Tuesday, August 31, 2010

Trading Masterclass - Crude oil not likely to go up soon

A fun little video from some people calling themselves Cantos.

Actually, I've been having great fun in option land playing this sideways action in oil trading calender spreads the high and low ends of the sideways channel.

Selling the Euro

Actually this is a double take. I shorted this AM but biled just before the 2pm FOMC meeting announcement. Took a 13 pip hit, maybe that was more due to nervousness on my part. The TWITTER feed reveals my re-entry.

Probably a mistake to be doing this as it smacks of pure day trading. My entry this am was not so good. But, I'd be up 20 pips right now if I had just stuck with it, even with this crap entry. Gotta work on that.

Look At The Overall Trend

Thursday, August 26, 2010

Smells Like 2008 To Me

Forex Trading Technical Analysis (2010/08/26) USD/JPY Retracement within Downtrend

James Chen is one of my favorites, very solid analysis Check out his site by clicking the title which is linked.

Forex Trading Technical Analysis (2010/08/26) USD/JPY Retracement within Downtrend

Short that USD/JPY

Been eyeballing shorting the USD/JPY as my next maneuver.  I'm actually trading both currencies ... the dollar may come back down to earth irrespective of the goings on in Japan.  The damn may well have been broken as far as Yen support via threats from their government to depreciate their own currency (weird huh?)

Same game, very mechanical. (click photo to enlarge) MARKETCLUB is saying short this thing and the Guppy 4 hr is identifying a clear cut down trend with its longer averafe and the short term moving averages popped and bunched up.  I guess I could have shorted this last night but my trading brain was exhausted.

I kinda felt a twinge of regret over not taking an obvious short in USD/CHF back down to that support but, oh well, my first month of FOREX trading is wrapping up as a profitable one.

Profit target on this trade is the lows (of course.) Same ole, same ole.  I hope to always be taking the excitement and drama out of this trading business.  This would be something like 75 pips or something.

Tuesday, August 24, 2010

More Selling Ahead

Ignore Mr. Christian from PerfectStockAlert.com at your own peril. He even confirmed by own analysis blasted out on TWITTER that GOLD is indeciferable at this point: people flocking to it, people fleeing it, governments messing around with it.

Lower lows and lower highs, that mean BEARISH. Get over it.

It blows my mind in the FOREX world when you have people looking at charts that look just like the Dow Jones or like the Hang Seng .. and they say to themselves (and the world) "Hey, buying opportunity, here." Insane just insane.
I'll stay patient and stay with the trend thank you very much. I don't care if the Pound, Euro or Aussie bounces off support .... the market is bearish .. people are selling that stuff.

Back at It

If you observe the Twitter Feed you can see now MARKET CLUB blasted out a freebie over Twitter.  It caught my eye about an hour later and I decided to go along with the shorting of GBP/USD.

Looking at the Guppy system entry , this was not exactly an optimal entry as the price had popped but you don't see that bunching up of blue lines.  I drove home thinking ... "oh boy, here comes a loser".  But this pair just kept chugging down to 1.54 which is a key level of support and has been for days.

As I write this, its 6:28 pm,  I've already sold off 1/2 when she got down to support for 47.3 pips of profit.  The stop has been set to break even plus a few dollars to cover commissions.  There's a case to be made for this pound to go much lower and that sceario will be covered in the next post.

This trade is at that point where you really do not know what is going to happen.  The stop is inside the size range of the last bar .... in other words it's tight but I'm not losing a dollar on this trade.  This pair has made an awesome run and if I had caught that TWEET from MARKETCLUB then I woulda got more like 100 pips on the first have.

It's important to be all about managing risk, taking risk off the table.  This helps keep your mind clear.

Ended that USD/CAD

I tried to twitter my exit from USD/CAD by exporting the trade to twitter via MYTRADE, the trading community embedded in the thinkorswim platform but I can see that that did not work.

I exited @ 6:33 am EST as it blew past the profit target #1.  The report came out at 8:30 am and it was pretty bearish on Canadian retail.  The pair blew past profit target #2 but then pulled way back.

