting and destroying cash flows in novel new ways that no one alive has experienced before.

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The previous analysis was excerpted from Elliott Wave International's
Credit Crisis Survival Kit. The kit, featuring 15 free resources
to help you survive and prosper during the credit crisis,
is available free. Visit
EWI to download the kit, free.

Trading is a Journey of Self Discovery

I'm doing my second round reading of The Disciplined Trader by Mark Douglas. Fantastic book, and I'm picking up some additional stuff out of it.

I'm less than half-way through the book, but one of the key things I've gotten out of it this time round is this - How well you are able to control your emotions when trading depends on the meaning you attribute to your wins and losses.

Do I hear some of you going "huh?". Well, basically, its not the event of winning or lossing that is critical, its our interpretation of what those events mean to us that's important. A person who attaches the meaning that "I'm a loser" to a losing trade, reacts very differently from a person who attaches the meaning that "I've interpreted the markets wrongly this time." The former is a global and permanent statement at the identity level, the latter is a specific and temporal statement at the behaviour level. Who do you think would be in more control in his trades?

One side issue that this brings up, is also that of self-acceptance. The more self-accepting one is, the more one is able to accept the mistakes. In Mark's book he says

"Taking responsibility is a function of self-acceptance. You can measure this degree of self-acceptance by how positively or negatively you think of yourself when you make what you perceive as a mistake. The more negatively you think of yourself, the greater you tendency to avoid taking responsibility, so you can avoid the pain of your harsh thoughts, thus generating a fear of making mistakes."

Well, I always say that trading is a journey of self-discovery. The better you know yourself, and are able to control your emotions, the better trader you are. And that's one reason why I believe, good traders who have undergone the necessary "training", generally tend to be of better character. Self-control is an important character to develop when you are a good trader... it shows in your trades, and your interactions with people.

Poll: What do you want to see more of on this blog.

Firstly, many thanks to all readers out there, and for the many encouragements. I'd love to know more of what you wish to see on this blog and I'll do my best to provide it. I've placed a poll on the right side, please take a minute to let me know what you would like to see more of.

If the option you want that isn't there, just leave me your suggestions as a comment here.

Thanks again!

AUDUSD Trade

My AUDUSD position has been stopped out, possibly proving my wavecount wrong. But we recall that flat corrections can make new price extremes.

The non-farm payroll data was 'unexpectedly' low. -159k actual vs -100k expected.
I say unexpected in quotes because I was expecting USD to weaken further. And besides that, many companies especially banks have been laying off staff.

In anycase, technicals are of key importance to me. So I'm taking my losses and waiting for the next opportunity. Its always painful to take losses, but necessary sometimes.

Take care and becareful out there.

Money as Debt

Here's an interesting video on how money is created. Very interesting to know, especially in these debt-filled times.

Trading Thoughts : A Gambling Account

Here's a 2-part series/article by BKTrader which I thought is pretty interesting. I've provided the two articles below, and I'll comment on it in another entry. :) Meanwhile, read, enjoy, reflect and see what thoughs come about.

—————–Trading Thoughts-A Gambling Account—————
Part 1
Admit it. Despite the volatility or rather because of it last week was a great time to trade. Not a great time to make money - unless you had the reflexes of jungle cat - but definitely a fun time be in the currency market. 20 rounds per day? 30? By Friday I was doing 40 and did even realize it. Of course when the dust settled I was up only modestly because wide spreads, sudden spikes and massive turns in sentiment created as many stop outs as winners. Never mind, it was rush to play and I enjoyed every moment of it because I never truly put myself at risk.

Like many FX traders I have more than one account. Almost everyone who trades FX seriously, be they retail or institutional has several dealing relationships. In a deregulated, decentralized, dispersed market that’s a smart thing to do. You never want to rely on only one point of exit in order to control your risk. But as retail traders we are fortunate not only to have many choices, but to trade smaller relative size. Since everyone in the currency market offers mini lots, its easy to open a small account and experiment to your hearts content. In fact I believe its not only easy, but also quite advantageous for retail traders to create a “gambling” account where you can go to town with your speculative capital.

What is the single biggest sin in trading aside from not using stops? No doubt its over trading. Yet telling an FX trader not to over trade is akin to telling a guy not to stare at a woman in a skimpy dress. We know its impolite but few can resist the temptation. Discipline may be the key to success in trading but when it comes to human beings all of us are subject to our appetites. Eventually everyone loses control. Much better therefore to lose it in a controlled environment.

That’s why a gambling account is so vital to your trading health. The markets will always entice us to gamble. Better to do it with a small amount of money, rather than wreck your real account. Trading books are littered with examples of guys and gals who made small fortunes in the market only to give them all back in a wildl over trading binge that typically ended up in a margin call. If you are going to get blown out of the market, do it your gambling account.

