Picking up nickels in front of steamrollers - forex trading eur usd strategies

Picking up nickels in front of steamrollers ~ forex trading eur usd strategies

When I was growing up in the trading world, high Sharpe ratio was the holy grail. People kept forgetting the possibility of "black swan" events, only recently popularized by Nassim Taleb, which can wipe out years of steady gains in one disastrous stroke. (For a fascinating interview of Taleb by the famous Malcolm Gladwell, see this old New Yorker article. It includes a contrast with Victor Niederhoffers trading style, plus a rare close-up view of the painful daily operations of Talebs hedge fund.)

Now, however, the pendulum seems to have swung a little too far in the other direction. Whenever I mention a high Sharpe-ratio strategy to some experienced investor, I am often confronted with dark musings of "picking up nickels in front of steamrollers", as if all high Sharpe-ratio strategies consist of shorting out-of-the-money call options.

But many high Sharpe-ratio strategies are not akin to shorting out-of-the-money calls. My favorite example is that of short-term mean-reverting strategies. These strategies not only provide consistent small gains under normal market conditions, but in contrast to shorting calls, they make out-size gains especially when disasters struck. Indeed, they give us the best of both worlds. (Proof? Just backtest any short-term mean-reverting strategies over 2008 data.) How can that be?

There are multiple reasons why short-term mean-reverting strategies have such delightful properties:

1. Typically, we enter into positions only after the disaster has struck, not before.
   
2. If you believe a certain market is mean-reverting, and your strategy buy low and sell high, then of course you will make much more money when the market is abnormally depressed.
3. Even in the rare occasion when the market does not mean-revert after a disaster, the market is unlikely to go down much further during the short time period when we are holding the position.

"Short-term" is indeed the key to the success of these strategies. In contrast to the LTCM debacle, where they would keep piling on to a losing position day after day hoping it would mean-revert some day, short-term traders liquidate their positions at the end of a fixed time period, whether they win or lose. This greatly limits the possibility of ruin and leaves our equity intact to fight another day in the statistical game.

So, call me old-fashioned, but I still love high Sharpe-ratio strategies.
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3 WAVE RULE DENIES BEARS ON CAD CHF - forex trading social network trading system

3 WAVE RULE DENIES BEARS ON CAD CHF ~ forex trading social network trading system

What looked like a promising bearish breakout has now turned Bullish with a sharp U-Turn that appears to have come out of thin air. However, based on our 3-Wave Rule of market trends, this pullback was always expected at some point in time.

Daily Chart below shows the strong Bull Candle that is now heading back to the broken Support barrier.


DAILY CHART

The cause of this reversal was the trend on the 4 Hour Chart. Several waves of bearish setups had led to that Daily Bearish Signal that broke the Range Support. However, pullbacks such as these are always to be expected to take place, making a short position an unwise one.


4 HOUR CHART

This technical aspect of trends can be seen across the Forex Market on all time frames. If there are several of these waves on a lower time frame, the immediate higher time frame will eventually pullback sharply.

In situations like these, we will either see a continuation of this rally that takes us back up to Resistance (False Consolidation Breakout Reversal)...


DAILY CHART

....or a U-Turn after testing Support to resume breakout...


DAILY CHART

In either case, the signal on the Daily Chart will have to be strong enough to justify entry such as the case with the GBP CAD trade (see Recent Trades).

Lets wait and see what unfolds.

In the meantime....

________________________________________

________________________________________

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

More info for 3 WAVE RULE DENIES BEARS ON CAD CHF ~ forex trading social network trading system:

The Average Trader Is Being Set Up By The Market - ddfx forex trading system free download

The Average Trader Is Being Set Up By The Market ~ ddfx forex trading system free download

The legendary trade Jesse Livermore once remarked very aptly that "The market is designed to fool most people most of the time." He has also been quoted in saying that "Markets never change, because human nature never changes." Although many aspects of this mans life may not be worth learning from, his perceptivities into the financial markets are timelessly invaluable to anyone who is serious about achieving success in trading.

If you have ever had some experience in investing or trading, have you ever felt that the market seems to have a way of going against you "most of the time"? For instance, if you have traded Forex before, have you ever felt that "it always goes down whenever I buy, and it always goes up whenever I sell"? Is it a matter of bad luck? Or are there some fundamental reasons why most traders lose money?

Think about it. If you do not have a highly systematic and controlled way of approaching the markets, the fact is that the markets are always rigged against you. It is not unlike going to a casino, where your chances of making money in the long term are practically zero. In the casino, all the games are rigged against us in the sense that they always have an edge over us. An "edge" is simply a statistical advantage that ensures that you will lose money if you stay long enough in the game.

So, how do some people devise strategies to take money out of the casinos? They do so by systematically eliminating the "house edge", and establishing "an edge over the house". Professional gambling syndicates win the games they play by playing only when the odds are in their favour, and knowing when to walk away without allowing the joy of winnings to get them carried away.

