Forex Mogul

AUD/USD Pin bar trade

2010-02-08T21:36:00.000-08:00

This is a pin bar as well as S/R trade.

Daily pin bar 02/05/2010

Multiple Daily support on 0.8575

Buy: 0.8620

SL: 0.8530 (below S/R)

Target: 50% Fib 0.8950

EUR/USD Pin bar trade

2010-01-14T20:59:00.000-08:00

EUR/USD have 3 pin bar for the last three days, upward momentum is exhausted.

Sell: 1.4495
Target: 1.43 (support zone)
Stop Lost: previous high 1.4560

AUD/USD Support trade

2009-12-17T00:53:00.000-08:00

Long AUD/USD a little bit below weekly/daily support level 0.8890. This trade fits fundemental and technical. AUD and USD rate difference will be widden and 0.8890 provide greate support.

Buy at 0.8890, SL 0.8795, first target is 50 Fib, 0.9148.

Long EUR/USD 1.4508 Support and Round Number

2009-12-15T22:43:00.000-08:00

I have been waiting to buy EUR/USD at a good price. Even though daily up trend line is broken, I still believe EUR/USD still in up trend. A trend won't change easily. USD was over bought, the pair lost 500 pips from 1.51 without much retracement.

Why 1.45 is a good entry point? First, it's a strong daily and weekly support. Sencond, it's a round number.

My SL is set at 1.4408, the first target is 50% Fib, at 1.48. Actually I see it back to 1.50. Below is the chart.

Update: Stop out, 100 pip lost.

New trade EUR/USD, S/R and shooting star

2009-12-06T14:06:00.000-08:00

Support and resistant are good entry points. This was the trade I open on 12/4. EUR/USD can't break though the resistant of previous high 1.515. A 'shooting star' after the price closed on the day. S/R and the shooting star give me strong odds for the short trade, the trade was open a little bit above the close price 1.5050. 100 pips SL, at 1.5155, which was also good risk management. The initial taget is 1.4805, the support. See below chart.

Update:

price stall on 1.4830 area for a few hours. As said before, the longer the price stay in the S/R, the more likely the price will break. I more the SL to 1.4950, and reset the target to the next support area 1.4685.

Update:

closed on 1.4685 with 265 pip profit.

Round number SR - entry point of the trade

2009-11-29T18:20:00.000-08:00

Round number is very valuable for currency trading. First, they are the target of funds and big traders. Second, they are good SR. Third, that's the point where there are a lot of price action, since it's option barrier and stop orders. Fourth, it's a psychological level. Example of round numbers are, 1.5000, 1.4500, 1.4700, the more 0 at the end, the stronger the level.

Price usually won't stay at those levels for long. They will be touched and leave soon, either break away for 20+ pips or pull back 20+ pips. One side will win the battle and take it further.

Below is one of the trades I took last weekend when USD/JPY break 85.00. I bought it at 84.95, the target is the 50% of Fib around 88.50. When USD/JPY broke 85.00, it only stayed at that level for less than a minute. This trade shows how valuable of round numbers as SR.

The trade was closed on Friday at the 50% Fib level 88.8 for 380 pips profit.

The foundation of my long term trade

2009-11-08T13:58:00.000-08:00

I use trend to enter and exit a long term trade. Only some pairs work well with this method, the trendy ones, such as EUR/USD, AUD/USD, GBP/USD, USD/CAD, EUR/GBP. Most of the cross do not have a strong trend, take a look at pairs such as EUR/CHF, CHF/JPY, you will understand what I am talking about. Don't misunstood, anyone can make a profit in any pairs, what I meant is, to utilize the trend, one have to find the pair with strongly trend.

How to define a trend? I only use two simple facts. One, the daily chart, any other time frame less than daily seem to be noisy, if the chart is left side at the bottom and right side at the top, it's up trend. if the chart is left side at the top and right side at the bottom, it's down trend. That's how simple it's. Second, FUTURE interest rate curve. If the future interest rate difference is going to be widden, the pair will be in up trend, otherwise down trend. Take a look at AUD/USD, AUD's rate will go up but USD will remain, so there rate difference will be widden, which make it a up trend.

About entry, one should only enter posistion at Support and Resistant, this will minimize your trade getting stop loss out. Even it gets stop out, there's high chance you can get back in the trade later when the trend is back. S/R are places where there are a lot of price actions, which it have been touched multiple times in the past. keep in mind S/R is a zone, not a exact price, it can be a 10-30 pips range. S/R should also be examed in Daily time frame, that's what the pros do and that's what the pros are targeting. S/R based on Hourly time frame are weak, only for naives.

