EURO USD TRADING GAIN AHEAD OF STRONG REVERSAL - forex lines 7 trading system review

EURO USD TRADING GAIN AHEAD OF STRONG REVERSAL ~ forex lines 7 trading system review

The EURO USD provided us with a small trading gain of 46 Pips on Thursday as we took advantage of the sharp Bullish Reversal that was predicted in December 2015. The original trading target was 165 Pips but by the end of the Holding Period established for this trade this had not been hit, obligating us to close our trade for the smaller profit. During this trade, a sharp bearish pullback had threatened our Stop Loss, coming within 5 Pips of taking out our trade. 

This pullback would have tempted many to exit the trade for fear of being stopped out. However, thanks to the rule that we have of never looking at our trades while they are open, we were able to capture this trading gain as the market u-turned and rallied once more. As a result, this trade, combined with the 138 Pips from the GBP USD, has now given us a good start to 2016 with a Rate of Return of 9.4%.

The screenshot below is taken from the Private Video Analysis we did for the EURO USD in December which predicted the sharp rally. 

As can be seen from the current patterns for this pair, this was exactly what occurred in the last few days. This provided us with the trading gain as we entered at one of the Bullish Candlestick Signals.

The chart below shows our Entry Setup on the 4 Hour Chart, including the original target that was set at the Resistance Boundary of the Range.

Entry and our Stop Loss placement were done using this ABC setup - a setup that was predicted a few days earlier...

Now this is where it got interesting. For traders who choose to follow their trades, the pullback that took place after entry would have led many to close the trade as the market began reversing towards the Stop Loss.

This would have led to an unnecessary loss instead of the trading gains offered by the rally that eventually took place. The temptation to monitor our trades while they are in motion is very common. It is very natural to want to ensure that our trades are heading towards our targets without any pullbacks that threaten our Stops. While this can prevent some losses, it is a habit that can affect our long-term profitability. 

The Forex, like all markets, has a natural tendency to move in waves towards its daily, weekly, monthly and yearly targets. This reflects the changing value of currency pairs in response to changes in economic fundamentals and investor sentiment. It is therefore necessary for us to expect this for all our trades and not interfere. This is why it is crucial to adjust your platform so that you do not see the chart of the trade open nor the balance but only the tab that shows you whether the trade is still open.

Another important issue related to this trade was the Holding Period. Keeping our trades open for too short a period can curtail our profitability while having them open for too long can expose us open to unnecessary volatility. It is for this reason why a specific time period is used for each type of trade to establish a balance between these two extremes. 

When the Holding Period for this trade had ended, we had to close the trade regardless of the floating profit/loss at the time. This decision was later proven to be accurate as you can see from the pullback now taking place.

This trade highlighted many of the important things we need to succeed at trading over the long-term. These relate to the technical factors that determine our decision to execute a trade but more importantly the emotional aspects of trading - the traders Achilles Heel. 

Watching our trades can feel like the right thing to do to ensure profitability given the volatility of this market. However, this can be a serious hindrance to success if this leads to the habit of constantly closing trades before they have a chance to hit our targets. By adhering to the rule of not watching your trades and obeying the Holding Period, you will be assured of maximum gains for each trade ahead of sharp market reversals.

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CAD CHF TREND LINE BREAK AS EXPECTED BUT WHAT NEXT - forex trading system resources

CAD CHF TREND LINE BREAK AS EXPECTED BUT WHAT NEXT ~ forex trading system resources

Having broken the Outer Uptrend Line as expected, the CAD CHF is now at a bit of a crossroads. The Double Tops that were formed were strong enough to lead to the bearish break, but may not be enough to push the pair down much farther. We could see the formation of a Range that eventually leads to the start of a downtrend, but if we see a strong Bull Candle above the Counter Trend Line (CTL) the Uptrend could continue.

Daily Chart below shows the breakout that took place below the Inner and Outer Trend Lines. Supporting this breakout were the Double Tops and the fact that we had rallied by  600 Pips, exceeding the Monthly Range for this pair.

DAILY CHART

Despite this break, the Double Tops seen here were too weak to start a significant downtrend. The first part of this pattern was strong, but the weakness of the candles for the 2nd `Top` rendered the signal too weak.

