AUSUSD 2010-05-26 Live Analysis

(Technical analysis done by Eric Lye in our Forex Trading Blog.  The purpose is to share how we analyze the market and put ourselves on the side of higher probability of things happening.)

Most pairs are forming a base now.  Price likely to go higher before coming down, as illustrated either using ABC corrective wave count or ABCD Harmonic pattern, the possible movement in coming days.  Former counts the wave, latter counts the points. (The drawings is just an estimation, allow the market to tell us what is going to happen and not predict the end points)


















[2010-06-15]  Follow up

Instead of a regular Gartley, a potential Bat or Crab is forming, depending on point D.  In any case, it is not that important.  In order for point D to confirm, we would want to see a clear price reversal pattern.

Forex Trading Tips and Tricks - What is a Trend

(This is a mini-series of Forex Trading tips and tricks by Eric Lye in his Forex Trading Blog.  Our objective is to help traders learn how to trade Forex properly, be educated and excel in their career)

Read this from Martin Pring's book.  "A Trend is a period in which a price moves in an irregular but persistent direction."


I like this definition as it helps us to define what is market direction respective to the time frame.  i.e. We should not be too sticky to the common school of thought that we should trend following strategies, especially for full time traders.  Learn to be flexible and trade what you see.

Forex Trading Tips and Tricks - Risk Managment

(This is a mini-series of Forex Trading tips and tricks by Eric Lye in his Forex Trading Blog.  Our objective is to help traders learn how to trade Forex properly, be educated and excel in their career)

Risk management is a big topic and there are many ways traders manage their risks.  However, I would like to highlight an important mistake that many makes and share my own risk management.


There are many traders that would risk 5% of their equity for each trade and they claimed that they might have a trading system that yield a 60 to 80% win rate.  This is in reality not easy to achieve and in my opinion, not practical.  A consecutive of 5 losses would throw your mind out of control if you risk 5%, it's a good 20% draw down.

If you have been trading long enough, you would realize the average winning rate is about 50%, what makes this business work is the way we control the 50% losses.  i.e. if you could break even or take small losses and allow your winners to run at the appropriate moments, your P&L would look healthy and good.


For me, I would only put in around 1 to 1.5% for each trade, and increase the exposure but not exceeding 4% when the market has proved me right.  That is how I create my big winners.


And I would take small losses without hesitation when the market stall long enough and not giving enough evidence that my trade is going to go my way.


Like the old say "Let your winners run, and cut your losses small".  So, as a trader, you would need to ask yourself, how shall I do it.

Forex Trading Tips and Tricks - Find yourself a Forex Mentor

(This is a mini-series of Forex Trading tips and tricks by Eric Lye in his Forex Trading Blog.  Our objective is to help traders learn how to trade Forex properly, be educated and excel in their career)

The journey of learning how to trade Forex is a very long one.  Find yourself a mentor that can give you focused coaching, and training from a skilled, knowledgeable and experienced individual.  You can also can get the necessary timely help and advice in handling the ups and downs in trading.

However, before you take on a mentoring approach be sure that you are able to commit the time yourself.

2010-05-12 GBPUSD Live Trade

(This is a live trade shared by Eric Lye in his Forex Trading Blog.  The purpose is to share how we trade and provide the learning points.  Note that there is no absolute right or wrong about a trade, it is all about managing it well)

[Wednesday]

Went long for GBPUSD after the price bounced off from key support yesterday night.  This is a continuation play.

And we did a review on this and could have chose to get out 100% at the top

Forex Trading Tips and Tricks - Trade with what you can lose

(This is a mini-series of Forex Trading tips and tricks by Eric Lye in his Forex Trading Blog.  Our objective is to help traders learn how to trade Forex properly, be educated and excel in their career)

We just had a traders gathering last Saturday and one of our very competent trader said this.  If you have the mentality of just trading with what you can lose, drop the idea immediately because you are planning to lose.  I totally agree with him.

Focus on learning how you should trade and minimize your losses when you are still at the learning stage.  And 95% of the traders do not get pass this stage and eventually give up this business.


Take each trade seriously, learn from it regardless if it is a win or lose.  Log down each trade and compile your statistics.  Start with a 30 trades cycle and see how you perform.  When you have developed the habit, increase to a 50 or even 100 trades cycle.

Forex Trading Tips and Tricks Mini-Series - Test and Re-Test

(This is a mini-series of Forex Trading tips and tricks by Eric Lye in his Forex Trading Blog.  Our objective is to help traders learn how to trade Forex properly, be educated and excel in their career)

Test and Re-Test is a very common technique to look for triggers.  Especially when price is a little bit far away from the support and resistance, you would minimally need to see a Test and Re-Test to form the interim support and resistance.

However, when market is undecided in the direction and you start looking for test and re-test, you would usually be caught on the wrong side.  When you are unsure about the market direction, wait for consolidation to form.  It can be a triangle or rectangle (or inside bar).  When your bias is eventually form after collecting enough information from the market, look to buy on the low side of the consolidation or sell on the high side of the consolidation.

GBPUSD 2010-05-06 Live Trade (Scalping)

Managed to close off my GBPUSD short around 3pm.  Price look to have found some support and I took this opportunity to scalp.  (Typo on chart, it's M5 chart for the second picture)

[Closed out]

Missed TP by 2 pips.  Time to get out and I can close shop for the day

Trading Performance 30 Trades Cycle

Keeping a statistics of how we trade is very important.  Below is a project I have with one of my students.  She started with me in March. We took about one week to run through the proper trading concepts and empty her head on the indicators system she learnt from someone else.  Throughout this month plus of training, we focus on building up her trading skills while trying to keep even.  It was good that we had a little bit more success than expected.  Below is a quick summary.


Total Trades: 33 (from 2010-03-25 to 2010-04-30)
Wins: 14 (WinRate = 42%)
Losses: 19 (LossRate = 58%)

Avg$Win (in percentage) =  + 6.40%
Avg$Loss (in percentage) = - 3.66% 

Net P&L (in percentage) = 20.08%

Happy :-)

I just want to write about my feeling and feel good about this.  I have a Google group with my students and fellow traders.  There are times that I felt that it was difficult to sustain the activity level within the group, but after months I saw good growth in us.  Many have evolved into better traders.  There was no magical trading system or trading strategy being shared within our group, what I saw was the hard work, the time, the effort, the pains that they have put into their learning process.  They learn, they trade, they fail and they bounce back up.

The is the fruit of committed learning.  I am so happy to see this.

2010-05-04 GBPJPY Live Trade

It was during the European session that the market decided to go south.  Though the analysis on EURUSD and other pairs were pretty much on possible reversal this morning, there were no setups.

When there was sufficient information that market is turning down, I took the short on GBPJPY.  And this trade made my day, as this trade gave me more than a hundred pips of profit.

EURUSD 2010-05-04 Analysis

Technical analysis on EURUSD done by Eric Lye in our Forex Trading Room

[Tuesday]
We may see some support at current level.  If the inverted head and shoulder turn out to be true, then there would be opportunities to go long on this pair.