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Forex EUR/USD commentary February 3, 2012

Chad — Fri, 03 Feb 2012 00:55:55 +0000

Happy NFP day everyone. Pretty much as I expected yesterday was fairly muted and the Euro was in a 50 pip range until the Chinese stepped in and said they are looking at dumping cash into the ESM and EFSM to help the Euro Zone. However that 50 pip spike was quickly squashed by none other than the Chinese if you heard the “market talk” going over the news sources. I guess if they do drop them some cash they want to get the best price on their Euros since the floor is more likely to fall out from underneath it rather than it somehow get a lift but I will admit stranger things have happened. Having said that the Chinese are really in the same boat as Germany and do want to see that the weaker EZ countries are getting their ducks in a row before they go throwing money into a bottomless pit. It is in China’s best interest to help the EZ since they are the 2nd largest importer of Chinese goods but if the Euro is going to fail then why would they take the risk when they have already but forth a lot of cash and taken some stiff losses as result. The other main news releases today are the EZ retail sales and is expected to rise modestly and at least be a positive number rather than a decline like last month. As long as it comes out as expected then there is still a

Fx commentary EUR/USD February 1, 2012

Chad — Wed, 01 Feb 2012 01:54:17 +0000

Again the Eur/Usd commentary is started with Greece in the cross hairs. I know it seems to be beating a dead horse but we simply cant ignore what is going on since the abrupt changes are happening left and right. Yesterday the Greek PM called an emergency meeting with his cabinet. The Troika is standing firm that Greece impose the austerity measures promised for the last bail out. This was a quote from the Guardian. “The troika doesn’t appear to be willing to accept any concessions whatsoever on reducing the minimum wage and scrapping bonuses,” said the government aide. “No political party is willing to move either, saying wage cuts are a red line they are simply not going to cross. You tell me how this is going to be resolved. We have no idea and we’re very worried.” It would seem that the debt deal is not the only concern of which I cant say I blame the Troika at this point. Remember the addict analogy I made yesterday? No body want to be the one who simply enables Greece to do the same thing over and over again. The facts are they fudged numbers to get into the Euro and are now paying the price since they didnt use the benefits of being in the Euro to fix internal problems they had when they used the Drachma. The old saying of paybacks are a bi___ comes to mind. There is not any major news events coming from the EZ today but ADP nonfarm will be released during the US session. The market will be looking to see some job creation that will show the US is actually not going back into recession. The number is expected at 189K which is a significant drop from last months 325K . Any significant surprise to the upside will most likely bring in some risk and the Euro may rise but with all the negativity out of the EZ these days a jump in employment may just bring back the decoupling theory and the Euro may drop. I will be standing aside until the reaction is settled and look for the set up. If I trade it at all. The daily chart has made a bearish close but had some rejection at the lows and barley closed below the close from December 20th by less than a pip. It seems Asia is not feeling the love and continuing the drop for now anyway. I expect it to chop a bit during Asia and possibly during London also. However if any tape bombs are dropped during the London session regarding Greece then it could pop either way depending on the news. Any release of the debt deal being finished may be muted since now there is more focus on the Troika and whether or not Greece can push the austerity package through their parliament. The 15 minute definitely shows major intent to the downside and not much interest in a sustained retrace. If the Asian market does push it further down then I will be looking for a pullback to the 1.3090- 1.3100 level and look for a short during the London session. Take care and Happy Trading Chad

EUR/USD Forex commentary January 31, 2012

Chad — Tue, 31 Jan 2012 01:21:03 +0000

Yet again we see another emergency EU summit come and go with nothing more than “we made a step forward”. That was the 17th summit that has turned up dismal results and nothing has really changed. The EUR/USD started the drop in Asia and never looked back running 145 pips before getting a decent pullback after reaching Fridays lows. There was some comments from Sarkozy showing some solidarity with Greece saying he did not back giving Greek budget control to Brussels which means Merkel will most likely give with no one to back her on the deal to force Greece to accept outside budget control in order to get the next aid package. The deal is not dead in the water yet. Of course it really only amounts to giving the addict his quick fix without him voluntary going to rehab. If Greece dont want to change then they wont and just like the addict will be knocking on the door of the last one that helped him get his last fix. Lets not forget that Greece is just the first in line here also and the rest of the financial addicts are not far behind. The next few years are going to be interesting to say the least. We do have a bunch of news today but most are not big market movers. Most important will be German retail sales expected up almost 1% but last months numbers have been revised down a little and 3 of the last 4 months releases were disappointing. If

Fx EUR/USD commentary January 30, 2012

Chad — Mon, 30 Jan 2012 00:17:49 +0000

I hate to say it but Greece is in our cross hairs again. After a very bullish Friday due to more and more “we are almost finished with the PSI deal” Germany has come out over the weekend and made a bid to attach the next bail out for Greece to a release of fiscal sovereignty for the debt laden country. Of course Greece has politely told Germany to stick that where the sun don’t shine. The bail out may just be dead in the water. I have to admit I cant say I blame them. Greece has promised many things to get the bail out and has only a very small percentage has come to fruition. In my view this is akin to lending money to your neighbor who is in debt up to his ears and then see him take the money he borrowed to go out and buy a new car when he already has three he cant afford. Here is a quote from Wolfgang Schauble from the WSJ. ”Unless Greece implements the necessary decisions and doesn’t just announce them … there’s no amount of money that can solve the problem.” I couldn’t have said it better myself. The “rescuers” in this type of situation will actually become “enablers” and only make it worse in the future there is no question about that. Although one must also admit that thus far the EZ core countries have actually been the “enablers” for a number of years and are just now getting their

Forex commentary EUR/USD January 27, 2012

Chad — Fri, 27 Jan 2012 01:18:52 +0000

Today the EUR/USD doesn’t look so healthy does it? It did make it ever so close to the 1.3200 level yesterday but was rejected to finish flat for the day. It would seem that the market is having doubts that all is well. The relative good news for Greece of more European Central banks considering taking it on the chin for the Greek bonds they hold doesn’t seen to be taken as well as I had figured. The ECB did kinda sorta loosen up on its possibility for taken a loss but was quickly scrubbed when the news was released that they are looking into legal ways to fight any loss on their holdings. I mentioned yesterday that there was chatter in the press that the market is pricing in a $770 Billion expansion of the Feds balance sheet. (AKA QE3) It just so happens that I read an article this morning that seems to me to make much more sense and could be the reason all dont look so well today. It describes the reasons why the Fed will NOT fire up the presses. Here are the excerpts from Phoenix Capital. The reasons for this are three fold:

1) Why bother with monetary intervention when you can get the same effect from verbal intervention?

2) The Fed is too politically toxic now to simply unveil a massive new monetary scheme without a Crisis hitting first. 3) The Fed is well aware of the consequences of QE (higher food and gas prices) and while it focuses on CPI as the measure of inflation, the political pressure engendered by higher costs of living are certainly on the Fed’s radar. In plain terms, the bar for more QE is set much, much higher than the vast majority of analysts realize. The reason is that the Fed can no longer simply prime up the printing presses if the economy takes a dip. To me this makes much more sense than the potential for a full scale money drop. Especially in a Presidential election year. Getting to the news today the only major release from the EZ is the M3 money supply. Which will give us

Fx commentary EUR/USD January 26, 2012

Chad — Thu, 26 Jan 2012 01:20:56 +0000

It sure is looking like the move to 1.3200 is likely. As I mentioned yesterday if the break was convincing and it was with a nice rejection seen on the daily chart. Now it has closed on its highs above the 1.3080 level resistance. I can say I expected the rise but was a bit surprised by the 100 pip drop during the London session. The short missed my entry by about a pip. The fundamentals backing this I assume was the Bernake speech when he admitted that QE3 is still on the table. This naturally created a risk appetite for the markets but if history tells us anything it wont do much for the real economy. However stocks do look better in the short term and I do expect this to continue. There were also signs from the ECB that helped this rally. There seems to be some lightening of the weight for the ECB to take the hair cut on the Greek bonds it holds. Germany and France are totally against the idea but the fact that the ECB is considering the option is big. Dont get me wrong they have rejected the idea many times but should it actually come to fruition then it will be a major step to making Greek debt sustainable in the future. It seems now they are seeing the light on the issue and may not have a choice. I have seen many reports from economists stating

Forex EUR/USD commentary January 25, 2012

Chad — Wed, 25 Jan 2012 01:34:53 +0000

It would seem that all it takes to show the EZ is out of recession is some good PMI data. Nice right? At least the purchasing managers feel a little better about the whole situation. I still have my doubts but the charts dont lie. Well they do but you would never know it unless you understand how the markets are manipulated. Of course we had the same conflicting news on the Greek debt deal. The Euro pumpers saying the deal is close then sources within the negotiations saying that hedge funds are preparing to sue Greece and that anything less than a 4% coupon could not be considered voluntary. Not even considering the CAC laws Greece is proposing to force the hold outs to conform. Man I am sure getting tired of writing about Greece and I am sure you are just as tired of hearing it but I feel its important to keep up to date as this is a hinging factor that until solved will serve as a lynch pin that if pulled will cause a big mess to say the least. So lets get on to the news today. There is not much news coming from the EZ today other than the German IFO business climate. Considering the PMI data was better than expected this should follow suit and at least be the rise they expect or better. This will of course put more fuel in the fire of a EZ recovery so I