DAILY CHART

The candles shown here, however, are closer to what we would expect for Double Tops.

DAILY CHART

So what can we expect at this juncture? Well one of two options. 

SCENARIO 1 - CONSOLIDATION ?

Since this breakout may not take place right away, the market could go into a period of Consolidation in the form of a Range. This is typically what you will see when the Monthly Range is hit and/or a Trend Change is going to take place.

DAILY CHART- RANGE SETUP?

We would see a rally to form the 2nd Support to complete the Range followed by a U-turn to breakout bearish. The new trend would be formed as the Swiss Franc regains lost ground against the Loonie.

SCENARIO 2 - RESUMPTION OF UPTREND ?

The Uptrend could actually resume with a simple Bullish Candle and break of the Counter Trend Line (CTL). Even though we are at the Monthly Range of the currency pair, trends can also continue once the setup and signals are strong enough.

DAILY CHART

Until the market shows us its cards, lets wait on the sidelines and then take appropriate action. Get familiar with how to trade these setups and then enjoy the Pips as they continue to roll in using my Methodology.

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Duane Shepherd 

(M.Sc. Economics, B.Sc. Management and Economics)

Currency Analyst/Trader

Contact: shepherdduane@gmail.com

Twitter: @WorldWide876

Facebook: DRFXTRADING 

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USD CHF 100s OF PIPS BULLISH OR BEARISH - forex trading system reviews

USD CHF 100s OF PIPS BULLISH OR BEARISH ~ forex trading system reviews

Hundreds of Pips in either direction appear to be possible for the next few weeks if we see strong Bullish or Bearish breakout signals. The Weekly Range has recently been hit after a very long and slow trend and has now settled above a major Downtrend Line. A convincing Bullish Candle break above Resistance would put the 0,9400 area in play, while a break short to also take out the Uptrend Line would make 0,8700 the long-term bearish target.

The currency pair has started to move within a small Range above the Inner Uptrend Line, following a rally to the 0,9100 area.

DAILY CHART

The gains for the Swiss Franc also put the pair above a major Outer Trend Line of a previous Downtrend.


DAILY CHART

As you can see, the recent uptrend was part of a break from the Inner Trend Line to the Outer Trend Line of that Downtrend. From this point, the market could either break higher for an even stronger Uptrend or break lower to resume the overall Downtrend. In continuing higher, the Daily Chart would first have to break the Resistance of its current Range setup.

DAILY CHART

The first major target would be the next Weekly Range which would be at the 0,9435 area. Short-term targets will be hit along the way as traders exit profitable positions in this new uptrend. Equally profitable targets could also be hit going short if there is a breakout bearish from this Range along with a break of the Outer Uptrend Line.

DAILY CHART

Before breaking bearish, the currency pair could actually spend a little longer in this Range to carry it closer to the Outer Trend Line. At times, trend changes that involve Consolidation breakouts tend to take place simultaneously with Trend Line breaks to make the start of the new trend even more convincing (TRADE TIP).

See how the concept of the Weekly Range and Consolidation breakouts worked on past trades in the Free Preview of the Trading Manual;

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Duane Shepherd 

(M.Sc. Economics, B.Sc. Management and Economics)

Currency Analyst/Trader

Contact: shepherdduane@gmail.com

Twitter: @WorldWide876

Facebook: DRFXTRADING 

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NZD CAD SHARP 800 PIP FALSE BREAKOUT AS FORECAST - mtf forex trading system

NZD CAD SHARP 800 PIP FALSE BREAKOUT AS FORECAST ~ mtf forex trading system

The last time we examined this pair in April this year, we had projected a sharp decline in favour of the Canadian Dollar based on the False Breakout pattern that had been unfolding. In the chart below, we can see that the Bullish Candles that attempted to break out long from the Pennant were eventually taken out by the slow Bearish Candles that took us back inside of the Consolidation.

DAILY CHART - FALSE BREAKOUT 

Based on this movement and the fact that False Breakouts usually lead to breaks at the opposing end of the Pennant, we had projected the pair to break towards the major Outer Uptrend Line.

