Wednesday, July 29, 2015

Learn Day Trading Strategies from Alligators to Become an Effective Day Trader
By Dr. David

Alligator Day trading strategyThe alligator is a fearsome and intelligent predator known to wait patiently for days or weeks on end until unaware prey come to the water’s edge and become its next meal.
Alligators are by many accounts the most successful animal that has ever lived; they’ve been around for about 200 million years and have out-lived the Dinosaurs, and they’ve evolved over time to become perhaps the most successful predator on Earth, next to humans.

Alligators are opportunistic predators; they’ve been known to learn the behavior of their prey and lie in wait for long periods of time almost to the point of starving, and then when the time is right they snatch their prey with confidence and precision.
In fact, it is quite common for people to swim with these animals for days or even weeks without any sign of aggression, until one day somebody goes swimming, fishing or even walking, and they never return.
This demonstrates real-world evidence that one of the oldest and most methodical predators on Earth is also one of the most patient and disciplined that has ever lived. Darwin’s survival of the fittest theory certainly favors this creature; they’ve been around since Dinosaur times because their method of hunting and adapting is so successful. The alligator and crocodile are perhaps nature’s ultimate “sniper”… they only need to eat once a week or so because it makes high quality kills rather than a high quantity of low-quality kills.
There are a ton of Day Trading Strategies we can learn from the Alligator,

Alligators Can Be a Trader’s Role Model:

They wait patiently and expectantly for the big juicy meals rather than morsels of small flighty fish that pass them buy.  Alligators are designed and have evolved to be patient “marksman” hunters…many little meals do not interest them as much as a big juicy nourishing meal does.
By trading less… our aim is to make a nice sized profitable trade that sustains us until our next trade. Sure we may have a few losses along the way to our big prize, but the goal here remains clear; waiting on the sidelines (or the shores of the swamp like the alligator) to pounce on our target and enjoy a huge meal. We don’t want to be running all over the pond or river chasing the small flighty fish… we’re going to wait it out and score ourselves a bigger trade that is predictable and has little to no draw-down on its way to profits.
\
Alligators are said to have a high success-rate: 

It’s fairly safe to say that if analligator teeth alligator gets its jaws around its prey, the prey is not getting away.
They have a good success-rate because they are patient and wait for the “easy” opportunities and then act with confidence and speed…they don’t hesitate.
In comparison a Lion might have many failed hunting attempts trying to catch a Gazelle or some other quick animal, expending a lot of energy in the process, alligators tend to have less “losing trades” or failed hunting attempts…because they don’t waste time or energy…they wait and wait and control themselves with precision until their target almost walks into their mouth…then they feast.
As traders, waiting and being patient will increase your success rate as well. Controlling ourselves is really all we can do as traders…we cannot control the market…we can only conserve our money andwait patiently until our trading edge presents itself. This is how you get a high success rate as trader, not by trading a hundreds of times each week in some futile effort to “scalp” the markets.


Alligators Are Good At Avoiding Risky Situations; they learn fast:  
avoid risk day tradingAlligators learn quickly and adapt to changes in their situation. They particularly learn to avoid dangerous situations very quickly”, according to the discovery show I watched recently, the ability of alligators to learn quickly and avoid dangerous or risky situations is yet another reason they’ve outlasted the dinosaurs and are still thriving today.
Avoiding risk is one way that a species can survive over time and “win” the battle of the fittest. Similarly, not taking on more risk than is necessary as well as learning quickly are two very important keys to becoming a successful trader.

