Forex Trends - Trend is your BEST Friend Following GBP/USD Trends on multiple timeframes

I found this quite interesting that there is an never-ending debate as to whether PIPS or dollars (you earn per week/month) are more important - and I wanted throw my opinion in the ring.

Fools chase dollars, wise gather PIPS - trendwaiter.com

I think PIPS are more relevant and IMPORTANT - as opposed to dollars which come & go according to your lot size (read capital) - you could have a great signal today & punch in 5% of your capital & make a killing - but thats not bound to happen everyday or even every week - great signals (where all things u want are aligned) & large moves comes up but a few times a month - at best.

however, if you can create a system that can produce a range (let’s say 100-300 pips/week - more is quite possible) and if you can hit the higher-end of that range (in the above range higher-end would be 180+ pips - anything over 60% of your expected range) - you have a GREAT system in your hand - use it well.

Amazingly money adds up - as long as your not losing it - modest gains + time = Great return.

so don’t chase the dollar figure (it will add up) - your 100pip gain in a mini-account of $1000 might equal $100 (1 lot=$50 = $1/pip = $100) - keep it up for ten weeks you would have made 100% of your capital - now you have $2000. Which means that you can add TWO lots to the trade - and soon (in another 10 weeks) you will have $4000 - all for the modest 100pip gain/week.

Don’t under-estimate the PIP - its the bloodline of earnings - as the saying goes MONEY BEGETS MONEY (PIP is the BEGETTING part) - lose your skill to make pips - lose your money. Simple as that.

Finally, I quote a wise saying from Abraham Lincoln - who once said:

Give me six hours to chop down a tree and I will spend the first four sharpening the axe.

The simple wisdom behind that is - make sure you have tools/resources ready for the job ahead - first learn to make PIPS and keep’em - start with low capital - so that you won’t miss any less & won’t have to pay it with your blood - you will eventually learn to trade those 100K accounts at ease - PIPS are quite definitely more importants - Fools chase dollars, wise gather PIPS - trendwaiter (quote me on that).

Trade wisely.

Hope your trading is going well - its late to wish you all a happy new year - but hey! - happy new year anyways!!

I haven’t written for sometime & got a few emails asking if I was ok - thanks for your concern! - appreciate it. Just got busy with work.

Interesting thing - since Jan - I started trading more volatile currencies - such as gbp/jpy, gbp/chf & gbp/aud - along with gbp/usd (my favorite pair)

I noticed a few patterns - typically gbp/aud is the odd kid - gbp/usd used to be the odd kid when I was trading majors - when i say odd -I have a different opinion of “odd” -here’s my definition:

Go to a park or church or someplace where families hang out - you will notice that typically there are few kids (not all kids do this) who try to outrun their parents - they have so much energy they can’t wait to keep pace with their parents - so either they start dragging them by hand or keep running ahead of them and coming back to the parents - etc… - gbp/usd pair is like that kid who has too much energy and can’t stay quiet for a long time.

if you ever followed gbp/usd & eur/usd together - you will get what I am talking about - gbp/usd always rushes into things - trends, sideways etc…and sometimes comes back to correct itself - most of the times is followed by eur/usd in the same direction.

When you place 4 gbp pairs together (gbp/chf, jpy, aud & usd)  - then it won’t take much time to notice that gbp/aud is the more “active” one - some can “restless” - in doing almost always seems to contradict the other three -  but here’s the good part - the remaining three pairs are in unison - they eat/sleep & move in the same direction - atleast that’s my observation.

so i completely ditched usd/jpy, chf & even eur/usd - which usually has a max-daily range of 75 pips (average) - unlike the last few weeks.

gbp/jpy seems to range atleast 200 pips in direction everyday - and usually more.

gbp/chf seems to range around 200 pips too

ofcourse gbp/usd has always had about 100-150 pip move on a daily basis in one direction.

gbp/aud can really move fast and if you are in wrong direction - its a slaughter and the spread could go as high as 30 pips - the spread itself makes me sweat.

I will keep you posted on the gbp-trades. Thanks for stopping by.

hi all…just hope you guys have a great thanksgiving…will be back with more blogs from next week.

I decided to write about what I learnt about technical analysis - if I may - I would like to generalize and and create two umbrellas - touch & go - and Breakouts.

Touch & Go - is where the market touches a point & reverses itself - the point is only valid if the market reverses itself - as may wise-old men say that “predicting the bottom or top is nothing but folly of the youth” - I humbly suggest that we have ample evidence to the contrary - many markets moves can and sometimes wisely predicted by these same old wise-men who left us the following:

1. Double-top: This is a touch & go - almost always I noticed that the best forming double-top come in a hurry near the top - they come like lightning - and for the naive trader it seems that the possibility of double-top is a myth - but as it unravels - its like a ball bouncing off a ping-pong table - it hits the points (and even crosses for a few more pips it as if the brakes failed) - and makes a u-turn so fast that it leaves you dizzy. Before you realize, the market reverses itself 20 to 50 pips from a few seconds to a few minutes - why does it happen? - simple, the buyers decided that the previous-top is where they intend to get out - and it triggers a huge-sell order rampage - which pushes the market down from that very point - creating a double-top.  So, can we not predict the reversal? - you decide.
2. Double-bottom: same as double-top just the opposite direction - here bears decided to unload their positions - creating an opposite effect - huge-buy order rampage.
3. Other various points: there are many points in market - which act are resistance - like last previous high and last previous-low - which are used as an indicator for many traders to predict the current trend - as long as previous-highs are not being tested or violated - then its bearish market - likewise, as long as previous-lows are not being tested or violated - then its bullish market - these points being resistances & support - are only one “touch & go” away to become new bottoms or new tops.

