GBPJPY Trading and a Brief Discussion on Losing Trading Days

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GBP/JPY Trading and a Brief Discussion on Losing Trading Days

LMAO. We did have a guy here in Australia fined for .

And then if a song could act as a 100 year moving average: video

Never gets old even if it was posted yesterday. video Yesterday All my troubles seemed So far away Now it looks as though They’re here to stay . Now I need place .

Here’s a blast from the past. probably only Aussies and Kiwi’s will relate to this. but. video

I agree with you except I don’t think successful trading is about risk management. Risk management just avoids you going broke. But unless the market trends, you can’t make money .

The Difference Between A Trading Strategy And A Trading Plan [Video]

The Difference Between A Trading Strategy And A Trading Plan

A solid trading plan is the cornerstone of your trading business.

Many traders think that all they need is a trading strategy.

This is NOT the case!

Let me explain the difference between a trading strategy and a trading plan.

First, let’s talk about…

What Is A Trading Strategy?

A trading strategy is surprisingly simple. Because it only has 2 main elements.

A trading strategy tells you…

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When to enter and

When to exit

The entry rules can be based on fundamental analysis or technical analysis such as indicators or chart patterns.

As an example, an entry rule for a trading strategy could be:

BUY when the 3-day moving average crosses the 7-day moving average from below

And there are 2 types of exit rules:

Exit rules for taking profits and

Exit rules to limit your risk, a.k.a stop losses

Here’s an example for a profit-taking exit rule:

==> SELL after the stock moved 10% in the desired direction

And here’s an example for a stop-loss exit rule:

==> SELL if the stock moves 5% against you

As you can see, a trading strategy is fairly simple.

On the other hand, a trading plan is more complex – but absolutely necessary!

What Is A Trading Plan?

A trading plan covers at least seven elements:

The market(s) you want to trade.

The timeframes you want to trade, e.g. 5 min, 10 min, tick or range bars.

A brief description of the strategies you want to trade and when to use what strategy.

The entry rules of the strategies.

The exit rules of the strategies.

Other important rules, e.g. when to trade and when not to trade.

The money management approach you are using.

Let’s talk about each element in more detail:

1. Markets

Do you want to trade stocks, options, futures or forex?

I personally like to swing trade stocks and options and day trade futures markets.

It’s important to define the markets you want to trade in your trading plan so that you don’t get distracted. One of the biggest mistakes that traders make is “chasing shiny objects.” Some traders trade stocks this week and binary options the next week – for no apparent reason.

Often traders switch markets after a few losing trades or reading another exciting email promising them “trading success if they trade THIS market.”

Don’t fall for that!

Learn about the different instruments that you can trade and then decide which one(s) you want to trade.

And that’s the FIRST element in your trading plan.

2. Timeframe

You can trade on many different time frames: daily, weekly, monthly, … or even intraday, e.g. 60 min, 30 min, 15 min, 5 min.

Choose the timeframe based on your availability to trade the markets:

If you can watch the markets every day, even if it is in the evening, then you should choose a DAILY timeframe.

If you only have time to focus on the markets on the weekend, you should use a WEEKLY timeframe.

And only if you can watch the markets throughout the day, then you should use an INTRADAY timeframe, e.g. 5 min.

Some traders think that day trading is more dangerous that swing trading.

And that’s not true!

As a rule of thumb: The bigger the timeframe, the more money you have to risk.

Let me give you an example:

The image below is a WEEKLY chart of Apple (AAPL). As you can see, the Average Weekly Move is $10.30.

Weekly Chart of AAPL

If you are trading a WEEKLY timeframe, then your stop loss should be at least $10, preferably even $15.

Here’s an image of a DAILY chart of Apple (APPL). As you can see, the Average Daily Move is $4.

Dail Chart of AAPL

If you are trading a DAILY timeframe, then your stop loss should be at least $4, preferably even $6.

Here’s an image of a 5-min chart of Apple (APPL). As you can see, the Average 5-min Move is $0.30.

5-min Chart of AAPL

If you are trading a 5-min timeframe, then your stop loss can be as low as $0.40 – $0.60!

