RATE OF RETURN NOW 13 0 ON SMALL AUD CAD TRADE - forex odyssey trading system

RATE OF RETURN NOW 13 0 ON SMALL AUD CAD TRADE ~ forex odyssey trading system

This trade was intended to take advantage of a sharp breakout short from a Pennant Consolidation, with the target set for its Breakout Equivalent. All Consolidations have Breakout Equivalents (B.E.) - it is the area that they break towards before pulling back. They will either pause here to then resume the trend or become volatile and reverse. Nevertheless, once spotted and measured accurately, one should either be exiting your trades there (see the AUD USD 148 Pip Trade and the AUD NZD 70 Pip Trade) or avoiding entries at these areas altogether.

In this instance, the pair had already broken out from a previous Range and was now breaking a Pennant. 



DAILY CHART - AUD CAD

(FXCM Charts used for Trade Signals- Dukascopy used for Live Trades)

Based on the way I had originally measured the B.E. for this Range, it would not be hit until a few hundred pips. However after analyzing the chart again for confirmation that my Entry Setup was correct, I realized the error and exited immediately. This provided only a small gain of 9,6 Pips, but was much better than what would have taken place if it was left any longer.


This was the entry setup on the 4 Hour Chart. It required waiting on the market to pullback so that my Stop Loss would have met the criterion in the strategy.


4 HOUR CHART - TRADE SETUP

Entry then took place as the market pulled back to trigger the entry but shortly after, I realized that this B.E. was actually at the Entry Price of my trade.


DAILY CHART

Luckily I was able to come out before the rally took place, which would have taken out the Stop Loss.


DAILY CHART- PULLBACK

Following this trade which pushed the rate of return to 13.0%, my Subscribers are still 9 trades away from a 100% return.

RATE OF RETURN FROM METHODOLOGY

The FXCM Demo Account that you will see in MyFxbook does not reflect this trade. The entry order was not triggered due to the natural differences in prices that takes place across trading platforms.


Mistakes like these are par for the course. Sometimes they lead to large losses, but sometimes you get lucky with only a small loss or gain. It can be very difficult to exit a trade that has the potential for large gains. However, this is perhaps the best trading decision that one will make when large sums of your funds or those of your clients are at stake.

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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
Website: www.drfxswingtrading.com

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SMALL 46 PIP TRADE ON USD CAD - best trading system on forex factory

SMALL 46 PIP TRADE ON USD CAD ~ best trading system on forex factory

This short trade was done as the pair continued to break above the Range setup on its Daily Chart. It was already close to the target of this Consolidation breakout and was always expected to provide a small number of Pips. If the exit point was correctly chosen here, we will see a pullback in the pair by the end of the week to confirm the decision.


DAILY CHART - RANGE BREAKOUT



The Breakout Equivalent is the price target to which all Consolidations head towards before pulling back. It is an ideal place to exit trades since this pullback often leads to a reversal or a long period of sideways movement before the trade continues. 

The breakout was part of the resumption of the overall uptrend above the Outer Uptrend Line following the break above a Downtrend Line.


DAILY CHART- STRONG UPTREND

Trades such as these are ideal for those who focus exclusively on the smaller movements on the Currency Market. They can, however, be very risky given the tighter Risk-Reward ratios that they would offer given the average size of Stop Losses needed to be used on the Daily and 4 Hour Time Frames.

Happy Trading!

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

Currency Analyst/Trader

Contact: shepherdduane@gmail.com

Twitter: @WorldWide876

Facebook: DRFXTRADING 

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KIWI DOLLAR LIKELY TO FOLLOW SHARP AUSSIE DECLINE - new forex manual trading system

KIWI DOLLAR LIKELY TO FOLLOW SHARP AUSSIE DECLINE ~ new forex manual trading system

Given the strong positive correlation between the AUD USD and the NZD USD, the NZD USD could resume its bearish trend following the recent decline of the Aussie Dollar by nearly 600 Pips.

The Aussie Dollar has been steadily declining over the last several days after breaking the Support of the very large Pennant setup.


DAILY CHART- AUD USD

In breaking out of this Pennant, the pair broke a smaller Pennant and a Counter Trend Line that tested the Support before starting the breakout.


DAILY CHART-AUD USD

Whenever large Consolidations are being broken, they normally form these smaller setups at Resistance and Support which "test" the strength of these boundaries before breaking out.