Good Things Come To Those Who Wait: 

The alligator waits for the big meal because it makes more sense to wait and conserve energy by eating a large chunk of protein less often. The alligator conserves energy and time by eating this way and it also is one of the main things that has ensured the survival of alligators over millions of years during periods when food was scarce.
If you think about it sometimes during the time you are watching the market you are better off not trading, because by not losing money from over-trading …technically you ARE making money.  You are not paying commissions and you are putting yourself under less stress.  An alligator would probably eat less food overall if it was constantly running around trying to find small prey.
The alligator intuitively knows that by being patient and disciplined it has a better chance pf getting a higher-quality meal. The alligator knows itself and its own limitations and uses its strengths to its advantage. Indeed, the fact that the alligator has been around since dinosaurs walked the Earth is evolutionary proof that the concept of patience and discipline most certainly pays off.
The alligator intuitively knows that it needs to conserve energy and wait for the perfect opportunity, this patience is actually a “skill” and a habit for the alligator that has developed over the years.
Longevity is critical to a trader; we need to conserve the money in our trading be-patient-fortuneaccounts and not chase after mediocre trade set ups, or perceived missed trades, so that when the perfect trade or obvious trade come along we can get the most out of them.
If we go around trading everything we see we will most likely miss the great trade because we were in on the wrong side just previous. Worse yet you may shrink your trading accounts and not have enough money in your account to get the most out of the high-probability trade.

Alligators Are Highly Adaptable: 

Alligators learn quickly and adapt to changes in their situation. This is a large part of how and why they have survived for years while many other animals have become extinct during that same time. According to the TV program I mentioned earlier the alligator researchers often have to change their capture techniques because it’s very hard to catch them with the same trick twice.
Many wildlife experts think that the adaptability of the alligator, including its ability to wait patiently for the “perfect” feeding opportunity, is one of the main reasons they survived. It’s clear that the alligator’s ability to adapt to its environment and to changing situations is one of the reasons it has survived and thrived for all these years.
Many trading systems that are promoted in the market place have no real system, no set patterns – they promote multiple sells and buys and even though they don’t want to admit it they are promoting trades on emotion rather than precision. You hear trading gurus say things like “play every Ace”.  This is setting everyone up to be an over-trader, and more than likely a poor trader.
As traders, we have to adapt to changing market conditions, and as we’ve already discussed we need to have discipline to only trade when the trade set up is ripe for the taking. One of the beautiful things about Safe Day Trading is that the day trading strategies taught take in consideration, decreasing your risk, conserve your trades, be disciplined to the rules and have the patience to wait for the perfect trade set-ups. And YES, they do happen every day!

Tuesday, July 28, 2015

US Dollar Weekly from 27 July to 31 July






The Dollar resumed rising since June 2014 and made an pullback on May 2015. Instead of making new high, the Dollar respected 78.6% Fibonacci Retracement nicely. On the second test, Buyer was trying to push price higher and ended up with doji with churning volume. Watch confirmation line for anticipation Short Entry. Another confirmation is the breakdown the blue trendline. Vice versus if price breakout, Long anticipation.

GBPCAD Weekly Chart from 27 July to 31 July



GBPCAD Weekly Chart from 27 July to 31 July: Double completion bearish ABCD and abcd (CD leg) at the Resistance level (10-year high) at the projected resistance channel @ initial ab=cd validation number @2.0160. Additionally, there is a sign of weakness of climax buyer followed by stopping volume at that level it indicates that demand being met by supply and smart money liquidates portion off the table and wait for pullback to go long. Otherwise selling stop below the doji candle with tight stop, targeting the support of channel.

Monday, July 27, 2015

GBPAUD Weekly Chart from 27 July to 31 July

GBPAUD weekly chart: Emerging bearish AB=CD pattern, its initial validation @ 2.200 area, in the rising channel (up trend). No sign of weakness then following the predominant trend is preferable (Shift to smaller timeframe such as 4 hour, 1 hour chart or smaller for good execution entry) which initial targeting @ upper line of channel @ 2.200. I will anticipate short only @ ABCD completion.



GBPJPY Weekly Chart from 27 July to 31 July

GBPJPY Weekly: Validated ABCD  made successful retracement about 38.2% of AD (technically initial target hit) then seller gained no strength to go lower results in hammer and followed by inside bar candlestick with volume slightly rising with churning it suggests that we should patiently wait for confirmation. Looking for long to follow the main trend if price breaks above inside bar, and vice versa for counter trend short.



