S&P 500 Trade Update

It looks like we are starting to get some follow through on our weekly buy setup on S&P 500. So I have added to my long position at 1369.45. I expect to see price action rally to 1414.00 with little resistance if this weeks candle can maintain itself above the weekly 20MA. The monthly chart is is also looking promising as it is inline with our weekly chart which provides further confirmation that we could get follow through to the prior high. I have my first Take Profit Level at 1413.75, at that point I will then be watching price action to see if it can break through the prior high at the 1414 level. If price fails to break the prior high then I will adjust my exit strategy accordingly. Stay Tuned!!!

You cannot have your cake and eat it too

Happy Birthday to me! Happy Birthday to me! Yesterday was my 28th Birthday. I spent time with friends and family, had a blast and I enjoyed a tasty Birthday cake. I love cake but this cake in particular was one where I couldn’t decide if I wanted to keep the cake and savor it, or just eat it. I was in a dilemma, I wanted to enjoy the cake and eat it but if I ate the cake it would be gone forever. Although it was tough I made the decision to eat the cake so that not only I could enjoy it but my loved ones could enjoy it too. This situation reminds me of the dilemma we face as traders on a day-to-day, often traders want to have their cake and eat it too. We want the luxury of profiting from our trading activities without the potential for loss. unfortunately we cannot have both.

To break things down a little further in trading there is enormous upside potential to make profits, but on the flip side there are the losses. The losses are apart of trading, they come with the territory and are the cost of doing business. To often traders try to avoid losses when they should be trying to keep their losses to a minimum instead of trying to avoid them entirely.

Trading is a numbers game and there is a random distribution between wins and losses. You could have 8 winning trades in a row and then the next 2 could be losers or you could have 4 losing trades in a row and the next 6 could be winners. Anything can happen. But you don’t need to know what is going to happen next in order to make money. The point I am trying to make here is you have to put yourself in the best position to succeed in trading and you do that by following your trading plan and taking every trade that fits within your trading plan. You got to be rigid in your rules and flexible in your expectations. Remember you are not working in your best interest if you are being selective with your trades in an attempt to avoid a loss. If the trade fits within your trading plan then have no fear and no emotion and pull the trigger. Because you never know, the last trade you avoided could have been the trade that made back the profit you just loss on the last 4 trades.

Now on another note I wanted to share with you my trading pick for the week. I really like what I see on S&P:500. S&P is looking very bullish coming off of a very strong month from the bulls closing above the 20 MA on the monthly chart leaving us with a bottoming tail. Now if you look below at the weekly chart you will see that we have gotten 2 Bull 180’s and a Bottoming Tail with price action finally making its way above the 20 MA on the weekly. This presents us with long opportunities above 1369.45 if price action can sustain itself above the weekly 20 MA. Are long-term target for this trade is at 1413.75. If you are trading on smaller time frames which most of you are I suggest that you set your target according to the risk to reward that fits within your trading plan.

Greek Elections create uncertainty in the markets

With the Greek Election being held on 6/17/12 there is expected to be lots of volatility in the trading week ahead. Analysts have viewed the Greek election as a potential turning point for Greece. This election could result in Greece’s eventual departure from the euro zone. Central banks from major economies are ready to take steps to calm financial markets should the outcome of the Greek elections create a market storm.

With the uncertainty that looms ahead, several firms have already started reducing their exposure to European Assets. During times of major volatility and uncertainty in the market, it is best to implement a different approach. Although I feel it is best to just sit on hands and wait it out till the smoke clears. For the trader who must trade the markets this week I recommend you take on lighter positions and be more selective with your entries.

With that being said it must be noted that Silver prices did not fall as much as some expected following Spain’s $126 billion Eurozone bailout on last Sunday 6/10/12. Many investors planned for a spike in the U.S. dollar following the bailout, hurting silver prices. With everyone’s attention focused on the Greek elections this Sunday, silver prices might be the beneficiary of any more turmoil and bailouts overseas.

