gbp/usd 2nd update 1-19-09

The 4hr bar that just closed at 0800 gmt (3:00am est) closed as a bearish reversal bar.A short entry is signaled on a pullback to 4825 as per video update.Instead of entry at the daily single bar resistance level of 4825 (which is a valid entrybecause it is a resistance level.

The safer entry to shorten your stop would be the open priceof bar A 4870 with stop above the high of bar A which is 4907.

An even better stop would be the high of bar 1 because it is the high of the last upswing.
You can see that we are bouncing off daily single bar support. and at the time of this writinglooks to be bouncing back up to test the reversal bar and overhead resistance at bar A.

You should always anticipate a bounce off a support or resistance level. Especially it the levelhas not yet been tested.

If the entry is hit then here is what you do from here. At the end of each 4hr period check to see if yourtake profit or stop has been hit. If neither has been hit you determine if the last 4hr bar closed weak.

If it closed weak you want to get out early with whatever profit or loss you have at that time.Also the signal is only in effect for the current 4hr period. If an entry has not been hit the tradeis canceled.

Cheers, Jerry

GBP/USD 1-19-09

VIDEO UPDATE GBP/USD 1-19-09

CLICK HERE FOR FULL SCREEN

VIDEO UPDATE GBP/USD 1/19/09

CLICK HERE FOR FULL SCREEN

gbp/usd update 7-24-08

click to enlarge


Let’s resume our gbp/usd tracking for a moment.

Today we can see that the 4hr gmt bar closed right above at 61% daily Fibonacci. So, we can assume that price will attempt to move up and challenge 50% daily fib at 9899. Why there? Because, That is the location of overhead price resistance as well as 50% fib resistance.

Both of these levels are untested after the breakdown through them. Most moves cannot be trusted to continue fully until the broken support or resistance level has been tested.

The 4hr trend is currently down so we would only be looking for opportunities to go short.

When price reaches our resistance area we don’t want to enter just because price touches that level. When price gets to resistance we want to drop down to our 1 hr chart and wait for the close of that 1hr bar to see if we have a setup. It is only then that we look for an entry trigger.

As I write this we are currently at 23% fib resistance where we can normally expect a pause and this is the first level we must close above before we can make it to the price resistance level of 9899.

You must not enter on the touch of resistance especially in this case because the 2 bars ago we closed with a long range down bar and it was a public.

You can best believe that operators are going to at least attempt to fade this bar up to near the high of that public and the high of that bar is a 61% fib resistance of the last down swing.

So, when we look at our 1hr we currently see the market is trying to form a bull pivot reversal. We won’t know until the end of this current hour.

We want to see this bar close higher than the high of the last bar (9849)
With higher volume than the previous 1hr bar or strong professional/operator participation.

If that should happen we will have a bullish 1hr setup. We would then look for our trigger which will be a pullback to 61% Fibonacci (9841) where we would enter long. This would be a counter trend entry so the risk on this one would be enhanced more than if we are entering with the trend.

If we get our trigger we would look to take profits at 9900 (50% daily fib resistance).

Our stop would go 6 to 11 pips below 61% fib and the low of the day ( 9815)or on 1hr weakness after entry even if stop is not hit. These are composite support for the moment.

So, no setup means not entry. No trigger means no entry. These are safety guidelines to keep your risk small.

Cheers, Jerry
jerry@foretradingmajic.com
tradingmajic1@gmail.com

BUILDING SMALL ACCOUNTS WITH MONEY MANAGEMENT

MONEY MANAGEMENT FOR MINI ACCOUNT DAYTRADERS

This article is a reprint of an article I wrote a while ago while keeping statistics on trade call I was making at the time. I am posting it here as there are many new members to THE LAWS OF CHARTS AND MEN who can benefit from some suggestions made here.

I have touched with you a little on trade management. There is something that goes hand in hand with trade management and that is money management.

When you look at the trade results I posted you may think that you can’t do a lot with that trading a mini account. Well, let’s see.

We will use our last 5 live trade calls and add contracts to each winning trade and subtract an equal number of contracts from losing trades.

In the end, you will see how a realistic profit of 1700 pips can be gained over a one month period, while risking only $16 dollars of your initial account balance, with an average winning trade of 23 pips.