It wasn't really an easy decision but I knew that those reports can do some crazy things.  In the end I got 43 pips on the first half and then 118.2 pips on the second half. Not bad considering that that I'm not doing this full time, staring at a screen.

If USD/CAD retraces a bit and MARKETCLUB trade triangles are telling to keep shorting then I'll re-enter with an eye on my trust 4hr GUPPY study.  That may happen tomorrow sometime.

Monday, August 23, 2010

Inverted Hammers

Pay strict attention to Mr. Christian from Perfect Stock Alert

Pros and Cons of the Trading Lifestyle - MoneyShow.com

Pros and Cons of the Trading Lifestyle - MoneyShow.com

This is kinda daunting but some of the negatives he mentions are actually positives. Like, the interaction thing. I have a family, I don't need coworkers in my life 10 hours a day. My life is already full of people.

Oh Canada

First things first ..... the Loonie is really the USD/CAD.  The way it works when you purchase a contract of this pair is that you are buying U.S. dollars against the Canadian dollar.  At first blush one may thing that there would not be much going on between this pair but au contraire mon frere!  As respective top trading partners, there's tons of action although the spreads (difference between the bid and the ask) aren't as tight as I would like.  

And yes, I have checked in with other brokers ..... this could be a whole series of posts on this blog.

There does seem to be a correlation between commodities and especially oil and the Canadian dollar and the oil is traded in dollars .. I'll post more on this later but safe to safe to say ... when oil tanks this pair rises and vice versa.  This is just one fundamental factor.  I'm no fundamentalist although I keep abreast of the news flow on the pair that I am trading.  The news is in the charts but one needs to keep attuned to what is going on if only to stiffen one's resolve in the face of a wavering position. 

I tend to set loose stops but I do make projections and see if a case can be made for a 3:1 risk to reward ratio.  I've marked primary and secondary targets in flourescent green.  This money management, a necessary practice.  You can just sign up for MARKETCLUB and let loose positions while you wait for the next trade triangle.  Its not that simple.

In this loony trade I already took some profits 43 pips in and set the stop at break even plus $2 to cover some commissions.  The USD/CAD has a good chance of making it to thos green area(s) but you gotta pay yourself along the way.  On this trade . this happened just 6 hours in but I'm not a forex day trader.  Those 43 pips could have taken 3 days and that would have been fine. 

Looming on the horizon at 8:30 Eastern Standard Time are some economic reports that may have a major effect on the pair.  A big report can fling your position around by 100 pips, or .0100, so that can bounce you out of a good trade REAL QUICK.  There's a real possibility of that happening and then there's the chance that the report will drive things in my favor, in which case, I will continue to ride this trend.

Short That Loonie !

Well, I've talked about it for months now but it is high time I execute on my promise (or veiled threat) to live blog my trades. I did this a bit on the blog I ran inside INVESTOOLS but my subscription ran out and I really did not have the money to renew so I said goodbye to them and resolved to fire this blog up.

I don't pretend to be a master trader.  This blog will always be a item published (honestly) by an average shmoe trying to make a little extra coin in his IRA and in his puny margin account.  Things have gone well for me this year as I am teetering on 20% gain in my IRA after having been virtually flat as late as May.  Got my head screwed on straight by tapping into some good analysis which I will feature regularly here.

As mentioned in other blogs, my forex goings on are based mainly on daily signals from MARKETCLUB but the actual entires will more likely be done on my own accord using 4 hr charts using the GUPPY method.  Nothing fancy here just buying on the dips on longs, selling on the pops on shorts.

This is what I was looking at ...... (click to enlarge)

Classic pull back and purchase on the cessation of selling.  I think the GUPPY maze of moving averages displays this fairly well.

Note:  I use thinkorswim on a black background with white OHLC bars.  My GUPPY study, is reversed in that the blues are the short time frame and reds are the long time frame and I will fix that later.

I used a sell stop a few pips above the action just to ensure things were going my way.  Follow my TWEETS on the left for the gory details.  I use somewhat or a "catastrophic loss" just in case something drastic happens but it is mostly mental as I watch the action hour to hour using my IPHONE even whilst working away at a day job.

Hmm .. now that I think about it .. there's many elements to this trade.... so much to blog ....

