GBP/USD update

You cannot win them all.

It looks like we might get stopped out on our GBP/USD trade. This is what happens when you take a trade that is counter to what the higher time frames are telling you. But it is not over until we are officially stopped out. Unfortunately I was not in front of my computer this morning  to adjust my stop-loss to break even before the aggressive move from the bears took price below our entry.  Now we have no choice but to sit back and see if price comes back into our favor. If not then it is what it is, losing is apart of the game.

GBP/USD Buy Setup

Ok traders we got what we were looking for on GBP/USD. Notice how price action reacted timidly towards the 200 MA and gave us a higher low as it bounced off of the support area at the 200 MA. Then had the strength to close back above the 8 MA OMG!. The buy setup on the daily is starting to show some follow through which is a good sign for our long position.

I have entered the market with my stop in 2 different areas. But if you are just now looking to enter this trade I would place my stop-loss under the previous candle. So our entry point would be at 1.58273, our stop-loss at 1.57415 and our initial target at the prior high on the daily. Stay Tuned!

You must learn how to lose before you can expect to win

I have officially conquered a demon of mine traders. For the life of me I could not find any success in the markets during the summer. Year after year after year I would struggle and give back profits during this season. Well August in particular, but all of that is behind me. Now I did not close out the month with a lot of profit which is understandable for August,  but I did close out the month with style considering my draw down.

If you take a look at my draw down for this month it only reached .97%. This is less than 1% of my portfolio. How was I able to accomplish this you might ask. Well by taking my lumps, dusting myself off and continuing to push forward.

30% of my trades were losing trades. But because I had a defined risk unit and an area where I was looking to get out of the market if it went against me. I was able to cut my losses and preserve my capital for other opportunities. Trading is a lot easier once you take your emotions out of the game and just execute.

One strategy that I use that helps me to be less emotional and more objective while I am in a trade is to have a defined risk amount, one that I am comfortable with losing if the market moves against me. Have you defined a risk amount that works for you. If not then keep adjusting your risk unit until you are comfortable and no longer losing sleep over your positions.

Knowledge is power but applied knowledge is more powerful

Gold did explode, did you get some?

I sure hope you did because this thing has got a lot more upside potential. The monthly is triggering now as we speak and the weekly followed through on our bottoming tail from last week. I know your thinking to yourself does he have a trading crystal ball predicting these moves? The answer is yes and it can be yours for the low price of just kidding with you lol!

But with hard work, back testing, the proper money management & risk management one can become successful in the markets. But the question some traders have to ask themselves is am I applying what I know, am I executing when I am supposed to. A lot traders find themselves stuck like a dear in the head lights when it comes time to execute. And other traders throw their strategy or even their whole trading plan out the window during the heat of the moment and start trading on the fly.

It is important that you are disciplined but it is equally important that you apply what you have learned and pull the trigger when your plan calls for you to without hesitation, reservation, or fear.

Now Looking at the charts below we can see gold is gaining some momentum. So for my swing traders you can take the monthly or weekly as is with your stop below the last pivot on the weekly. But for my intraday traders and my day traders you might want to wait for a pull back on the daily as we are a bit vertical and due for a pull back. Oh I cannot forget about silver she is a beast as well. Stay tuned there is much more bullishness to come from both metals.

Bullish XAU: RingGOLD Hmm! I think my mother was on to something!!!

I am big trader of gold and a lot of other commodities mainly because of my political beliefs and knowledge on the banking system and the fiat currency that is used as a medium of exchange around the world. Another obvious reason is that it is apart of my family name. As I stated in previous Newsletters whenever I have an opportunity to go long Gold, Silver or Oil etc.. I hop on the opportunity as I believe long positions are inline with my long-term bias of gold reaching all time highs as it is a necessity in today’s society, and as central banks continue to print more and more money the result is higher gold prices in the long run. With all that being said it is obvious that price has been consolidating in an ascending triangle on our Daily gold chart. The weekly chart is very promising as we have had several bottoming tails that have formed since the beginning of May. Now we are officially above the weekly 20ma and our bias has shifted to the upside on the weekly chart. With the monthly inline with our long bias and coming off of a bottoming tail that bounced off of a rising 20ma last month. OMG look out Gold is set to explode to the upside. You heard it hear and from me and my fellow colleague Jonathan Velez first GOLD IS SET TO EXPLODE so strap on your seat belts and get ready for the ride. Stay Tuned!!!

AUD/USD Trade Update (Up 264 pips)

I can’t forget about my good ole AUD/USD long position. We are up 264 pips at the moment and still got some good size on. Our stop-loss is at break even so we are trading with the houses money at this point. I am expecting a pull back so that I can add to my position. If price action fails to pullback, gives us a shallow retracement and then decides to rally, then be mindful of the resistance at the 1.06321 level stay tuned.

S&P 500 Trade Update (The Bottoming Tail)

Do you see what I see! Things just keep getting better and better for S&P 500. I mean are you kidding me a Bottoming Tail some call it the Hammer others call it the hanging man but regardless what you choose to call it, it is the second most bullish candle in our Candle Stick Alphabet, sitting right on top of the 20 MA. Need I say more traders, we are getting blatant strength from the bulls. A bottoming tail is formed when the bears start out dominant and are able to push price down to a lower level. But before the candle closes the bulls are able to overcome the bears strength and close out the candle as the side that won the battle. If you look at the chart below you will notice how in the past four weeks every time the bears attempt to muster up some strength, before the week is out the bulls have wiped out what the bears have tried to establish and then some establishing themselves as the side that is in control. In a lot of cases doing so in less time then the bears had to establish their strength, talk about power. This is why the Bottoming Tail is one of the most powerful tools inside our Traders Toolbox that we have at our disposal.

