Weekly Trading Update - 23-27 May 2011

It's been quite a profitable week this week on all fronts. My share trades did well, the Forex Morning Trade system generated a profit of 92 points, and my main 4 hour forex system (see right for more details) generated a decent return as well. (I also traded a few breakouts on Wednesday which produced a small profit as well, which you can read about in my previous blog post).

I should mention that despite the fact that the Forex Morning Trade system produced a nice profit this week, I have decided to stop trading this system for now. It has had a few more losing weeks in recent times, and to be honest I am getting fed up of getting up so early every day. So this will be the last time that I report the results from trading this particular system:

Monday: +40 points
Tuesday: no trade
Wednesday: 0 (break-even)
Thursday: +40 points
Friday: +12 points (closed manually because didn't want to take a loss)

I may return to this system at a later date and will still keep on eye on the results, but I am putting it to one side for now.

On to my 4 hour system now, and it found some decent trading opportunities this week. There were two trades in total - one on the GBP/USD and one on the USD/JPY pair.

The first was on the GBP/USD pair on Monday morning. The EMAs crossed nicely downwards on the 4 hour chart and I went short at 1.6178 after a slight pull-back. I then closed half the position for 50 points and moved my stop loss down to break-even. I then closed the second half of the position at 1.6100 in the end, which was extremely cautious but I didn't think it was going to fall much further at the time.

There was actually another downward EMA crossover on Wednesday morning, but to be honest I was so busy trading the breakouts that I mentioned in my last blog post that I didn't even notice. Not to worry though because it would have been a losing trade anyway and the breakout trades generated a total profit of 23 points if I remember correctly.

The other trade (on the USD/JPY pair) occurred on Thursday afternoon. I was reluctant to enter a short position after the EMAs crossed decisively downwards on the 4 hour chart, simply because the candle was so long. However I did eventually decide to open a position and went short at 81.40.

I managed to close half the position at 81.00, and having moved my stop loss to break-even, I am still waiting for my second price target of 80.60 to get taken out. I'm just going to sit and wait to see what happens for the rest of the day. It's essentially a free trade anyway, which is the major benefit of moving the stop loss to break-even after you close the first half of the position.

Finally it's been a great week on the shares front. My spread betting account is in a very healthy state after banking profits in Barclays, Lloyds and BP and my main investment portfolios are not doing too badly either with Lloyds the only share currently in the red. However I'm planning to hold on to those for about 5-10 years anyway.

I bought some shares in Vedanta this week at 2080p, but other than that I'm still most interested in accumulating shares in Barclays, Lloyds, BP and Tesco for the medium-long term.

Anyway that's enough for this week. I've waffled on far too much already. Have a great bank holiday weekend.

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Weekly Trading Update - 16-20 May 2011

Well it's been another mediocre week this week. My main 4 hour trading system did generate one winning trade, but the Forex Morning Trade system, which lost 40 points last week, is set to have another losing week. I am still waiting for today's trade to reach it's conclusion (I need the price to go up to 1.6275 to hit the 40 point profit target), but at the moment it is either going to lose 80 points or 120 points (it turned out to be 120 points). I will update you with the result of this trade later, but these are the results from using this particular day trading system so far:

Monday: -40 points
Tuesday: -40 points
Wednesday: -40 points
Thursday: no trade
Friday: 0 (break-even)

As you can see, this is not good at all and I am now seriously considering whether I should continue using this system. It had a tremendous winning run for many months, but the GBP/USD has been difficult to trade this year (with the ADX staying below 20 for much of 2011 so far) and this is reflected in the results with more losing weeks than last year. It would also be nice not to have to get up at 6.15 every morning, which is another reason why I am considering abandoning this system.

The annoying thing is that I made money using all my own systems. My 4 hour system found a nice winning trade on the GBP/USD pair. This pair is now in a downward trend according to the Supertrend indicator on the daily chart, so I went short when the EMAs crossed downwards on the 4 hour chart, eventually opening a position at 1.6184 on Wednesday evening after a slight pull-back.

I had to wait a while but it eventually hit my initial 50 point target the next day, where I closed half the position. However after moving my stop loss to break-even, the price bounced back and quickly took out the second half of the trade at this break-even point.

There were also a few good breakout trades for this particular pair (where the overnight trading range is very small compared to the average daily range). I went short on Wednesday morning after the price broke below the range and below the pivot, and rode it all the way down to the S1 line for around 53 points, and this morning I went long after an upward breakout and closed the position at R1 for around 24 points.

Not every trade worked out though because I placed a similar breakout trade yesterday and had to take a 35 point loss after going short at 1.6151.

Finally as regards my share trading, it's been a great week overall. After a very nice rise in BP yesterday and today I have managed to bank some decent short-term gains, and I was automatically closed out on my main Barclays position for 10 points this morning as well.

So overall I finished up on the week but the Forex Morning Trade system cancelled out some of these gains unfortunately. Even if it only loses 80 points, which is looking likely, it has still had a really bad week. I think I will possibly trade it for one more week before making a final decision as to whether I will carry on using it.