EUR/USD Fx commentary January 24, 2012

Chad — Tue, 24 Jan 2012 03:37:33 +0000

The move on the Eur/Usd yesterday goes to show that fundamentals are just a side show in the markets sometimes. Of course they matter but then again sometimes they dont LOL. Which is why we trade the manipulation and watch the fundies rather than trade them. Everything seems to be going as planned with the Greek debt write off (joke). Well if you look at the charts anyway haha. Even though the EZ finance ministers rejected the plan the Eur/Usd barely made a retrace off the highs of the day. However it does look like the US didn’t buy into the move and equities ended mostly flat after a nasty chop through the day. This shows that the move in the euro was not risk driven but Euro strength for some crazy reason. I tend to go along the lines of manipulation and think the short squeeze but that’s just me. I will be happy to error on the side of manipulation in any case. There were also several EU banks that got a credit downgrade by S&P. This is significant because the EU banks are finding it much harder to lend to each other and has already created a credit crunch in Europe. We can see this by the fact that the deposit facility at the ECB is still at record levels and seems to be the safest place to park cash. One could say that the 500 billion euros dished out by the ECB has for the most part been parked right

Fx EUR/USD Commentary January 23, 2012

Chad — Mon, 23 Jan 2012 01:53:24 +0000

As everyone reading this knows when we talk fundamentals considering the Euro the Greek debt talks have come to the forefront. I really dont want to beat a dead horse on this but I cant deny that this deal is whats driving price action as of late. It seems the LTRO has done the trick for Spain and Italy for the time being and all eyes are on this debt deal. After many hours contemplating the outcome I have come to think that eventually the deal will get done in some fashion. The fact is they have to. The alternative is unacceptable to most all involved. I think about it this way. The banks and hedge funds are better off taking something rather than getting nothing but will (as they have) hold out to get the best deal possible. It seems like common sense to me at this point. Having said that we all should remember that common sense is NOT all that common. I have already seen many reports of economists crunching the numbers and very few of them believe that Greek debt will be at a sustainable level considering the slump Greece is in presently. However the market will feel much better about contagion for the time being and will most likely turn focus to somewhere else for awhile anyway. Most likely Ireland and/or Portugal. These 2 countries have been coming up on the radar lately and last I saw on Ireland

Forex commentary EUR/USD January 20, 2012

Chad — Fri, 20 Jan 2012 02:03:21 +0000

I find it hard to believe the market can be this optimistic on the horror picture that is the Euro. Having said that this move up does not really surprise me. As I noted in yesterdays commentary the daily close was very bullish and it surely seems like the short squeeze is in full force at the moment. I should mention that the draft of the EU Fiscal Treaty was leaked out and could be reason for some of the optimism. However the fact that it has no teeth seems to be just what the market wanted LOL. Personally I will always side with the banks market manipulation and feel this is just a reason to push out the weak shorts so the Smart Money can load up for the coming jump off the cliff. The talks regarding the Greek debt write down are still at a stalemate but we still keep getting reports of everything is going well LOL. If this were the case then why havent they actually made a deal yet. I did read an interesting article yesterday that seemed to make alot of sense on what the outcome will be. It mainly said there will most likely be a deal as the hold outs are forced to go along in some fashion. Be it kicking and screaming or something of the like. Then the banks will somehow skirt the idea that the rating agencies view it as a default and all will seem hunky

FX commentary EUR/USD January 19, 2012

Chad — Thu, 19 Jan 2012 01:01:36 +0000

Its always nice to see a prediction of price movement come to fruition. However yesterdays price action on the EUR/USD was nothing less than a whipsaw. When I see days like this I can help but think the Smart Money has differing opinions of direction and are dueling it out right in front of our eyes. There has been more conflicting reports on the Greek debt deal. CNN has now reported that Charles Dallara the director of the IIF and representative of the investors in the deal has said. ”It’s not entirely clear” how close the parties are to a deal.”I wouldn’t say I’m confident, but I’m hopeful we’ll reach agreement,” Dallara told CNN International’s Richard Quest in a phone interview from Athens. This is more or less an admittance to what I have been saying for awhile and the hold outs are being a pain in the hind end and hindering any deal. The fact is they are running very short on time and even with full cooperation the sustainability of Greek debt is in doubt any way. The fuse has been lit in my opinion and now its just a question of how long that fuse is. This could explode any day now. Today should be interesting considering the news releases today. Its fairly quiet during the London session with the ECB monthly bulletin and Current Account numbers. I have doubts either will be market movers as the data is released unless there is something surprising

EUR/USD Forex commentary January 18, 2012

Chad — Wed, 18 Jan 2012 02:57:06 +0000

In todays EUR/USD commentary I am going to briefly discuss Greece. I think everybody could use a break on it LOL. Reports are looking better for the IIF and Greece making a deal however nobody I see believes the deal will be enough to make the debt sustainable and only buying time. Enough said. My fundamental focus is now going to be keeping a closer eye on Germany. There was alot of ECB speak yesterday on just how they are to maintain their back door QE tactics. Mulling over a full blown QE scheme for the future. This in no doubt will literally get right in the craw of Germany and many are saying that the Germans have begun building them self a back door out of the euro. This was reported at Zero Hedge this morning and has been mostly ignored since these news releases are not new. German Chancellor Angela Merkel’s Christian Democratic Union party voted to allow euro states to quit the currency area, endorsing the prospect of a move not permitted under euro rules. The resolution reads: “Should a member [of the euro zone] be unable or unwilling to permanently obey the rules connected to the common currency he will be able to voluntarily–according to the rules of the Lisbon Treaty for leaving the European Union–leave the euro zone without leaving the European Union. He would receive the same status as those member states that do not have the euro.”

Fx EUR/USD commentary January 17, 2012

Chad — Tue, 17 Jan 2012 05:33:23 +0000

Todays EUR/USD commentary is a bit late guys I apologize. However this does give me an opportunity to express a few things considering trading the Asian session. I have been getting many comments regarding trading Asia and now have a reason to discuss it since there has been a decent move for a change. First of all with issues in the EZ coming to a head and much of it being priced in there has been just about no market movement during the Asian session. Which begs the question of what the heck happened today? In two short words its “Chinese data”. As I look at this move and the correlation between the S&P and other risk currencies this move is definitely risk related. Meaning risk appetite is in the market today. Chinese GDP data was better than expected along with industrial production and retail sales. Lets just forget for a moment that Chinese data is for the most part unreliable. What else does the market have to go by LOL. I always tell students to be well aware of any pertinent news releases of the day and this is a good example. So how would I trade this using what we know about how the Smart Money operates? looking at my 15min chart there is plenty of info that would have gotten me into this move and I do understand I have hind sight to my benefit. First off we have a fake intent bar before Tokyo even opens

Forex commentary EUR/USD January 16, 2012

Chad — Mon, 16 Jan 2012 00:43:37 +0000

Hello all. I hope everyone had a great weekend. In todays Eur/Usd commentary the buzz word is “downgrades”. Since S&P finally came out and made them real. I’m sure a lot of us are wondering what it means for the markets. Even though there were several countries on the list the most important I see are France who got one notch and Italy which got downgraded by two notches. In simple terms this means that the costs for these countries to borrow on the market will go up and of course the ECB will be stepping in to cap those costs but is limited in its actions for now. However that could change in the near future. In the short term I expect much of this has been priced into the markets for now but it would not surprise me in the least if we see the 1.2000 area on the Euro in the next few weeks. Time will tell. There have also been reports that Germans are increasingly upset and are possibly weighing options on a Euro exit. This was in Reuters this morning. “I fear the willingness of crisis countries to reform themselves is abating if, in the end, the European Central Bank steps in,” Linde’s chief executive Wolfgang Reitzle was quoted as saying. “If we do not succeed in disciplining crisis countries, Germany needs to exit,” said Reitzle who was previously a board member at carmaker BMW and head of Jaguar and Land

Forex EUR/USD commentary January 13, 2012

Chad — Fri, 13 Jan 2012 01:36:32 +0000

Its Friday the 13th and what does the market have in store for us today? Seems like the short squeeze is on. The ECB left its rates unchanged yesterday as expected. however the speech was so uneventful that the market seemed to think it was a good time to try and push out all the shorts they can for now. There was really no fundamental reason for the pop up other than the Spanish bond auction that went off so well that they sold twice the amount originally planned. To me this by its self is not all that encouraging considering all the crap going on with Greece. We will see what happens when the Italians step up to the plate today and try to sell some bonds also. This ought to be interesting. It would also seem that the decoupling theory has literally blown up in a session. With US unemployment coming out a full 22k worse than expected I,m sure this added fuel to the fire underneath the Euro as the S&P dropped while the Euro was on a nice climb. However the S&P did recover and close a little higher for the day while the Euro did about nothing after London closed for the day. It seems the US dont buy into the coupling factor just yet but were happy to help out with the short squeeze LOL. When I see days like yesterday I just cant help but think bank manipulation! Of course that is where the term short squeeze or stop run comes from. With the retail shorts breaking record levels every week according to the CFTC the smart money is going to do their best to push those out so the smart money can

Recent Student Trade

Chad — Thu, 12 Jan 2012 06:24:38 +0000

Hi all. I thought it would be nice to post a recent trade one of our students took on his own without any help or guidance from us. We had already closed the room for vacation over the holidays and as any new trader does just as I did when I started is just keep on trading thru the thin volume. I don’t do that anymore but understand the desire. This is a great opportunity to express how important it is to make the method you trade your own and how important it is to your success. you will never be able to simply copy what a mentor does due to the fact that you have psychological differences that make it impossible. The sooner you learn your own mentality and adjust the method to your comfort levels the sooner success will come your way. The story unfolded like this. On December 28th he sent me this skype message. [12/28/2011 10:49:46 PM] Martin : just took a nice ride down woohooooo!!!! was in at 1.3071 and came out at 1.2971 as I’m leaving for UK for Russia now – Thanks for the training mate My reply was. [12/29/2011 6:04:13 PM] Chad : Awesome buddy. That’s what I like to hear. It warms my heart when I hear a student taking trades on their own and raking in the profits. Have a safe trip.