DAILY CHART - PROJECTED DECLINE 

Looking at the current situation on the Daily Chart, we can see that this forecast had in fact materialized over the last few weeks. Starting from the high of the start of the reversal, the pair has declined sharply by approximately 800 Pips.

DAILY CHART - SHARP DECLINE 

Now, how could you have taken advantage of this profitable move?

Having seen the start of the breakout below the Support of the Pennant, the first thing to do would have been to draw the Downtrend Lines that were being formed.

DAILY CHART - DOWNTREND LINES 

These Downtrend Lines can be used for the placement of Stop Losses with the assurance that your profits will be protected throughout the trade. The next step would have been to enter short at around the 0,9100 area, with a Stop Loss of 100 Pips placed above the Inner Downtrend Line. Your Limit Order would initially be set to the Outer Uptrend Line for a profit of 370 Pips.

  

DAILY CHART - ENTRY SETUP

As the market began to move in you favour, you would have moved your Stop Loss lower, breaking even initially and then locking in profits below your Entry. This would have continued until the market started to reverse bullish just above the Outer Uptrend Line target. Your Stop Loss would “sadly” have been taken out and you would have pocketed 300 Pips in gains.

DAILY CHART - 300 PIP PROFIT

This is one of the ways in which Breakouts and False Breakouts can be profitably traded in this market. Many of these opportunities are likely to continue to present themselves for us given the current environment of low liquidity that now characterizes the major Currency Pairs. As Swing Traders, we simply need to spot these setups and the appropriate signals provided to take advantage of them, for continued monetary reward.

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5 Steps to Managing Risk as a Microfinancier - forex atr trading system

5 Steps to Managing Risk as a Microfinancier ~ forex atr trading system

It might surprise some of you that lending money to middle-class American home owners to buy houses may be much riskier than lending money to Bangladeshi farmers to buy their first cellphones. (The beauty of diversification at work here?)

I have invited guest blogger Heather Johnson to explain microfinancing, and the quantitative risk management tools available if you want to do it yourself.

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5 Steps to Managing Risk as a Microfinancier

By Heather Johnson

Microfinancing is a growing trend among investors, as it offers low-risk money opportunities and a way to bring social change to poverty-stricken communities. "Low-risk" doesnt equal "no risk," of course, so many potential microlenders are keen to learn the ins and outs of credit risk management in this arena. After all, most microborrowers have poor credit or no credit at all. A villager who needs $200 for starting a third-world chicken farm isnt going to fare well in that department, as you can imagine.

The good news is, even in the event of a loan delinquency, you wont be losing a substantial amount of money. Most microloans range from a few hundred to a few thousand dollars. Any losses are unfortunate, though, so you will want to manage your microlending risks and keep loan delinquencies to a minimum.

Here are five steps to managing your risk as a microfinancier:

1. Research Your Borrower – If youre lending through a site, such as Prosper, then you will have access to your borrowers profile and credit reports. However, don’t be afraid to ask more questions if you have any doubts about this persons ability to repay the loan. If you are lending the money through other channels, definitely start with the credit reports and interview the borrower.
2. Lend With a Group – Though this wont make your borrower any more likely to repay a loan, lending with a group will help to spread out the cost and share responsibility. In other words, you will be risking less money and will have other people with the same interests to consult with.
3. Use Analytical Tools – Third-party applications can help you determine what is working best with your microlending. Both seasoned microlenders and newcomers are highly encouraged to use such tools. Microfinance sites that come with excellent built-in tools include Trickle Up, Opportunity International and Heifer International.
4. Provide Incentives – Consider an incentive program for those who pay on time. A small, inexpensive gift will be very appreciated by those living in third-world countries. Lenders have used food, such as rice or corn meal, as a bonus.
5. Be Proactive in Collecting – This doesnt mean you should harass your borrowers. However, you should research your delinquent accounts as soon as payments are late, rather than letting them go into default. There could be a simple breakdown in communication or an emergency on the borrowers end.