This is the true power of LCM. The power to keep your risk/stops small while still providing a very high win rate.

1ct X +25 pips + 25 pips

2ct X+22 pips + 44 pips

3ct X+ 43 pips + 129 pips

4ct X+23 pips + 92 pips

5ct x+7 pips + 35 pips

TOTAL 325 PIPS


STOP INITIAL CAPITAL RISKED

1. 16 PIPS 16 PIPS
2. 20 PIPS 0 YOUR NEXT STOP IS WITH HOUSE MONEY
3. 23 PIPS 0 YOUR NEXT STOP IS WITH HOUSE MONEY
4. 36 PIPS 0 YOUR NEXT STOP IS WITH HOUSE MONEY
5. 38 PIPS 0 YOUR NEXT STOP IS WITH HOUSE MONEY

NOW YOU HAVE EARNED 325 PIPS WHILE RISKING ONLY 16 PIPS OF YOUR INITIAL INVESTMENT…OR DOUBLED A $300 MINI ACCOUNT.

THEN, ON YOUR NEXT CYCLE OF TRADES YOU CAN START WITH 2 CTS INSTEAD OF 1 AND ADD 2 ADDITIONAL CONTRACTS AFTER EACH WINNING TRADE AND IT WOULD LOOK LIKE THIS;

2ct X +25 pips + 50 pips

4ct X+22 pips + 88 pips

6ct X+ 43 pips + 258 pips

8ct X+23 pips + 184

10ct x+7 pips + 350 pips

TOTAL 930 PIPS + 325 PIPS ON FIRST CYCLE = 1255 PIPS

THIS IS NOT AS FAR FECTHED AS IT SOUNDS BECAUSE LCM CAN ACCOMPLISH 10 WINS IN A ROW OVER A 2 WEEK PERIOD INTRADAY.
SO NOW WE GO INTO A 3RD WEEK OR CYCLE OF 5 TRADES


NEXT CYCLE START WITH 3 AND ADD 3 TO EACH WINNING TRADE

3ct X +25 pips + 75 pips

6ct X+22 pips + 132 pips

9ct X+ 43 pips + 387 pips

12ct X+23 pips + 276

15ct x+7 pips + 105 pips

TOTAL 930 PIPS
+ 1255 PIPS ON FIRST 2 CYCLES = 2185 PIPS


Now To the 4th or End Of the Month Cycle
Start With 3 and Add 3 to Each Winning Trade

4ct X +25 pips + 100 pips

You get the Idea.

Cheers,Jerry

jerry@forextradingmajic.com

tradingmajic1@gmail.com

video update gbp/usd

click chart to watch video


Here is a video update to give you some more trading ideas.


JERRY
JERRY@FOREXTRADINGMAJIC.COM
TRADINGMAJIC1@GMAIL.COM

THINKING LIKE THE HERD

DO YOU HAVE YOUR BEARINGS?
ARE YOU A COUNTER INTUITIVE THINKER?



I know I was annoying yesterday with all those emails to you but how else can I show you in real time what works and what does not. But today won’t be a annoying; you need time to digest “TRUTH”, so today I will just try to cook up a little food for thought cause trading is not just about numbers and lines, it is a way of thinking. And the truth is this…everything you already know does work BUT, only when integrated into the whole.

Any technique you are using as your primary technique you need to know how it fits into the scheme of motion.

Why isn’t a biologist a doctor? A biologist knows all about the actions of cells but cannot heal you. A doctor knows less about cell biology but the doctor knows how to integrate cell biology into the whole of the body. Are you studying to be a cell biologist or are you studying to be a doctor?

If you are simply searching for a trading system you are studying to be a cellular biologist and when things don’t go as expected you won’t be able to heal your account. If you are studying to learn how to trade then, you are studying to be a trade doctor.

LOST BEARINGS

This has happened to me a few times in my life. I know it’s never happened to you because you are way too smart. But listen.

I’m at a party in an area I don’t know very well. A friend asked me to drop him off at his girlfriend’s house after a party. We hop in the car and I ask him where his girlfriend lives.