EUR/USD Forex commentary January 12, 2012

Chad — Thu, 12 Jan 2012 01:37:56 +0000

Wednesday was interesting trading guys. With all the tape bombs during the day from more rumors of a French downgrade to Fitch coming out and saying the ECB needs to step up and do everything to prevent a Euro crash. Then saying the ECB cant do it alone LOL. The French downgrade was quickly squashed by the French treasury but still remains a concern. As for Greek bond write downs the picture still remains unclear. On one hand we have banks saying they need clarity on the deal and stories of how the hold outs have been more or less forced to take the hit. Given the choice of write off 50% or take a 100% loss. That seems like a no brainer to me. However the IMF did come out and admit that they think Greece will need at least tens of billions more cash at the next bail out in March. Things are still in a cluster of all clusters. If you know what I mean. At this point its still a toss of the coin as whether or not Greece will default in March. I think it will depend mostly on the hold out hedge funds that have significant CDS they are holding and if any reports come out of creditors being forced to take the haircut. At that point I think the rating agencies will have a field day trying to get the first default rating out for Greece. There is a plethora of news today most

FX commentary EUR/USD January 11, 2012

Chad — Wed, 11 Jan 2012 00:17:44 +0000

Fx Commentary EUR/USD January 11, 2012 Hello all Today I will be focused more on the voluntary debt write downs forced upon holders of Greek debt. The clock is ticking and they need to have an agreement pretty much this week. As I mentioned yesterday there are still many hold outs and the number seems to be growing as noted in a report from Ekathimerini yesterday. This doesnt even consider the fact that the IMF has said that even the 50% write downs that they are working to get will not be enough to get Greek debt down to sustainable levels. I have also read reports that said a 90% hit for private holders would not be enough and suggested that the ECB and other central banks would be in the cross hairs if Greece is to have realistic debt levels to be able to get out of its mess. This is going to get interesting really quick. The kicker is going to be the hedge fund hold outs for now. If the IIF does manage to get cooperation (which is doubtful considering these hedge funds have been buying up Greek debt that matures on March 20th at 40 cents on the Euro) it will be positive for the Euro for the time being until the market realizes that its not enough for Greece to get out of the hole. Then it all starts again in a few months. Keep one eye open when your sleeping LOL I am also

Forex commentary EUR/USD January 10, 2012

Chad — Tue, 10 Jan 2012 01:09:54 +0000

Forex EUR/USD commentary January 10, 2012 The euro found substantial support at the daily level of 1.2667 and has made a nice 100+ pip move up which leaves the door open to test the next level higher around 1.2900 considering the daily charts. Intraday it does look to have some work ahead to bust thru the 1.2800 level. There really is no fundamental reason for a run up in the pair. I figure it’s a short covering going on and since the CFTC reported another record in retail shorts last week it doesn’t surprise me. There are several bond auctions being held in the EZ this week also with Italy and Spain being the ones that will be watched closely by traders. Italy on Thursday and Spain on Friday. There has also been several articles about Greece and its eminent default however the conflicting press releases by the powers at be still continue to reject the idea. However Merkel did say at the press conference after her meeting with Sarcozy yesterday that Greece will not get its next tranche of bailout money if it doesn’t speed up the bond swap process and hold up to its past promises. The way I see it is Der Spiegel hit it well on the mark (Here). Greece is screwed to put it lightly. Its only a matter of time. If the Euro cant make a decent rally today and at least close

FX commentary EUR/USD January 9, 2012

Chad — Mon, 09 Jan 2012 01:30:43 +0000

I apologise for the recent gap in the EUR/USD commentary guys. As you can see we are having the site redeveloped and I was told not to post anything for a few days. A word of warning also. Its not finished and there will more than likely be another gap coming up in the coming weeks. Hopefully the last. Getting to the issue at hand. The Euro has gapped down this morning and has had some strong follow thru. It has tested a daily support level at 1.2676 and has been firmly rejected for now. There is also 2 daily support levels right below this area from August. A solid close below these levels opens up seeing the 2010 lows fairly soon. Today I am expecting at least a test of the bottom of the gap or an attempt to close it during Asia or London today. I will be looking to see any loading up of shorts to jump in anywhere around the 1.2700 level. As for news today there is a Mercozy meeting today and expect the same rhetoric as usual with an agreement to have an agreement LOL. They will also be discussing the PSI on the Greek bond haircuts. There has been talk that the IIF and Greece are expected to be closer to working out a deal. However I have also read that there are still some hold outs. It seems that some hedge funds

Forex EUR/USD commentary January 4, 2012

Chad — Wed, 04 Jan 2012 02:12:56 +0000

To be honest I didn’t quite expect that much optimism for the first solid trading day of the year. However it’s nice to see what you expect to come to fruition. The most interesting piece of news released last night as I was sleeping was the FOMC minutes. Not necessarily the minutes them self. Those were pretty much as expected. However looking a bit deeper into the release one cant help but notice that there are some voting members leaving the table and new ones coming into the vote. I pulled this from one of my favorite news sources this morning (Zero Hedge). The composition of the FOMC voting members changes drastically as of January 1, with Hawks Fisher, Kocherlakota and Plosser now out of the voting rotation, and replacing them will be the gaggle of ferocious doves Pianalto, Lockhart and Williams. In fact the only hawk left in the Fed as of today through the end of the year is Richmond Fed’s Jeffrey Lacker who has shown substantial dovishness in the past. In other words, from a rotation of 7 and 3, the Fed is now uber-dovish by a 9 to 1 majority. Soooooo… QE3 is looking to be on the table again and even more likely. This will of course be bullish for stocks and the Euro will benefit as normal for now anyway. There has been a lot of chatter against it but with helicopter Ben at the helm the odds are skewing more in that direction I think. As we can see on the daily chart the descending trend line has been tested and the close was pretty much spot on the line. What’s also interesting is that looking at the 15 minute chart the two pull backs from the daily highs were both on decreasing volume. The lower volume drop as the US session was closing is to be expected. However the low volume drop after London closed tells me that the US is feeling a

EUR/USD FX commentary January 3, 2012

Chad — Mon, 02 Jan 2012 23:47:30 +0000

Hi all. Now is when things in the market will start getting interesting as we start to get back some normalcy this week. The market should be ramping up the volume in the next couple days as ADP and NFP jobs numbers are released and traders come back from vacation. The big one being NFP of course. The numbers are expected to increase from 120k to 153k however even the better jobs figures will have little effect on unemployment and will most likely be due to holiday hiring rather than an increase in demand in the workforce. So unless there is a substantialÂ unexpectedÂ increase I am thinking the reaction may be muted although as we all know the NFP is a prime event for the SM to run the manipulation game so thats what I will be looking for. The EZ has posted its 5th month of contraction in manufacturing. This was reported from Reuters. Euro zone manufacturing activity declined for a fifth consecutive month in December, although at a slightly slower rate than November’s 28-month record low, a survey showed on Monday, suggesting the decline would continue in the early months of 2012. Markit’s Eurozone Manufacturing Purchasing Managers’ Index (PMI) rose slightly in December to 46.9 from November’s 46.4, but marked its fifth month below the 50 mark that divides growth from contraction. It was unchanged from an earlier preliminary reading. Survey compiler Markit said levels of production and new orders fell in all of the euro zone countries covered by the survey for the second month running. “Despite the rate of decline easing slightly in December, production appears to have been collapsing across the single currency area at a quarterly rate of approximately 1.5 percent in the final quarter of 2011,” said Chris Williamson, chief economist at Markit. “The survey also points to a strong likelihood of further declines in the first quarter of the new year, with producers cutting back headcounts, inventories and purchasing.” For now I expect the Euro to benefit from any optimism and positive US data. However once the thinking of economic decoupling becomes more prevelant the Euro and US equities will start to diverge until of course this decoupling theory is disproven by the US slowing down also. Its going to be an interesting first few months this year

Forex commentary EUR/USD January 2, 2012

Chad — Sun, 01 Jan 2012 00:34:56 +0000

Happy New Year to all. I sincerely hope everyone had great holiday season with family and friends. I know this is the time that we should all be reflecting on the past year and make predictions for the coming year however I am not going to do that. To be honest I dont have the stomach for the dire straits the world is facing. I can only look back and hope that governments have theÂ wherewithal to do whats needed to get us back on solid footing. I amÂ choosingÂ to be optimistic at this point because the alternative is just toÂ bleakÂ to start a new year. I found it best summed up in a quote in this article from Charles Biderman of Trim Tabs. ” Until there is a total restructuring of developed market economies to the point where entrepreneurs are encouraged to act and where government spending is ‘closer’ to government income and not to ‘wish fulfillment’, there can be no jump-start to growth. Political will remains bereft of desire to do anything but kick the can down the road – and unfortunately, that can is getting bigger and heavier by the minute.” Enough said I think. Now lets get on to my short term outlook for the EUR/USD. At this juncture the daily chart is what I will be looking at closely. It has tested the yearly lows from January 2011 at 1.2873 and been rejected in thin volume