More times a point becomes a “touch & go” point the more valid it is to the market - ie., traders

I personally like touch & go’s - coz they tend to provide me with a clear stop-loss point (which is usually the next possible touch & go) - and more importanly, I close my trades if a “touch & go” is violated - then we are either in a “breakout” moment (see below) or some mystic session of the market which is searching for its own soul and direction.

 Breakouts: These are some of the most lucrative trading methods - they are as follows:

1. Breakouts from touch & go: if a touch & go point does not live up to its expectations (reverse the market from its current trend) - then the current trend is so strong that it intends to go ahead and CONQUER the touch & go - that’s a strong signal - an army invading a country with strong borders - if you don’t expect resistance at their borders with their fully-trained armed forces - what are the odds that the civilians within the country will put up any fight? - its basically game over.  Not so fast, don’t underestimate those stay-at-home-soccer-mom’s they might put up a fight -  if should their be an uprising within the invaded country to oust those invaders - how far will these invaders retreat before they come with more forces to take out the new uprising?  the question is do they even have extra forces in place to come back? (the point i am trying to make is how far is the retreat a correction of the market? - where do you put your stop-loss and say if the market having penetrated the touch & go should it return Xpips below that touch & go - I will say its a false breakout?) - breakouts’s biggest disadvantage is the not-so-clear stop-loss.

1. Ascending triangle & descending triangle: These are very clear breakout patterns - its almost as if the armies are being gathered before the big invasion - its like joshua’s army circling jericho - the very anticipation is overwhelming for the enemy - whose morale is first bought down before the walls -and the stop loss would clearly be at the longest-side of the triangle - although the stop-loss is clearly defined - it could far away from your comfort zone of loss - and false breakouts are not new to these triangles - especially over-extended ones - ofcourse, it does help to get some divine help as Joshua did.

So, you choose wisely - whether you want to trade “touch & go’s” or “breakouts” - but have its own advantages & disadvantages - mostly they have to do with your “appetite for loss” - remember, charts always repeat themselves - so even if you missed a chance - you are bound to find it next time - better a lost opportunity than lost capital.

and also don’t forget - even if you should conquer the whole world in a hurry - remember the words written by a historian about the greatest conqueror known to man - “When Alexander saw the breadth of his domain, he wept for there were no more worlds to conquer” - surely, somebody forgot to tell him happiness is a journey, not a destination - enjoy trading - take it slow - but learn it CORRECT the FIRST time.

Happy Trading!

I believe the market fell too fast - 2257 pips in one week - MY GOODNESS!!! - that’s a feet unlike ANY. I could not find any historical data that showed such steep loss.

Good news - its time for correction- expect teh market to hit 50% retraction level or more before it either pursue bearish movement or decides to go into a sideways market for a good amount of time.

It already crossed 23.6% (giving back 630 pips - WOW!!!!!) and will face a serious resistance at 1.6800 - which is JUST above the 61.8%

I have never see this pair like this - and I wonder what’s next - in anycase, buckle up. 

Here’s wishing you a good piece of that pie.

Its the second week that I noticed this opening range breakout in action - but this time in gbp/usd pair - it was amazingly obvious.

As my habit goes - I trade 4hr chart - with an eye on weekly chart. So I combined the two to get a screenshot which is posted below.

Once the market fell below the opening price after trading above it for no more than two sessions in 4 hr chart.  It didn’t come back to test the opening price - well, it tried - but went down fast and kept going all week.

If you are not sure about the opening range breakout - pls read more about it at Opening Range Breakout

Also check out the fact that the weekly high - never tested the last week’s high - hence composing an argument that the downtrend is still in effect.

Finally, fibonacci on the weekly chart confirms the down trend - last week’s candle - as bullish as it looked - was nothing but a correction which test the 38.2% level - but never quite reached 50% (see below chart) - the trend is believed to be in the same direction - which in this case is bearish - until fibonacci penetrates 618%.

So we HAD three things going on for this pair

1. Looking at last week’s candle - the pair hit the Fibonacci 38.2% - indication the continuation of trend
2. Upon opening the market kept going bullish - but never dared to give us either a double-top or full penetration of the last week’s high - indicating that it strongly bearish
3. The opening range breakout - when the price fell below the opening price - it never came back to test the opening price - hence confirming the bearish sentiment.

