Traders are constantly learning their craft. Those who do not share information, discuss tactics and review prior trades are doomed for failure. Global-View.com knows this. It is the leading destination for Forex traders looking to learn and discuss trading. With over 33,000 registered users from 125 countries, Global-View.com exposes its users to an incredible base of knowledge. In this book, the authors dissect each of 15 chosen trades, using the material to expose some of the best (and worst) practices of a Forex trader. The book weaves a plethora of Global-View.com information into the detailed dissection. Each description will include how the trade was selected and why it was made, as well as money management and psychological aspects of the trade. Entertaining anecdotal stories are interspersed throughout each trade story.
Figure 12.3 shows a moving average that indicates the major trend for a Position Trader on a 3-hour chart. Traders also used very complicated and closely guarded secret indicators to determine the major trend. But is that really necessary? FIGURE 12.3 Using a Moving Average to Spot the Trend Source: FXtrek IntelliChart. Copyright 2001-2007 FXtrek.com, Inc.
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MARKET ENVIRONMENTS My methodology of market environments (ME) (see Chapter 28) uses directional movement and Pchange in price/timeto determine all trends at all time unit and price levels. Save your effort for other activities related to your trading. To find the major trend, draw a line from the first closing price on a chart to the last closing price on that chart. (You can, of course, simply visualize the line without actually drawing it.) Is it up or down? That is the major trend. By how much is it up or down? is the only other question you need to ask. This tells you how strong the major trend is at the moment. Redraw the trend line periodically for an updated major trend. Now, that was not difficult, was it? Does the moving average, which required calculation, really give you any more information? Not really. I can assure you the same is true for those complicated indicators I mentionedthey are truly much ado about nothing.
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When I was in this chapters trade I could not help but think of the Feldman brothers at Peavey & Company, who carefully, patiently milked silver futures for every penny they could get. On occasion they would go into a small side room and close the door. You could hear them arguing shouting and yelling at each other. But when the door opened and they came out, all was peace and harmony. Partnerships are hard work; I am happy I trade alone!
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ANALYZING THE TRADE In Figure 12.4 I caught the major trend quickly from the 3-hour chart (A) and followed it by buying on the secondary trend breaks using the Dagger entry principle. I stayed a bit too long, as you can see (B). That is an occupational hazard of trend following: You do not know it is overuntil it is over. But one good major trend ride can cover a great many small losses. It should be noted that a position trade of weeks is very unusual in the FOREX arena, especially for retail traders, who usually stay only for hours, if not minutes. For each trade I am providing the basic statistical information so the trader may find and review the appropriate charts with his or her own charting service: Pair: EUR/CAD Entry Date: May 4, 2006 Exit Date: May 24, 2006 Long/Short: Long Entry Price: 1.3970 Exit Price: 1.4285 Profit/Loss: Profit of 315 pips Theme: The trend is your friend!
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