Sunday, July 26, 2015

USDJPY Weekly Chart from 27 July to 31 July

USDJPY already broke the resistance line @ 121.80 since 23 June to test 10-year high @ 125.60 but failed to close above that level then dropped again to 121.80 level forming a dragonfly doji rejected by all MAs and short-term trendline which potentially confirming a new support. Warning !! The current candlestick is narrow range with churning volume it indicates that demand is being met by at supply in this range (125.60 - 121.80). It's likely a false breakout, I prefer to wait the next candle tell me where I should take action.


USDCAD Weekly Chart (27/07/2015)

It seems that Cup and Handle pattern found its handle from January to July as aggressive buyers broke above the handle to test 5-year high @ 1.3060 result in spinning top with the churning volume at the level it indicates that retracement is coming or potentially finding top. This week should be answered whether it breakouts the 5-year high (long preferable) or another reversal candlestick pattern (Short anticipation).


EURUSD Weekly Chart (26/07/2015)

There is a bullish Harami candlestick pattern @ support of bearish symmetrical triangle at the PRZ of  Completed bullish AB=CD while volume is still high it indicates that supply is possibly being met by new demand. Patiently wait the next candlestick closes to anticipate direction of the market. Place buy stop above harami 5-7 pips and/or sell stop below harami 5-7 pips with tight stop.

NZDUSD Weekly Chart (26/07/2015)

Inside Bar @ the 5-year low 0.6560 and 200% fib projection of BC confluence @ support of falling channel with the rising volume which potentially finding support. I prefer to wait for inside bar pattern breakout to go long, and breakdown to go short.


Thursday, July 23, 2015

$NZDUSD H4 (24/07/2015)

Emerging Bearish Bat which D point 0.6740 area. Price is testing the support of Rising channel of the AD leg. I wait to see bullish candlestick close above all MAs at the channel support to look for long opportunity. Short anticipation if channel breaks down.

Wednesday, July 15, 2015

In Forex you can be rich this minute and broke the next minute!



Oh, I’m +110 pips up, I’m rich, the market moves my way and I will buy a new car soon! […Dancing, jumping, stressing out your calculator with additional digits that no longer fit on the screen…]

1 hour later: …Oh no, my dear pips, where did they go? I should have taken profits last time. […Tears, broken glass, and many hours bad mood and a general stress…]

Well, stress, my friend, is a bad thing. If you stress yourself out while trading Forex, you will get nowhere; instead, a person inside you will get more tired, sad and unsatisfied with you and your trading. Next time, I guarantee, you will cut your profits too early and watch the market making another +200 pips but already without you. What you will get? Let’s say it out loud, kids, everyone together – STRESS! That’s right, again. Thank you!

How to deal with that?
Each time you get stressed out, take my dark secret pill and the sun will shine again! Pills are in my cabinet.
But better, do yourself a favor, while you are trading, don’t count in those pips in the first place.


Don’t consider pips to be yours while a trade is open.
You haven’t earned them yet.


And yet, traders are so cheerful seeing those virtual profits, that some of them even manage to spend those money in their bright imagination! What a trap to put yourself in!

And, of course, when you don’t get the reward you were already considering yours, you start blaming yourself and may be crying like a child. Ha-hah… Stop crying.
You need to relax and trade according to your rules and count profits only when a trade is closed, not before it, not during it.

That’s it. Simple but very effective rule: no pip counting, no stress, no early exits.

Well, well. I see some of you still have the question marks “???” in your eyes. And those questions are: How to achieve that, anyway? What should we do?
Ok, you asked. Now listen.


You should trade as if you don’t need money!


If you took this literally, I’ll explain: I meant “as if you don’t need extra money”. Protecting your initial investment and money you earned earlier is a duty of every Forex trader.

