rafuzii GBP/jpy journal

So you want to be a Forex success.....most wont! I wrote this last week and had a warm response from those that chose to reply. I though it would be a good idea to post here. Hope everyone likes it, and if not please share your distaste. What makes a successful trader and trading system? I have been inspired to speak from the heart today because every day I see a new advertised trading system being sold for $100 or more. Why do you think you have to use an automated system to be a success? Are you afraid to trade the markets? Do you want to blame someone else for your loses? It’s time to understand what YOU have to do to succeed in building wealth for you and yours. NO MORE LOSES!!! First step…Education and Dreaming BIG! Read everything. Visit every website. This process can take a year or longer; so what. Do it! There are plenty of resources on the web and in your local bookstore. In order to break through the blockade you must understand the history. This is true with any venture taken on the path to a fulfilling life. Some of us have spent 15+ years in our development from a young age to become who we are today. It’s time to take steps backwards to take giant leaps forward and remember our childhood; remember how we we’re educated and the experiences we had that contributed to who we are today. The critical analysis of who we are will give you a purpose behind your trading. It’s not about profits, it’s not about YOU! This is bigger than us and our small deposits are small peas in this big world! The real questions that should be asked are why we trade and what do we want out of it? I would recommend demo trading as much as possible until you have not one, but many mental breakthroughs. We are all given a unique eye to see the world; to act or react in given situations. Newton’s law states that for every action there is a reaction. Be aware of the implications behind every trade until it becomes second nature and you will be successful. You don’t need to double or triple a demo account, just be consistent. Step two…A strategy should be based on your risk appetite. Opening your first account can be quite exciting and you’ll want to jump in and trade ASAP. Be patient! Your strategy should be based on your risk appetite, so make sure you have an exit before you make any entries. Here is a quote from Sun Tzu’s Art of War, “The general who wins a battle makes many calculations in his temple ere the battle is fought. The general who loses a battle makes but few calculations beforehand. Thus do many calculations lead to victory and few calculations to defeat: how much more no calculation at all! It is by attention to this point that I can foresee who is likely to win or lose.” Ask yourself these questions: 1. Do I hold on to losing trades? 2. Do I add to losing positions? 3. Do I have sleepless nights? 4. Do I miss out because I over think entries or exits? 5. Do I let missed opportunities get me down? If you answered yes to more than one of these then the only person to blame is yourself. You must improve on your thoughts and actions before you can develop an optimal trading strategy, go back to the drawing board. To appreciate and understand the positive and negative experiences could bring enlightenment to you and your strategy. When you can remove yourself and your emotions, you will see the market for the first timeJ. Step three…Greed, Fear, & Ignorance I don’t want to write too much on these. Albert Einstein summed it up pretty good when he said these 3 forces rule the world. I would recommend studying psychology. You will see how much it impacts markets moves. In conclusion, I have seen successful automated systems and am not completely against them. There are just way too many that have been optimized to look attractive. I would recommend saving your money and investing in your own education before using an EA. This isn’t for everyone and it’s ok to walk away. You’ll be a better person through your experience. Last quote from The Art of War, “If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.” I speak from experience and I have failed. I wish nobody to go through what I went through. Sometimes you have to crawl through sh** to come out smelling like roses. __________________ http://www.forexfactory.com/showthread.php?t=103539

Trading Rules for Swing Trading

These trading rules below should help your swing trading efforts yield more profits. By following some trading rules, your trading approach will be far superior to any trading method without rules. The objective for all of us is to maximize gains while minimizing losses along the way. Successful trading requires discipline, and these guidelines will help you in your quest for profitability.


1. Emotional control is at the heart of good trading.
Controlling yourself allows the ability to think clearly at each moment, resulting in success as a trader.

2. Cut losses with the most strict discipline.
We must preserve capital at all times. Losing is part of trading, but opportunity cost is to be considered when hoping for a losing position to reverse course. If your trade reverses and violates support, get out and be willing to re-enter. This will save you from big losses and you can always re-enter if the stock crosses the entry price again.


3. Make good decisions and winning will take care of itself.
Focus on how you play the game and not on the scoreboard. Trade with discipline and follow your game plan.


4. When you lose, don't lose the lesson!
Forget the names but remember the events. Those who don't remember the past are doomed to repeat it. Make mistakes with composure and character, without blaming others, and don't dwell on mistakes.


5. When in doubt, get out.
Scrutinize your positions at all times, each day, and you will not be left holding a stock without reason. Be willing to change direction at any time, because your flexibility as an individual investor is a big advantage which should be embraced!


6. Keep your risk/reward profile in check.
Profits can exceed losses even if the number of losing trades is greater than the number of winning trades. Always properly manage money, size positions accordingly, obey stops, and protect profits. This will keep you in the game!


7. Avoid scheduled news.
We are unable to foresee breaking news, but scheduled news we can step aside from. Scheduled news includes interest rate announcements, corporate earnings announcements, and various daily economic releases. Remember to trade only when you've got the best of conditions.


8. Consider your account size for appropriate trading.
An account that is too small magnifies the effects of each trade, which keeps us from thinking rationally. Trade with the attitude that the next trade will simply be 1 of the next 1000 trades you will make.


9. Get a charting program that allows you to build watch lists, sort stocks, and draw trendlines.
This is essential to learning. Price action and volume are vitally important in finding good chart patterns.


