Current Standings

Down the Rabbit Hole

I feel a little bit like I am going down the rabbit hole with my new effort.

Effective 3-22-06, I will be posting all of my trades and running account values using some money management.

I have had people ask if it is possible to trade the forex with very little money. I am going to trade a $500 account with a dealer that allows base 10 or unit based trading.

What does unit based trading mean? This means that if I have $500 (493.60 after transfer fees) account and have a trade where I would normally place 2.5% at risk, I can actually invest $12.50 in the trade by investing 1,250 units or 12.5% of a mini contract. Unit trading allows exact money management.

For those that are using a dealer that trades based on mini and full size contract, I will be starting with $5385 and be buying 2 mini contracts for most trades.

I decided it is time to show that a conservative approach in the currency market can still generate good returns whether you are trading a small account or if you are trading a large account. As such I will not post my scalps or more other account, just the accounts as described above.

Because I am posting account results, I may miss a trade posting but all trades can be verified by the account report.

Be aware that if I post a trade late I will post my actual entry price and exit price and can verify the time if you are interested. There may be a little disparity between the two accounts as I am manually placing the orders and stops and they have different spreads.

The smaller account allows for trading the spot gold and spot silver markets as well as the South African Rand (Usd/Zar) where the FXCM $5385 does not. I will be taking gold and silver and USD/ZAR trades on the smaller accounts.

My current positions consist of:

Position
Pair
Entry
Stop Loss
Current
Long
Usd/Jpy
117.3
116.42
117.69
Short
XAU (gold)
550.6
552.90
551.00
Short
Eur/Usd
1.2078
1.2109
1.1979
Short
Usd/Zar
6.2729
6.3299
6.3034
Long
Usd/Chf
1.3144
1.3115
1.3160
Short
Gbp/Usd
1.7337
1.7400
1.7361


Current Equity
$494.33

Current P/L
$0.69

Eur/Aud breakout

The Eur/Aud broke down below support and confirmed a test of the triangle formed over the past month. I am expecting the full run down to 100% retracement on the fibonaccis and the bottom of the channel. A stop near the 38.2 fibonacci line would give a nice risk to reward of nearly 3.5 to 1. CCI is confirming the trend, entering into the lower reversal zone and the oscillator trending itself.

For those part of the email list, you already are aware, I did not enter the Aussie trade. If you are interested in receiving email updates send an email to actsofforex@gmail.com and ask to be part of the email. If not watch for further updates.

Aud/Usd Fibonacci 

Aussie Down Under

Much to the chagrin of gold enthusiasts, gold has pulled back over the past 5-10 days and showing uncertainty in the advance in the past 4 days.  The AUD is following in uncertainty and indecision.  We have a cross over on the MACD and a downward trending RSI.  If the AUD/USD continues down, I would expect a move 0.7241 or 110 pip move from where we are at right now.  I feel I am jumping the gun a little bit with the breakout action on the aussie has occurred after the close of the day and before the Australian market opened.  The risk to reward is good with a stop loss at 0.7410.  There is some support near 0.7275 that would justify a tightening of the stop loss or profit taking if the pair reaches 0.7275.

Knowledge is like money.

Knowledge is like money; the more he gets, the more he craves.- Josh Billings

That being said, I hope that to this point the ready has got some knowledge and some money and craves more as I do.  The bonus in currencies is the better your knowledge the more money you can get (then crave).

There is the philosophy for the day now for the set up.

The CHF/JPY formed and broke out from a double bottom formation on 1/24.  It was a nice confirming break as it paused right at the top of the middle peak and broke to the topside well beyond the 10% break I usually look for.  The double bottom’s target shows 190 pip target (yellow line).  It is interesting to see that the target puts us right to previous resistance.  There was a small pull back today, which could turn into a reversal.  I would like to see Monday as an up day before entering this trade.  If Monday is stable and positive, the entry will be close on Monday or at 92.25, whichever comes first.  Stop loss originally being set at 91.40 (10% of the mid channel defined by the Fibonacci lines).  This is a little aggressive on the initial entry due to the 1.7 to 1 risk to reward ratio and a possible bearish divergence developing on the CCI.  If the pair does not move up with any commitment, I will scrap the trade and wait for clarification.  If the entry price puts me into the trade, I will watch for an approach to 93.25 (distance targeted by the double bottom).  If the pair slows at resistance at all, I will tighten my stop into profitable territory maybe 92.75, locking in 50 pips with the potential of a break through to the next target near 94.25.  The 94.25 would give us a 200 pip movement and some interest payments on this pair.  Monday’s price movement will define this trade.  See Chart.