Next week, I’ll tell you how you can turn vice into virtue by making the gambling account your own little trading lab.

Part 2
Last week I talked about the need for a separate gambling account to let off steam and allow our worst impulses run wild in a controlled and contained environment. This week I’d like to suggest that a gambling account is not merely a diversion for Vegas like entertainment but could in fact be a very useful tool in our arsenal as FX traders.

Perhaps the greatest problem facing many traders is the fear of losing. It is the primary reason so many trade without stops, postponing the day of reckoning in order to avoid the immediate pain of capital loss. In fact when trading a gambling account many traders do just that - they lay on a trade, leave no stop and hope for the best. But the “have a hunch bet a bunch” strategy inevitably ends in tears and a margin call.

On the other hand, if you actually practice safe trading by always using stops, a gambling account can be an incredibly liberating, educational experience. A gambling account when used with stops can be a source of experimentation and learning. You can experiment with a variety of strategies and money management approaches that you might never consider in your regular account.

Granted you could do all of these things on a demo, but your experience and sense of commitment would be completely different. Do you really think you would be checking quotes every 5 minutes on your Blackberry on your USDJPY position if it was done on e demo account? Hardly. Even if your are trading for just a $1 per point real money makes a difference and makes your trading much more meaningful.

For me one of the most useful lessons from trading a gambling account is the realization that just staying the course can often mean the difference between victory and defeat. Woody Allen one said that, “90% of life is just showing up.” In trading this can often be true. Trading in these wildly volatile markets this week, I often would find myself in a deep hole by the middle of the day, but by sticking to my plan and continuing to take trades that were part of my setup I was able to end up positive by the end of the day. Would I have had the courage to continue if this wasn’t my gambling account? I doubt it - that’s why the lessons I learned were worth far more than the pips that I earned.

News Laden Morning, and wild week ahread

There's a huge amount of financial news this morning, and I've shared them on the panel on the right. But I thought I'd just share my thoughts. :)

Bradford & Bingley to be nationalized: reports
Looks like shortly after Freddy and Fannie have been nationalised in US, Bradford and Bingley are being nationalised in UK. (What's with this same first letter alphabet thingie for these firms? Perhaps I should come up with a W&W or A&A... haha)

Either I hadn't been kept up to date on UK news, or there hadn't been as much interest in B&B as there was in F&F. I'm not sure of the impact of this new on the GBP, but it would certainly be good to take this into consideration. Perhaps with its nationalisation, banks in UK are more comfortable with lending and liquidity issues are lessened.

There are a few items on the bailout bill:
Text of economic rescue bill official summary
Rescue bill released

Basically, the bill will be passed, and Paulson will have the authority to manage $250 billion upfront instead of his intended $700 billion. It doesn't say what has to happen or when he can use the rest of the $700 billion. I suppose some checks and oversights out in place is a good thing, because I'd be worried if he did dump all $700 billion at one shot. So perhaps, $250 billion as a first tranche is good enough for now.

The most important question would be how the markets are reacting to this. Perhaps some short-lived joy on the improved liquidity, followed by the realisation that markets are still on its way down.

Why do I say that? Well, the Fed had been pumping in loads of cash, cutting rates like mad, all in efforts to stablise the markets. This $700 billion bill (enough to wage a full fledge war) is almost a final resort after seeing all else had failed. I do think it is necessary for the Fed to act, but I think it serves to cushion the impact of the market correction, or prevent it.

That's all for now. Good luck with your trading!

Elliott Wave Summary Tool

I come up with an excel spreadsheet once to tabulate my preferred and alternate wavecounts for a variety of currency pairs. It really takes time and discipline to use it constantly, but for a start, it can help provide some overview as to what's happening in the markets.

Feel free to take and use it if you find the spreadsheet useful.

EW Summary - Upload a Document to Scribd

AUDUSD Forecast (27 Sep 08) - Correction

My friend told me that his wavecount was different from mine.... so I went back a took a second look at how I did mine. And I realised.... my wavecount was wrong.

While I said that a Wave b of B was underway, my charts actually labelled wave b of C. What's wrong with that? Well.... Wave C sub-divides into 5 waves, not 3. So if I label a-b-c, I'd be wrong. Unless of course, Wave C is a diagonal and subdivides into 3-3-3-3-3. That's one possibility, but its too early to tell.

Another possibility is that, instead of a A-B-C. What I have is a W-X-Y. Tada!! Each in itself can be a contained 3-waves. And if that's true, then we can look for alternation between Waves X and Y.

Overall, I must say that this chart isn't very easy to label for me. Haha... and here's my revised chart with the W-X-Y count.