In very much the same way, the Forex market (and any financial markets, for that matter) is being "set up" against us. Firstly, we know that we start from a losing position from the very first moment after entering into a position. This is due to the transaction cost of entering a trade, i.e. the difference between the bid and ask price, known as spread which immediately shows up as a floating loss from the very first instance after entering a position. Psychologically, many traders are affected by the floating negative number that is displayed on the trading statement, and spend a lot of time scrutinizing the moment-by-moment increases and decreases of that number.

Our psychological reactions to market movements, and the ups and downs of the numbers in open positions, will almost certainly leads us to make counter-productive trading decisions. The interaction between human emotions and price movements naturally cause us to buy high and sell low most of the time!

What we see on price charts is essentially a graphical representation of the ebb and flow of mass market psychology, which involves millions of trading decisions at any one point in time. These trading decisions are the outcome of human nature at work in the market, involving many instinctive trading habits and attitudes.

The more we understand these and overcome the same habits and attitudes ourselves, the more we are able to eliminate the markets edge over us and stand out above the majority of traders and win successfully. Successful trading is about eliminating the markets edge over us and developing an edge over the market. It is only possible if and when you realize how the market is naturally "designed" to beat you. This involves not only understanding the market behaviour, but also understanding your own psychology as a trader.
More info for The Average Trader Is Being Set Up By The Market ~ ddfx forex trading system free download:

199 PIPS ON GBP CAD TRADE PUSHES RETURN UP TO 22 - best forex news trading system

199 PIPS ON GBP CAD TRADE PUSHES RETURN UP TO 22 ~ best forex news trading system

The Swing Trading Methodology continues to produce results with the most recent gain of 199 Pips on the GBP CAD. This brings the overall return from the strategy to 22% since it was launched in July, from only 8 trades. As it stands, clients are now only 8 trades away from a return of 100%, which is likely to be reached in the first four months of 2015. The Demo Account, which lags the Live Account by just 3 trades, is now up 17% since it was opened in October.

The Range Consolidation on the Daily Chart of this pair was initially broken short a few days ago, indicating the potential start of a sharp bearish breakout. However, given that the pair had already provided 3-Waves of Bearish Signals in breaking the Support boundary, a bullish pullback was always expected.


DAILY CHART




This reversal began a few days later with the appearance of Bullish Signals and a break of the Downtrend Line.


DAILY CHART

At this juncture, there were two possible scenarios that could have unfolded. The first was for the pair to continue its reversal and break back inside the Range, rallying sharply to the Resistance boundary once more.


DAILY CHART

This sharp rally would be typical of what takes place with False Breakouts. Not only would the reversal take the pair quickly to the other end of the Consolidation, they often lead to breakouts at the other end of the setup for even stronger gains for traders. Despite the bullish signals that initially favoured such a move, we also had to consider the bearish scenario as well.

The boundaries of Consolidations are often "tested" for a brief period before resuming the breakout. This "test" often takes the form of a U-Turn or a break of a small Consolidation setup formed at that area. A sharp bearish breakout following such a pullback was also a scenario to be considered.


DAILY CHART 

As it turned out, the bullish scenario eventually took precedence as the pair provided an ABC Reversal Signal to continue the False Breakout Reversal. The pair of Double Bottoms below the Range also provided support for the trade. 


DAILY CHART

FXCM Charts are used to provide signals based on the New York Candle Close of the Daily Chart

Given this strong setup and signal, entry then took place on the 4 Hour Chart. The Stop Loss was placed below the Range and the Entry Order set just above its Resistance in expectation of a pullback. This would allow our Stop Loss to comply with the 120-Pip maximum for entries based on the Daily Chart. 


4 HOUR CHART

This was the Entry Trade Sheet as sent to my Subscribers;

TRADE SUMMARY & SETUP 

PAIR	GBP CAD
TRADE TYPE	FALSE CONSOLIDATION BREAKOUT
ENTRY DATE	TODAY, DECEMBER 8, 2014
TRADE DIRECTION	LONG/BUY
ENTRY TYPE	ENTRY ORDER
ENTRY PRICE (MAXIMUM)	1,7904
STOP LOSS	1,7784
LIMIT ORDER	1,8104
MAXIMUM HOLDING PERIOD	7 DAYS - WEDNESDAY DEC. 17, 2014
DAILY TIME CHECK	21 00 GMT

After pulling back to test the Resistance of the Range our Entry Order was triggered. Following the U-Turn to resume the breakout, the target was hit a few days later.


4 HOUR CHART

DAILY CHART- LIVE ACCOUNT RESULT

This movement to our target was very fast. Given that we had the combination of the Double Bottoms, a False Breakout Setup and the ABC Signal - which individually always lead to sharp movements - the short duration of the trade was not a surprise. 

The main Technical factors involved in this trade were;

• The 3-Wave Rule (Section 4 - Consolidation Trading on the Forex Market);

• Double Bottoms (Section 3 - Currency Trading with the Daily & 4 Hour Charts);

• False Consolidation Breakouts (Section 6 - Consolidation Trading on the Forex Market);

• ABC Signals (Section 6 - Consolidation Trading on the Forex Market);

Placing this trade in a larger context, the Methodology has now produced a 22% Rate of Return since it started in July of this year. Only 8 trades have been made so far with a simplistic assumption that will be no further losses, clients are only a handful of trades away from realizing a 100% return.