Friend, “Just go to the light and turn left.
Me, “What’s her address?
Friend, “Just make a right at the next corner
Me, “What’s her address?
Friend, “We’re almost there just make another left at the next light

After going through these directions all the way to his girlfriend’s house he got out we said our byes and I left. But only one problem…!

I got a few blocks from his girlfriend’s house and realized. I DON’T KNOW WHERE I AM. I’m lost. You see, I was focused on turning right and turning left per my friend’s instructions, that even though I drove to the destination I didn’t really know how I got there.

I HAD NO BEARING ON MY LOCATION…

If I had some bearing I could find my way home. I first needed to know if I was north, south, east or west of my home. Once I found out from a gas station attendant that I was east of my home it was a simple matter to just travel eastward until I could recognize where I was.

That’s what I try to do for you in your trading. Not just give you some trading techniques (turn left, turn right); I give you your bearings.

I am like you. No matter how much I think I know about trading I am always scouring for more information to add to what I know. I have spent thousands over the years on books, seminars, etc…

Even the very worst of these I found some value in. See, here is where most think differently than I do. I find the most value in information that will keep me out of bad trades. I look for information that will save me lost pips rather than information that will earn me pips.

If I know all the times that I should not trade, all that’s left is when I should. If it is a situation that does not say, “Stay out”, all that’s left is to get in. There is a sign on the door that says, “Do not enter”. If there is no sign that say’s do not enter, then it is okay to enter.

Don’t lose money and making money will take care of itself. You should not be trading to win. You should be trading not to lose. FLAT OUT…DEFENSE WINS CHAMPIONSHIPS…

Just like war, sports, or any competitive endeavor, in trading, defense wins.

I bought a particular book on trading some years ago that I thought was the worst trading book I ever saw. Later that week I was about to make a trade and something I read in that book caused me to pause and reconsider the trade. While I was reviewing the information the market shot up 250 pips against the position I was just about to enter.

One tiny piece of information contained in that book paid for that book four times over. That terrible book. So, this is where we may differ, on how we evaluate value. Most people do not because this type of thinking is counter intuitive, but that’s exactly the type of thinking you have to have in trading…COUNTER INTUITIVE.

Really the term counter intuitive just means, THINKING OPPOSITE OF THE HERD…

You will find it hard to only think counter intuitive only when it’s time to make a trade.
This type of thinking is a state of mind not a trading event.

Counter intuitiveness must be in play when you consider where you get your information, and how you get your information/education.

I’m not saying that you have to obtain the information I provide but I am saying that you should never stop buying books, courses, and as well as any free info you can find. Forever…as long as you consider yourself a trader.

So, if you want to save yourself a lot of time, and time is money, you need to start looking at your trading education like a college education. Tell me…each semester, how much do you pay for books? I have to spend several hundred for each of my daughters each semester just for books.

So, we are perfectly willing to spend 15-30,000 per year to go to college for 4 years and then hope that the economy is kind enough to give us a job that pays just enough to keep us in debt. HMMMM…

However, most traders think they can readily get the information they need to make a killing from trading all for free. I’m here to tell you that you can do it that way if you have 3-5 years for your learning curve.

So, even if you think you cannot afford to purchase information I’m telling you that you cannot afford not to purchase information. Is that counter intuitive or what.

I’m not hyping you to obtain LCM I’m saying you should be obtaining something and never stop obtaining. Build yourself a trading library.

In fact. You should stay away from me. I want you to go and check out everybody else first. Then come back and see me. In that way you will appreciate that the free information I provide is more than you get when you obtain all these holy grail systems.

LCM IS NOT A SYSTEM. It is a method. And before you can understand what that really means you need to go out and try all those systems.

Just some food for thought in response to a couple of emails I received…

Cheers, Jerry
jerry@forextradingmajic.com
tradingmajic1@gmail.com

2nd post gbp/usd update

click to enlarge




If the close of the 1hr bar at 12:00 pm est does not close above today’s high of 9974 on higher volume than the previous 1hr bar it will be time for an early exit and reassess the market.

If we do close above 9974 on strong volume we can stay in the trade and move our stop to break even at 9952.

If you are not long here an opportunity for you to do so will come on a close above 9974 with volume parameters being met.

You can then place your stop below 9952. Profit targets have already been mentioned in the prior post.

Cheers, Jerry