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July 15th, 2009 @ 2:13 pm by Matt "NewstraderFX" Carniol

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There are  times when deciding not to trade is the best trade you can make and right now appears to be one of those times. I know, I know, there are a certain number of you guys out there who claim to be very nimble when the market is moving sideways (as it has been over the past 6 weeks or so) but for the vast majority of traders (me included), sideways movement is just too hard to deal with. The problem is that staying on the sidelines is difficult for many to do because they develop a syndrome I call ‘trader’s finger,’ which means your finger gets itchy to push the buy or sell button.

It’s very important to resist the urge to trade just for trading’s sake or because you feel you have to “do something” like earn a certain amount of pips each week.  I haven’t taken a trade since I saw the markets moving sideways weeks ago and I’m feeling better about my decision every day.

I can’t feel comfortable in a trade if I don’t have a clear idea of where the market will be in a few weeks or months and what’s even more important is that I’ve avoided putting myself through the mental anguish of making bad trading decisions and losing money, which I hate to do and which I know is inevitable when markets get choppy.

Basically, I have the same goal in trading that I have when I get in my car, which is to not get into an accident. The way I look at it, as long as I avoid crashing, the odds are a lot higher that I’ll eventually get to my destination.

What’s interesting is that over the past few weeks I’ve seen so many “professional” opinions on Bloomberg or wherever turn out to be totally wrong. Even good ‘ole Marc Faber, one of my favorite people, appears to have gotten things incorrect when he said 2 weeks again that the dollar was set to gain over the next two months or so. Since then, he might be ahead a little bit but what’s more likely is that all the back and forth movement has caused him a lot of aggravation.

Now, Marc Faber is probably one of the world’s great traders but even he looked to be suffering from trader’s finger during his last Bloomberg interview. Back in March when markets were really crashing, he seemed to go out of his way to say that stocks were set to rally-and that turned out to be one of the year’s great calls. He didn’t have quite the same confidence 2 weeks ago however-in fact, it looked more like he was saying something in order to justify being interviewed. After all, it’s hard to get in front of the cameras and advise people to stay on the sidelines!

But when you think about it, why should that be so? I know that I put just as much effort into making a judgment not to trade as I did when I called a 1000 pip short trade on the pound last summer (my “Four Figure Trade” article), or when I went long on GBP/JPY and AUD/JPY in May (see twitter) and made about 900 pips over 4 days, or when I made about 400% on some A$ options (twitter again) between April and May.

Now, what am I looking for that could start a trend? Simple really if you use some logic. Let me ask you a question.

Is it not true that all of the fiscal and monetary policies have been put in place because the economy is in an emergency situation? Of course it is. So then doesn’t it follow that if and when the signs are given that these extraordinary policies can begin to be withdrawn it indicates that conditions are improving and will continue to do so? I would think so. In fact, I was hoping against hope that the G8 might signal just that last week but unfortunately, they did just the opposite when they said that now is not the time to begin withdrawing liquidity. Apparently, they weren’t in a “green shoots’ mood in Italy (although we did learn that Obama has a preference for satin-clad booty…lol).

Likewise, when economists like Paul Krugman are talking about the need for a second stimulus, that doesn’t exactly instill much confidence in me that the economy is set to improve in a meaningful way any time soon. And when I hear Nouriel Roubini talking about unemployment going to 11%, an anemic recovery and the chance of a double dip recession along with housing prices falling another 20%, somehow it just doesn’t put me in the mood to buy and hold for the long term.

In fact, I think that professor Roubini helped put the kibosh on the spring rally, so what we need to see is some data proving his opinions on the economy are wrong (a tall order, I know). So, it would be great to see new unemployment claims fall below 500K per week and for the number of continuing claims to stop making fresh records with each report. Stabilization of housing prices as measured by the S&P/Case-Schiller Home Price Index would be helpful. The ISM’s above 50 would be very significant.

Obviously it’s going to take some time to see these data points materialize but what I’m also going to be looking for are any surprises like Bernanke announcing the Fed was “electronically” printing dollars. Listening to what’s being said at Jackson Hole next month could prove to be valuable.

Also, check the Fed’s H.4.1 report each week, specifically the line regarding the amount of deposits commercial banks are holding at the Fed banks under liabilities. In normal times there’s about $14B or so on deposit being kept there because of reserve requirements but at the height of the crisis banks were hoarding nearly $1T .

All that money sitting at the Fed means  the banks aren’t lending (or doing very little lending). We need to see that trend towards normalization because as the amount on deposit decreases, the velocity of money increases as banks make more and more loans.  The amount kept on deposit decreased to about $625B just before stocks took in March but increased to about $900B during the stress tests, so I would like to see it get at least to that level (and decrease further) again.

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February 15th, 2008 @ 7:00 am by Mihai Marinescu

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Hi everybody!

Today the AUDUSD presented an interesting bullish opportunity, we got a confirmation for a long and we are now looking for a buy@0.9050-0.9065 – let’s see if this trade comes into play later today.

Also, GBPJPY looks bearish short-term, with a possible target at 211-210.80 possibly supporting a new rally up with 214 as a main target (2 sets of double tops in the area).

USDCAD continues to look bearish, with repeated tests down at 0.9965 creating a downward slope favorable to the bears – but momentum still expected to build up to sustain a short trade. In standby for now…

Happy trading!