Forex Bank Trading Strategy Introduction Video

stersuhr — Sat, 31 Dec 2011 06:47:53 +0000

Forex Bank Trading Strategy Introduction Video Take A Free Trial of Our Live Day Trading Room & Education Course Here Learn More About The Forex Bank Trading Strategy In Our Recent Article Here

Forex Bank Trading Strategy Revealed – Forex Day Trading Strategy

stersuhr — Mon, 26 Dec 2011 04:08:35 +0000

Forex Bank Trading Strategy

Anyone successful in the forex market will hands down agree there is no greater career one could have. The ability to work your own schedule, the freedom, and income potential is hard to match with any other career. Having said that, what does it take to become successful in the forex market? Plain and simple we need the proper forex education to achieve success. In a market with a success rate of 5% it is important that we search out and receive forex training that will allow us to be in that very small successful group of traders. How does one go about doing so? To put it simply if the forex trading strategy that is being used is one used by the masses, then how can one expect different results than the masses? 5% of retail traders succeed, which tells us that 95% fail and thus we have no other choice than to break free from the failing forex education system!

Enter You Enemies Head and Think Like A Bank

Before we begin I would like to give a preface to the forex bank trading strategy. First, it is common knowledge that the banks drive the forex market. It is not a hidden fact that they drive the most amount of volume on a daily basis and as a result they drive short term moves. If we understand that the banks drive, manipulate, and push this market then wouldn’t it be hugely beneficial to track when they are entering and

FX Commentary EUR/USD December 21, 2011

Chad — Wed, 21 Dec 2011 01:41:45 +0000

Well it looks as though the Santa rally is on! Yesterday I was sceptical of a rise mainly being caused by a short covering scenario. However a 300+ point rally in the Dow is encouraging. I am still a little concerned that the Euro had no follow through during the US session but things are looking better. All of the data reviewed yesterday was positive as Germany showing they may fair better than I expect with the EZ crisis and housing data from the US was encouraging. I don’t think anybody is actually out of the woods yet but missing the Santa rally this year would have been very discouraging and show that the pessimism is persistent. There is still hope anyway. There is no high impact news scheduled for today so I anticipate the rally has a good chance to continue. There has already been a momentum push up at the Tokyo open and there don’t seem to be much selling going on. A break of yesterday’s highs is not out of the question and the test and break of the daily close on October 3rd at 1.3173 is possible if this rally continues. At this point the only thing that could stop this rally is some disappointing tape bombs out of the EZ which is unlikely in my opinion. Intraday I would be looking for clues that there is no interest in selling. I would want to see

Our Trading Beliefs & Philosophy At Day Trading Forex Live

stersuhr — Tue, 20 Dec 2011 04:14:07 +0000

Our Trading Beliefs & Philosophy at Day Trading Forex Live

Over 7 years ago I began my career as a forex trader. I’m sure that my story in the forex market isn’t much different than anyone else reading this. Much like the majority I have literally tried every form of forex trading there is out there, and like the vast majority I had the same negative results. I firmly believe that there is only two variables that separate a profitable forex trader from one that never succeeds. The first variable can be summed up with ones method of trading forex. Simply put 95% of all forex traders fail. If you or I do what everyone else does we will have the same results…this I can promise you. Therefore to restate the first variable of success, we must all break free from the same forex trading strategies you see everywhere or we will continue to fail with the rest of the 95%. Before we get into the meat of this article I want to say it is a bit lengthy. If you are struggling to profit in the forex market I strongly urge you to put forth a few minutes of effort to read this article through to the end. The forex trading strategy we use is one that you will have never been taught. Its a way of viewing the market from smart money’s (Primarily the 10 largest banks) perspective. After all, the banks are the ones driving the foreign exchange marketplace. Therefore if we want to know which direction the market is headed its only logical we understand the forex trading strategy used by the banks! Above I mentioned there are two variables for success, and the second is your personal ability to endure. If you’re looking for me to tell you this market is easy, and that you can turn 5K into a million in a month, or any other promise your used to hearing then you’ve come to the wrong place. You see endurance is the great refiner of the forex market. Those who are willing to learn, think outside the box, and repeatedly get back up after the market beats them down are the ones who will succeed. Through this article I will discuss the key concepts to the forex bank trading strategy. To begin it is crucial for you to believe some basic concepts. I’m going to ask you to put down what you’ve been told up to this point in the forex market. I ask that you give some serious thought to what I’m about to say and let the facts speak for themselves. Facts and only facts should guide our decisions as professional forex traders. First lets discuss the 95% failure rate among traders. I was asked before if I really feel this is an accurate percentage representation of retail forex traders and I personally feel like it is at the least a 95% failure rate. Here is a simple test to prove this to yourself….can you think of one person you know who can prove they are profitable to you through either a track record or watching them trade live over the course of time? After teaching well over 1,000 traders over the last 3 years, I’m confident that the vast majority of those reading this cannot think of even one profitable trader. Again I’m not here to skate around the truth I’m here to show others why the 95% fail, and how both you and I can be in that very select special group of 5% that profit in the forex market. The facts of this market are not pretty, but in order to get to the promised land of profits we have to face the facts as bleak as they may be. Now that we understand that vast majority of traders fail we need to reverse engineer why this happens so as not to repeat it. What I’m about to say next is going to be a radical shift from anything you’ve ever heard. Not only that, but most are going to refuse to accept it because it is so different. Before going any further let’s not forget the proven failure rate among retail traders. Keeping that in mind will help us to remember we HAVE TO be different from them if we are to ever be professional forex traders that consistently produce profits month after month!

The Realization We All Must Face….

Following the standard forex trading strategies commonly found in this market will result in losses. First lets establish what forex trading techniques I’m referring to. In general I’m referring to the belief in trading indicators, bar chart patterns, chart patterns, trading software, EA’s, or any other style of trading that requires a chart or the “face value” analysis of price movement. Now I don’t expect you to understand that statement without some explanation, and that is exactly what I intend to do through the use of questions and a general understanding of market basic. First we need to understand how forex brokers work as a general rule of thumb. Simply put when you buy they are the ones to sell it to you, and when you sell a currency they are the ones to buy it from you. Forex brokers are the counter party to every trade you place. Therefore every time you make a profit they lose money, and every time you lose money they make a profit. This is an amazingly profitable business model when you consider the massively high failure rate we discussed earlier. Forex brokers are a business like any other, they are there to turn a profit and turn a profit they do. This style of forex broker is called a bucket shop broker, others brokers do process your order in live market and we will cover how this effects us in another forex training article. Understanding this fact about forex brokers is a piece to the puzzle, but we also must understand what this means at its core. To do this I want to recall a conversation I had with a new trader not so long ago… I started out with statements very similar to what I said above about brokers, and then he abruptly stopped me and said, “just wait right there Sterling…..if forex brokers want you to lose money then why do the majority teach you how to trade chart patterns, read candlesticks, understand price action, and on top of that pay a massive licensing fee for MT4 so you have access to all the indicators, trading software, and EA’s out there?” We were on a skype conversation and it’s at this point that I just started to smile, and it is at this point that everything made sense to him. The forex broker business model is a fact that is not hidden, and the fact that they want to teach you all of the above should be a MASSIVE warning to you! If the brokers thought that the general education they give, or access to MT4 and therefore the most popular indicators, trading software, and EA’s would help you….do you think they would so readily provide it to everyone, and do so for free? Remember there business model profits when traders lose money, and the brokers lose money when the trader profits. If this is a standard model, then we all have to honestly examine why they give us all these so called tools as well as free forex education? Plain and simple forex brokers are so sure that if they get you to start using the mainstream forex indicators, EA’s, trading software, candlesticks, chart patterns, etc… then they have you hook, line, and sinker. I cannot state it any simpler than to call it all fallacy put there to extract money from retail forex traders. I understand many reading this if not most have probably spent months if not years trying to be profitable with the “tools” we have been discussing. It’s at this point that you must be honest with yourself and ask just whos “trading tools” are you using. I would argue that they are the tools of the forex broker and banks, and I’m proven right 95% of the time when another trader walks away having never realized their dream. For a moment let’s just assume that all the talk about forex brokers giving you the tools mentioned above so that you fail is a false statement. In fact let’s not even consider the brokers. For this illustration I want you to go to your favorite forex forum on the web today. Go into the strategy section of that website and what are the trading systems you see based off of? After a quick search you will see indicator based strategies, price action strategies, charts pattern setups, candlestick pattern traders, trading software, indicators and the list goes on and on. If we know 95% of traders fail, and we now know what form of trading they are doing then why in the world do thousands and thousands of forex traders continue to follow the same path and expect different results. Right now you know the facts, its been proven through logical reasoning and therefore the choice is yours.