Anyway have a great weekend and I will speak to you again soon.

(If you want to check out my main 4 hour trading system, you can access it for free when you subscribe to my newsletter. Simply fill in the short form above).

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Weekly Trading Update - 30 May - 03 June 2011

This is the first week that I haven't traded the Forex Morning Trade system and I have to say I've enjoyed the extra hour or so in bed. I just looked at the charts for this week and I think it would have lost 40 points using the original settings, so I think I have made the right decision as it doesn't seem to be as profitable as it used to be.

My main 4 hour trading system didn't generate any decent set-ups on the major forex pairs this week, but I did manage to find a trade on the FTSE 100.

The Supertrend indicator was red on the daily chart (indicating a downward trend) so I was looking to go short on any downward EMA crossover on the 4 hour chart. I don't trade this index very often, but it had just rejected the key 6000 level a few times and looked like an excellent shorting opportunity.

The EMAs looked like they were crossing downwards on Wednesday afternoon after a double dose of poor economic figures from the US, and after a slight pull-back I went short at 5930. My plan of attack was to close half the position for 40 points and the other half for 80 points, and I did eventually manage to achieve this goal after the price hit 5850 yesterday afternoon.

Other than that I think I placed 5 separate breakout trades on the GBP/USD during the week. I don't really feel like discussing each of these trades separately as it will take forever, but they were all based on low overnight trading ranges and subsequent breakouts occurring after 08.00, when the London market opens.

You can check them out on the 5 minute chart if you want. There were two breakout trades on Wednesday morning (one long and one short). With the first trade I closed half the position for 10 points before being stopped out at break-even, and with the second trade I closed the entire position at S1 for around 20 points after poor manufacturing figures had just been released.

There were another two breakouts on Thursday morning. The first one didn't come to anything and I took a loss of 20 points, but the second one generated a nice profit as I closed half at the pivot points for around 14 points, and the other half at 1.6400 for around 32 points profit.

Finally there was a decent breakout opportunity earlier today on this pair as well. Unfortunately because I always like to end the week with a winning trade, I was a little too cautious and decided to close half the position for 10 points and move my stop loss down to break-even, which was subsequently triggered. The annoying thing was that I was targeting the S1 support level as my exit point, and the price did actually hit this point relatively easily.

Elsewhere my shares haven't really gone anywhere, except for Lloyds which has been woeful, and I am now just sitting on the sidelines mainly. There are a lot of potential bargains out there such as Barclays, Lloyds, Aviva and BP amongst the large cap stocks, but ideally I want the FTSE to fall to around the 5750/5800 area before buying into any of these.

Anyway that's all for this week. If you want to check out my main 4 hour trading strategy, you can access it for free when you subscribe to my newsletter via the form above.

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Weekly Trading Update - 02-06 May 2011

Well it's been a fascinating week on the markets. I'm sitting here watching the oil price getting absolutely hammered, and am tempted to buy a crude oil ETF for the long term with the current price just below $95, but ideally I would prefer it to fall to around $90.

Anyway back to the forex markets and it's been a fairly quiet week overall. My main 4 hour trading system didn't actually generate any trades at all. There was one on the EUR/GBP pair which would have worked out well, but this occurred on Bank Holiday Monday (and on the day it was announced that you know who had been captured) so it would never have been considered, even if I had been at my computer that day.

Thankfully the Forex Morning Trade system had a return to form and generated a total profit of 80 points, as you can see below:

Monday: no trade (bank holiday)
Tuesday: +40 points
Wednesday: 0 (break-even)
Thursday: no trade
Friday: +40 points

This system does have the occasional losing week, but on the whole it has been extremely profitable. Mark Fric has made a few adjustments recently, but I am still using the original settings of 40 points for the stop loss and target price, and moving the stop loss to break-even when it is 24 points in profit. This seems to work really well so I see no reason to change it at the current time.

If you want to find out more about the Forex Morning Trade system, you can do so by clicking here.

With regards to my share trading, I've had slightly mixed fortunes. I made the decision to close out most of my positions with the FTSE trading close to the stubborn resistance level of 6100. I closed multiple positions in Tesco at 410p for some very healthy profits (with the aim of buying in lower) and closed my positions in Barclays for a small profit.

I am left with one long term holding in Tesco and another long term holding in Lloyds, which actually dropped a lot this week. However I think they have tried to issue all the bad news at once, so it should hopefully be onwards and upwards from here on in.

It's nice to be sitting on a pile of cash at the moment as there are quite a few bargains around. However I think I will try and be patient because the Supertrend indicator has only just turned red on the FTSE 100 daily chart and the Smoothed Repulse indicator has just crossed below 0, which suggests that there could be a lot more downside to come.

Next week should be very interesting and it's actually a full five day week for once. Bank holidays are all well and good, but when you work for yourself they can be quite frustrating because you cannot earn any money. Anyway have a great weekend and I will speak to you again soon.