10. Scale out of winning positions as they work for you.
This achieves two goals: taking some off the table and keeping you in the game. If your trade reverses, you took some profit at good spots. If the move continues, you are still on board for the ride.


11. Don't dig yourself into a hole early in the day or in your career.
Be willing to observe the market and make an informed decision. Missed money is better than lost money, so wait patiently for the best opportunities to arrive.


12. Trade with a blend of anticipation and confirmation.
Balancing these two will mean that you adopt a system of "if this happens, I will do that." Wait for your pitch!


13. Beware of your trading process following a winning streak.
After a win streak, be extra disciplined! Many will make money in the market, but discipline is required to KEEP it. Stay on your guard at all times!


14. Evaluate your results at least monthly.
Monitor your P&L, your win/loss ratio, and the relationship between your biggest wins and worst losses. Reviewing these results helps you continually improve your understanding of the markets and yourself.


15. Finally (perhaps most important), always be patient.
Long-term patience will keep your confidence and optimism high, and short-term patience will help you wait for the best trades. Success doesn't come easy, and rarely are fortunes made overnight. Be willing to pay your dues and put in the work in order to achieve your goals.

words to remember

The Holy Grail
Stock Trading System It’s a tendency of many new chartists to feverishly search for the Holy Grail stock trading system. They think if they just look hard enough and study enough charts, they’ll discover that perfect pattern or oscillator. The perfect stock trading system does not exist, but profitable ones certainly do... What you want to do is give yourself a slight edge. If you discover a combination of techniques that are right only 50% of the time, you can make money provided your winning trades are larger than your losing trades. You can even be right less than 50% of the time and still make money, as long as your winners are sufficiently larger than your losers. So long as you have a positive expectancy, you’ll make money, even if you have lots of losing trades.

● Expert Recommendations
Once you become even slightly familiar with technical analysis, you’ll realize that many stock brokers and analysts recommend stocks that look absolutely horrible from a technical analysis perspective. They violate basic TA principles like buying in the middle of a downtrend. Unfortunately, some people take on “expert” recommendations as their stock trading system. Maybe these analysts and brokers will be proven right. Maybe whatever they’re touting will stage an amazing reversal or break through resistance. On the other hand, maybe it won’t. Why not wait until the charts look good, and then buy?

● Don’t Try to Catch Falling Knives
Many people love to trying to pick bottoms. Their stock trading system is to buy stocks thinking they “can’t possibly go any lower,” only to get killed when they fall even lower. If you follow technical analysis, bottom picking starts to look less and less attractive. Most times bottom picking involves buying stocks in horrible down trends. The fact is, yes, you will lose some profit by waiting the trend to reverse, but you will also spare yourself much pain by avoiding jumping in front of a speeding train. For those just learning technical analysis, it’s probably best to avoid bottom picking all together.

● Money Management
Even the best stock trading system is completely useless unless it’s used on conjunction with proper money management—that is, at what point you cut your losses and how much of your total account you put into each trade. Here are some practical notes on properly putting together your own stock trading system.

● Always Cut Your Losses Early
Your stock trading system can be right 90% of the time, but if the 10% you’re wrong destroys your account, you’ll never make money. That’s why when it comes to learning how to trade stocks, you cut your losses and admit when you’re wrong. You should exit a trade when the reason you entered it, from a charting perspective, is negated. For example, if you buy XYZ because it’s bouncing off its well-established trend line, then XYZ suddenly falls below its trend line, it’s time to cut your losses and sell. Of course, admitting you’re wrong is easier said than done, which is one of the reasons why the psychology of trading has been studied quite a bit. A great book on the subject is XXXX.

● The 2%
Rule How much of your account should you allocate to each trade, and when should you cut your losses? As a general rule, never risk more than 2% of your total account on each trade. This way you can be wrong 50 times in a row before you lose all your money. That does NOT mean you set a 2% stop-loss (a predefined exit point) on each trade. It does mean the following: * Let’s say you have a $10,000 account; 2% x $10,000 = $200. That means you can risk $200 per trade. * In a $10,000 account, you can make a $4,000 trade IF you maintain a 5% stop loss ($4,000 x 5% = $200). Although 2% is considered an acceptable risk, many traders still consider it too chancy. If you want to risk 1% or even 0.5% per trade, then by all means, do so. Risking as low as 0.5% of your account per trade is quite prudent. On a $10,000 dollar account, that translates into $1,000 per position with a 5% stop loss. First, determine what % you want to risk per trade, then adjust your position sizing accordingly. Remember, if you follow the above advice, you cannot go too wrong when putting together your own stock trading system.

Implications For The Dollar
The dollar is likely to continue appreciating against the high-yielding currencies (EUR,GBP.AUD and NZD). Against the yen, appreciation will happen if the stock market can find its footing. The main reason to expect further dollar appreciation is twofold:


1. The Federal Reserve has real rates of interest which are negative, while the BOE,ECB,RBA and RBNZ do not. The pound has an especially large potential to fall, because the BoE is scheduled to cancel its special lending facility on October 20, a move which will decrease liquidity as the U.K. economy goes into contraction.


2. The move by the Treasury to take over the GSE’s and provide liquidity (a market) for mortgage securitization will allow housing to begin the stabilization and recovery process, especially if mortgage rates can decline.
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