The Eur/Aud has formed a 300 pip double top.  This pair pays good interest and has a long term down trend.  With an additional 40 pip move to the down side, I will enter this trade targeting the remaining 260 pips and hope it takes its time reaching the target as I get paid interest every day.  There appears to be a 3 to 1 risk to reward placing the stop loss near 1.6190.  See other Chart.

Have a great weekend!

Chf/Jpy Double Bottom 

Eur/Aud Double Top 

Newsletter? Updates? Something New?

Beginning of something more?
I am considering a weekly newsletter and occasionally sending out midweek emails when updating my blog. The newsletter will have additional insight not just trades but will be less dynamic in regards to trades with the blog still looking at trades specifically. If you are interested in receiving an email newsletter and occasional blog update notifications, or know someone that is, please send an email to actsofforex@gmail.com listing the email you would like me to use and I will place you on the list.

45 minutes to blast off

We are 45 short minutes away from Alan Greenspan’s final hurrah as Chairman of the FOMC.  Coincidentally, many are speculation on interest rates and the new captain taking the helm.  Because of the volatility expected from the meeting there are a couple of strategies to consider.  The Eur/Usd is extremely interest rate sensitive.  The Euro has climbed 60 pips in anticipation of the announcement.  One may consider placing interest orders both sides of the current rate of 1.2176, 50 or more pips out, in this way, it doesn’t matter which direction the rates go as long as it is a significant move, the trade could be profitable.  Another technique would be to buy exotic or fixed rate options placing one-touch positions out over 100 pips assuming a run one direction or the other.  This will work if and only if the payout on one direction is higher than the cost on both of the one-touch options.  The Aud/Usd will also be affected as many investors move to gold as a hedge against interest rates, if interest rates go up, the investors will run back to the interest rate or USD if interest rates stay the same or go down than the investors will stick with gold.  Once again the straddled entry technique or exotic options could also be used on the Aud/Usd, keep in mind the Aussie does not move as much as the Euro so you will want to tighten up the options and/or entry positions.

Tightening stops before the weekend

USD/CAD really hasn't moved since the entry price. Tightening to 1.1675. EUR/AUD is paying us the interest so I won't be tightening it as much but still tightening to 1.6155.

Short the USD/CAD

Took the short position on the USD/CAD at 1.1620. 100 pip stop loss, targetting 1.1420 over the next 2 weeks. Resetting Eur/Aud short position to 1.6090

Quick scalp or long trade watch

For the aggressive scalper, you may be interested in jumping into the USD/CAD short for a 20 to 30 pip swing in an hour or so.  For the more conservative longer-term trader, watch for a close below 1.1600.  Remember this could be volatile due to Canadian elections.  I am still pro commodity-based currency pairs, such as the USD/CAD short and the AUD/USD long.  With a little push post elections, I would not be surprised to see the USD/CAD got to 1.1400 easily if not down to 1.1300 over the next 2 weeks.  Keep an eye on these commodity currencies

Give me break

It has been a volatile few weeks with few strong signals but now we are looking for some big move breakouts.

As you know I am a fan of trading the Eur/Aud short when I am justified to trade it short.  I have been waiting for this head and shoulders pattern to complete.  I wanted a close below 1.6130 and we got the close below yesterday. (see image below)

Because this pattern is looking for 200 pips and gets paid 1 pip a day in interest, I like the set up and continuation of the pattern today.  I am entered the trade at 1.6116.  Even though the pair has moved down significantly I would still feel comfortable with a 1.6042 entry and a target of 1.5920.  You will notice there are only 122 pips left in the move.  I still like it.  I am not putting a limit on this trade as of yet, but I will be adjusting my 125 pip stop loss as we get closer and into the pattern a little further.

I think we are going to have a great opportunity to short the USD/CAD in the next couple of days.  Keep an eye on that pair.

The GBP/JPY may be setting up a head and shoulders to go short.  If we close below 200.35 in the next week, we could hope for nearly 600 pip move on that pair.  If not a break down I will watch for a close above 204.50 and go for 300 pips plus interest to the top side.

Eur/Aud Head and Shoulders 

Publishing errors

Much to my disappointment there have been technical errors. I had 2 post and only 1 made it to the site and 4 days late at that. Please note the post on Monday. I entered the GBP/JPY on the 7th at 209.90 and it is breaking higher. No good news from Japan is good news for this trade. Oil has also been rising this week helping the GBP side of the trade. I was taken out of a number of my trades on tightening my stops. All of the trades exited were profitable. I am waiting for another entry on the USD/CAD but with no luck on a break out yet. This is actually a good thing. The more time it spends in the channel and the tighter the channel the more pressure it will be under when it breaks out giving a greater opportunity for profits. Friday is usually fairly quiet. I anticipate the market will pull back some and calm down for the afternoon. Next week could be full of opportunities.