RATE OF RETURN AS AT DECEMBER 12, 2014

These projections assume that each of the next trades will provide a 150 Pip value, which is the average of our 100 to 200 Pip target range. An FXCM Demo Account was opened on October 1, 2014 to track these trades and is now up 17% after 5 trades. This account would also only require 8 trades for the 100% target.

RATE OF RETURN - DEMO ACCOUNT

DEMO TRADES MADE

ACCOUNT BALANCE

When these results are compared with the Year-To-Date returns as at September 30, 2014 of the Top 10 Currency Traders as ranked by BarclayHedge...

SEPTEMBER YEAR-TO-DATE RETURNS OF CURRENCY TRADERS 

....the Methodology so far, appears to be able to hold its own.

Naturally, for reasons of privacy, I only share the results of individual trades on my Live Account without showing my actual Trading Account. However, since this Demo Account is only behind by 3 trades and is audited by the trade verification services of MyfxBook, you can be assured of the integrity of the information you see here.

RATE OF RETURN- DEMO ACCOUNT

(http://www.myfxbook.com/members/DRFXTRADING/duane/1079693)

The style of trading that has produced these results is both conservative and high-paying. Trading is only done 1 to 2 times per month, minimizing the exposure of your capital to the volatility of the market. When trading is conducted, however, only the highest paying Swing Trading opportunities that have the largest probability of success are targeted.

______________________________________________

RECENT EMAIL FROM CLIENT

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Sabtu, 30 April 2016

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

Diposting oleh gogod di 18.35

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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)

___________________________________________________________

RECENT EMAIL FROM CLIENT

____________________________________________________

SUBSCRIBE TODAY

____________________________________________________

US$120.00

Free 

 ___________________________________________

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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Jumat, 29 April 2016

76 PIP CHF JPY TRADE 100 RETURN BECKONS - forex binary options trading system omni11

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76 PIP CHF JPY TRADE 100 RETURN BECKONS ~ forex binary options trading system omni11

This trade took advantage of the False Breakout on the Pennant of the Daily Chart, following a short-lived Bullish breakout.  It provided a gain of 76 Pips over 4 Days as the pair returned inside of the large Consolidation on its way to the Support boundary. This latest trade was added confirmation of the accuracy of my Methodology which continues to produce above average trading gains. A Demo Account, which was opened in October (up 4%), now tracks my Live Account and will demonstrate how a 100% return is possible by January 2015 with only a small number of trades.

There was an initial breakout long above the Resistance of the CHF JPY Pennant that pointed to the start of sharp gains for the Swiss Franc. It was expected to mirror the gains for the US Dollar against the Japanese Yen, following a Range breakout of 700 Pips. 

DAILY CHART- USD JPY BREAKOUT

The Pennant setup on the CHF JPY was much larger in comparison and was also in an Uptrend. As such, when the Bull Candle breakout signal appeared above its Resistance, the distance of the breakout was expected to be much greater.

DAILY CHART- CHF JPY PENNANT

DAILY CHART- CHF JPY BREAKOUT

As tempting as this appeared to be, there were two important Technical Factors that mitigated against entry;

 

1. The Breakout Signal was a Large Candle 
• (Weekly Technical Notes - August 25-29, 2014 & October 13-17, 2014)
 
2. The Weekly Range was hit 
• (Section 4 - Trading Manual)

Given these reasons, a pullback was expected and we needed to wait on another signal to resume the breakout. Instead of this, however, the pair became volatile and eventually reversed to start the False Breakout back inside of the Pennant. 


DAILY CHART - CHF JPY FALSE BREAKOUT 

With this turn and the Bearish signal given, the pair was expected to decline towards the Support once more. Entry then took place at a Counter Trend Line break signal on the 4 Hour Chart, with the Stop Loss placed above the high and the Limit set to the Near-End Value of the Pennant (Section 6 - Trading Manual).

4 HOUR CHART- ENTRY SETUP

ENTRY SHEET SETUP (As Sent to Subscribers)

  

ENTRY DATE	TODAY, OCTOBER 6, 2014
ENTRY TIME	NOW
ENTRY PRICE (LOWEST PRICE)	113,20
STOP LOSS	114,07
LIMIT ORDER	112,20
HOLDING PERIOD / FINAL DAY	4 DAYS-  FRIDAY OCT.10, 2014
DAILY TIME CHECK	21 00 GMT

At the end of the established Holding Period, the trade had not yet reached the Near End Value and thus had to be closed for 76 Pips instead of the targeted 100 Pips. 


DAILY CHART- CHF JPY TRADE EXIT

DAILY CHART - LIVE ACCOUNT RESULT

9-Pip Loss due to initial uncertainty about Trade Setup vis-a-vis Methodology

  

With this result, the Demo Account generated its first win of just handful of trades needed for a 100% over the next few months.

PROJECTED RETURN

More info for 76 PIP CHF JPY TRADE 100 RETURN BECKONS ~ forex binary options trading system omni11:

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