I will keep an eye on all four currencies and report the same when I find - if you are following this blog or you would like to follow - pls feel free to write a few encouraging words.

Thank you.

Ok - first my apologies for not being able to blog the last week - been moving and had to restart my services including internet etc.

Jumping right in - Opening range breakout is one of most popular intraday trading ideas in professional trading community - I am going to use this on a weekly chart - but first some history: this was first written by Toby Crabel in his book “Day Trading with Short Term Price Patterns and Opening Range Breakouts” - if you search for this title - ISBN: 0934380171  - they are being sold for hundreds of dollars - and some price-comparison sites show them in thousands - yes! for a book.

Although, it is not a good idea to assume that the ideas of a book must be great or even worth it - bcoz of its set price - its probably not a bad idea to look into the ideas - if you can read them elsewhere for free.

The idea behind the “Opening Range Breakout” - is that the market before it finds its direction sways around (usually above or below) the opening price - but once it sets it mind on direction (we all know how the fickle the market is) - it continues its path for the most of its reminder life (that is candlestick/bar session life)

That’s why they say that Amateurs trade early in the day - professional join around afternoon - that’s usually when you see a preferred direction for the currency pair (or for anything that is being traded - stocks etc)

And we all know - the FX market opens its new day at 2pm PST or 5pm EST - so the day begins with the Asian Markets opening first, then the europeans wake up - and we Americans enter the last trading zone for the day with NY waking up early.

If you ever noticed - you probably would have - if you trade 4hr chart like me - 9pm candle (pst) and 1am candle (pst) - usually set the tone and make some real large movements in the market - decisive or indecisive - markets are rarely silent during these times -  and you could lose or gain a big chunk of cash (pips) depending on whether you know what you are doing or not.

I decided to use the opening-range-breakout on a weekly chart (the original theory was written for daily-charts) - there is a 4-week-rule for the weekly chart - which I will talk about it some other day - but today I looked into all 4 Majors and found that USD/CHF actually would have been very profitable - if I followed the opening-range-breakout.

I drew the weekly opening-range-breakout on a 4hr chart - and here’s how it looks:

Notice that had I taken the position at breakout of the opening price (1.1335) and used the last high (1.1444) - as a stop-loss - I could easily had a limit order of 100 pips and hit it too - the market corrected itself at 1.1213 = 122 pips.

The market then tested the opening price again - and dropped this time for 206 pips - to 1.1129 - ofcourse, it is folly to assume that you can predict a bottom - but if you are in the market to make 100-150 pips a week - I think this would have been a good trade.

I looked into USD/jpy pair - the market never came back to test the opening price:

The eur/usd and gbp/usd - was all over the map - regarding the opening price range.

I will keep you posted in the upcoming weeks about this theory - using opening price range breakout - on a weekly chart.

Feel free to share your thoughts.

ok - it drifted below 7950 my yesterday’s - if bearish prediction - and seems to have hit a temporary support at 7750 - but with its new-high at 7875 unbroken - the pair could go lower.

Next possible Path - Bullish

1. Will take out the new-high of 7875
2. will meet resistance at 7950 - if broken - can move up to 8200

Next possible Path - Bearish

1. will take out 7750 and go down
2. 7450 will the next waiting support

 Pls share your thoughts. Thank you.

gbp/usd chart - 4hr timeframe - sep 30th, 2008 - 3:30am PST

Ok - here’s the gbp/usd 4-hour chart.  here are my observations:

1. The trend is definitely bearish
2. MA crossover of 5/20 - also called donchian (used mostly in daily charts - I used it here) indicated downside
3. Resistance at 1.8300 (last week’s low)
4. A possible new resistance from the new high at 1.8200
5. A double-bottom has been hit at 1.7950

Next possible Path - Bullish

1. Will take out 1.8200 and test 8300
2. Real uptrend will test 8465 - the low of the side-ways market

Next Possible path - Bearish

1. Will break below 7950 and head towards 7730
2. If broken at 7730 - the next bottom is at 7450 - support establish around sep 11th.

pls feel free to share your insights.

Hi - thanks for stopping by.

I am a forex trader - or atleast trying to be one since 3 yrs. I am actually a web developer - who has been trying to become a full-time trader.

I decided to log gbp/usd - the pair I trade the most - and hope to post my “visions of the chart” - i.e., the trends, support / resistance, MA crossovers and cross-check data across multiple time-frames.

Ofcourse, but now, you might have realised I am a technical trader. I believe in technical analysis and I have seen support and resistance move markets too many times -and I subscribe to that school of thought - however, I have learnt to refrain from trading during news - especially NFP, FOMC etc - I just watch the market parade and be content with the fact that I neither lost nor made money - I feel risk needs to match reward - every possible time.

I hope my blog readers will actively participate and share their thoughts about the charts - whether you see my trends or if you notice something else. Collectively, I hope we can spot opportunities and trade together.

If in case, I don’t get any users - atleast this blog will be a record of what I saw and how I traded - maybe a few months/years down the line - I can correct my mistakes and become a better trader.

Here’s wishing all the forex traders out there - tremendous success.