There's a reason why I'm still counting it as a corrective move. Overall, wave structure takes precedent. And the waves I've labelled W-X-Y all look corrective to me.

So in summary, I still think that at the 4h chart its either a
A) A-B-C Expanded Flat Correction with C wave as a Diagonal.
B) W-X-Y Correction (that still looks like an expanded flat?? haha)

I thought we'll take a look at other people's count as well. I've taken this from DailyFX, and its a chart by Jamie Saettele.



If I look at the significant low, I agree with her that the move up looks corrective and warrants an a-b-c count. The only thing that I disagree with is the labelling of wave v. Which doesn't look implusive nor look like a diagonal to me. Since interpretation of the charts are subjective, I suggest you pull up your own charts and make-up your own opinion. Her chart could very well be the correct one.

Looking at Fundamentals next week.... Markets could well be consolidating while waiting for non-farm payroll on Friday. Before that, Aussie has quite a number of news events too. It'll be a busy week... keep a close watch if you can!

Alright, that's it for now. Pretty long post compared to yesterday's. I hope I can find another chart with a clearer wave count.

AUDUSD Forecast (26 Sep 08)

Looks like AUDUSD is headed way way down, and my count on the AUDUSD is shown below.



In a nutshell, I'm counting it as a wave 4 (I used roman numerals in the chart) expanded flat retracement. On the daily chart, I'm expecting price to move further up for shorting opportunities. Fundamentally speaking, with all the chaos on the bailout proposal, I think no one knows where the dollar is really headed. So I'm sticking to technicals.

Lets look at the 4h charts.



I think its currently in its b of B wave. So I'm looking for a long opportunity around .8080, Stop .7790, and take profit around .8500. Because of the strong support/resistance level there, it'll probably bounce off that level and I may make another long trade if the opportunity arises. Alternatively, if you have a large enough position size, you can take your first profit at .8500 and let the remaining run to about .8770 (that's 1.616 of the A wave). I still think it will probably bounce off the .8500 level though.

Well, that's it for this short post. Good luck with your trading!

Investor Superconverence '08

There's an upcoming Investors' Superconference in Oct 08. For an early bird price of $399 for 2 days worth of talks by some pretty renown people, I think its a pretty good deal. Note that I'm not receiving any benefits for writing about this event... I just think that based on the speakers, its a pretty interesting talk.

I've listed the 5 speakers below for easy reference. Actually, looking at their expertise and the topics covered, I wonder why they didn't call it a traders' superconference instead...

------------------------
Speakers for Investor Superconference '08
Ron Ianieri
Chief Market Strategist, Options Unversity
Trainer of Today’s Top Wall Street Floor Traders & Regularly seen on CNBC Asia, Fox Business News, Bloomberg Asia

John Person
President of Nationalfutures.com
Master of Candlesticks, Pivot Point Pioneer and Best Selling Author

David “Firstwave” Elliott
Technical Analysis Wizard
Twice Voted World’s #1 Market Timer!

Tom Sosnoff
Founder, thinkorswim
20 years Market Maker on CBOE and featured in publications like Wall Street Journal and Barron’s

Price Headley
Founder, Bigtrends.com
Top 10 Stock Market Timer, Best Selling Author featured on CNBC, Fox News and Bloomberg Television

Fickle-Minded Markets

You know by now that I'm hardly trade based on Fundamental News or Expectations. But I do look at news to

1. Keep updated on the economy
2. Identify market psychology/sentiment
3. Identify possible market-moving news

Ok... The 3rd one does sound like I trade the news, so it needs alittle elaboration. Basically, markets love to wait for news to move, many times in a direction that it intends to move anyway - this includes both reversals and continuation. What does this mean? If I got a really good technical set-up, with good risk-reward ratios and a proper stop-loss, I'd likely keep my trades and expect the news to move my trades in my direction. :)

Back to the topic of news, this post also serves as a reminder to myself. Just some weeks back, people thought that US Markets had bottomed out and the worst was behind. Several tropical storms, like Gustas and Ike, threatening to impact oil production and cause further dollar weakness. But the dollar continued to rally, and oil continued to drop as the storms one by one passed without any long-term significant impact on oil production. Naturally, factors impacting oil prices are many and goes beyond just oil-production, but that's another topic in itself.

So the dollar rallied, markets became hawkish, and here's what I think was interesting - People were starting to expect the Fed to hike rates! Personally, I agree with what Buffet and Sorros and expressed sometime during this entire Sub-prime saga - The housing market is weak and may continue to weaken, and this is likely to continue for quite sometime still.

But look at how quickly the market turns! Just a couple of weeks back, people were expecting rate-hikes, and how people are looking at possible rate-cuts.