Can you do this? Can you free your mind from “I need money” statement? If yes, you may add +1 key quality to your portrait of a successful trader. If not, well, not all people are perfect…

$GBPUSD H4 15/07/2015

$GBPUSD H4: New Bearish Gartley is appearing and time liquidate some $$$ and keep the rest until shaking off. Note that predominant trend is uptrend on 4h tf so it might be failed any time but I'll wait until price is settled ( I expect GU will go sideway in this PRZ before its resuming and making retracement) before I go short. I will also draw short term trendline on A-D leg of gartley.




Tuesday, July 7, 2015

$AUDUSD H4

$AUDUSD H4: Aussie is flirting and confirming a new support @.74xx area but prices remain below all MAs. Cover short and wait to see how the candle closes (hammer again? ) whether it's resuming or making retracement. 


Thursday, July 2, 2015

PREPARE A MONEY MANAGEMENT PLAN

       You need to prepare a solid money management or position sizing approach. How much of your money will you risk on any one idea? When will you add to a winning position? When will you start taking money off the table? How much will you risk in order to make how much?

GATHER SUFFICIENT CAPITAL TO TRADE

       It takes money to trade. You can’t start with a paltry sum and expect it to last. You can’t expect to get lucky on your first few trades.

“For which of you, intending to build a tower, sitteth not down first, and counteth the cost, whether he have sufficient to finish it?”

—Bible: St. Luke

       The winning trader is prepared with sufficient capital. He understands that he can’t trade on a shoe string. He has decided in advance how much he needs and how much he’s willing to risk. Risk capital is money that you can lose and still maintain your life-style and still maintain your peace of mind. He doesn’t start trading with capital he needs to live on.

COMMITMENT

       The winning trader has made a commitment to the process of effective trading. It’s not a random bet or two. He has laid down the foundations for success. This profession demands training, groundwork, practice, and readiness.

       This does not mean that you should over prepare, or strive for a perfection that does not and cannot exist. That’s research, not trading. As soon as you have something that puts the probabilities strongly in your favor, you’re ready to begin. You don’t want to begin too soon, and you don’t want to begin too late.

       You don’t want to fall into the trap that Jason, a retired engineer, found himself in. He practiced simulated trading in financial futures for five years. He took over 80,000 simulated trades. His trading was profitable on paper, but he never made any actual money because he never put on a real trade. Every day he planned to, but he never did. In the meantime the money in his account dwindled because of his living expenses. By the time I spoke with him, he had barely enough to trade, and he really couldn’t risk it. He had been able to trade before he started his extensive research, but he researched too long and lost the ability to act.

“Sow an act, and you reap a habit. Sow a habit, and you reap a character. Sow a character, and you reap a destiny.”

—Charles Reade


PREPARING YOUR MIND AND PSYCHE FOR TRADING

       You need to come to trading psychologically prepared to trade. Your own personality is the multiplier effect of your trading results. Your strategy, plus your money management, plus your capital, multiplied by YOU equals results.

       Strangely enough, this is the last place most traders think they need to prepare. They simply assume they have what it takes to enter into this arena and excel. How surprised they are when they find themselves doing things they said they’d never do and not doing the things they said they would surely do. And even when they realize that they are the cause of their failure, they are reluctant to get help.

       I have talked with many traders who are sabotaging their trading results. Some can’t pull the trigger and sit there day after day doing nothing but watch and marvel. Some are unwilling to take a loss and will let loss after loss eat up their trading account until the pain of keeping that loss is greater than the pain of taking that loss. Some get in trouble by not following their trading rules. Others can’t consistently follow a trading system and find themselves skipping the big winners and taking the losers.

       And yet, while they may call me to find out about my coaching, they delay signing up for mental training. If I call them back a year later, they’re still repeating the same behavior and still reluctant to pay for coaching. “I should be able to handle this myself.” they say. But they can’t, and they don’t. It’s the winners who seek assistance for their trading weaknesses. And it’s the winners who correct their trading foibles by strengthening their weaknesses and their strengths.

