Traders' Hub

Monday, February 9, 2009

I BOUGHT USDJPY AT 91.04!

Today, I started my demo-candlestick tutorial in real time as promised. I bought 1 lot (100,000) USD against Yen at 91.04 at Advanced Currency Markets.

As I have discussed in my previous post, I took my general direction from the monthly Japanese Candle Stick Chart which showed a reversal pattern after a failed second test to break the historical low around 87.00 last month. What the monthly JPY chart showed me was a Bullish Ladder Bottom Formation happening after a failed breach of the 87 low - a very, very significant reversal signal!

In the above candlestick formation we see the dollar bears having a grand time buying the Yen against the dollar from September last year pushing the dollar down until December, 2008. This was the period when the financial crisis In the U.S. was at its height, mortgage defaults were widespread and more troubled banking institutions were closing or about to close, and recession finally took hold of the U.S. economy. As the recession spread and became global, the economies of the other major countries also faltered and their currencies weakened. This has sort of stopped the dollar from making a continuing free fall since everyone else found themselves in the same predicament as the U.S. dollar.

As each government scrambled to implement their economic stimulus package to get out of recession at the start of 2009, dollar bears became wary and hesitated at the approach of the historical low of 87.00. The candlestick shows them taking profits at that level as can be gleaned from the "Shooting Star" candle formed for January, 2009. The small body of the January candle signifies some hesitation among the market players, specially the dollar bears to push the dollar further down. The long tail of this particular candle which reached the 87 level further confirmed the dollar bears' hesitation as the tail shows that the bears themselves started taking profits at that level and pushed the price back up and closed at almost the same price as the opening resulting in a short candle body and the star formation.

This month's candle body is turning out to be the confirmation of the reversal pattern (The Bullish Bottom Ladder) which we can see in the above illustration. It will be wishful thinking to expect that this month's candle will really confirm this without any basis. However, everyone else is expecting President Obama's revised economic stimulus to be finally passed by the Senate. We also expect the Fed to finally implement its aggressive plan to rehabilitate and prop up the banking institutions. Every dollar bull is now looking forward to seeing "the light at the end of the tunnel" and the candlestick tells us it might just as well happen. Expect the week to be volatile with jobless claims for Europe and the U.S. to be released. The Fed chairman is also slated to meet with the Senate this week.

My Trading Plan- Buy the dollar against the Yen at around 91.00 or lower.
91.00 is the immediate line of support on the daily chart and it is likely to be tested during the Asian session. ( It did and I bought the dollar at 91.04!)

My near term objective is to take profits at the nearest resistance which is at 92.25. I have set my stop at 90.38 which is the mid-point of last Thursday's candle body which is also the nearest most significant candle body that must be used as reference.

For a longer term scenario, a test of the 93.00 is likely to happen and a breach of which will warrant a climb to the 110 level.

Notes: The Bullish Bottom Ladder Pattern

The shorts may have a chance to close their positions and realize their profits by the fourth day of a considerable downtrend. Then we see an upward gap on the fifth day as a result of this. If the body of the fifth day is long, or the volume of trading is high, this may also imply a bullish reversal.

There is a considerable downtrend for some time and the bears are happy. Then we see a good move downward. Prices start trading above the opening price and almost reaching to the new high of the previous day, but then they close at another new low. This action is a warning for shorts telling them that the market will not go down forever. The shorts may then be forced to reevaluate their positions and they may start closing their positions on the next day if profits are good. This act is the reason behind the upward gap we see on the last day of the pattern and also the close is considerably higher. If volume is high on the last day, a trend reversal has probably occurred.

Advanced Currency Markets - My Premium Choice For An Online Forex Broker

The only online broker with a presence in four continents and the first to be ISO certified, Advanced Currency Markets is by far one of the most reliable online forex broker.

ACM is regulated by the Swiss Federal Department of Finance and has more than $20M capitalization and a $100B monthly volume to boot. It boasts of being the first to have four trading platforms which are all user-friendly and are powered by Flash Technology which allows you to access your sessions from anywhere without having to download anything at all. You are even able to trade online via your mobile phone.

Formed in 2002, ACM is now the second largest online broker in the world. Apart from reliability and integrity, ACM provides the online investors exceptional benefits which is by far unequaled in the industry. For one, their spreads are as low as 1 pip and they charge no commission at all. And when you trade, there are no slippages or re-quotes which are quite annoying and a normal occurrence in other platforms of other online brokers. Their in house analyst is regularly featured by CNBC News for his valuable currency opinions and insights.