People might say - "Hey! No one expected Lehman to file for bankrupcy, and why did the Fed suddenly stop bailing out companies now? This is an unexpected development!" So suddenly, expectations have switched.

That's one reason why I remind myself not to be too caught up with the crowd psychology, and while news is important to know, it really should never be the key/only deciding factor for your trades.

Alright... just ranting. The markets never cease to amaze me.

[P.S. The article above was written based on memory, for actual opinions expressed by Buffet and Sorros, do a google search. =) ]

News Sharing

While I'm a technical trader, there is still a need to keep updated on the current affairs which would affect the market, or at least market sentiments. To do so, I subscribe to various news feeds via Google Reader.

I've just realised that Blogger now allows me to share interesting news bits that I read on Google Reader, and I've just added the widget to do so. Look to the right side, and there's a segment that says "Alex's shared items", and those are news items that I think are interesting bits to be shared. Hope you enjoy this new feature!

Chartered Market Technician (CMT)

While studying for my Chartered Financial Analyst (CFA) exam, I came across a new (new to me at least) designation called the Chartered Market Technician (CMT). I thought I had previously written about it, but it appears I hadn't.

The CMT is mainly for technical traders and shows that a market technician has both broad-base and in-depth knowledge on technical aspects of the markets. It is something that I will consider going for in future, but since I'm already working on my CFA I'll leave it for another time. Somehow though, I think the CMT exam is somewhat easier to tackle if you have a keen interest in technicals and have already been reading books on the subject extensively. If you take a look at the recommended readings, you will find that these are common TA books in the markets.

Well, anyone interested to give it a shot? :)

More info via the Market Technicians Association website.

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My Forex Performance

Just in case people think I had been just putting out charts and analysis without being in the trenches myself... here's a pip of my performance thus far.

The performance looks postive for the past 4 months, the main blemish is when I lost control around January period where the sub-prime become full blown and markets were really hard to read. That markets were hard to read wasn't the real reason for that decline. It was a lack of emotional control, and the need to recoup losses made me lose grip on money management and taking more risk with larger positions than I should.

(P.S. The Scribd application I'm using below is really cool! You should check it out.)

FX Money Mgt (Performance) v2 - Upload a Document to Scribd

Read this document on Scribd: FX Money Mgt (Performance) v2

INVEST Fair '08

INVEST Fair 2008 is being held at Suntec on 16-17 Aug, and there are a few talks that Forex traders (or Forex Traders-to-be) may be interested in.

Saturday

• Trading Psychology with Technical Analysis (Conrad Alvin Lim, Master Trainer, Investment Strategist, Adam Khoo Learning Technologies Group Pte. Ltd.)
• Forex Seminar (Kishore M., Chief Executive Officer, PowerUp Capital Network Pte. Ltd. )
• Indicator Trading (Discretionary) vs System Trading (Ee Chee Koon, Chief Operating Officer, Asia Charts Pte. Ltd.)
• How to be an excellent market timer for stock, forex and futures (Binni Ong, Chief Trainer, Terraseeds Market Technician Pte. Ltd)

And many others.... I'm too lazy to copy and paste everything here... so do check out the website here.

Some Possible Trades

Markets are still extremely choppy, and I'm hard pressed to find impluse waves on the charts. I could be just me... but personally, I think most markets are really in a long looonnnnggg corrective mode.

But since I hadn't put up much charts in the past.... and I'm really been busy. Well, too busy to put up nice charts... but not quite that busy that I didn't trade at all. So for how, since I've had requests for updates on the blog.... I'll put up my uncleaned charts. I must say, I hadn't put that much time into the charts these days... so I won't be putting up a series of different time-frame charts up. So... what are the trades I'm looking at for the week?

Here are some charts, but please note that I'm disposed to change my opinion of the markets at any point of time. :)

Firstly... AUDUSD


Entry : Long at 0.9550
SL : 0.9430 (120 pips)
TP : 0.9900 (350 pips)

And

Entry : Short at 0.9880
SL : 1.0060 (180 pips)
TP : 0.9650 (230 pips)

The charts tell the story.

Next chart, EURUSD with two possible shorting positions:



Entry: Short at 1.5785
SL : 1.6060 (275 pips)
TP : 1.5380 (405 pips)

Entry: Short at 1.5885
SL : 1.6060 (175 pips)
TP : 1.5480 (405 pips)

Take care out there!

EURJPY Forecast (11 Jul 08)

I hadn't been doing much forecasting of late. Partially due to being occupied, and partially because the charts are so messy these days. But I'll try to do one on EURJPY which I think is due for another down leg.