One of the biggest draws of microfinancing is the relatively low risk involved. However, that doesnt mean that you will have a 100% success rate. The best way to get your feet wet is to start with a small loan. Something as low as $100 will let you learn the process and allow you to become more comfortable with the system. Microfinancing isnt for everyone, but you may just find your niche with this kind of investment.

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Heather Johnson is a freelance finance and economics writer, as well as a regular contributor for CurrencyTrading.net, a site for currency trading and forex trading information. Heather welcomes comments and freelancing job inquiries at her email address heatherjohnson2323@gmail.com .

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Using Pivots as Secondary Support Resistance - forex trading pro system download

Using Pivots as Secondary Support Resistance ~ forex trading pro system download

Basically, there are three major forms of support and resistance which can be represented specifically by way of horizontal lines drawn from left to right, all of which serve the same basic functions. They include: Old Highs & Lows, Fibonacci retracements and extensions, and pivots.

While it may seem to be a minor technical detail, it may be worth knowing how pivots are actually calculated. Firstly, we input the High/Low/Close (HLC) numbers for the last completed trading session into the calculation of the Central Pivot (CP) value for the following session. Ideally, the calculation is automated, but such is not always the case. This is why it might be handy to know how to do the calculation yourself.

The formula for the Central Pivot is as follows:

Central Pivot (CP) = (High + Low + Close)/3

As you can see from the formula above, the Central Pivot is in effect a simple average of these three parameters of the prior trading range. While you might find some variation among analysts (and charting packages) as to what constitutes a standard pivot set, my approach provides for four Resistance (or R) pivots, and four Support (or S) pivots, each sequentially numbered outwards from the Central Pivot (CP).

These S and R pivots are calculated with reference to the Central Pivot, as follows:

In addition to these major intervals, we can also plot both half and quarter pivots. A convenient method for labelling these levels is to simply add to the respective R or S pivot name, a suffix for 25 corresponding to the first quarter pivot beyond the major interval (again, in the outwards direction from the Central Pivot), 50 for the half pivot (or M level) and 75 for the third quarter pivot. Therefore, as illustrated below, the third quarter pivot up between RI and R2, for example, would be labelled R175; the third quarter pivot down between S1 and S2 would be labelled S175, and so on. This scheme is then repeated through all the remaining whole pivot levels in the set. Once you take a moment to get used to it, this labelling system makes it spontaneously obvious exactly where you are in the spectrum of pivot values from S4 to R4.

The calculation for quarter-pivot levels is straightforward: the half-pivot labelled 150 simply splits the difference between the adjacent whole pivot levels (e.g. Rl and R2); the smaller quarter pivots labelled 125 and 175 split the difference again between the half and two adjacent whole pivots. While the market is less likely to make a major turn on a quarter than on a whole pivot, these levels can be useful and should be watched within a potential confluence of events.

So now that we have figured out how to calculate pivots for different degrees of trend, and plotted them on our charts, what do we do with them? With all three varieties of horizontal support and resistance mentioned above, what we are most interested in is finding a confluence of events suggesting that price should either:

• Provide an interim take profit opportunity prior to a retracement of some kind; or
• Conclude the retracement (either at resistance in the downtrend, or support in the uptrend) and continue in the direction of the higher level trend; or 
• Reverse outright at or near the horizontal line, changing higher level trend direction from down to up, or vice versa. 

In other words, we plot horizontal support and resistance lines on our charts to identify potential levels where price could possibly change direction.

Example 1

In this chart, which plots Daily pivots on a H1 chart, lets say we have a valid reason to go long following a Swing Point Low completing a pullback in the uptrend. The open price for this trade was 1.6628. We see that the trade might have carried through to the next Daily session, as indicated by a second set of pivots painting in to the right. While the Daily Rl pivot (the lowest red line on the right-hand side of the chart) provided a minor take-profit objective, the next higher resistance level at R2 did a better job, in real time underscored by a still bullish confluence of oscillator readings higher up.

Realistically, it would have been prudent to trim a few pips off that target for the sake of safety (i.e. not missing a fill on the exit limit), but putting that issue aside for a moment, we can see price ran up precisely to the R2 pivot, before hitting resistance and commencing a relatively steep retracement. From the open price to the close on this level at 1.6752, the run up was worth 124 pips as a day trade. Holding the trade open beyond that level would have resulted in a disappointing drawdown of 116 pips as price fell almost all the way back down to entry, which would have triggered a stop loss if previously trailed to breakeven. This serves as an excellent example of why booking profit on anticipated support or resistance levels can be a useful tactic.