If you notice in the chart below we are starting to get some follow through to the upside as a result of the Bottoming Tail from last week. By spotting the right candles on the right time frames you are able take advantage of certain moves and opportunities as they present themselves with the confidence of knowing you are trading in the direction of least resistance.

$&P 500 Trade Update were in the money!

Man what can I say S&P 500 has been a beast. I mean did we pick the right time to go all in or what. Our Long position and add has paid us handsomely. As stated earlier we were looking to take profit at the top of the channel as price makes its way into the prior high. We are up 600 points and counting and we still got some nice size on this position. I am looking to get light on my position at the prior high on the monthly. It is rare in trading to have a home run but I think it is safe to say we knocked this one out of the park. Stay Tuned!

On another note have you ever heard the saying strike while the irons hot, get to gettin while the gettin is good, ride the trend till the end, Milk it dry etc… Although it is best to ride the trend as long as you possibly can during any season in the markets. During the summer since good trades  and solid trends are far and few between  (except this week in the market oh boy) one has to try to take advantage of any trend you find and follow the money. That means ride the wave and add till you cannot add no more. Now of course you want to keep your risk in check, treat every trade separately even if they are on the same chart, and follow your trading plan. But if there is money staring you in the face on a particular pair or commodity then stick with that pair or commodity because if it is paying and the other pairs or charts are choppy then the instrument that is paying is the one that commands our attention. As you can see in the chart above I have played S&P in a major way as well as AUD this past month because these are the charts that commanded my attention. In directing my focus to these charts I was able to avoid the whip saw and choppiness in other pairs that would have more than likely resulted in me giving some profit back.

A body in motion tends to stay in motion

Newton’s first law of motion is often stated as, An object at rest stays at rest and an object in motion stays in motion with the same speed and in the same direction unless acted upon by an unbalanced force. 

So in our case it is safe to say that a candle in motion will tend to stay in motion in the same direction, unless compelled to change that state by external forces acted upon it. To explain this matter in further detail. If we have had a bullish month on the monthly chart where the momentum on the previous or current candle is with the bulls then there is a great probability that the next candle on the monthly chart will be a bullish candle. If we have had a bullish week on the weekly chart where the momentum on the previous or current candle is with the bulls then there is a great probability that the next candle on the weekly chart will be a bullish candle. And if we have had a bullish day on the daily chart where the momentum on the previous or current candle is with the bulls then there is a great probability that the next candle on the daily chart will be a bullish candle. I think you get the point.

AUD has been the big boy on the block. It has been very bullish for the last 2 months and has been out preforming the other currency pairs. Looking at the Monthly AUD/USD chart below you can see I have an arrow pointed at last months candle. Notice how last months candle wiped out 80% of  Mays candle. Based on where last months candle closed we can see how the momentum has shifted in the bulls favor. As this months candle comes to a close and sets us up for a potential buy setup  it looks like unless something drastic happens price action will follow through and continue the momentum from last months candle in the direction of our long bias.  Although we have a much higher long term target for this pair, our next target is at the prior high on the monthly. Now there are other aspects to this strategy that must be implemented in order to have success using newtons law in the markets, but when you have mastered this strategy you will find it a lot easier to develop a directional bias and stick to it.

If you fail to plan you plan to fail.

Traders it is here the time we all dread as traders. THE SUMMER!

Every year at the end of June I hit the road and travel because during the summer you will find that there is a lot more consolidation and choppy price action due to there being low liquidity in the markets.

In past years I would find myself trying to force things during the summer only to find myself in a deeper hole. I was under the impression that not even summer could stop me. It wasn’t until I gained time in the chair that I realized you cannot work harder or force progress to get more performance out of your strategy.

If you try to work harder and force things you just fail more and dig yourself a deeper hole.

In order to get more performance out of your strategy you must follow your trading plan. You must be rigid in your rules but flexible in your expectations.

And being flexible in our expectations means making the necessary adjustments as the season or the sentiment changes in the market.

In prior newsletters I touched on the four key areas that a trader needs to master in order to become what is referred to as a Master Trader. But in this newsletter I want to shine a little more light on an area that is over looked by so many traders. DISCIPLINE, so many traders trade with no clear plan or set of rules. Unfortunately how can one be disciplined if you have no clear plan or set of rules to follow.

A Trading Plan is like a road map. When you are on a road trip the road map allows you to know if you are progressing along on your journey or if you have veered off of the path at some point.

If you have not drafted a Trading Plan then I recommend that you should not take another trade in a live account until you have drafted a trading plan that addresses when you are to enter and exit the market, your risk management & money management etc……

The point I am trying to make here is if you have no clear map you will not know if you are progressing along as planned in your journey to becoming a profitable trader or if you have veered of the path.

Have you veered off of your path are you finding you are having inconsistent results in your trading. Then ask yourself two questions. Do I have a trading plan? If you answered yes then ask yourself the next question am I being DISCIPLINED and following my trading plan.

Now on to the fun stuff. Below is the S&P 500 weekly chart. For the second week in a row the S&P 500 has made me proud. For most traders their emotions would have shaken them out of this trade, since price action came within a few points of our stop-loss. But if you held on and implemented some discipline and stuck to your guns you would have been rewarded as price action came back into the bulls favor and closed out last week with a bottoming tail. This presents us with the opportunity to go long or add to our position above the 1369.05 level. Stay Tuned!!!