As you can see, the lower the timeframe, the less money you need to risk!

Choosing the right timeframe that is best for you is the 2nd element of a trading plan.

3. Brief Description of the Trading Strategies

Each trading strategy has an underlying idea. As an example…

A Trend Following Trading Strategy takes advantage of trends in the markets,

A Trend-Fading Strategy looks at overbought and oversold situations,

An Earnings Strategy is designed to take advantage of explosive moves after Earnings are being announced,

A Scalping Strategy takes advantage of small moves in the markets, often only a few ticks.

You MUST know the underlying rationale and assumption behind your trading strategy so that you know about the best time to trade the strategy.

As an example, if you are day trading and want to use a trend-following strategy, then it’s best to trade this strategy shortly after the open and then again before the close. That’s when most markets have the best trends.

Often markets are just going sideways during the lunch hour and also in overnight trading. So if you plan to trade during these times, you might want to focus on a scalping strategy.

Including a brief description of the trading strategy or strategies is the 3rd element of a solid trading plan.

4. Entry Rules

The next element in your trading plan are the entry rules of the trading strategy. As discussed above, THIS is the easy part because every trading strategy comes with specific entry rules.

Just copy and paste the entry rules from your trading strategy into this section of your trading plan.

If you choose to trade multiple trading strategies, make sure to post the entry rules from each trading strategy, sorted by trading strategy.

5. Exit Rules

Same as entry rules: simply copy the exit rules from your trading strategy into your trading plan.

Make sure that you have rules for exiting with a profit and rules for exiting with a loss.

The biggest mistake of traders is that they don’t have specific rules and exit “when I made enough money.” Trust me, there is never “enough money” in a trade. You want to make sure that you don’t let a winning trade turn into a losing trade by holding onto it for too long.

Have specific rules for exiting your trade as part of your trading plan.

6. Other Important Rules

The more you specify in advance, the less you have to make decisions in the heat of the moment.

In your trading plan, you should clearly define…

How to trade around holidays, e.g. “Black Friday” or the days between Christmas and New Year.

How to trade around major economic reports. This is important when day trading because often markets go crazy when a major economic report is being released. As a rule of thumb, I don’t trade 5 minutes before and after a major report.

Do you have daily or weekly targets? Some traders stop trading after they achieved a daily or weekly profit goal. I think that’s a great idea! Do YOU want to incorporate it into your trading plan? Or do you prefer to trade without any targets?

What to do when you feel sick: I personally don’t trade when I don’t feel 100%. After all, in order to succeed with trading, 2 conditions have to be met: The markets have to be ready and YOU have to be ready. It’s a good idea NOT to trade if you don’t feel 100%.

You get the idea!

THIS section of your trading plan is very important, and you will add to it as you get more experience. Over time, you will have a super solid trading plan that keeps you out of trouble and helps you to grow your account!

7. Money Management

Money Management tells you how much to risk on any given trade based on the amount of money you have in your trading account.

The easiest Money Management approach is the “Fixed Rational Money Management.” When using this approach, you risk a fixed amount of your trading account on any given trade. One of the most popular approaches is “The 2% Rule” which says: “Never risk more than 2% of your account on any given trade.”

The problem with this approach is that your account will grow rather slowly.

I personally recommend the “Fixed Ratio Money Management” approach to my private students. With this approach, you increase your risk based on the number of profits that you make. This approach is the fastest way to grow your account, and I will write another article about it shortly. It would take too long to explain it right now.

Summary

As you can see, a trading plan is much more comprehensive than a trading strategy.

The main purpose of a trading plan is to define what trading strategies you trade and when.

It’s not that difficult. And now you know the 7 important elements of a rock-solid trading plan.

Take the time to write your trading plan, and then test on a trading simulator to make sure you’re getting the results you expect.

Trading Futures, options on futures and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. The lower the day trade margin, the higher the leverage and riskier the trade. Leverage can work for you as well as against you; it magnifies gains as well as losses. Past performance is not necessarily indicative of future results.