I have chosen ACM for my demo trading. I recomend you try it too.

Sunday, February 8, 2009

TRADINGS SPOT CURRENCIES WITH JAPANESE CANDLESTICK CHARTS

Image by Wayan Vota via Flickr

DAY 2

BASIC ASSUMPTIONS ON THE USE OF CANDLESTICKS ON SPOT CURRENCY TRADING

USD AGAINST THE MAJORS

There is no doubt that the currency market still regards the USD as the currency to contend with. The bulk of the volume traded in the spot currency market worldwide is still concentrated in the buying or selling of the majors against the USD. This actually simplifies the task for us since we only need to track the rise or fall of the dollar, resulting from the strengthening or the decline of the U.S. economy relative to the economies of the four majors. More often than not, the strengthening of the U.S. economy is often accompanied by the appreciation of the dollar against the majors in varying degrees and conversely, the decline of the U.S. economy is usually followed by the depreciation of the dollar against the majors.

THE TELLTALE SIGNS WE SHOULD BE LOOKING FOR

Similar to all the other technical analysis tools, we also use the candle sticks to determine strengths and weaknesses in market movements. The candlesticks will be our road signs which will tell us whether a market is trending in a particular direction or not, whether a particular trend is about to end, whether a particular trend has been reversed. In short, Japanese Candlestick charts also have their own reversal patterns, patterns that show a continuance of a trend, patterns that warn us of a weakening market movement.

Image by mollyeh11 via Flickr

When I first lectured on the Japanese Candlestick Charts to a group of investors in San Francisco in 1990 the seminar participants never failed to laugh as I mentioned the names of the different candlestick patterns. For example, when I discussed the "Harami" which is basically the "inside day" formation on the Western Charts (where the current price traded in a very narrow range and well inside the range of opening and closing prices of the previous session), my audience had a big laugh when I explained that the Japanese word meant "pregnant woman". You may find the names of the candlestick patterns very amusing and at times very traditional but they vividly express the underlying collective sentiment of the market players at the time the particular pattern was formed. The basic candlestick patterns include such names as "Shooting Star", Evening Star", "Morning Star", "Hammer", "Dark Cloud Cover", Dragon Fly", and many more seemingly simplistic terms.

The success of the Japanese Candlestick charting technique lies in this simplistic pattern recognition. The "Evening star" carries the connotation of a reversal of a bull run, happening as it is after an extended uptrend. The star is basically characterized by a narrow trading range where the opening price is almost the same as the closing price.

I Shall give you a walk through of all these patterns as they appear in the course of my live demo trading starting Monday. In the meantime, let me lay out the rules I follow in the use of the candlesticks.

1. You must give more importance to candlestick patterns which appear and are formed at or near significant highs or lows or at and around recognized support and resistance lines.

2. A confirmation of the pattern after its formation must first occur before you initiate a trade. A confirmation must consist of a candle whose closing at least falls beyond the mid point of the previous sessions candle.

3. When initiating a trade, set a tight auto stop by using the previous candle's close as your stop if you are on a buy, or the previous candle's open if you are on a sell (for USDJPY, USDCHF and vice versa for EURUSD, GBPUSD).

4. Adjust your stops after each session (like a trailing stop) always using the previous session's candle as your reference point.

5. Do not buck the trend. Trade only in the direction the candles are leading you. Consult the monthly candlestick chart for the market trend. Use the daily candle charts to initiate positions. Shorter period charts like the hourly and 5 minute charts are only for day traders. I have found candlestick charts to be more effective for position traders (and not so effective for scalping).

6. Every position taken must not only be based on a candle pattern but should also have an underlying economic fundamental currently existing or as anticipated by major market players.

7. When you are on a buy, use the nearest most significant resistance as your first profit objective and immediately take profits by liquidating positions when the current candle fails to break the resistance towards the close of the session. When you are on a sell, use the nearest most significant support as your first profit objective. (for USDJPY, USDCHFonly, vice versa for EURUSD, GBPUSD).

For now, these are the ground rules we will follow when we begin to trade on Monday. I shall discuss the others as we trade.

