Malaysia - CLC4x Technical Analysis and Weekly Trading Journal

Many people like to find fault elsewhere. When you are trading badly, it is your fault and no one else’s. It is not the market maker’s, a bad quote’s, a broker’s, a local’s, or a computer problem’s fault. There is no “They” that is out to get you. If you lost money or got a bad fill, it’s your fault; don’t blame anyone else. One has to accept responsibility for one’s mistakes. If a broker misleads you, it’s your fault for listening to him; at lease the second time it is. Don’t blame other people or other things for your bad trading. If you do, you will never get better because you won’t be working on correcting your weaknesses, as you won’t think you have any. If you want to be successful, you will accept the blame for losses and not pass it off to the market, a broker or a bad fill.

I am actively participating in ForexFactory recently. A lot of traders are trying to predict and trade the news released. Of course,
1. there are winners and losers.
2. interpretation of a news release is often subjective.
3. Those traders who have opened trades on hand are worry about the news released and trying to post their opinions that bias to their positions.

Here I am trying to share how I deal with news releases.

Many times unexpected news may come out that is the opposite of what the market has been doing. Initially, the response is a rapid, hard move the other way, but once traders take a deep breath and reevaluate, the market normally will continue in its set trend. I can’t count how many times an above expectation news release, has a quick bounce, and the spirals back downward. The news isn’t important here; it is more important to see how market reacts to it after the initial move. Fundamentals should be believed only as long as the technical signals agree. Too many times a trader will stick with a news story and not let go no matter what the market ends up doing. Opinions mean nothing to the market; the market goes where it wants to, not where you think it should go. If the market shakes off news and continues its trend, a trader should ignore the news and follow the market.
In my opinion, the most important thing a trader should do before a scheduled news release is to be flat. The market can go either way when a report comes out, and by having a position you are adding too much risk to your trading. It’s not worth trying to guess which may be the market will go after a report comes out. When a traders starts doing this, he becomes a gambler, not a trader.

When it comes to being objective about a fundamental idea remember to not think with your position. Two people can hear the same news and look at it completely differently because of their positions. The market will tell you where it should go, and your opinion doesn’t mean anything to the market. By focusing on the market and not on the fundamentals, one can be more objective and have a better grasp of what is going on.

Lastly, this is my 2 cents.

A lot of this poem can be applied to trading. I have highlighted some of the lines that relate to trading.

IF you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
If you can wait and not be tired by waiting,
Or being lied about, don’t deal in lies,
Or being hated, don’t give way to hating,
And yet don’t look too good, nor talk too wise:

If you can dream – and not make dreams your master;
If you can think – and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
If you can bear to hear the truth you’ve spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build ‘em up with worn-out tools:

If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breathe a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: ‘Hold on!’

If you can talk with crowds and keep your virtue,
‘ Or walk with Kings – nor lose the common touch,
if neither foes nor loving friends can hurt you,
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds’ worth of distance run,
Yours is the Earth and everything that’s in it,
And – which is more – you’ll be a Man, my son!