Trade With The 5%…

I want to now present you with my belief, and again base it off of the facts so we can all come to the same logical conclusion. It’s well known that the banks are the driver of the currency market. By learning how to identify when they are entering the market, and what direction they are entering, this is all that we need to know! This is exactly what the Forex Bank Trading Strategy is all about. By getting away from every single “tool” losing traders use and tracking smart money you can identify market direction consistently! Most say that it is impossible for retail traders to know when a bank is about to drive the price….what do you think? It is well known that smart money has no other choice but to enter the market over time. Because of the sheer volume of their position they must accumulate a position rather than simple take a trade with the click of a button as you or I might. This fact gives us a distinct advantage! The banks accumulation leaves a figurative “foot print” that we at Day Trading Forex Live have over time learned to identify, and therefore understand not only when smart money is entering a position but more important what type of position they are taking, either long or short. If you properly identify the position that is being accumulated you will be taking the same trades as the mega banks, and simply put banks don’t lose. It’s important to understand that all patterns, either chart patterns, candle patterns, or other price based setups can all be and frequently are manipulated by the mega banks. Smart money can and does create patterns in the market in an effort to trap traders for their benefit. If a bank is looking to enter a long position they must create those willing to sell it to them, and conversely if they are looking to sell the market they must entice someone to buy it from them. Every trade placed has a counter party to it. Because of this smart money on a daily basis creates the patterns discussed to trap traders into the false position before often driving the price the opposite direction. The same holds true for EA’s, trading indicators, and other forex trading software. In general these “tools” are used by the banks to trap traders in the false direction of the market. Doing so creates buyers when smart money wants to sell, and sellers for when they are looking to buy. Have you ever felt like the market the majority of the time turns up when all your indicators, chart patterns, and systems are telling you to go short, or it turns down when every “tool” you use is telling you to go long. This is not a coincidence, this is not a fluke, it did not happen by chance! Unfortunately this is hidden from most traders because these patterns seem to work when you are testing them. You may design a strategy, it starts to look good, you then go live and have a few good trades only to within a short period of time get wiped out. Most then repeat this pattern over and over until they leave the forex market never having realized their dreams. The banks have a business model like every other successful business out there and retail traders are the predictable “fuel” they use to enter and exit their positions. Once you understand their model you can be part of the profitable 5%, and this model is exactly what we intend to teach you! You can be successful in the forex market you just have to do 2 things. Number one you must break the cookie cutter mould of most forex traders. If your using ANYTHING the majority of forex traders use to trade forex you will have their same results of loss after loss. The second key to success is to track smart money. Learn the forex bank trading strategy we outline on this site and stick to it! Learn to take the same trades as the banks, and you will profit like the banks! Learn More About Our Trading Strategies & Follow Our Live Trades Each Day – Take a Free Trial Here

EUR/USD Holiday Rally Commentary – December 20, 2011

Chad — Tue, 20 Dec 2011 01:43:15 +0000

Hi all. Well so much for the Santa Clause rally everyone was hoping for. I guess there is still 5 days left until Christmas but things are not looking good with stocks dropping 100 points on Monday after the ECBs Draghi said the law forbids him from increasing government bond purchases to fight the crisis. The Euro has seemed to hold its own through the malaise but is looking more set to fall than rise at this point. Some fund managers have said that the beginning of 2012 will be a “risk off” scenario as the crisis deepens in Europe and of course the Euro will follow to some extent. The test and failure to get higher than 1.3080 on the daily chart shows that the pessimism is not subsiding any time soon and any break and daily close below the 1.2900 level should clear the way for a substantial drop to 1.2600 and an eventual test of the lows at 1.2000 As for news to watch today there is German PPI numbers that are expected to drop a bit lower than last months. Consumer and business climate results are also expected to drop a bit. I have my doubts any of these will be market movers since any surprise upwards will be muted by the EZ troubles. An unexpected larger drop may create some movement but traders already know the slowdown has affected Germany so may already be priced in. The numbers I

Forex Weekly Recap EUR/USD – December 19, 2011

Chad — Mon, 19 Dec 2011 00:37:16 +0000

After the latest emergency summit the EUR/USD tumbled as traders didnt buy the success of the deal at all this time. The 400 pip drop on Monday and Tuesday confirms traders seem to have lost any confidence in a swift action that will halt the euro zone crisis. As I noted as every emergency summit in the past has brought a bounce in the euro so I expected some of the same for this latest one also. This time there was no optimism at all. This tells me a lot. The CFTC also released its latest numbers and more traders are short the euro now than any time back to 2007. Which leads me to think there may be a short covering before the end of the year. However the end of the week has seemed to be a lack luster up move so at this point I will let price tell me what action to take. Monday, December 19th A clean break of the stubborn 1.3000 level and the 1.2900 level should be an easy target this week. If it holds above 1.3000 for the first couple days of the week then a short run up is possible as high as 1.3165 area. Intraday I will be watching the 1.3050 area and see a rejection for a short. I would only be considering a long from the 1.3000 level as it may well be defended as it was last week. I have my

EUR/USD FX Trading Commentary – December 14, 2011

stersuhr — Thu, 15 Dec 2011 03:06:21 +0000

Hi all. Todays news events were somewhat muted. there was a rumor of S&P downgrading France that never happened. the rumor did make the euro surge lower but didnt have any real follow thru. There was also an Italian bond auction of 5yr notes that they had to pay the high yield of 6.47%. Definitely not a good sign. The most troubling for the EUR/USD is todays close below the 1.3000 level this is significantly bearish however there is a large Eur/Usd option expiry today at the 1.3000 level so I somewhat expect the pair to make efforts to stay around there. Looking at this daily chart with the volume added its plain to see there was quite a bit of buying going on in efforts to defend the 1.3000 level. Notice the increase in volume and the significantly smaller spread of yesterdays candle. This tells me there were buyers there. There is a good possibility for the retrace to the 3073 level now but since it was rejected by more than 10 pips yesterday a retrace may only reach the 3063 level. The only thing that might change that is some super duper good news that I dont see happening in the near future. Considering the possibility for the retrace now As I look at my 15min chart I will be looking for the thrust thru the 1.3009 level and a retest for a long but only ride it to the rejected highs at 1.3050 for

EUR/USD Forex Commentary – December 13, 2011

stersuhr — Wed, 14 Dec 2011 07:43:26 +0000

Hi all. The euro acted as expected yesterday. I did have my timing a bit off and was stopped out +20 pips on my short but no biggie its still a good day. Considering we had the typical plethora of tape bombs yesterday its no surprise the Euro tanked another 180 pips. Where do I start? How about Greece. The Greeks are having more trouble getting private investors to take the hair cut. What gets me about this is these investors cant see the forest through the trees. Either they take the haircut or they risk getting absolutely zero back on their investment and I have seen many economists say that the full write down from all private investors is the only way to make Greece solvent. At this point in time if I held Greek bonds I would be thinking lets get while the getting is good. Then there was talk of the Irish playing the referendum card like Italy did which cost Italian Prime Minister Burscaloni his job. The Irish want a better deal on their bail out and who could blame them when is was German Chancellor Merkel that was a catalyst in driving Irish bond yields above the dreaded 7% forcing the bail out situation. Where was the ECB then? I ask myself. Just ponder that for a moment. What if the ECB protected Irish yields like they have Spain and Italy? Would this situation be this bad? True it

Forex Day Trading Commentary EUR/USD â€“ December 12, 2011

stersuhr — Tue, 13 Dec 2011 02:19:07 +0000

I was obviously wrong about any optimism concerning the EZ summit. It seems just as the US market didnt buy into the BS neither did Asia or London/Europe for that matter. There were a couple of tape bombs as we call them that were released yesterday also that I am rather sure contributed to the drop. Although there was no announcement of downgrades by S&P, Moodys did release a statement saying they were concerned about Europe going into recession and that would be credit negative. More or less letting them know they are watching without making it official. There was also a disturbing release from the president of the German Federal parliament saying that they doubted the measures adopted last week at the summit to strengthen integration in the EZ would be considered legal by the German Constitutional Court. If this is a fact it would mean the summit may have well not even happened and does show that they are actually very far from deciding on what to do as well as even further from implementing any of it. There was definitely progress made at the summit and a lot of people were happy with the results. However time is running out and I dont think Mr Market has any more patients. The euro sits on a substantial support area as I type this. A daily low back from Oct 4th at the 1.3170 level. A clear break here and we should see

EUR/USD Forex Weekly Recap – December 11, 2011

Chad — Sat, 10 Dec 2011 09:16:29 +0000

Hey traders, As for the week ending Dec 9th. I was a bit surprised by the run up late in the day on Friday given the fact that most of the news during the week was euro negative considering the big “plan to have a plan” to fix the crisis. Although there was some positives from Germany on services PMI, factory orders and Industrial production. The fact that Germany alone cant bail out Europe doesn’t change. The BIG PLAN was more or less derailed by Finland and the UK on treaty changes but they seemed to leave that door open still. The euro is still very much attached to risk even though it has waned a bit in the past couple weeks. I think for next week there could possibly be a small run up during Asia Monday and depending on the dribble that flows out of the EZ possibly during London session also. It really all depends on how long traders buy the line of crap. Considering there wasn’t any follow thru during the US session tells me the US didn’t buy into it. Looking at the result of the last few emergency meetings called and the initial bullish results that followed it seems to me that traders are waking up to the BS sooner each time so don’t expect any bullish moves to last. The levels on the EUR/USD I will be watching during Asia come Monday will be

Learn To Trade Forex With Smart Money Part 3

stersuhr — Sun, 27 Nov 2011 04:52:03 +0000

In this forex trading course series covering how Smart Money (SM) trades in the currency market we have covered quite a bit of information. If you haven’t yet read the first two articles in the series entitled Learning to Trade Forex With Smart Money I recommend you go back and do so now. The first two articles in the series covered the problem with most forex trading strategies, and the second article in the series covered the very basic foundation of how SM trades in and moves the currency market. We also learned the all important fact that consolidation is accumulation. Through the rest of this article we will cover and break down the 3 phases of the SM day trading forex strategy. Lets begin!