EUR/USD slips below 1.08 amid weak data, coronavirus headlines

EUR/USD is trading below 1.08 as eurozone Sentix Investor Confidence plunges to -42.9, around the 2008 crisis levels. Encouraging coronavirus headlines kept the euro bid earlier.

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Equities are on the rise, US government debt yields are also up. There are modest signs in Italy and Spain that the pandemic curves are flattening. USD/JPY could extend its advance towards the 110.00 price zone once above the daily high.

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GBP/USD recovers amid reports that Johnson is doing well

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XRP leads cryptos on the verge of a new bullish trend

XRP/USD crosses the long-term bearish channel ceiling and signals the launch of a new uptrend in the crypto market. Ether should be the positive player in the coming weeks. Market sentiment remains very pessimistic despite the significant improvement in recent hours.

Gold: Bulls remain in control near 2-week tops, around $1640 region

Gold gained positive traction for the fourth consecutive session on Monday and climbed to near two-week tops, around the $1638 region during the mid-European session.

Making money in forex is easy if you know how the bankers trade!

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7 Ways to Avoid Forex Scams

The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?

What Are the 10 Fatal Mistakes Traders Make

Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.

Strategy

Money Management

Psychology

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Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.

Wednesday Brief: JPY and CHF Down on ‘Risk On,’ GBP Up on Good Employment Data; UK CPI, FOMC Minutes [Video]

Market Recap

Generally a “risk on” day after China announced it was considering more stimulus measures to support the economy, such as exempting small- and medium-sized enterprises from paying pension contributions until June. Asian markets are up almost across the board. Hence AUD higher, JPY and CHF lower.

In that case, the fall in NZD needs to be explained, and frankly, I can’t. AUD was under pressure after S&P Global Ratings said Australia is one of the economies facing a “material knock to growth” from the virus and its impact will force the Reserve Bank of Australia (RBA) to cut rates twice this year. At the moment the market is pricing in a little over one cut this year. In New Zealand by contrast is pricing in only ¾ of a cut. So why did AUD/NZD move up on this news? NZD fell througout the day yesterday. A sharp fall in the price of milk at the latest auction may have helped, but it was moving lower even before then. In any case, the milk price hasn’t been a dominant factor for NZD for some time now – probably it’s more monetary policy. Which may be why NZD stopped falling after the Reserve Bank of New Zealand (RBNZ) published some comments from Gov. Orr saying that policy is “in a good position.” I don’t understand why the currency weakened so much vs both USD and AUD – I’d expect to see some profit-taking today, particularly in AUD/NZD.

It’s nice to see economics beating politics as a market-mover for once. GBP fell on Monday due to Brexit worries, but it bounced back Tuesday after the UK employment figures beat expectations: 180k new jobs vs 148k expected (208k previously), and all of these were full-time jobs. The unemployment rate stayed at 3.8% as expected. Average earnings were a bit disappointing: up 2.9% yoy vs +3.0% expected, (3.2% yoy previously), but the Monetary Policy Committee (MPC) noted in January that it expects compositional and base effects to depress wage growth for now (more people who’ve been unemployed for a long time have been getting jobs recently, and that tends to put less upward pressure on wages than if companies are hiring newly unemployed people). The MPC estimates the “long-term equilibrium unemployment rate” is around 4 ¼%, meaning that unemployment is still below its equilibrium level = upward pressure on wages should continue.

Today we’ll get the UK inflation data, which I expect to be neutral for GBP (see below).

EUR/USD fell through 1.08 as EU indicators contine to disappoint and US indicators continue to beat expectations. The ZEW survey yesterday was much worse than expected. In particular, the expectations index fell 18 points, the first major decline since August. That shows diminishing optimism about the German – and hence the Eurozone – economy.

On the other hand, yesterday’s Empire State manufacturing survey beat expectations soundly – the market was going for a small increase to 5.0 from 4.8, but instead it jumped to 12.9, the highest since last May.

The result was that the US economic indicator surprise index resumed its upward climb, while the Eurozone index resumed its decline – further divergence.