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January 31st, 2008 @ 10:23 am by Mihai Marinescu

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Riding the “Post-Interest Rate Decision” Rollercoasters

Hey guys, choppy market action today after yesterday’s interest rate decision – 0.5% cut and more cuts expected, so the headlines read: broad bearishness for the dollar. Which is why we focused on some short-term SHORT setups on EURUSD, GBPUSD :) At times like this when the market actors agree on a certain scenario (in our case the dollar falling), I’m thinking they will probably be right, but NOT RIGHT AWAY. Remember – the fundamentals are not what they appear…

EURCHF displayed an excellent shorting opportunity (a perfect wave formation backed up by divergences and trendline break) – we went in 1.6103 and closed the position during US session for 71 pips (the trade of the day).

We also took a short GBPJPY – low risk position for a large target – our 30 pips stop got hit by 2 pips and price rallied to our target just after that – better luck next time! :)

Also, took a short EURUSD on a retracement however the pair went up again in a 3rd test up and we got stopped out for -35.

Overall a positive day, however the effects of rollercoaster rides in the main currency pairs obviously didn’t help our technicals.

We also observed bullish scenarios in EURCAD and bearish on all yen pairs – it was only during US session that the yen started to gain some ground (after the US jobless claims report) .

Let’s see what tomorrow brings – I’m still bearish on EURUSD and GBPUSD, for as long as they don’t break the triple tops on the large charts, in which case I’m expecting a sharp rally up that would put an end to the current correction.

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January 28th, 2008 @ 8:06 am by Mihai Marinescu

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Hello everybody!

We started today’s London session with an careful look at GBPUSD and GBPJPY, where the overall sentiment seemed bullish at the time. With the EW picture suggesting both pairs possibly getting out of the minor correction down started on Friday and short-term technicals also confirming reversal (including 200MA signal on 15m) we went LONG on cable @1.9808 on a trendline break confirming a 1-2-3 setup. Stop was placed below the trednline @1.9758. Our target is the possible top of a 5 waves formation up at 1.9915 (where another pullback can be expected).

Also, GBPJPY seemed to continue the large retracement move started last week and so far we have a good support @209.61, a previous resistance and supp. As long as the pair is holding above this level, we are still on a bullish retracement scenario, with initial target @212.10, followed by 214.00 and 217.50.

EURUSD looked like trading in range, and we expect it to continue some range trading until the interest rate decision on Wednesday. No trades on this pair today.

USDCAD has confirmed already a bearish move on Friday, and we are looking for possible entries short.

See you tomorrow!

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January 24th, 2008 @ 9:01 am by Mihai Marinescu

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We started the London session today with a look at GBPUSD and AUDUSD, both pairs were displaying bullish formations (EW / 1-2-3 on several timeframes), with other technicals on 4h and 1D giving further hints of a possible rally up. We were able to identify 2 trading setups for GBPUSD, one of which confirmed later before the cable rally. Also, we identified a bullish setup in GBPJPY just before the breakout, however got stopped out for a few pips (5m and 1m entry, with low risk). EURUSD was perfectly flat at the time. We also analyzed a possible bearish setup on USDCAD based on range breakout and 200MA resistance on 15m (target 1.0140 already hit), but we did not take the position.

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November 21st, 2007 @ 1:47 am by Eugene Teplitsky

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This is a video summary of the Live Forex Trading Room session on November 20, 2007.

Today’s Summary, by Sunil Mangwani:

Its not necessarily every day that we get into a trade, nor do we need to enter a trade every day. We also have our share of losses. But for us, as long as we don’t have any formed confirmations based on technicals, we don’t enter into at trade. We spend the entire day here in the Live Trading Room analyzing the trades and different currencies using different tools to determine which phase of the price movement we are in.

Case in point, EUR/USD – for a couple of days now we have been looking for a Triangle Formation breakout on the H4 charts. We can see that the breakout took place to the upside – but the most important part, more so than the trade itself, is that we – and our members – are prepared. No matter which direction the breakout takes place in, we are ready with fixed targets, based on certain principles of Fibonacci Expansions which we use for targeting our Triangle setups. Read the rest of this entry »

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November 8th, 2007 @ 2:01 am by Eugene Teplitsky

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This is a video summary of the Live Forex Trading Room session on November 7, 2007.

Today’s Summary, by Sunil Mangwani:

Out of intraday trade setups today, we traded just one. The Yen pairs were going crazy in the Asian session, and have been dropping like a stone. We managed to catch the GBP/JPY – and did not anticipate such a large move.

The Divergence was certainly there – a Bearish Divergence. We entered our Short trade based on our Fibonacci Fan levels, and price went far beyond the expected target levels. We did not ride the price all the way down, however. This trade was a good example in the room of the effectiveness of Fibonacci Fans in general, and how to use them. Read the rest of this entry »

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November 7th, 2007 @ 1:08 am by Eugene Teplitsky

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This is a video summary of the Live Forex Trading Room session on November 6, 2007.

Today’s Summary, by Sunil Mangwani:

There was one intraday trade taken today which went off very well. I would like to concentrate on this trade today and the process which gave us the necessary confirmations to enter the market correctly.

It was a Yen pair on which we traded, but thats not how the trade started out. Lets have a look at the sort of correlations we were looking for.

We started off analyzing the EUR/USD. This pair has been in a bullish intraday phase, and we plotted some 1-2-3 Formations and applied our Fibonacci Expansions. Based on the Expansions, we knew that a certain level has yet to be satisfied. We were thus bullish on the EUR/USD, expecting it to go up. Read the rest of this entry »

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