Accumulation Before The Trend

Plain and simple without accumulation SM cannot and does not take a position in the currency market. Therefore accumulation is the first phase of this forex trading strategy, and must be identified when looking for a setup. SM has no option but to enter the market through periods of accumulation which is often seen visually to you and I as sideways consolidation. Normally you will want to see at least an hour of sideways accumulation, with the market on average accumulating for a few hours before moving off into one of the next phases. This stage is absolutely critical to the trade setup. As discussed in the second article of the series, because of the sheer volume of currency SM moves they MUST enter their position over the course of time so as not to

Learn To Trade Forex With Smart Money Part 2

stersuhr — Fri, 25 Nov 2011 03:36:48 +0000

In the first article of the series entitled Learn To Trade Forex With Smart Money – Part 1 we talked about how the retail trading sector is setup keep traders losing. We also discussed how this benefits the forex broker, but have you ever considered who else might be benefiting from this business model? You’ll have to think bigger than yourself to answer this question, in fact you’ll need to think bigger than the retail forex market to properly answer the question. Not only do forex brokers benefit from retail forex traders but Smart Money in large part profits as well. How so? This is a question we will answer later in this article, before we get to that let me reiterate the purpose of this series of day trading articles. The first article should have served as a wake up call for all retail forex traders caught in a “cycle of losses”. It should also have clearly identified the problem forex trading strategies all losing traders tend to use. Within this second article we will discuss who is driving the moves in the forex market. Additionally we will cover the exact model those driving this market use! Think about that for a second. If you can identify when those actually driving this market are getting in then you can essentially take their same trades. The power behind that one fact alone is huge!

Who Really Drives The Forex Market?

In the last article we discussed Smart Money (SM) briefly. To reiterate, SM refers to those who are driving the forex market such as the banks, hedge funds, and/or large trading institutions. Its been said that no one can control the forex market. This is a thought that most new traders are taught in regards to forex. I’d like to present to you a different school of thought, and that is that EVERY move during active trading times is a calculated and manipulated move made by SM. First lets dispels the myth that this market cannot be controlled even by a central bank. For this we will use the recent example of the EUR/CHF. The Swiss National Bank (SNB) said they were going to not allow the EUR/CHF to

Learn To Trade Forex With Smart Money Part 1

stersuhr — Thu, 24 Nov 2011 05:55:51 +0000

I personally feel like you and I are a lot alike. You probably started in the forex market the same way I did, with the same dream of day trading forex a living and financial freedom. Heck, you and I probably bought some of the same trading products. Do you remember the feeling you had when you bought those first few products? I sure do! If I had to sum it up in one word for me it would have been hope! The hope of never having to work again, the hope of being financially free, the hope of money never being a worry! Unfortunately for me, and probably for most reading this, things didn’t quite pan out that way. Now I’m not going to sit here and harp on how bad the products in the forex market are, rather I’m simply going to get right into the problem and how to go about fixing it! I’d like to ask you right here and now to “suspend your disbelief”. What I mean by that, is to shut off the little part of your brain that always wants to raise doubt. If you can suspend your disbelief long enough to get though this series of articles I believe I can help you. Alright let’s get right into the core of the issue.

Suspend Your Disbelief

Everyday there is more crap thrown in everyone’s face. “Educators” wants to tell you trading forex is so

Why Retail Forex Traders Are Predictable

stersuhr — Sun, 20 Nov 2011 04:46:32 +0000

Why Retail Forex Traders Are Predictable

Long ago I realized a problem in the forex market. I realized this problem only after years of losing money, thousands of dollars lost, and numerous sleepless nights. This problem didnt just affect me but it affected every forex trader I knew at the time. This problem is so prevalent that it no doubt affects 95% or more of all those reading this article. To state it simply, I realized main stream forex education was failing traders, including myself. When you think about it no matter what forex trading strategy you use, for the most part they all rely on the same thing to trigger a buy and the same thing to trigger a sell. For example, all indicators, trading strategies, EAs, candle patterns, etc. rely on the price beginning to move up to trigger a buy. Some will begin to signal the buy early and some later, but in the end upward price movement is required for a signal to go long. The opposite is true of a trading signal to go short. Therefore while there are literally hundreds of techniques used in the forex market they all boil down to upward movement to trigger a buy, and downward movement to eventually trigger a sell. I understand this is an over generalized statement but I believe it holds true the majority of the time. I ask you to not just immediately dismiss this idea but rather give it serious consideration along with the rest of the thoughts that are presented in this article. If we know what triggers the masses to buy and the masses to likewise sell, then dont you think the banks driving this market do as well? One recent article said retail forex traders make up 250 billion of the daily forex volume. Considering forex is a little over a 3 trillion dollar a day market, retail traders make up close to 8% of the daily volume. If you subtract all the general order flow from 3 trillion dollars a day (currency exchange for global commerce/business) you would end up with a much smaller number that is actually speculative trading. Lets just assume half of the 3 trillion is speculative and the other half is general order flow from global commerce/business and such. If this is true then the 250 billion in volume from retail traders is in actuality 16% of the total daily speculative order flow. At 16% of the daily speculative order flow this now makes us the average retail trader important to the banks. As we have discussed before for every buyer there is a seller and for every seller there is a buyer. This is a basic fundamental in every market, and this is what makes us important to the banks. Lets examine an example, and draw a conclusion from the facts.

How Retail Forex Traders Predictability Is Used…

If a bank was looking to short 10 billion of the EUR/USD they would need to find 10 billion in EUR/USD buy orders to fill their desired short position. Therefore in order to not drive the price down as they enter their short position, the bank must make retail traders believe the EUR/USD is going up. If traders believe the market is going up they will begin to buy which is exactly what the bank wanted to happen in order to fill their desired short position. As retail traders begin to buy, the bank then begins to sell into that buying pressure until their position is nearly filled. Its at this point the bank/banks begin to sell more aggressively pushing the price down and thus shifting the belief of retail traders to the downside. Retail traders begin to close out their previous long position (thus selling to close the long position) and not only that but they will often chase the price down only fueling the banks position even more. As it relates to the 3 steps forex bank trading strategy, what was just described here is the accumulation phase where the actual position is entered. As we discussed in the beginning most all forex trading strategies rely on the same thing to trigger either a buy or sell entry, and this makes retail traders predictable prey of the banks. At this point I ask you to give serious consideration to this thought, and then examine the forex trading strategies and forex systems you have experience with. Because banks understand this concept as well, they then use it to their advantage as we described above. Again I urge you to use your own reasoning on this matter based on your own experiences in the forex market. Maybe this explains why so many traders say â€œthe market turns against me as soon as I enter? The key here is to separate ourselves from the predictable masses so we too don’t have the same negative results! It is my belief that we must learn the forex trading strategy of the banks to achieve success. Learning how they manipulate the market allows us to profit from it rather than being their victims!

Live Forex Room Update October & 7/11/2011 Day Trade GBP/USD

stersuhr — Tue, 08 Nov 2011 03:21:14 +0000

Hey everyone! I hope trading is going well for you all. In this recent trade update we are going to wrap up last month and then get into the trade setup that we had today. October ended up with a gain of +265 pips. We didn’t win every trade and we had a few losers in a row but as you can see what matters is the monthly profit or loss. I think one of the biggest downfalls of most forex traders new to this market is there inability to lose their short sighted point of view. Often traders get so wrapped up in the here and now they lose sight of the big picture which is monthly profit. Losing sight of the big picture leads to over trading, revenge trading, “system jumping”, ect ect… Hopefully by sticking with the simple idea of only identifying what smart money is doing, everyone will be able to improve in their trading and finally crest the hill of profitability! Again going back to day trading strategy outlined in the article series learn to trade forex with smart money….accumulation, manipulation, followed by market trend. That’s all we need to understand. Â Today we had the first two steps come together quite clearly, we just never happen to enter a clear defined market trend. As you can see the GBP/USD came up and spiked above previous resistance (off screen). This showed a clear stop run at resistance, therefore showing a high probability of the accumulation of sells. Normally I like to see the stop run at the end of the accumulation however we had it at the beginning today. As you can see I have the accumulation marked in the red square. This is clear sideways price action that is often mistaken as a market lacking momentum, but as we know these periods are often times smart money accumulation areas. The market took off to the downside and we did not catch the first move down. After the first run down I said I wanted to take either the EUR/USD or GBP/USD when/if it pulled back into the accumulation area. It’s worth noting that once the market break out of the accumulation area, it will more often than not pullback into this point. This is why I stress not chasing a market but rather letting it pullback at a later time. These pullbacks are part of the manipulation. Think about this for a second. If the accumulation was the accumulation of sells which the first move down showed, then why would smart money drive the price back up to the same point. What do you think most indicators looked like as the price was coming back into the accumulation areas? More than likely everything was starting to turn up for a buy, and this is exactly what smart money’s intention was. By creating the belief in further upside traders are more likely to buy thus providing supply for smart money to sell into….clear manipulation. The EUR/USD showed the same thing as the GBP/USD. We took the EUR and it unfortunately pulled back past the accumulation area stopping us out. The EUR/GBP just happened to turn up which caused a quick spike in EUR strength, and that was enough to stop us out. Had we taken the same exact trade on the GBP/USD it would have been good for up to 40 pips initially. Later on we did end up taking the GBP/USD. We took it after the second test of the accumulation area go rejected. This trade is a bit tricky, let me explain. I had set before we left the room that I wanted to move the stop loss to break even when this hit +20. With an average entry of 27 it would have hit +20 on some brokers and not on others. It personally hit +20 on one of my brokers but not the other. Therefore some could have ended up break even and some it could have hit the stop of -20 pips. I’ve got 2 emails thus far both saying break even but I’m sure some did get stopped if they weren’t around to see what happened. Thus we will split the difference and call this a -10 pip trade. Today ended up down, but we have a lot of month left. Every month we will have losing trades which is why we learn to accept them, move on to the next day, and this is how we consistently turn a monthly profit!