       You need to psychologically prepare yourself to execute your plan. Trading requires a mental toughness. Trading demands a mindset that may not come naturally. You cannot charm the market. You cannot persuade the market. You cannot bully the market. You cannot cheat the market. You cannot merely study or research the market. You have to TRADE what the market gives you.

       A successful trader trains his mind for high power trading. If he needs a coach or mentor, he gets one. He takes the time for meditation, self suggestion and positive visualization. He learns helpful questions to ask himself. He does whatever it takes to prepare himself mentally to trade.

Wednesday, July 1, 2015

How Forex Market Works

The Forex market, just like every other market in the world, is driven by supply and demand. In fact, understanding the concept of supply and demand is so important in the Forex market that we are going to take a step back into Economics 101 for a moment to make sure we’re all on the same page. Having a good grasp of supply and demand will make all of the difference in your Forex investing career because it will give you the ability to sift through the mountain of news that is produced every day and find those messages that are most important. So how do supply and demand affect the Forex market?

       Supply is the measure of how much of a particular commodity is available at any one time. The value of a commodity—a currency in this case—is directly linked to its supply. As the supply of a currency increases, the currency becomes less valuable. Conversely, as the supply of a currency decreases, the currency becomes more valuable. Think about rocks and diamonds. Rocks aren’t very valuable because they are everywhere. You can take a walk down a country road and have your choice of hundreds or even thousands of different rocks. Diamonds, on the other hand, are expensive because there aren’t that many of them in circulation. There is a small supply of diamonds in the world, and you have to pay a premium if you want one.

       On the other side of the economic equation, we find demand. Demand is the measure of how much of a particular commodity people want at any one time. Demand for a currency has the opposite effect on the value of a currency than does supply. As the demand for a currency increases, the currency becomes more valuable. Conversely, as the demand for a currency decreases, the currency becomes less valuable. To get a good idea of the effects demand can have on something’s value, you have to look no further than Tickle Me Elmo. When Tickle Me Elmo was first released, there was an insanely high demand for the toy. Mothers and fathers were trampling each other to grab and pay for Elmo before someone else could wrestle it from their arms so they could make sure they had everything on their kid’s holiday list. For those who weren’t fast or aggressive enough to get Tickle Me Elmo at the store, paying outrageously high prices on eBay was their last resort. Huge demand had made this red, giggling doll much more valuable than it would have been if nobody’s child had wanted it.

       To illustrate how supply and demand interact to determine an ideal exchange rate in the Forex market, we use a standard supply and demand graph (see illustration below). Supply is represented by a solid diagonal line that is directed up from a low point at the left to a high point at the right. Demand is represented by a dotted diagonal line that is directed down from a high point at the left to a low point at the right. The y, or vertical, axis represents price. The x, or horizontal, axis represents the quantity of supply and demand. Finally, the ideal exchange rate is represented by the point at which the two diagonal




lines intersect. In this case, the supply and demand graph indicates that the ideal exchange rate for the EUR/USD pair is $1.2100.

       To illustrate an increase in either supply or demand, all you have to do is move the corresponding line to the right along the x axis. So if supply is increasing, you move the diagonal supply line farther to the right. If demand is increasing, you move the diagonal demand line farther to the right. To illustrate a decrease in either supply or demand, you simply do the opposite. All you have to do is move the corresponding line to the left along the x axis. If supply is decreasing, you move the diagonal supply line farther to the left. If demand is decreasing, you move the diagonal demand line farther to the left.

       As we discussed, as supply increases, the ideal price decreases. You can see in illustration below that as the diagonal supply line moves farther and farther right—illustrating an increase in supply—the intersection of the two lines moves lower and lower on the y axis. This tells us that the ideal exchange rate is getting lower and lower.



       Conversely, as shown in illustration below, as the diagonal supply line moves farther and farther left—illustrating a decrease in supply—the intersection of the two lines moves higher and higher on the y axis. This tells us that the ideal exchange rate is getting higher and higher.