THE USDJPY CANDLESTICK CHART AND WHAT IT TELLS US

With the benefit of hindsight, we can easily see the effectiveness of the candlestick patterns in determining market reversals. A classic Reversal Pattern called "The Evening Star" was formed from May, 2007 to July 2007 after USDJPY reached a historical high somewhere around 124. This was when the "bubble started to burst" as predicted by many economists. The reversal brought the rate down to around 96 in March, 2008. The dollar made a laborious run up to around the 111 high in August, 2008. The run up was characterized by narrow trading ranges which tells us that the rally is not attracting dollar buyers at all and that the dismal outlook on the U.S. economy is more pervasive and it is keeping the dollar bulls sidelined. True enough, another classic candlestick reversal pattern was formed. August, 2008 developed what is termed as the "Evening Star" promptly followed by a confirmation candle(September, 2008) which significantly closed below the midpoint of the reference candle (July, 2008). The reversal brought the price down to the January, 2009 low of 87. Significantly, a market weakness (possibly a reversal) in the current downtrend is evident. A "Hammer" was formed last month signalling a possible near term run up for the USD. This must however, be confirmed with close above the 93 level this month.

With an economic stimulus package almost in place, a better than bleak outlook for the U.S. economy may be in the offing and a dollar rally may be had in the near term..

Notes:

EVENING STAR

Recognition: A three candle pattern at the top of an uptrend. The body of the first candle is white, confirming the current uptrend. The second candle is an indecisive formation. The third candle is black and should close at least halfway down the white candle.

Pattern Psychology: After an apparant uptrend the Bears step in and open the price lower than the previous day's open. The price finishes lower for the day and the Bulls are concerned and begin selling to take their profits.

SHOOTING STAR

Recognition: One candle pattern appearing in an uptrend. The shadow (or tail) should be at least two times the length of the body. The color of the body is not important, although a black body has slightly more Bearish indications.

Pattern Psychology: After a strong uptrend the Bulls appear to still be in control with price opening higher, but by the end of the day the Bears step in and take the price back down to the lower end of the trading range. Lower trading the next day reinforces the probability of a pullback.

HAMMERS and HANGING-MAN

Recognition: The lower shadow (or tail) should be at least two times the length of the body. The color of the body is not important although a black body has slightly more Bearish indications and a white body has slightly more Bullish indications.

Pattern Psychology: This pattern at the bottom of a down trend is called a Hammer. This pattern at the top of an uptrend is called a Hanging-Man

Friday, February 6, 2009

LET'S TRADE THE CURRENCIES TOGETHER USING THE JAPANESE CANDLESTICK CHARTS

TOKYO - MARCH 17: Traders monitor stocks at G...

Image by Getty Images via Daylife

DAY 1
LAYING THE FOUNDATION

At last, after almost two months on hiatus, I am back to my writing and trading days. From my post election trauma to the expected election aftermath, I found it best to shy away from all the hullabaloo going on around me and find a quiet place to spend the holidays all by myself!

And now that I am back, I decided to go on and write about the Japanese Candle Stick charting technique as promised. Much more than that, I decided to do a demo spot currency trading as I blog about the Japanese Candlestick charting technique. In short, I will not only be writing about candlesticks in theory (as a lecturer would to his students or a book author to his readers), but rather, I will be progressively writing about the Japanese candlesticks as I use them in actual, real time trading.

This blog will be the first in a series of daily trading updates using the candlesticks. I shall be documenting every market move I will make using the simple rules I adopted through the past years as a candlestick trader. I shall explain every step of the way what move I will be making at different price levels, why I will be making such moves, what fallback positions I shall be laying out, what objectives I shall be aiming at, and how I shall set my trading directions.
For those who really want to find out if the technique works, I suggest you do the same and open up a demo account with any online broker. I am sure you will end up a better trader after our hands-on trading/training experience together. The best thing about it is that it will cost you nothing. We will not always be able to call the correct trades since the market has always been unpredictable even to the most experienced trader. However, we will learn how to wiggle out of tight situations and learn how we can still end up on the profit side.

It is fortunate that I am starting this candlestick blog series on a Friday since I normally won't initiate trading positions going into the weekend, for several good reasons. First, Fridays are often shrouded with unpredictable price swings. [People normally square off positions on Fridays since leaving open positions on this day would cost you money on roll-over interests for two non-trading days while holding on to your currency contracts over the weekend. This in turn often translate into more volatility in the market.] Second, there are 'position traders' (usually big market players) who may want to preempt next week's market moves and may take advantage of establishing positions towards Friday's market closing, not minding the rollover interest concerns just so they can establish a vantage trading position. [It will be to our advantage if they make this move first and we act after a confirmation of the same.] Third, I can take the time to discuss with you the basics of trading the different candlestick patterns in the next three days and prepare us for the actual trading on Monday.