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Should You Use Multiple Time Frames When Trading Forex?

In today's article I want to talk about the merits of using multiple time frames to trade the various different forex pairs. If you go to some of the forex forums and check out the different strategies that people use, you will find that some prefer to use just one time frame, whilst others prefer to use two, three or four different time frames. So how many time frames should you use?

Well the short answer is that you can potentially make money from forex trading using however many time frames you want. There is no right or wrong approach in my opinion.

You may automatically assume that you are more likely to make winning trades using multiple time frames because you can find pairs that are trending in the same direction on each of these time frames, and then pinpoint your entry point on the shortest of those time frames. For example you could look for currency pairs that are trending upwards on the 1 hour, 15 minute and 5 minute charts, and then look to go long at the most opportune moment on the 1 minute chart.

This kind of strategy definitely has it's merits because you are always trading in the same direction as the longer term trend, and therefore you always have probability on your side. However if you use too many time frames you can over-complicate things and you ultimately end up getting a lot of conflicting signals and fewer and fewer opportunities to actually trade the markets.

That's why when I trade my main 4 hour trading system (see right for more details), I only use two time frames. I use the daily chart to highlight the current trend, and the 4 hour chart to find opportunities to go long/short in the same direction as this trend.

The actual system I use only produces a few really good trading opportunities every week (and sometimes none at all) across the major currency pairs. So if I were to use the weekly and monthly charts for additional confirmation of the long term trend, then my trading system would barely produce any trades at all.

I also think it's important to point out that whilst it's a good thing to always be trading in the same direction as the long term trend, you don't always need to use multiple time frames when trading forex. For instance the Forex Morning Trade system, which has made me a lot of money since I first started trading it last September, only ever uses the 15 minute charts.

Similarly when I trade early morning breakouts using my own breakout trading system, I only ever use the 5 minute charts to enter and exit positions. I don't even look at the 15 minute or 1 hour chart, for instance, to look at the longer term trend. All I am interested in is finding a profitable breakout opportunity on the 5 minute chart using simple price action and a couple of technical indicators.

So the point is that you can indeed use multiple time frames to trade forex. I myself use two different time frames when trading my main 4 hour trading system. However as you start to use more and more time frames, you will start to get a lot of conflicting signals and you will also get a lot fewer trading opportunities. Furthermore it is sometimes just as easy to make profits trading just one single time frame, as I have hopefully demonstrated using the two examples above.

The fact is that everyone has their own trading strategies, and it doesn't really matter how many time frames you use because you can still generate profits regardless of how many you use.

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Q3 Predictions For 2011

I have a guest post for you today which has been kindly contributed by Christopher Lewis from DailyForex. It basically offers predictions as to where the major currencies are likely to be headed in Q3, which is not that far away now. Anyway here's the article:

When looking at the Forex markets, there are several things that can be concluded when looking around the world. While there is no accounting for “black swan” events, there are several things that are starting to play out in the headlines that could move the markets during this time period.

The first area of concern is Europe. The Greek debt issues are starting to creep back to the forefront, and Ireland recently suggested that they are looking to restructure their debt as well. Be clear, when the phrase “restructure” is used, it means that someone isn’t getting paid. When this happens, it can absolutely crush a currency. While it is speculation to think that the Euro is going to collapse, the truth is that there are a lot of issues just waiting to pop up in that region. In fact, some of the brightest minds are openly wondering how long the Germans and French are going to be willing to fund the poor decisions of the Portuguese, Irish, Greeks, and Spanish. Because of this, we remain cautious about the future of the euro, and think that it may suffer later this year.

The British pound has been strong against the dollar for a large part of this year. The 1.70 level should continue to be the line in the sand and with some of the economic malaise in the UK – the area is likely to be a top in this pair until something good happens in the UK, or the world finally punishes the United States for printing money.

The US dollar will be mixed, but it is hard to see a situation where the world doesn’t run to it when things go wrong. There will more than likely be a move to the USD sooner or later, due to issues in Europe as outlined above. The dollar will probably see continued weakness against other more responsible economies such as Switzerland, but will win “by default” against many others. The destruction of the dollar will continue in the long run, but the feeling that one of these “panics” is coming can’t be ignored.

The rest of the year will not be as smooth as the first part of it has been. The easy profits have been had, and now we shall see concerns overtake the market from time to time. This is obvious as every minor issue causes a sell off in the “risk currencies” in short order. The market acts like a market that has little confidence in the safety of trading. Because of this, we will see strong moves down in commodity currencies as well. However, there will be periods of optimism as well. This is what will cause the choppiness. Even with these headwinds, the likelihood of another meltdown isn't very high. Shorter-term trading will be the order of the day.

About the Author:

Christopher Lewis is a regular contributor to DailyForex, a website that offers Forex broker reviews, technical analysis and Forex news aimed at helping traders make their Forex trading as profitable as possible.

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Critical Stock Alerts for Bank of America, Thermo, Compuware, DTE, Hasbro, & Nordstrom

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