For its part, the Kiwi Dollar has also formed a small Pennant at the Support of its large Pennant as well, but has not yet provided us with a breakout signal.


DAILY CHART- NZD USD

DAILY CHART- NZD USD

Although both pairs are highly correlated, without a breakout signal, the Kiwi Dollar is now equally likely to rally back inside of the Pennant as it is to break short. If a breakout short takes place, it would be in sync with the trend on the Aussie Dollar, leading to strong gains for the US Dollar over the next several months. However, a False Breakout Reversal inside could also keep this correlation in tact if it coincides with a temporary pullback in the Aussie Dollar.

The main reason that the Aussie Dollar trade is on the Demo Account is that the breakout started and continued with Weak Candles. These types of signals tend to be associated with slow breakouts that can provide large trading gains. However, they are also notorious for leading to False Consolidation Breakouts....


DAILY CHART - NZD USD

Once a strong signal is provided in either direction, Live Account trading of this pair is likely to be highly profitable. Distinguishing between these types of candles is therefore very important to avoid False Breakouts and unnecessary losses (Section 8 " Consolidation Trading on the Forex Market").

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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
Website: www.drfxswingtrading.com

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EURO TRADE UP 200 PIPS ON NFP NUMBERS - open source forex trading system

EURO TRADE UP 200 PIPS ON NFP NUMBERS ~ open source forex trading system

The dreaded Non-Farm Payroll (NFP) Employment Change was released today and led to the sharp and volatile movements normally feared during this major Fundamental announcement. The employment data, which was positive for the US Labour Market, led to sharp gains of 100 Pips and 80 Pips against the Euro and Swiss Franc, respectively, within 2 hours of the release. Lucky Day Traders may have got some or even all of this movement if they had correctly guessed the short-term reaction of the market. However, those who were already in long-term trades based on the major trends of these two pairs, would have comfortably avoided this volatility on their way to even larger trading gains.


The number of persons employed in the United States increased by 248,000 in September, translating to a welcomed decline in the Unemployment Rate to 5.9% from 6.1%. The increase was also more than the forecast 216,000 and the previous figure of 186,000 for August. Naturally, the reaction to these numbers was sharp, positive and immediate for the US Dollar.  


EURO USD- 30 MINUTE CHART

 USD CHF - 30 MINUTE CHART

On the Euro pair, one could have anticipated this movement with a short position placed before the announcement, since the forecast was for an improvement in the numbers. Similarly, there was already a start to the breakout from that Pennant on the USD CHF which the trader could may have used as a sign to enter long. Nevertheless, given the history of these and other currency pairs reacting in contrast to the economic data-especially for the NFP-the trader may have had some doubt about the actual direction of the market.  

Past trading losses from this and other fundamental data may have also increased the anxiety about trading altogether, inclusive of how much to get from the trade - 30 Pips, 50 Pips, 10 Pips? Complicating matters for USD CHF traders would have been the weak candle that started this breakout- a weak breakout that often leads to False Consolidation Breakouts.



USD CHF - 30 MINUTE CHART

 



In contrast to these difficulties, long-term traders would have already been in trades based on the larger patterns and trends on these pairs. 

The EURO USD was always expected to continue bearish regardless of a single monthly economic data point. A wider view of the Daily Chart reveals that the pair had been in a sharp downtrend since May this year when it turned at the Resistance of the large Pennant Consolidation. 

 
EURO USD - PENNANT CONSOLIDATION

Similarly, the USD CHF was continuing a sharp rally towards a major Outer Downtrend Line after breaking above the Inner Downtrend Line in August.


USD CHF - SHARP RALLY TO TREND LINE

 






















Within this context, a short trade on the EURO USD could have been opened using the most recent bearish signals on the Daily and 4 Hour Charts. The Daily Chart had already broken a Counter Trend Line (CTL), while the 4 Hour Chart followed up with a bearish breakout from a Pennant.


DAILY CHART

 



















4 HOUR CHART

 

 





















Entry took place after the breakout, with the Stop Loss set above the Resistance of the Pennant. As you can see here, additional entry points were also possible to add to that position. The inversely correlated USD CHF provided a similar Pennant breakout setup on its 4H Chart.


4 HOUR CHART

The Stop Loss was placed below the Support with the target set for that major Trend Line target. After 7 day patient days, the target was finally hit.