Looking at the Daily Silver Chart below we can see the repeated Higher Lows and Bottoming Tails. Price has made several attempts to close below the 20 MA but keeps rejecting off of our trend line and rallying to close back above the 20 creating our 5th Bottoming Tail. These are signs of a bullish reversal in the works. Since this is more of a swing trade I have a more long-term approach for this trade if we can clear the area of resistance on the weekly chart at the 20 MA. Our entry will be just above $29.05 with our stop loss at $28.07 just below the trend line and Support level 1. Our first target is at $31.00, once price reaches our initial target we will see how price reacts at the weekly 20MA. Stay Tuned!

Canada O Canada USD/CAD Trade update 6/3/12

We have hit all of our target levels  for TP1 & TP2 on our both of our USD/CAD long positions. We are now trailing Bar by Bar on the daily chart, as we are expecting a correction since price action on the weekly has gotten extended and far away from the MA’s as a result of price action being little overbought on the weekly.

Gold Finger is back in love again

Gold is a commodity that has great potential to go higher in the near future along with the rest of the other commodities due to their necessity in our everyday lives. My belief is as things get worse economically around the world more and more countries will start abandoning the $ as the worlds reserve currency, by reducing their holding in US securities and increasing their holdings in commodities like Gold. For some countries this has already become a reality. This presents an opportunity for the day to day trader to take advantage of any moves to the upside that may present themselves in commodities like Gold & Silver. Although I take trades on both the long and short side, as the world goes through the financial crisis that now has now become commonplace. I have given extra attention to bullish signs that present themselves in the Futures Market.

Notice the Higher low on this monthly Gold chart. Price action has started to show bullish signs this month after failing on the three separate occasions to break the higher low that has been formed at the $1530 level.  I have long term targets at the prior high at around $1900 but price has to clear the monthly 8 MA.

With the weekly Gold chart below we can see how we got 3 Bottoming Tails after price bounced off of the same level where we recently got a Triple Bottom( you might have to click on the picture to get a clear picture of the candle formations I am referring to). These candlestick formations are all very strong bullish reversal signs and the fact that we got all these reversal signs on the weekly chart gives them even more significance which means we should pay even closer attention to this commodity along with Silver. If price clears the weekly 20 at around $1656 we will have wiped out all of last months price action and should have no problem reaching the prior high on the monthly at $1900.

Notice the strength the bulls have shown on this daily Gold chart. The last candle that we got on the daily chart is one of the bullish candles we have seen in a while from the bulls. This candle indicates that the bulls might be ready to take over and flex their muscles for a while in an attempt to reverse the current trend.

Canada O Canada Update 5/31/2012

OMG incredible movement in the markets this week. UCAD has been following through quite nicely. Price action has made a new high and we have officially hit TP1 for 119 pips on our first position and 81 pips on our add.

Prop Trader wins 1st place in Futures trading competition

I would like to take the time to acknowledge Larry Wells for winning 1st place in the International Trading Competition. Larry placed first out of 300 traders pulling in a return of 99.59%. Mr. Wells is prop trader for iFundtraders.com. ifundtraders.com is a proprietary trading firm that equips traders with the skill sets necessary to capitalize on the lucrative 24 hour foreign exchange markets. I have been working very closely with Larry and I must say I am very proud of Mr. Wells and his growth as a trader and as a human being. Keep up the good work Mr Wells.

Update on last weeks Trading Picks

As my trading buddies always say “WE ARE LOOKING GOOD!!!!”

Our USD/CAD position has rewarded us quite nicely we have not taken profit yet as we are looking to take our first TP level at 1.0330 which is R1 on the daily chart. TP2 will be taken either by trailing bar by bar or price action reaching our second TP level at 1.0360 which is R2 on the daily.

EUR/YEN update

This position what more can I say but incredible. We have taken profit on our initial position and our add. We are now trailing bar by bar on the 4 hour chart on our remaining positions for this pair. We are up 358 pips and counting and look to take in more profit as price continues in the direction of the trend.

Oil update

Oil is another that has moved quite nicely in our favor. If you trade Oil and USD/CAD then you should divide your risk in half between the 2 since USD/CAD is typically a mirror image to Oil. But all in all we have had a great run on this commodity. We are currently up 38 points from our initial entry and still looking to capitalize on this commodity.