Example 2

In the above chart, which plots Weekly pivots on a H4 chart over a span of 10 weeks, we see a total of seven instances where retracements in the downtrend ended - sometimes literally to the pip - on either a whole- or half-pivot level. (As denoted by the green arrows underneath price action on this chart, there were also a few instances when a retracement started on a bounce off a support pivot; however, trading with the trend, we would have more likely used these as take-profit targets rather than opportunities to go long against the trend).

If we were poised throughout this downtrend to sell the rallies, these pivot resistance events would have provided an important part of the confluence of events desired to execute a trade to the short side (and bear in mind, this is only one pivot set; it would be interesting to see what kinds of resistance events were  confirmed on the Daily and Monthly time frames as well).

With reference to the chart above, from the open of each candle following the confirmed pivot resistance, and carrying the trade open through to the lowest low on the right-hand side of the chart, this 10-week span offered the possibility of the following gross profit potential:

Example 3

Finally, in this chart, which plots Monthly pivots on the Daily chart over a period of roughly 13 months, we see from left to right that there had been a long uptrend covering a distance of at least 2,242 pips. The final leg of this larger move sub-divided perfectly into a smaller 5-wave impulse pattern, the fifth and final leg of which ended with a high degree of precision at the Monthly R3 pivot (solid red line). As is typical of major reversals, we can recognise a Swing Point High in the area of this resistance pivot, which was followed several weeks later by a so-called Death Cross of the Moving Average pair plotted in blue, which helped to confirm the new downtrend underway.

From this top reversal to the lowest low on the right-hand side of the chart, the resulting down move covered a distance of 1,469 pips. Whether viewed as an important take-profit target on the preceding long move, or a signal to position trade to the short side (or both), this high level pivot event correctly foretold a reversal of major importance.
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MATLAB as an Automated Execution System - forex trading weekly strategy

MATLAB as an Automated Execution System ~ forex trading weekly strategy

I just published an article "MATLAB as an Automated Execution System". (It is available to readers of my book and subscribers to my Premium Content website.) It comes with example MATLAB codes executing a simple Bollinger-band high-frequency E-mini trading strategy.

As I mentioned before, I now find MATLAB to be a good platform not just for backtesting, but for automated execution as well. Of course, not all brokerages have APIs that connect to MATLAB. My example codes are for submitting orders automatically to an Interactive Brokers account.

In general, I find that writing execution programs in MATLAB is a breeze compared to C++, Java or even C#. It takes about 1/5 the development time of a C++ program. Any performance limitations will probably not be due to MATLAB, but to the latency of your brokerage in updating positions and order status.
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LARGE CANDLE LEADS TO NZD USD REVERSAL AS EXPECTED - launch pad forex trading system

LARGE CANDLE LEADS TO NZD USD REVERSAL AS EXPECTED ~ launch pad forex trading system

As was predicted in a recent Private Video Analysis for Subscribers, the NZD USD has begun to show volatility that is typically associated with Large Candles. This Candle appeared as part of an ABC Setup at the Support Boundary of a Range Setup on the Daily Chart as the pair heads to Resistance. Despite the strength of this Signal, I warned that trading this Candle or any other that followed would be too risky based on the theory behind Large Candles across all time frames. 

As we would see the following day, the market began to pullback with a strong Bear Candle that would have taken out Long Positions that may have been opened - justifying our decision to avoid trading this pair.

The video below shows the analysis that was done last week and the rationale provided about Large Candles.

There are 3 main types of Candlestick Signals. One of these is the Large Candle that is very risky to trade. It is usually associated with pullbacks and sideways movements instead of profitable trades. This can be very tempting to trade because of their strength but unfortunately this is one of the traps of the Forex Market that can take us by surprise. As long as you are aware of this type of Candle and the reason they are dangerous to trade, you can focus your trading on the other 2 Candles that lead to profitable trade.

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