First, lets take a look at the weekly chart. Cut a long story short... I think that EURJPY has completed its wave 3 of (4) and is now completing its wave 4 of (4), which usually ends around the 4th wave of its one lower degree. Also, since I think its a wave 4, then it shouldn't overlap with wave 1 either. Lets enlarge the chart.



If price moves to below Wave 1 which also happens to be the 78.2% retracement, then my wave count become invalid. But that's not the main concern now because price could still move further up or it could being its beautiful descend down to around 150.7. That's quite a large move.

But we need to take a look at the smaller timeframes to see what is going on.



My preferred count is that wave B is now being completed. Here's the 4hr chart.



And finally, the 1 hour chart....



The 1 hour chart is what I really want to get to... haha, because that's what I'm trading right now. In short, I think that the wave c of B is actually a Diagonal Triangle, which would be invalidated once price exceeds 169.52, and the target price is the start of the diagonal at 167.13. So yup, while the weekly time frame since to suggest prices dropping all the way to 150.70, for near term, I'm looking for a target of around 167.13.

Lets see how it turns out. :)

EUR Plunges Dispite Rate Hikes

I'm currently on reservist and did not really monitor the markets. So I just came back from camp and I found that EUR had made a plunge! I thought that surely the ECB had kept rates instead of increasing them, but lo and behold! They did increase rates!

The Eur had been rising for the past few weeks in anticipation of rate hikes, and I believe many traders were expecting Eur to appreciate with the rate hikes as the ECB has expressed concerns over inflation. Other (technical) traders are looking at the charts see weakness (for me in the EURUSD pair) and were looking for shorting opportunities. I shorted the pair and was waiting for it to come down.... it stay up there for a couple of days before finally dropping dispite the rate hikes. Here's what some articles say about it.

Euro Plunges (Source: ForexNews)
The euro posted steep losses following ECB President Trichet’s press conference, falling by over two big figures to 1.5683. The European Central Bank, as expected, hiked rates by 25-basis points to 4.25%. However, the subsequent press conference by Bank President Trichet offered little hint as to whether any additional rate hikes can be anticipated. He said that, “The monetary policy stance following today’s decision will contribute to achieving our objective”, while emphasizing that the Bank has no bias on future decisions. Trichet said that rate increase was necessary adding that the Eurozone is experiencing moderate but ongoing growth. The economic releases from the Eurozone overnight were mixed, with retail sales sharply higher than anticipated while non-manufacturing PMI disappointed consensus estimates. Retail sales reversed from negative prior readings, increasing by 1.2% compared with -0.6% a month earlier and up 0.2% versus -2.9% in the previous year.Traders focused more on the less hawkish comments from Trichet, tempering expectations for additional policy tightening despite recent record high inflation reports. Accordingly, the euro plunged toward the 1.57-handle, with support seen at 1.5675, backed by 1.5640 and 1.56.

Euro Collapses as Trichet Proves to be a Big Disappoint (Source: DailyFX)
Thursday, 03 July 2008 21:50:53 GMT
Written by Kathy Lien, Chief Strategist

For the first time since 2007, the European Central Bank raised interest rates by 25bp to 4.25 percent. However despite this move, the Euro dropped more than 200 pips when ECB President Trichet failed to signal to the markets that interest rates would be increased again this year.

Going into the ECB meeting, the Euro rose to a high of 1.5910, indicating that currency traders were clearly banking on hawkish comments. Instead, Trichet played down the prospect of more rate hikes by saying he has “no bias” more than 5 times in the question and answer session with reporters. For Euro bulls, having no bias is just as bad as not having raised interest rates today. Despite strong retail sales, a sharp drop in the German unemployment rate and much stronger than expected producer prices, the ECB was surprisingly neutral. For a staunch inflation fighter, it is quite uncharacteristic to have no bias especially on a day when oil prices hit a new record high. German factory orders are due for release tomorrow. A strong rebound is expected but that may not have much of an impact on the Euro. We expect a bit more weakness before some stabilization in the EUR/USD.

Div 3 Reversal System

I recently came across this trading system using RSI Divergence, and the good thing about this free video is that it provides you with clear entry and exit points. I do trade divergences, but just not exactly the same way as this system. But I think this system seems like a valid trading strategy.

Check it out here.

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My Trading Archetype is : Trader!

Some people upon seeing the title of this post will say "DUH!", but just hear me out a sec. :)

Mark Tier, Author of The Winning Investment Habits of Warren Buffett & George Soros (titled Becoming Rich in hardcover in the United States), has provided a set of tools for you to identify your own trading personality on his website.

He has identifed three different investor archetypes I call The Analyst, The Trader and The Actuary. Each takes an entirely different approach to the market, depending on his investment personality.