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Stop Run Reversal Day Trading Entry EUR/USD 27/10/2011

stersuhr — Thu, 27 Oct 2011 05:12:17 +0000

In the last recent trade update I briefly went into the smart money model. Here is an extremely clear example of the market consolidation before a large market move. In the last update I also spelled out the facts about consolidation in that it is the vast majority of the time hidden accumulation. Therefore after a long accumulation period we were anticipating a very nice move and that is exactly what we got! I will make this update brief because I just finished the 3 part article series on how Smart Money moves the forex market. The article series is entitled Learning To Trade Forex With Smart Money. If you haven’t viewed them yet I welcome you to go check it out. The chart you see here will make a bit more sense once you go through the educational articles. Anyway, on to the trade setup. Initially the candle that jumped out of the range looked like a jump bar up to me and it in fact fulfilled all the criteria that we look for (I will cover the criteria in the coming days with another article). Therefore when the next candle began to pullback we took the entry long at 1.3933 and closed this trade out for -10 pips. One thing I personally feel new traders dismiss to frequently is the information your gain from being stopped out. Here the market showed clear intent to the upside. That intent clearly failed. Often times when you have strong false intent that is rejected equally as aggressively the opposite direction the market will move a great distance. Knowing this we took the next trade short after the candle closed down below the accumulation. At this point we knew what SM had been accumulating with a high degree of accuracy. The reason for this is the stop run. Why is price ran above the resistance. Think for a second what type of orders sat above the highs of the accumulation. There were stop loss orders for anyone who was short before the move up (thus a buy order) and there were buy orders for those looking to take a long on the breakout. Therefore by driving the price above the resistance Smart Money pushed the price into a great deal of buy orders that they were able to sell into at a great price. Therefore if they caused the stop run to accumulate buy orders wouldn’t it make sense that the sideways accumulation was as well buy orders. It is critical to read the lessons mentioned above to fully understand the Smart Money market cycle. Once you understand that you will see how perfect this setup was in that it contained exactly what we look for in the perfect formation as well. Accumulation, stop run, market trend. As I mentioned above we entered the market right after the first down candle formed. Based on the formation of the candle you can see that it completely engulfed the entire accumulation area. Half of this trade was closed for +40 pips and the

Forex Charts Patterns – Do They Increase Your Edge?

stersuhr — Fri, 21 Oct 2011 06:08:38 +0000

Forex chart patterns (increase your edge) Every one trading forex chart patterns knows that they have the potential to increase your edge. Every different chart pattern including triangles, bull and bear flags, Gartley patterns or any other common pattern, all have a certain percentage of successful trade setups. Depending on your money management even a pattern that has a mere 50-50 outcome (most have better ratios) can still keep you in consistent profits, and I’m not going to argue that fact. My argument Just the other day I got into an argument with a good friend of mine when I told him that chart patterns are fake. I probably used the wrong words in our discussion because he got pretty angry. He took it as though I was telling him that the method he uses to trade is wrong and that wasn’t my intention. I was merely pointing out that the chart patterns we see on the charts are not true patterns. Even though they repeat and have a certain percentage of likely outcome over time, the percentage of successful setups changes over time. Consider this, in order for any pattern on a chart to be true you would need the same traders, thinking the same thing, taking the same trades, with the same fundamental outlook, that created the first pattern, and all this would need to happen at the same time with the same amount of money used on each trade. This

Learning To Day Trade With Smart Money GBP/USD Short 10/20/2011

stersuhr — Thu, 20 Oct 2011 06:17:00 +0000

Hey! I hope trading is going well for everyone. We’ve seen some nice moves the past few days and I thought I would cover something rather important in this recent trade update that I’ve never really touched on before. This is a bit longer than usual but I can promise you that this information and the information to come is some of the most important I have ever put out! Over the last few weeks in the forex room I have really been stressing the need when day trading forex to not focus on only one specific “thing”, but rather the need to focus on the overall picture of theÂ market. Being able to decipher this overall picture is without a doubt a day traders key to success. Let’s break down this trade. This is something I feel the vast majority of traders do….that is they completely neglect what consolidation really is. You see, retail traders are told from the very beginning that consolidation is very simply the market not picking a direction. That would be nice if it were true but for the most part its not! Then what is consolidation?Â More often than not CONSOLIDATION IS ACCUMULATION! I will break this down in extreme depth sometime this week or early next so for now just assume I’m right and stay tuned for the further info. An example of what someone might term as consolidation is circled above. Who Is Accumulating Have you ever noticed that following times of consolidation are some of the largest moves? Have you ever noticed that at the end of the consolidation it will often make a quick “stop hunt” type move and then take off in the opposite direction? If you haven’t begin to look at this. Without a doubt this is one of the largest fallacies in the forex market. Who moves enough money to have to accumulate orders over time? You and I can simply press buy or sell and the market doesn’t even know we entered, but who could be big enough to HAVE to enter the market gradually overtime through accumulation times like this? Simply put smart money (SM). In reference to this article we will define SM as banks, funds, large institution, ect. Therefore if these are the times when smart money is coming in the market shouldn’t this be the single most important time

Live Forex Room Trades EUR/USD – Week Of 10/10/2011

stersuhr — Sat, 15 Oct 2011 20:37:53 +0000

Let’s get right into the first day trade we took in the forex room this week. The was a standard Jump Bar (JB). Again were not really focusing on the candle or bar but rather the median line. This median line helps us sift through the volatility we have seen lately in the forex market. First and foremost, to be a JB the median line needs to close above or below at least 3 previous median lines. The JB marked here closed above 7 previous bars median lines thus fulfilling that criteria. When this happens you also want the bar closing above its 50% point. This bar could have closed at its lows which would have shown rejection, and the median line would have been in the same location. Therefore in the case of a JB up it needs to close above its 50% point, and in the case of a JB down it would need to close below its 50% point. Additionally this bar closed with higher volume than the previous candle showing an increase in intent, thus fulfilling the 3 criteria for a JB. We closed this day trade for +30 pips on half and the second half was closed for break even. The market came back and stopped this trade out at break even on the last half before running and hitting the final +150 pip take profit. Another point worth mentioning is the bar right before the JB. Notice how

BOE Asset Purchase 10/06/2011 GBP/USD

stersuhr — Mon, 10 Oct 2011 23:05:23 +0000

Identifying when consilidation is actually breaking in the forex market can be difficult. What we term the jump bar is one way of identifying that break. The jump bar uses a 1 Moving Average HL/2. The 1MA HL/2 very simply plots the median price of each candle. This is how we identify trade setups for the Jump Bar (JB) entry. We will break down this forex trading strategy and hopefully you can begin to put it into practice with your own day trading. Notice the bar with the arrow pointing to it. It fulfilled the 3 criteria we look for in order to be a “jump bar”. Number one the median line needs to jump above or below at least 3 previous median lines…in this case it jumped above all the sideways consilidation which was 10 bars. After it does that we need to insure that the jump bar closes above its 50% point, in this case it clearly did. Finally it must close with higher volume than the previous bar. As you can see the bar with the arrow pointing to it was the first bar in the sideways consilidation that meet the criteria for a JB. Once you have a JB you then take the entry when the next candle pulls back to the median line of the JB. Right before this setup there was a 200 pip spike down on the GBP/USD caused from the BOE expanding their Asset Purchases from 200 billion to 275 billion. The next 15M candle moved down a bit more and then fell into a couple hours of quite boring sideways price action. Finally the market gave us a JB entry long which we took at 1.5325 on the GBP/USD. We closed half of this trade for +30 pips and closed the last half of the trade for +310 pips the following day. This trade was +170 pips overall. I will be posting an article tomorrow covering the Jump Bar Entry which should help in the explination of the day trading strategy.