Source: http://www.gregsecker.net/index.php/...y-greg-secker/
We often hear that 95% of people who try trading for a living fail within the first year. These are not very good odds and it is natural for new traders to wonder if they have what it takes. In this issue, I give you a list of 20 characteristics I believe could be found in most winners. I also included some Truths about trading.
The methods employed by winning traders are extraordinarily diverse. Despite the broad spectrum of traders, certain characteristics are found in most winning traders (in no specific order):
- Winners have a trading plan with a strategy that incorporates effective money management. They have the discipline to execute their plan relatively flawlessly and the self esteem to accept the money the market gives them.
- They use their head and stay calm – they don’t get excited or depressed because of their trades. They don’t act on emotions. They can handle success and failure without self-destructing.
- They don’t trade to feel good or to get high.
- They handle trading as a serious intellectual pursuit.
- They always protect their capital because they know they cannot trade without it. This means that they don’t get caught up in the thrill of the moment, the excitement of a running stock – they don’t jump into careless trades.
- They love trading, trading is a passion and they spend a large portion of their time trading and learning about trading.
- They know that sometimes the best thing to do is to do nothing (sit on their hands). They do nothing unless there is something to do.
- They don’t pay attention to other people’s opinions, they make their own.
- They don’t try to guess the future – they know it is a game of probabilities. They understand that they will always have a percentage of losing trades but they keep the losses for those trades small. They don’t hesitate to get rid of a position when the loss is still small.
- They have a great respect for the markets and they never think taking money from it is easy.
- They behave like professionals. They take full responsibility for their actions and don’t look for something or someone to blame. Instead they use their losses as an opportunity to improve their plan.
- They trade to trade well, not for the money.
- While they are in a play, they don’t count how much money they have made or lost because they know this would influence their judgment. They focus on trading well.
- Amateurs keep thinking what trades to get into, while professionals spend just as much time figuring out their exits.
- When they have a winning position, they don’t let their emotions dictate when to close the position, which would result in small gains. They know emotions cannot be part of the decisions.
- When they enter a play, they don’t have any expectation. They understand it can go either way and that nobody can know the future.
- They have confidence in their plan, patience, and discipline.
- They are not afraid because they have developed attitudes that prevent them from getting reckless.
- They have self-monitoring skills and can continuously monitor their performance in order to improve it.
Some Truths about Trading
- The market is a huge crowd of people. Each member of the crowd tries to take money away from other members by outsmarting them. Everyone, including some of the brightest minds in the world, is against me and I am against everyone. It’s every man for himself. The money I want to make belongs to other people who have no intention of giving it to me.
- The market is like an ocean, it moves up and down regardless of what I want. The market does not know I exist and I cannot influence it. I cannot control the market any more than a sailor can control the ocean, but I can control my own behavior.
- Trading is all about management – managing myself, my money, my attitude, and my positions. It is not about predictions, forecasts or opinions.
- There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. No man can always have adequate reasons for buying or selling stocks daily or sufficient knowledge to make his play an intelligent play (Jesse Livermore).
- Trading without imagination is like painting by numbers – and is about as rewarding(William R. Gallacher).
- The market is not going to reward anyone for observing the obvious.
- A mistake made by many traders is that they become so involved in trying to catch the minor market swings (generating lots of commissions in the process) that they miss the major price moves.
- Advisors are only wrong when you get too many of them start thinking the same thing.
- A strategy to enter and exit trades will not help you unless you are both disciplined and organized.

I came across this article: When You Will Become A Professional Forex Trader? Honestly, this is a good and comprehensive article.
I would like to add few more points that I learnt from Marcel Link.

1. One of the differences between a successful trader and a losing trader is how mistakes are dealt with. The good traders take note of what they did wrong and try to learn from their mistakes; bad traders make the same mistakes repeatedly and never learn.
2. Making mistakes and learning from them are part of trading and its learning process. This is why traders who are well capitalized have a better chance of surviving; they have room to make and learn from mistakes without blowing out. A small trader can easily lose all his capital before fully understanding the lesson the market was trying to teach him. (Fortunately, Forex broker provides practice account, but demo trading do have significant differences if compare to live trading.)
3. Why does it seem institutional traders succeed better than the average trader? The institutional traders have much more capital behind them. They can and do make the same mistakes but don’t have to worry that one mistake will end their careers; with capital and management behind them, they can survive those mistakes. When they start out, they go through training programs, are assistants, work on a desk with proven traders, or are given small accounts where they can’t do much damage. When they screw up, it costs the firm virtually nothing compared to the mistakes of larger, more established traders. As they get better, they are given more buying power and freedom. This doesn’t happen overnight but may take a few years as they go through their learning years.

Last thought: If professional trading firms expect their traders to take a few years to develop and are willing to risk a large sum of money in training them, why does the typical average trader (like us) think he can open an account for $1000 having never traded before and expect to make money immediately? (Those 2-3 days courses will give you some foundations/basics of trading, but these courses won’t lead you to become a professional trader.)
You should not get discouraged if you lose your initial capital; instead, should see it as part of the tuition toward their ultimate goal – being a winning trader.

Does this means today NFP will push EUR further down?

Just to share with you, this is my daily trading plan. As I am only using D1 to trade, so I can trade many pairs. Everyday, I spent about 30-40 minutes to do this plan.