The Analyst is personified by Warren Buffett. He carefully thinks through all the implications of an investment before putting a single dime on the table.

The Trader acts primarily from unconscious competence. This archetype, epitomized by George Soros, needs to have a “feel” for the market. He acts decisively, often on incomplete information, trusting his “gut feel,” supremely confident that he can always beat a hasty retreat.

The Actuary deals in numbers and probabilities. Like an insurance company he is focused on the overall outcome, totally unconcerned with any single event. The Actuarial investment strategy is, perhaps, best characterized by the legendary investor Benjamin Graham. It’s also the basis of most successful commodity trading systems.

Check out the tools, and I think you may find the results interesting or even enlightening.

---------------------

My Results

Your Analyst score is 30.00
The Analyst archetype is personified by Warren Buffett who carefully thinks through all the implications of an investment before putting a single dime on the table.

The Analyst may research an investment for months before making a final decision. He wants to understand as much as he can about any investment before he takes any action. But, the minute he DOES decide to act, he follows the 11th Winning Investment Habit and acts instantly.
Of course, not everyone who prefers the Analyst style invests like Warren Buffett. Far from it.

Every investment style that has, as one of its components, what is loosely called "fundamental analysis" requires the abilities of the Analyst. For example, the Trader who (like Soros) aims to profit from shifts in macroeconomic trends must devote a great deal of time to research so he can feel certain that the trades he enters will be profitable.

Similarly, the Trader who specializes in a few commodities or currencies; the arbitrageur; the investor who specializes in shorting stocks he considers overvalued...to be successful they must all have many of the qualities of the Analyst.

The only exception is the technical analyst or commodity trader who follows a pure Actuarial approach (see below). While this type of investor does not analyze any individual investment, he must, nevertheless, have some of the skills of the Analyst to research, develop, and hone his system.

If your Analyst score is less than 50% it’s important to improve your skills and abilities in this area.


Your Trader score is 86.67
The Trader archetype is epitomized by George Soros who can act primarily from unconscious competence – what most people would call “intuition.”

The Trader can also act decisively, and instantly on incomplete information, trusting to his "feel for the market."

One ability that sets the Trader apart is that he never hesitates. He is always prepared to take instant action, especially when the unexpected occurs.

He is also capable of comfortably handling situations that, for most people, would be sources of great stress.

If your Trader score is less than 40% you’d be advised to avoid trading or speculating entirely.

You can invest successfully, even if you do not have the predisposition of a Trader, by steering clear of investment methods that require quick decisions and fast action.

Needless to say, regardless of your investment style there can be times when the skills of the Trader would come in very handy. So it would still pay you to improve your abilities in this area, even if your personal investment system isn’t centered around trading.

One way is to improve the certainty with which you make investment decisions: then, when the time comes to act, your course of action will be clear and you’ll have little reason to hesitate.

Your Actuary score is 56.52
The Actuary archetype acts like an insurance company in reverse. An insurance company will write a large number of policies on a similar class of events. For example, the risk that your car will be involved in an accident.

The company has no idea whether your car will ever crash. And nor does it have any idea whether an individual vehicle will experience a minor dent, or be totally written off.

What the insurance company can calculate is the average probability of claims per thousand policies it has written. And provided it has priced its policies correctly, it can be sure of making a profit – regardless of what happens to any individual automobile.

In the same way, the Actuarial investor has identified a class of investments that he knows -- if he buys them at the right price -- will make an overall profit, regardless of whether he suffers a loss on any individual investment. Like the insurance company, the Actuarial investor’s primary focus is on probabilities.

The legendary investor, Benjamin Graham, would only buy a stock at 35% to 50% of its liquidation (or breakup) value. Since he only investigated the numbers, and did not look at the management or the company’s products in any detail, he had no way of knowing in advance whether any single stock he bought would be profitable.

But he did know that by purchasing a large number of such stocks at the right price, he would make money overall.

Like other Master Investors, Graham did not operate solely from this one perspective. Indeed, as the author of the classic investment books, Security Analysis and The Intelligent Investor, he is also known as a Master Analyst. Which indeed, he was. That’s how he identified the stocks he bought – but his investment system was actuarial in nature.

The extreme example of an Actuarial investor is the commodity trader following a computerized trading system whose buy and sell instructions are generated and placed automatically by the computer.

His focus is not on any of his individual investments. He spends his time attempting to improve the reliability and profitability of his system.

One of the essential components – for such an approach to be successful – is a set of strict money management rules that limit the amount of your overall capital put at risk in any individual position to a small percentage of the entire portfolio. As a result, his portfolio will usually consist of a large number of individual investments.

If your Actuary score is less than 25% you would be advised to improve your understanding of probabilities and how they can be used in the investment world.