Calendar Events

Quick post, tightening stops. Eur/Aud to 1.5727. Usd/Cad to 1.1605. Eur/Cad to 1.3677. All ahead of EuroZone minutes, Australian Balance of Trade, Canadian Building Permits and US non Farm productivity and Factory orders.

Happy Holidays. USD/CAD

Happy Holidays.  I hope you had a great Thanksgiving and hope you took the trade set up on the USD/CAD.  As I posted before, if the USD/CAD broke the 1.1850 it would be a good entry, well it most certainly was.  Right now that trade is up 175 pips.  I am a little leery of the upcoming FOMC meeting Thursday.  My take on the market is, for the first time in over a year, we are not certain of a rate increase.  An increase would be a pleasant boost to the dollar bulls, a non increase to rates could give the USD the beating many have been expecting for months now.  The USD/CAD could drive down to the original target near 1.1520 if rates are not raised, but I am not willing to lose my 175 pips. I will be tightening my stop loss today to 100 pips from the close and potentially tighter tomorrow afternoon ahead of the announcement.  

The Eur/Cad trade is up 240 pips.  I am readjusting this stop loss to the highs for the last 2 days at about 1.3880.  This only locks in 90 pips but it allows for the volatility that the Euro has shown.

The Eur/Aud has paid out the $1 a day per mini contract.  Since the open of the trade at 1.6023.  So now we have 20 days of interest (0% return on a 2% margin account) plus 85 pips to boot.  I am a little uncertain about this trade.  The US changing or not changing rates will affect the Euro and the AUD differently.  I am readjusting the stop loss on this trade to 1.6023.  If I get taken out of the trade, I got paid the interest, if not and the pair continues flat or drops further I am golden.

We also looked at the head and shoulders on the GBP/USD.  I would like to say that I took this trade, but then I would be lying.  If you had taken this trade, you would have been up about 180 pips.  I did not take the trade and now that we are ahead of the FOMC announcement, I wouldn’t chase the trade.  Take a look at the chart, you will see today being a significant bearish day for the GBP.  Purely based on technicals, this appears to be testing the neck line and could be a good entry short on the GBP/USD.  Once again, I am not comfortable with the trade.

We are still in the Eur/Usd.  We never hit our stop nor our limit.  Currently we are up all of 20 pips.  I will be tightening this stop right up against tomorrows high, before Thursday’s announcement.

For those keeping track, we are doing rather well with our trades.  Based on the postings, I don’t include my scalping; we have profited about 510 pips.  Adding the interest earned and risking no more than 5% in any one trade, based on the stop losses, the account is up 25.4%.  Not too bad for a month of trading with minimal risk.

Last thought and I have said it before, “THE LONGER I TRADE, THE LONGER I TRADE”.  Some of these trades are 3 weeks old.

Bearish Pennant

Bearish Pennant

As I posted, I jumped into a trade short term. Eur/Cad is up 44 pips. I have 2 contracts on this pair; I am closing 1 contract and letting the remaining one run. The Eur/Aud contract is still paying its interest and is up 58 pips. The Eur/Usd trade is up 121 pips.

Looking at the Usd/Cad, I have been stubborn about the fact the Usd/Cad should be going down due to fundamentals, yet it has been rising. I have been adamant about oil not going below $58 but it did and then stalled out. If you look at crude oil prices, the price has reached where oil gapped up in March. Frequently a gap in price will act as a barrier (support or resistance). Oil bounced off that level and rose just under 2% today. The Usd/Cad has consolidated, giving spinning top dojis right at the resistance price 1.1975, which has been a barrier 6+ times in the past year. This has occurred in a downward trend, creating the bearish pennant formation. The formation is encompassing 380 pips at the widest point. If the Usd/Cad breaks below the pennant by 10% or about 40 pips (1.1850) the price pattern would set up a move to near 1.1520, coincidentally the trend line going back about 9 months. Add one more technical indicator forming, a bearish divergence on the CCI. If the pair breaks below the 0 on the CCI at the same time it breaks the 1.1850, this is a great signal to go short. I am still very bullish fundamentally for our friends to the north (bearish for this pair). That being said, if it breaks upward above 1.2010, the price could go to 1.2200 short term.

Quick entry to trade

Got called out for a few pips of profit. Went short the Eur/Cad AGAIN (3 times a charm) at 1.3971 and the Eur/Usd is still running at 1.1660. The Eur/Aud is still paying out about $1 a day and is up a few pips to boot. Happy trading.