Master Traders use D.O.P.E. not HOPE

There are many characteristics and skills required by traders in order for them to be successful in the financial markets. The ability to understand fundamentals and the ability to determine the direction of the trend are a few of the key traits needed, but not one of these is as important as the ability to contain emotions and maintain discipline.

Below are the 4 key traits that I feel are nessccesary for a trader to master in order to become what is referred to as a Self Actualized Trader.

Discipline
Observation
Patience
Execution

Discipline:

“Failing to prepare is preparing to fail.”

Proper preparation is required before every open. The easiest thing to do is prepare. If you don’t, on behalf of the other market participants, we thank you.

“Never mistake activity for achievement. If you don’t have time to do it right, when will you have time to do it over?”

Perfect trading practice makes perfect trading. You learn by breaking down each trade into small pieces and reviewing each piece. Develop a plan before you trade or do it later with less cash and more frustration. (Remember to Back test, Study, Back test, Study and more Back Testing etc….)

Remember money management is required on every trade. It only takes one trade to undo months of profitable trading. So always remember, that the one trade that can undo it all is always lurking around the corner. “Control your own destiny or someone else will.”

Put yourself in the best position or you will not have a position come tomorrow.

Observation:

“A man should look for what is, and not for what he thinks should be.”
Albert Einstein

A trader should look at a chart for what it is, and not for what he wants it to be. Face reality as it is, not as it was or as you wish it to be. Bend your view to the charts, not the charts to your view.

You want to be diligent in looking for other opportunities, but still mindful and conscious of what is  currently on your plate. If you are not conscious of what is on your plate you will not see what is falling off the sides. In other words you want to manage your current positions effectively with still looking for other trading opportunities.

Patience:

“Be quick but do not hurry.”
Pull the trigger when you see the trade but not before.

“Do not let what you cannot do interfere with what you can do.”

You become a better trader by being patient and waiting for the plays that make sense to you and trading more of them with more size.

There are times when you should have positions on, and times when you should look to be flat. Knowing when to trade and knowing when to be patience and sit on your hands in cash is a necessary step towards obtaining trading mastery. Remember remaining flat in cash is a position too, a big part of trading is not just making profit but retaining it as well.

Execution:

A good plan violently executed now is better than a perfect plan executed next week.
George S. Patton

A trading plan is just words until you act on it.

I was once told by a mentor of mine “He who hesitates is poor.”

So If you are thinking about getting out, your competition is already flat.

Confine yourself to the present and always do whatever’s next. ” Stay in the now moment opportunity flow”

A trade is not connected to another, unless you let it. Move on, understand what happened in the past but do not have an emotional attachment to it.

Michael Jordan is one of the greatest athletes and competitors of our time. One of his most famous quotes is “I’ve failed over and over and over again in my life and that is why I succeed.” With that being said we are what we repeatedly do. So excellence, therefore, is not an act, but a habit.

The view of trading changes after a loss it is your job to get it back to where it was. And maintain it through periods of adversity.

Traders should periodically review and assess their performance and refine their approach. This means not only should they review their bottomline and their positions, but also how they prepared for the trading session the night before, and how they’re progressing in terms of ongoing education, among other things. This periodic assessment can help the trader correct mistakes, which in return helps to enhance their overall profitabilty. It also helps to maintain the right mindset and be more psychologically prepared to execute their plan the next morning.

In closing it’s important for a trader to be able to read a chart and devolope a directional bias, but there is often a psychological component to trading that shouldn’t be overlooked. Establishing trading rules, building a trading plan, doing research and getting experience are all simple steps that can help a trader overcome these little mind matters.

Canada O Canada: USD/CAD trade update

So far our add to our USD/CAD long position has worked out in our favor. We have been up as many as 77 pips on our first position and 40 pips on our add. We are holding both positions until our take profit levels are hit, and building on our position at every retracement into the 8 MA. If price fails to hit our target and creates a lower high, then at the first sign of the break of the 8 MA we will close out our long positions. So we are in the trade till it hits our targets, breaks the 8MA or till the trade fails and our stop loss is hit. Stay tuned next week for an update on this trade.