The Master Investors like Warren Buffett, Carl Icahn and George Soros can each act from all of these styles. Nevertheless, they each have a clear predisposition for one particular style.

So, should you wish to be a great investor like them, you’d be advised to master all three styles even though you will primarily act from just one of them.

If your ambitions are not quite so lofty, it will pay you to be clear about the style you prefer. And to choose an investment area that’s compatible with it.

One of the secrets of the great investors’ success is that they develop investment methods that are compatible with their personality.

No substitute for good trading education

I just attended CK's Singapore Automated FX Trading Meetup Group today, and Kudos to him and his team for making it possible. Many thanks also to the two sponsors who made the venue free for all to attend.

Now, I'm not exactly an Expert Advisor (EA) fan, and I do my trades manually. One of the key take-aways that CK brought across at the session is that "there is no subsitute for a good education". People who are just looking for a software that will trade for them and make money without making the effort to learn about trading are almost definately doomed to failure. And what's worse is that many ultimately fall for scams online promoting profits without any trading experience.... kind of their personal money genie - just let it run and rake in the profits. To these people.... WAKE UP!

Here's an interesting video on youtube with CK shared.... and I thought I'd share it with you... just for amusement. :)

Soros: Recent gains a likely 'bear market rally'

Fed's rate cuts export U.S. recession to Europe, hedge fund legend says
By William L. Watts, MarketWatch
Last update: 2:04 p.m. EDT May 21, 2008

LONDON (MarketWatch) - Billionaire hedge-fund legend George Soros said Wednesday that recent market gains mark a "bear-market rally" that will wilt as the global credit crunch continues to run its course.

The rebound is likely "just a bear-market rally based on the false conception that the authorities can handle all these crises," Soros said in remarks at the London School of Economics.

Soros highlighted arguments made in his new book, "The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means." In the book, Soros describes the current financial crisis as the worst since the Great Depression.

The current crisis follows the building of a 25-year "super bubble," an explosion of credit creation that accompanied increased deregulation of financial markets, Soros said. Authorities have been quick over that period to bail out markets during periods of distress, but are now overwhelmed by the fallout from the credit crunch.

Soros said he wasn't predicting a return to the Great Depression of the 1930s, but argued that the likely path for the U.S. economy lies between two extremes: In the best-case scenario, growth begins to revive by the end of 2008. In the worst-case scenario, the U.S. experience echoes Japan's long-running bout of subpar growth in the wake of its burst real-estate bubble and damage to the Japanese banking system.

"I think reality is somewhere between those two extremes," Soros said.

Soros said the U.S. economy will likely be dogged by several factors, including the prospect that house prices will "overshoot" to the downside much as they had overshot to the upside during the build-up of the housing bubble.

As a result, U.S. consumers, who had grown increasingly reliant on home equity to fund consumption, will no longer be an engine of growth for the U.S. or world economy, he said. The banking system, meanwhile, is "severely impacted" but has shown a remarkable ability to raise capital, he said. Still, banks are likely to prove reluctant to lend.

Finally, the U.S. economy now faces the prospect of inflation and recession at the same time, "partly because the dollar has ceased to be accepted as the reserve currency it has been" in the past, Soros said.

Troubles for euro-zone

Turning to Europe, Soros said the United Kingdom's housing woes aren't as severe as those in the United States but noted that the troubled financial sector weighs "quite more heavily" on the overall British economy.

The 15-nation euro-zone, meanwhile, is likely to see "serious, serious tensions" emerge as past trends toward economic convergence now move toward divergence, Soros said. This is exacerbated by the European Central Bank's "asymmetric" mandate to hold down inflation without paying heed to growth, he said.

Data has pointed to signs of a significant slowdown in Italy, Spain and other southern economies in the euro zone, while France and Germany, the two biggest economies, have so far proven relatively resilient to a slowing global economy.

Meanwhile, the U.S. Federal Reserve's interest-rate cuts have served to pressure the U.S. dollar versus the euro, effectively exporting "recession from the United States to Europe," Soros said.
Soros warned that authorities shouldn't let the pendulum swing too far toward re-regulation, because regulators tend to be overly bureaucratic and slow to adjust to changing circumstances.
Authorities should aim to "improve the quality of regulation rather than the overall quantity of regulation," he said.


William L. Watts is a reporter for MarketWatch in London.

Price Action Trading Method

Here is another trading strategy posted on Tradology. While my definition of swing highs and lows is slightly different - For me, a swing high requires two preceeding and two succeeding lower highs - this article is still an interesting read.

Check it out here: Price Action Trading Method

Commitments of Traders (COT) - 19 May 08

The new COT figures are out. And I realised that all the information is provided in a single article by DailyFX, so I need no put up multiple links. Haha... Here it is.