Sunday, August 22, 2010

Shorting via Guppy

I programmed the moving averages into my think or swim and added a twist.  To help visualize the movement a bit I shaded the long and short waves of averages with the lighter tone being the shorter of the group (closer to the price action.)

I screwed it up a bit by having the red group the long term and the blue group as the short term.  I'll fix that later.  For my account size and planning, I like to use a 4 hr chart as this fits in with my Daily Trade Triangle system that I get from MARKETCLUB.  It also seems like most active swing trader types use this 4 hr window to screen out the noise but stay close to the action at the same time.

In a way, I must say, this is just visually appealing, it looks cool.  It beats you over the head that a pair is not moving, meaning that you should not trade (necessary info for newbs to forex like me.)

Guppy Traders

From Guppytraders.com


This indicator was developed by Daryl Guppy. It is fully explained in TREND TRADING. Captures the inferred behaviour of traders and investors by using two groups of averages. Uses fractal repetition to identify points of agreement and disagreement which precede significant trend changes.




Applied to understand the nature and character of the trend. Used to assess the degree and extent of trading activity. Excessive trading activity can destabilise strong trends. Trend analysis enables more effective selection of appropriate trading strategies such as breakout, trend continuation etc. Can be applied to long side and short side trading. Can be applied to intraday trading. Also used for longer term investment style analysis.


  • Join established trends at points of price weakness
  • Join established trends breaking to new highs
  • Trade breakouts using rally dips and rebounds
  • Trade downtrend rallies as rallies rather than trend breaks
  • Recognise trend breaks as they develop


  • Degree and nature of separation in the long term group define trend strength and weakness
  • Degree and nature of separation in the short term group define the nature of trading activity.
  • Degree and nature of separation between the two groups of moving averages define the character of the trend.
  • Compression shows agreement on price and value.
  • Compression of both groups at the same time indicate major re-evaluation of stock and potential for a trend change
  • Trade in the direction of the long term group of averages
  • The relationships between the groups provide the necessary information about the nature and character of the trend.
  • Do not use as a moving average crossover tool



  • Enables effective analysis of the trend environment
  • Improves selection of the appropriate trading tactics
  • Better understanding of trend strength
  • Effective evaluation of unusual price movements, such as dips and spikes
  • Effective understanding of trading activity and behaviour


  • Not effectively applied to trend less stocks
  • Cannot be applied to all trending stocks
  • Do not use as a moving average crossover signal  

Learn Forex – Guppy Multiple Moving Averages (GMMA) in Forex Trading

Learn Forex – Guppy Multiple Moving Averages (GMMA) in Forex Trading

FXPath has bunch of articles in FX trading and analysis. This GMMA method sorta caught my eye and I've started to investigate it as an entry tool although my analysis tool is still Market Club trade triagles.

The FXpath web site links to guppytraders.com and I'll be posting excerpts from that site which give a sense of what is going on. My methodology is already set but in between trades I like to look at new ways of looking at things. And admittedly I let my unconscious mind tell me what strikes my fancy and what does not.

I listen to my instincts. More on that later.

Learn Forex (FXpath.com) – The GMMA, or Guppy Multiple Moving Averages, was developed by Daryl Guppy, an Australian trader. See the accompanying EUR/USD chart with the GMMA set of moving averages overlaid on top. Used by many forex traders, this multi-faceted indicator combines two different sets of moving averages. One set (the longer-term moving averages: 30, 35, 40, 45, 50, and 60 periods) represents a currency pair’s long-term traders, and the other set (the shorter-term moving averages: 3, 5, 8, 10, 12, and 15 periods) represents a currency pair’s short-term traders. There are several ways to interpret the GMMA, the most recommended of which has to do with looking at the separation between each individual moving average as well as the separation between the two sets of moving averages. These separations reveal vital information regarding trend strength, both short-term and long-term, as well as pullbacks within a trend and potential impending changes in trend. They can also provide specific trade entries and exits in the direction of the prevailing trend. For more detailed information on this dynamic indicator and how it can be applied to forex trading, please click on the following link: http://www.guppytraders.com/gup329.shtml .

James Chen, CTA, CMT
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