       Moving the diagonal demand line left and right will have similar effects on the exchange rate. As demand increases, the ideal price increases. So when you move the diagonal demand line farther and




farther right—illustrating an increase in demand—the intersection of the two diagonal lines moves higher and higher. (See Illustration above.)

       You can also see (in Illustration below ) how when you move the diagonal demand line farther and farther left—illustrating a decrease in demand—the intersection of the two diagonal lines moves lower and lower.


       The instances in which you see a dramatic shift in the ideal price level come when both the supply and demand lines are moving. For instance, if demand for a currency suddenly increases while supply is decreasing, the ideal price level will climb very quickly. (See Illustration below.)

On the flip side, if demand for a currency suddenly falls off while supply is increasing, the ideal price level will fall just as quickly. (See Illustration below.) Supply and demand work efficiently in tandem.


       Take a moment to make sure you feel comfortable with the concept of supply and demand and how these graphs represent the interaction between the two because we use these graphs to explain why the Forex market does what it does and how you can profit from it.

       Understanding the movement of the Forex market is relatively simple because the same forces of supply and demand you experience in your life every day play a significant role in determining the exchange rates in the Forex market. Take oil prices, for example. When demand for oil goes up or the supply of oil drops off, oil prices go up. As oil prices go up, gasoline and natural gas prices go up. As gasoline and natural gas prices go up, you end up spending more to drive around town and to heat your home. And as you spend more and more on oil-based products, your budget gets leaner and leaner. The same factors that affect your budget affect the budgets of the world’s largest corporations and governments.

       One country that suffers from rising oil prices just the way you do is Japan. Japan imports nearly 100 percent of its oil. It’s not known for its booming oil reserves, so it doesn’t have much of a choice. Therefore, any oil Japan wants to use to produce electronics, cars, and other goods must be bought at whatever the going rate is. But that’s just the beginning. Japan’s economy relies on its ability to export the goods it creates to other countries, like the United States. As you’ve noticed driving around town, it costs a lot of money to transport your groceries, your kids, and yourself from one place to another. It costs even more when you have to ship your goods across the Pacific Ocean. Every car, DVD player, and computer Japan produces is becoming more and more expensive to ship to consumers. So when you look at it, Japan is getting hit on both sides. It has to import all its oil at inflated prices to create its goods, and then it has to pay inflated prices to ship all the goods it creates.

       So what impact does all this have on Japanese goods? It makes them more expensive. If Japanese companies have to pay more to produce their products and then have to pay more to distribute their products, they are going to have to charge more for their products so that they can cover their expenses and make a profit. As products become more and more expensive, consumers are able to buy less and less. And as consumers buy less, companies make less money, which leads to all sorts of economically negative outcomes. Now, let’s take a step back and look at what all this has to do with the exchange rate of the Japanese yen.

       Looking through the lens of supply and demand, you can see how an increase in the price of oil would affect the value of the Japanese yen. Oil is priced and sold in U.S. dollars. As oil becomes more expensive, purchasers in Japan have to convert more and more of their Japanese yen into U.S. dollars so they can pay for their oil. This increases the supply of Japanese yen in the Forex market and subsequently lowers the value of the Japanese yen. To compound the problem, as Japanese goods become more expensive and fewer and fewer people can afford to buy them, the demand for Japanese yen falls. Since you must purchase Japanese products in Japanese yen, you have to sell whatever currency you have to buy Japanese yen. The fewer products you buy, the fewer Japanese yen you need. And when you don’t need something, you stop demanding it. Rising supply plus falling demand equals a decrease in the value of the Japanese yen.

       The price of oil and its effect on the Japanese yen is just one example of how supply and demand affects the Forex market. We look at many other fundamental factors that influence the Forex market in the coming chapters. The important thing now is that you feel comfortable with the concept of supply and demand. Once you are comfortable with this most basic and most important concept of economics, you will be unstoppable in the Forex market.

       So, every time you analyze the Forex market, all you have to do is ask yourself how supply and demand are going to be affected by what is going on.