COT Report - COT Favours Dollar Weakness

On my own trades, I'm short on AUDUSD, EURGBP, and USDCHF. Actually, shorting AUDUSD and USDCHF is almost equivalent to shorting AUDCHF, so I took a peek at the AUDCHF chart which does look abit bearish to me.

That's it for now! Good luck with your trades.

Trading Resource: Trading Psychology

I recently came across this website by Brett N. Steenbarger which has a whole treasure throve of resources for traders, including articles, resource links...etc. I've also placed the link on the sidebar under Trading Resources so we can always find it when we need it.

There's also a very interesting Three Dimensions (3D) Trader Personality Quiz by Brett, which will help shed some light on your own trading psychology.

Check it out and enjoy!

Commitments of Traders (COT) - 05 May 08

The COT for 05 May 08 is out, click on the following links for the currency that you are interested in: COT 05/05 - AUD (Bearish)
COT 05/05 - CAD (Neutral)
COT 05/05 - CHF (Neutral)
COT 05/05 - EUR (Bearish)
COT 05/05 - GBP (Bullish)
COT 05/05 - JPY (Bullish)
COT 05/05 - NZD (Bullish)

I'm still short on AUDUSD and EURUSD. The better than expected NFP and unemployment rates last Friday caused a extremely short-lived rally for the dollar, pushing AUDUSD and EURUSD down to my delight. However, USD pared its gains on Monday, even on bettter than expected ISM Non-Manufacturing Composite Index. The USD weakness is cost me some of my profits last week, unfortunately.

AUD will have a series of news coming out later today, namely: Trade Balance, Monetary Policy Statements and Cash Rate. This will probably impact the movement of AUD and I'm really hoping for AUDUSD to continue its bearishness especially since it is now testing its 0.9740 high.

Benanke will be speaking later as well, and any further hints of pausing the rate cuts could cause the Dollar to rise further.

Good luck for your trading!

Tips From a Pro: How To Trade Forex With Elliott Wave

A FREE Report and Video Lesson from EWI’s Chief Currency Strategist


Fact: Never since the Dollar Index – a measure of the dollar's strength against a basket of six other currencies – was created in 1973 has the greenback been as weak as it is today.

Regardless of how you feel about this fact, one thing is for sure: The dollar is the current center of the global financial community's attention, and it will likely stay in the spotlight for a while. And that could be good for the forex market.

Already the largest and most liquid market on the planet – with the daily volume ten times larger than the combined daily turnover on all of the world's stock exchanges – recent focus on the dollar is likely to attract even more currency speculators. And that means even more volume and liquidity – a nimble trader's paradise.

Winning in forex is not easy. You need skill, discipline – and sometimes, just pure luck. You also need a method. After all, how can you expect to win unless you follow a strategy? You may have heard that Elliott wave analysis is something many forex traders use. It's true; wave analysis is not a crystal ball, but it helps you accomplish three crucial goals: Identify the trend, stay with it, and know when the trend is likely over.

For you as a forex trader, meeting these three goals can mean a difference between a winning trade and a losing one. We at Elliott Wave International have many resources that can help you learn Elliott – but nothing helps you learn faster than watching a good teacher. And if you've been looking for such an opportunity, you’re in luck. Learn from a pro with these two free resources:

FREE Video Lesson: How To Trade Forex With Elliott Wave
In early November 2007, EWI's Senior Currency Strategist Jim Martens taught a live 3-hour course on trading with Elliott to an audience of independent investors in Denver, CO. What you are about to see is a condensed, 20-plus-minute version of Jim's course, the highlights of his best insights. Here's what you'll learn:
- At its core, Elliott wave analysis is simple. Watch Jim explain why.
- What Elliott waves are best for trading forex?
- How do I identify trade setups?
- At what point in a wave pattern do I enter a trade?
- How do I manage risk with Elliott?
- And more

Your FREE Report: Take Advantage of News Using Elliott Wave AnalysisThe Forex Journal, one of the premiere forex trading magazines, recently selected this report by Jim Martens as the main feature and cover page. If you've ever felt you could be better at trading forex around economic report releases, this is a must-read.

Join Club EWI to gain access to your Forex video and report, FREE! It takes just 30 seconds. Club EWI is the world's largest Elliott Wave Community with more than 125,000 members. It only takes a minute to sign up and it's absolutely free.


Who is Jim Martens?
Jim Martens was first introduced to the Wave Principle in 1985. Since then, he's built an impressive resume, having worked for such firms as Bank of New York and Nexus Capital Limited, a George Soros-affiliated hedge fund. Since 2005, Jim has been EWI's senior forex analyst – and one of the best teachers of the method we have.