About stop lost, this depends on the valativity of the pair and the market, usually between 70-120 pips. for example, AUD/USD can be 100 pips, GBP/USD is more valatile, a bigger stop loss is needed. If a good entry is used, and the trade gets stop out, most likely the trend is broken as well. That's why S/L should be defined with daily time frame, not hourly.

New Journal start

2009-11-08T13:32:00.000-08:00

I have been stop blogging and posting any of my trade for a while due to personal reasons.
Due to the high frequency of my short term trading, I believe it's less valuable to the readers. I decide to post the analysis of my longer time frame trades.

I am both a short term and long term trader. These combined strategy helps to minimized capital draw down and increase return. I will post my long term trading strategy in the next post.

January 2009 Trading Journal with 5/15M System

2009-01-12T15:14:00.000-08:00

Settled Trade:
We have backtested this yesterday and ready to put it to real in 2009. This system bascailly utilize 5 min/15 min chart, detail of the system will be published if it works out well in the coming 3 months, thoughts and analysis will be discussed from time to time

1/12/2009: 3 trades,8 Pips.
1/13/2009: 9 trades,14 pips.
1/14/2009: 15 trades,14 pips.
1/15/2009: 14 trades, -6 pips.
1/16/2009: 0 trade
1/19/2009: 0 trades
1/20/2009: 42 trades, 6 pips
1/21/2009: 15 trades, 18 pips
1/22/2009: 32 trades, 31 pips
1/23/2009: 39 trades, 18 pips
1/26/2009: 10 trades, 35 pips
1/27/2009: 1 trade, -12 pips
1/28/2009: 1 trade, 5 pips
1/29/2009: 35 trades, 44 pips
1/30/2009: 43 trades: 8 pips

January: 283 trades, 346 pips

All trading can be found in:

http://spreadsheets.google.com/pub?key=p529a7zpbiaHSyJcazklXXw

5 pips breakout trading journal - 1. USD/JPY

2008-05-08T14:44:00.000-07:00

5/7/2008, USD/JPY was trading in the range of 104.05-104.80, 104.05 provide a good support. Using the 5 pips breakout system.
The setup -
Pair: USD/JPY
Entry point: support and round figure 104.00 breakout point 103.95,
The trade: Sell USD/JPY at 103.95, Limit profit 103.90, Stop Loss 104.15.
Result: the moment USD/JPY broke 103.95, it went all the way to 103.85 in second.
Thoughts: as I pointout in the 5 pips breakout system, large stop of USD/JPY is put around 103.95 - 104.00. That's why price drop 20 pips in seconds.

5 pip breakout - Peanut and butter for hedge fund

2008-05-01T14:58:00.000-07:00

There are a lot of players in the Forex market, they use different strategies to make money. In this example, I will explain one of the popular trading ideas hedge fund use. The 5 pip breakout system.

The Idea - We all know there are supports, resistants and psychology levels in currency trading and those are the places traders usually put their STOPs, especially retail traders. If you pay attention to the price movement, there are high probabilities the price will breakout the supports/resistants or it doesn't touch the supports/resistants at all. Case 1, a clear breakout, price break the level with little or no retracement. Case 2, a fake breakout, it price the level about 10-20 pips then move back. It's the second case that most of retail trader get pushout before they see the price move back to their favorate direction because most of them put the STOPs 5-10 pips around the supports/resistants. We often see when price breakout, its momentum last at least 15-20 pips and the movement usually very quick, in a fews seconds. Why? It's very obvious, trader's STOP get trigger, which push the price move further.

The trading setup - Buy/Sell after the pair pass the N pips of the support/resistant/psychology level. Take 5 pips profit. Set the stop loss for 20 pips.
* N: depends on the pair, different pair have different breakout pips, usually EUR/USD is 3 pips.

The Statistic -
Reward: 5 Pips
Risk: 20 Pips
Ratio: 1/4
Probability of winning trade: 85%-90%
Summary: The ratio 1/4 looks odd. It needs 4 winning trade for every loss trade to break even. But through our research in a lot of pairs, the probability of winning in this settup is higher than 80%, which make it profitable in the long run.

Example -
1. EUR/USD: resistant/psychology level 1.50, Buy EUR/USD if it pass 1.5003, take profit at 1.5008, set STOP at 1.4983
2. AUD/USD: support/psychology level 0.94, Sell AUD/USD if it drops below 0.9396, take profit at 0.9391, set STOP at 0.9416.

Thoughts - Determine the resistant/support/psychology level and findout the magic breakout point N for different pairs are two important factors of this system. And pairs, major or cross tend to breakout together, making multiple trades will lower the risk.