DAILY CHART

 




















For the EURO USD, however, the target at Support is likely to take a much longer time. With 150 Pips left in this trade, we could see this area hit by the end of the upcoming week.


DAILY CHART

The larger trends and setups on the Daily and 4 Hour Charts provide bigger profits with less volatility and trading stress relative to the Smaller Time Frames. Short-term reactions to important but inconsistent Economic reports have very little bearing on the main direction and targets of the larger charts. With the greater stability and clarity of these trends, Retail Traders can therefore hold on to profitable trades for a much longer period with greater confidence that their analysis and patience will be significantly rewarded.



MAIN TECHNICAL POINTS

• Counter Trend Lines -  (SECTION 3 - CURRENCY PATTERNS & MARKET DIRECTION)

• Downtrend Lines - (SECTION 3 - CURRENCY PATTERNS & MARKET DIRECTION)

• Breakouts - (SECTION 4 - MARKET DYNAMICS - TRENDS & CONSOLIDATION)

• Stop Loss Placements - (SECTION 6 - TRADING PLAN - EXIT & ENTRY RULES)

• Weekly Ranges - (SECTION 3 - CURRENCY PATTERNS & MARKET DIRECTION)

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Twitter: @WorldWide876

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Psychological Mistake 2 Impact Of The Law Of Small Numbers - forex daily trading system free download

Psychological Mistake 2 Impact Of The Law Of Small Numbers ~ forex daily trading system free download

In the field of statistics, the law of large numbers tells us that the more times we do something, the more likely we will get results which are consistent with what the system will intrinsically give us. For instance, if you toss an "unbiased" coin, the probability of "heads" showing up is 50%, while the probability of "tails" showing up is also 50%.

However, if you toss the coin 10 times, you may not get 5 heads and 5 tails. Instead, you may get 7 heads and 3 tails, or even 8 heads and 2 tails. If you toss the coin 100 times or even 1,000 times, you are then more likely to get about 50 heads and 50 tails, or about 500 heads and 500 tails. This is why you need a sufficiently large sample of data in order to be able to justify the statistical "evidence" you get.

When trading the Forex market, many traders, by virtue of a short-sighted bias and selective perception, easily come to conclusions about market behaviour based on a small number of occurrences. For example, after getting 2 or 3 losing trades, some traders will conclude that the trading strategy does not work. Such an "it doesnt work" mentality is extremely common among traders who constantly seek after new indicators, strategies and software. This is where the "law of small numbers" works its way into the psychology of traders. It is rooted in impatience and an inability to think in terms of the "big picture".

Similarly, when traders attempting to look for patterns in the behaviour of market prices and indicators, this "law" often distorts their analysis. This is where the tendency of selective perception causes many of us to see patterns and arrive at conclusions based on selected occurrences of these patterns.

Thinking in terms of probabilities is an important mental habit that all traders must cultivate in order to be successful in this business. In order to overcome the influence of the "law of small numbers", a traders must understand the following principles:

• Probabilities work out over a sufficiently large number of trades
  A trader must not only realize this principle at the intellectual level, but also at the behavioural level. It is typical for traders to say, "Yes, of course! I never expect winning trades all the time. If I can get a 70% win rate, I will be extremely happy!" However, as soon as they start taking "real time" losses, they naturally allow the immediate feelings associated with the losing trades to overwhelm them. They start losing faith, feeling discouraged, or even complaining about their trading strategies. This behavioural pattern is so common because human are by nature short-sighted, whereas probabilities involve a "long-sighted" mental attitude.
• Representative samples of historical data must be used in order to justify probabilities
  There are many software programs and indicators available to aspiring traders, displaying extremely promising back-testing results. Sometimes, these back-tests seem to involve reasonably long historical periods. However, many people do not realise that trading rules can be manipulated to fit the market movements in a certain period of time.
  
  When testing systems, the historical data being used need to represent a sufficiently wide spectrum of market patterns. Whenever statistical surveys are done on a certain population in a large country, it is impossible for the study to incorporate every single individual in the populations. As such, in order to make the statistical study valid, it must include different aspects of the population, i.e. selecting individuals from various age groups, races, religions, educational backgrounds, etc.
  
  Similarly, a realistic testing of a trading system must involve a wide spectrum of different market scenarios such as trending, ranging, quiet, volatile conditions and rare market events. This will enhance our confidence that a tested trading system is likely to meet our trading objectives when applied "live" in real-time market situations.

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