To start off, let me point out that Japanese Candlestick Charts are mere trading tools, and they

Image via Wikipedia

DO NOT MOVE MARKETS. Like a compass to an explorer, candlestick charts merely gives us the general direction the market is headed. It may be grouped with other technical analysis tools commonly used by Western-educated traders, but with a big twist.

While technical analysis tools and mathematical models were developed in the West (wishfully) to strike out the influence of personal emotions and retain objectivity while making those buy or sell trading decisions, the Japanese Candle Charts were developed to capture these very same emotions and vividly present them in a manner that one can easily discern the underlying collective emotional factor behind each market movement.

It is quite ironic to note that even up to this day, traders using technical analysis tools developed in the West still make themselves believe that they will be more objective in reaching trading decisions using these tools, when in truth and in fact, after all the analysis is done, after all the fundamentals have been digested, traders still rely on their own instincts when they finally push that button, or make that call to buy or sell a contract! - I have always argued that no trader can escape the influence of his own emotions come decision making time. - I have always pointed out that for every market move, major or minor, it is driven by the greed, or fear, or nervousness, or eager anticipation of the market players. There is no escaping that!

This is exactly what is captured and conveyed to us vividly by the candlestick charts...the indecisiveness or sometimes nervousness of the market players during troubled times; their confidence, sometimes bordering on greed in a bull run; their fears and apprehensions during bear market crashes!

And this is what makes the candlesticks an effective tool for me in making my own trading decisions.

When demand D 1 is in effect, the price wil...

Image via Wikipedia

As a trader, never pretend to be an expert in economics and project future price movements according to how you view existing fundamentals will tilt the balance between supply and demand. Leave the the economic analysis to the economic experts and let the big market players preempt future trends. It is enough that you understand how fundamentals influence the supply and demand equation. It is enough that you take a free ride in a trend set by the major market players. You may not maximize earnings in any of the market trends, but you will minimize your risk and gain consistent profits. Candlesticks will help you achieve this as they will tell you exactly what the market wants to do or wants not to do!

My next blog will be a discussion on what the candlesticks are telling me about the currency markets!

Friday, December 19, 2008

HAIRLOSS TREATMENTS – DO THEY REALLY WORK?

AndroGenetic Alopecia (AGA) is what they technically tern this affliction. Also known as pattern hair loss, this health condition affects both male and female and has been the subject of numerous intensive research studies for years now. (And, this is for a good enough reason.) It is estimated that 50% of males worldwide suffer varying degrees of hair loss at certain points in their lives. Some prematurely encountering hair loss problems as early as age 21, while most start losing their hair as they approach middle age. Females are no exception. Although to a lesser degree, females do suffer from hair loss too!
Hair loss occurs when the hair follicles or roots are prevented from growing normally and instead are thinned out causing them to be easily uprooted. Researchers have actually identified a scalp enzyme called Dihydrotestosterone (DHT) which they say breaks down the hair growt

h cycle by reducing hair follicles and ultimately leads to hair fall. Not to be outdone, other researchers have also claimed to have discovered other genetic variants of this scalp enzyme that also impairs the normal hair growth cycle similarly.
With such a big market for hair loss treatment products worldwide, manufacturers have been trying to outdo each other in producing the best hair growth formula. The web in fact is flooded with sites promoting hundreds of different brands all claiming to be the best hair regrowth product in the market. Claims of efficacy are freely published with some even providing documented proof of their products’ effectiveness. As a result, choosing the best hair treatment product can be truly tasking. It is always best to consult your dermatologist before making your choice. It is also wise to make your own research on the different hair loss treatment products available in the market so you can knowledgably discuss your treatment options with your doctor.

One of the new internet sites you can visit for a no-nonsense information source about hair losstreatment available online is the ‘Best Hair Treatment Review 2008’. The site publishes product reviews of choice hair treatment products available in the net. It has sections on Hair Science, A discussion on the different types of hair loss, plus a whole caboodle of relevant and useful articles about hair loss. The site heralds the latest development on hair treatment technology. It gives you the a listing for the Best Hair Growth Products in the internet. Contrary to the belief of many, hair loss is not an irreversible process. The new site will also help you find the Best Hair Regrowth Products around.

If you are looking for the ultimate source of information in the net for the Best Hair Treatment products visit this site - 'Best Hair Treatment Review 2008.'

Saturday, December 13, 2008

DIET PILLS: MYTHS, FACTS, & MISCONCEPTIONS

Staying fit and trim is what this is all about!