I had been “god like” in trading using demo account, but when I started trading for real, everything changes. Mistakes I never ever thought of start popping up left and right. I learnt a few lessons:

1. Losing real money will make you feel a pain that paper trading can’t. Losing $1000 on paper is quickly shaken off; when it is real money, it can be emotionally guy-wrenching and depressing, and when it happens on Friday, it ruins the whole weekend.

2. No one gets a margin call when paper trading and has to liquidate positions, and everyone gets the best prices on every trade. When real money is on the line, risk aversion levels change, profits are taken too quickly, losses are allowed to grow too big, and slippage and commissions become a major factor.

Above are just a few things that paper trading can’t simulate.

Although it is important to risk real money, it is wise to start on demo account or paper until you get a feel for the markets. The best way to avoid making mistakes is to make them, lose money, realize they were mistakes, and consciously be aware of them the next time the same situations arise. I also recommend voraciously reading everything one can get one’s hands on.

http://www.patterntradertools.com/?page_id=37

Here I would like to share how I use Channel in my trading. Basically, I use Channel for 3 purposes:
1. To determine support and resistance
2. To determine whether a trend may be losing steam
Support and Resistance
For instance, in an uptrending channel, every time the market makes new highs, it stops at the resistance line created by the top of the channel and then begins to retrace back to the bottom of the channel. I use Channel to determine whether the market is overextended and so that I can exit before a pullback or wait for the market to back off before getting in. If the market is near the top of the channel, we should never buy because the downside risk is greater and the odds of its breaking out of the channel are low. If there is a clear break of the channel and it can be confirmed in a higher time frame that there is room for the market to keep going, we can consider getting in.

Attached Image (click to enlarge)

Determine whether a trend may be losing steam
Refer to the above picture, a channel can help identify when a trend may be losing steam. AUDUSD failed to reach the upper line on an upwave, this was a warning sign that the trend is weakening or will soon end. This does not mean you should go short, because unless proven otherwise, trading with the trend is the way to go.

Here, I would like to share a portion of lectures from my guru on how to deal (NOT TRADE) with news release.

The news doesn’t really matter. What is important is the other
traders’ aggregate position and what they are expecting when the
news comes out. As soon as news comes out, the smart traders look
to see how the market reacts and what the other traders are doing.
A rule of thumb for when news comes out that should affect a stock
or commodity is that if it is bad news and the market shakes it off
and rallies, this is a bullish reaction to the news, so buy it. It probably
means that the market has already discounted the news. On
the flip side, if good news comes out and your stock or commodity
fails to rally, the high probability trade is to short it. It’s more
important to see how the market reacts to the news than to know
what the news is. Experienced traders look to see what happens
after a news item comes out, and then they react accordingly. They
hope to see a market fail to react the way it should have and then
fade the news. The more anticipated the news is to be positive or
negative, the more likely it is that it will be potentially disastrous
to trade on the side of the report. If the market was expecting good
news, it may have run up accordingly before getting it so that the
market is priced with the news taken into consideration. Many
times the reason for the market to end its move when news comes
out is that traders were already long in anticipation of news, a rate
cut, or a heat wave, and then the event or news does come out as
expected. Once it comes out, the market may fail to continue
because it may be saturated with longs and there is no one left to
buy. As the final suckers rush into the market, the smart money
sees it as an opportunity to take profits. When the news does make
the market react the way it should, the best thing to do is to wait
for it to settle and then get in on the right side. If you jump into it
early, there is always a good chance that you may get caught in a
retracement or spike.

When it comes to being objective about a fundamental idea
remember to not think with your position. Two people can hear
the same news and look at it completely differently because of
their positions. A typical example occurs when an economic
number comes out that is good for the economy. Those who are
long-biased will think, “Wow, the economy is doing great; this
market will keep going up.” Those who are short will look at it
and think, “Great, the economy is getting too strong; the Fed will
not cut interest rates again, so the market should sell off.” The
market can go either way in these situations. The market will tell
you where it should go, and your opinion doesn’t mean anything
to the market. By focusing on the market and not on the fundamentals,
one can be more objective and have a better grasp of
what is going on.