I’ve been talking for some time about the risk of a further downturn in EUR/USD from a fundamental point of view, based largely on the widening difference in expected growth between the two regions. There’s also a technical argument to be made for a lower euro: the single currency is approaching a major long-term support level. If it breaks through this support, heaven only knows where the next support might be.

Apparently, a number of market participants think this is a good possibility, because the longer-term risk reversals have recently flipped into negative territory, i.e. 3- and 6-month puts now cost more than calls. This indicates more long-term bearishness about the pair. Note how swiftly the rate has shifted from positive to negative. I remain negative on EUR and especially EUR/USD.

Virus update

The officials figures as usual show that the spread of the virus is slowing. Good news! But South Korea reported 15 more cases.

Today’s market

The day starts with UK inflation data. Headline inflation is forecast to accelerate modestly due to higher energy and transport prices, but remain below the Bank of England’s 2% target. Core CPI is expected to accelerate only a notch, as are producer prices. On a month-on-month basis, prices are expected to fall. Net net, the data suggest that inflation is remaining pretty stable at a bit below the Bank of England’s 2% target but well within the Monetary Policy Committee (MPC)’s 1%-3% “range of tolerance.” This is consistent with the Bank of England’s comment after its January MPC meeting that “there has been a somewhat greater margin of spare capacity in the economy over recent years, which has been exerting downward pressure on domestically generated inflation.” I don’t think inflation is a major concern for the MPC right now – I think the purchasing managers’ indices and other indicators “of an improved outlook” will be more important in determining the Bank’s view at its next meeting (26 March).

US housing starts and building permits are forecast to show that the vibrant housing market is still going strong, although yesterday’s small decline in the NAHB housing market index suggests that it’s a bit less strong than it was. Unseasonably warm weather is expected to boost starts once again. That makes permits a more reliable indicator of the strength of the housing market, and there too the signs are expected to be good – permits are expected to rise back almost to November’s post-crash peak. It’s clear that low interest rates and easier lending conditions are feeding through to the housing market. USD positive

US producer prices (PPI) are forecast to move higher, both at the headline level and core, although they’re both expected to remain below the Fed’s 2% inflation target. Higher inflation at the producer level should be modestly bullish USD.

The Canadian consumer prices index (CPI) is forecast to be boring, boring, boring. The headline number is expected to tick up one notch, but the Bank of Canada doesn’t watch that one – it watches its three core measures, all of which are expected to continue to rise at the exact same pace as in the previous month, and all within a whisker of the 2% inflation target. How perfect can you get, eh? Like other central banks, the BoC isn’t worried about inflation at this point, it’s worried about growth (which will affect inflation in the future).

The minutes of the 29 January meeting of the Federal Open Market Committee (FOMC), the Fed’s rate-setting body, aren’t likely to tell us much that we don’t already know after two days of grilling Fed Chair Powell in the House and Senate. There could be further information about two points, though. First is the Fed’s policy review. While the Committee was unanimous in declaring the current stance of policy “appropriate,” Powell noted in his post-meeting press conference that under a different policy framework, such as average inflation targeting, the conclusion could be different. We will be looking for any more detail about these alternative ways of managing monetary policy and which way the Committee is leaning. Secondly, there could be some information about the Fed staff’s insight into the economic impact of the coronavirus.

If the minutes don’t give us much insight into the policy review, don’t worry, Richmond Fed President Barkin (NV) will take part in a panel discussion on that very topic this evening, plus Cleveland Fed President Mester (V), Gov. Brainard (V) and Vice Chair Clarida (V) will all be speaking at a monetary policy forum in New York on Friday, when they will no doubt be discussing this issue.

Overnight we get the Australian employment data. This is the key indicator for Australia nowadays, as the Reserve Bank of Australia (RBA) has singled out the labor market as the only indicator that it is “monitoring carefully.” (“The Board will continue to monitor developments carefully, including in the labour market.”) The economy is expected to have gained only 10k jobs, which is about half the recent trend rate, and the unemployment rate is expected to have ticked up one tic but remain within the recent range. While not really great, these figures are within the normal range. I think they’ll be seen as neutral for RBA policy and therefore neutral for AUD.

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