The average lifespan of a human being has ranged down to between 65 and 70 years old. This has concerned everyone who has so loved life in this world and therefore wishes to defy the numbers to live longer than the averages.

With an ever increasing medical knowledge and understanding of deadly diseases and what causes early death, almost everyone has become obsessed with trying to stay fit and trim. Others start young and incorporate daily work outs and a strict dietary regimen early on into their lifestyle. Others who have lived the early parts of their lives in wanton neglect of their health (as if they will live forever in this world) are now scrambling to catch up to keep fit, trim and healthy.

It is only in the last two or three decades that everyone is starting to realize the fact that as we grow older we tend to slow down on our physical activities resulting in our bodies burning less and less of our carbohydrate intake transforming them into fat buildups. This in turn transforms us into pot-bellied ugly slobs exposed to greater health risks that may ultimately cut short our lives!

The increasing health consciousness has triggered a boom in dietary supplements and a race to develop the most effective weight loss pills in the last 25 years. Diet pills have been developed by the thousands worldwide both by small pharmaceutical outfits as well as by the giant multi-national companies. Billions of dollars have been spent and is continuing to be spent on research and advertising for new diet pills. Why not? The market for diet pills is ever increasing with more and more people growing wary of the health risks associated with fat buildup!

Unfortunately, the diet pill boom resulted in the manufacture of too many diet pills of different makes and brands which confused the consumers who had to choose from thousands of products available in the market. To add up to the confusion, false claims and misleading advertisements, not to mention the adverse side effects of some diet pills, are prevalent in the diet pill manufacturing industry.

Diet pills are also readily available online, but if you do a simple Google search you’d be drowned with hundreds upon hundreds of websites you need to sift through each one claiming to be the best diet pill choice for you! Unfortunately too, fat buildup in your body may not only be simply because of a slowdown in your physical activity. There are other reasons why our bodies may build up excessive fat. This is why diet pills are categorized according to their main chemical action in our body. There are fat binders, metabolism boosters, calorie burners, carbohydrate blockers, thyroid supplements, appetite suppressants, and complex weight loss supplements.

Worry not! There is a new website designed to make your search for the best diet pill for you.

http://www.bestdietpills-1.com will provide you with all the information you need to lose weight easily. The site is doing the job of selecting the best diet pills that work and are available online for you. It also provides you with a comprehensive diet pill review for your reference to help you in making your choice. “Bestdietpills-1.com” also gives you a free weight loss ebook download entitled 101 Everyday Tips for Losing 10 Pounds.

It has several links to other websites and articles about diets too. And most important of all, www.bestdietpills-1.com provides you updated information on the best prices and special offers by choice diet pills in the net. For the most comprehensive gateway to the best diet pills in the internet, bookmark http://www.bestdietpills-1.com. It will come in handy one of these days.

Watch this video from the site!

Tuesday, November 4, 2008

MONEY-FOREX.COM - A TRADING PORTAL FOR FOREX TRADERS

Foreign Currency Trading is the best alternative for investors wanting to make good use of their money during these 'troubled period'.

The foreign exchange market is the most liquid financial market in the world and placement and/or liquidation of investments can be done with a mere click of a mouse. Today, uncertainties has gripped the various financial markets lately and there is no clear indication in the near term that the markets will stabilize soon. Volatility has been a regular fixture in all financial instruments and derivatives making them not a notch safer than the high risk but high yielding foreign currency trading. But under the current dismal situation of the financial markets, it is important that you chose an investment venue that offers the utmost liquidity - one where you can convert your investment into ready cash when you want it where you want it. Foreign currency trading is the only one that offers investors such liquidity and stability.

If you are seriously considering investing on foreign currency trading you need to study the whole thing first. One of the resources in the web you can use to learn more about foreign currency trading is www.money-forex.com. This is a new trading portal that provides the more relevant and the more basic information about foreign currency trading. As a trader, the most important feature of this website which attracted me is the comprehensive feed of relevant financial news. You need not surf the net to research other sources of news that matters to your trading activity because this website gives you the a complete rundown of the more relevant financial news. On top of the that, the website features its own review of the more trusted online brokers to help you decide which online broker is trustworthy enough to use! Www.money-forex.com also has a whole section devoted to trading strategy - a good resource to hone up your trading skills.

Information is vital to trading the currency market successfully. This is what www.money-forex.com gives you - financial news that matters, when you want it and where it counts the most.