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Forex Day Trading Room 23/09/2011 EUR/CHF

stersuhr — Mon, 10 Oct 2011 21:30:45 +0000

Well I’m finally getting over being sick so I thought I would do a recap of the day trades taken in the forex day tradingÂ room this week. Overall we had quite a boring week as far as the NY session is concerned. That being said London was very productive and profitable which was nice! The highlight day trade of the week was the EUR/CHF. As I put in the last recent trade update the SNB pegged the EUR/CHF to 1.2000 a few weeks back. After this the EUR/CHF was channeling between roughly 1.2020 and 1.2050 Knowing this level we put a OCO (one cancels other) order in the market as I talked about previously. It missed triggering us in at 1.2020 by roughly the spread, and then went to fill us long at our pending order of 1.2055 This trade took over a week to finally close out. Overall we took +125 pips off this trade. It was half the position size we normally take and therefore it is only counted officially as a +62 pip trade. Not a bad day trade, but it could have been a bit better. There was a “tape bomb” that hit the wire Friday which caused a brief spike towards USD weakness. This caused the USD/CHF to spike down, which in turn caused the EUR/CHF to spike down and hit our stop of +125 pips. Hopefully we will see a deeper pullback this coming up week for another chance

Channels, Triangles, And Trend Lines – Short Term Day Trading

stersuhr — Sat, 17 Sep 2011 03:54:08 +0000

Day trading channels, triangles, and trend lines has been around for a long time. These are standard chart patterns that many look for, and use in their day to day trading. As a forex trader we are always looking for an edge. Something to give us better entries, smaller stops, higher risk/reward, ect. That being said let’s re-examine these three forex chart patterns as they relate to the 1M chart. Now I don’t believe in forex scalping in the traditional sense of the word. Taking a few pips over and over is simply not a profitable long term forex trading strategy for retail forex traders. Having to deal with a 2-3 pip spread simply negates any thought you should have of this type of trading method. That being said we are looking for 1 to 1 risk/reward (R/R) at least. Doing so will ensure we do not set ourselves up for failure. That is also why I call these types of trades, “short term day trades” rather than forex scalping. Trend Lines – As stated above we are looking for trend lines on the 1M chart. Unlike traditional use of trend lines I’m only looking for the break of these trend lines, not a re-test and bounce off of them. In order to be properly formed I need to see 3 clear points touch the same trend line. Again the key here is that there are 3 obvious points at least, making a clear decisive trend line. Remember

Weekly Update 16/09/2011 – Long Term Day Trade Setup EUR/CHF

stersuhr — Sat, 17 Sep 2011 01:42:51 +0000

Hey everyone. It’s been a while since the last trade update. I hope everyone is doing and trading well! This week was for me a “testing” week, and thus why I only took a few day trades. Over the last 2-3 weeks we have seen some incredibly strange price action in the forex market. It seems as if the fx market caught a bad case of alzheimer’s and forgot how it “normally” responds to general price action based day trading strategies. This isn’t so out of the norm for the forex market during this time period. It is well established fact that many major bankers and currency traders are on holiday from the end of August through Labor Day week. This time is often referred to as the “summer doldrums” due to it’s lack of activity. Now this time around we had no lack of movement, it was rather the way in which the market moved. That being said we stayed cautious this week hoping to see a return to normal in market volume, patterns, and general price action…..and we did! I don’t have much to go over with the weekly update except for one pair and that is the EUR/CHF. Last week on Sept 6th the SNB (Swiss National Bank) pegged the EUR/CHF at no lower than 1.2000 Essentially they vowed to keep the EUR/CHF above this point. In slightly over 15 minutes the EUR/CHF spiked up over 900 pips to get above this point. Therefore 1.2000 is the protected level. Trading forex is all about risk vs. reward. Before getting into a trade, while managing a trade, and determining when to exit a trade are all points where you should be examining the potential R/R. That being said let’s examine the R/R on the EUR/CHF. If you look at a weekly chart of the EUR/CHF you will see that the last push down starting in October of 2007 was close to a 7000 pip move down. With the SNB’s promise of holding the price above 1.2000 there is from the current price only around 80 pips of risk and about 4700 pips to the overall highs of the last large move down. Now I wouldn’t shoot for that as a take profit but I’m simply illustrating potential. Let’s just say this goes to just the 38.2% retracement which is right above 1.2600 and thus in the area of a 600 pip take profit from this current point. Now I rarely hold trades for an extended period of time but this situation is a bit different. In the forex room we got long on the EUR/CHF from 1.2055 with a pending order to go long. On the chart above it triggered our pending order to go long with the first bounce off the trendline. Essentially I put a long order above a range from the previous day. This day trade is based strictly on R/R. We plan on holding this trade for quite a while. As of right now we have a 40 pip stop on our position. I don’t think this will re-test 1.2000 exactly which is why our stop is not below that level. When the market opens on Sunday give some thought to this trade and if there is a short term price based entry giving a small stop it might not be a bad scalp that you could potentially turn into something much much bigger! See you all Monday! If your interested in a quality forex education in a live learning environment then check out our 14 day trial of our Live Day Trading Room

Day Trading Forex News GBP/USD 26/08/2011

stersuhr — Sun, 28 Aug 2011 04:31:16 +0000

Today we had the intensely awaited speech from Ben Bernake. Forex traders everywhere were waiting on the words “QE3″ and they didn’t get it. Once this happened we saw equities sell off instantly. Both the EUR/USD and the GBP/USD went with it. The GBP/USD spiked into lows and started to bounce and we went long. Candle #1 on the chart was our entry candle on this 1M chart. On this one we took +20 on half and then the last half was closed for +10 pips. The second trade we took was at point #2 on the chart. If you were watching the EUR/USD at the same time you would have seen the EUR/USD absolutely tanking at that time. However the GBP/USD was still holding above the last major support level, therefore it still was giving a decent entry. Using correlation we knew the GBP/USD had a strong possibly of breaking the lows the same as the EUR/USD did. Â We went short during candle #2 and took half of the position off at +20 pips and the last half we closed at +55 pips, thus making it a +35 or so pip day trade overall. Before both of these trade we also had a EUR/USD long that went for +10 pips total. Overall today we took +60 pips. This was a nice close to a week that showed some extremely difficult price action. Patience will always pay off in the end, and today was

EUR/USD Forex Trade Short 25/08/2011

stersuhr — Sun, 28 Aug 2011 04:10:09 +0000

Going into the NY session the trend was down and as you can see on the 5M chart above we have consecutive lower lows and lower highs. Again we were waiting for out standard volume based forex trading strategy to come together. Things started to work out when we got a higher than average volume candle at resistance, which was candle #1. After that we then look for a candle to move down as far or further from high to low, but yet do so on clearly less volume. Candle #2 didn’t quite fulfill this criteria, and besides that it was right above support. Taking a day trading entry short right above support is a common sense no no. After we weren’t happy with candle #2 we then waited to see if candle #3 would fulfill that criteria. Candle #3 finally gave us what we were looking for which was a candle that moved as far from high to low as candle number one, and did so on less volume. Additionally it closed below support which gave further indication of another push down. You can read more about our volume based forex trading strategy in the forex education articles section of the site. About 5M after entering this trade it was announced that Warren Buffet was putting 5 billion into Bank Of America. This caused a large spike in equities. The EUR/USD and GBP/USD have been tracking right along with equities lately, and when they

Forex Volume Day Trading Entry GBP/USD 24/08/2011

stersuhr — Thu, 25 Aug 2011 20:23:03 +0000

The GBP/USD was already trending down slightly when coming into the trading room Tuesday. There was a small range that the market stayed in for close to an hour before finally breaking down. Normally those resistance channels, once broken…become resistance if they break to the downside. If it were to have broken up we would have looked for that range to provide support on a re-test of it. This is the same basic principal of a breakout continuation level. For more information on that you can read the article that covers those type of support and resistance levels Knowing this area would more than likely provide some resistance we waited for the market to reach this level and give us a volume based setup. Forex volume gives the final confirmation that the support or resistance is going to hold, in this case resistance. The day trading strategy using volume requires 2 candles to point towards a change in direction. Once the market reached that resistance point our forex trading strategy criteria was fufiled and we took a volume based day trade short. We took +15 pips on the first half and +40 pips on the last half for a total of a little over +25 pips. For more information on the forex trading strategy used in this day trading setup check out the article that goes over our forex volume strategy. Trading has been rough out there. With increased volatility, larger swings, and abrupt moves trading has becoming increasingly difficult. While you may not make money every week, it’s important to stay focused and stay disciplined. Forex trading can be a very boring job when you go it alone. If you would like to come trade with others, and more importantly learn how to trade forex then come check out our 14 day trial to the forex room. Times our tough, and in an effort to include everyone we have a special running. $299 for the entire year. This allows you to trade with others, receive a quality forex education and learn new day trading strategies for an entire year at one low

Breakout Continuation Level – Day Trading The USD/CHF 19/08/2011

stersuhr — Mon, 22 Aug 2011 02:37:05 +0000

We will keep this day trade setup short and sweet. To begin we had a previous support level on the USD/CHF that broke and then became resistance. The market re-tested this previous support turned resistance, and it held nicely. The USD/CHF again began to run down off this level. I want to give credit where credit is due….a member in the forex room pointed out this level to me as the USD/CHF is not a pair I normally watch. It’s nice to see traders taking what they have learned and putting it to good use:) There was one final support area that I said I wanted to see go which was the .7869 area. It started to work through that and we went short. Overall we took 30 pips off this trade. Someone in the room brought up a good point mentioning the intervention on the Swissy. The reason I was comfortable shorting the Swissy was because of history. Ask yourself this….have you ever seen an intervention in the forex market actually break a trend? Every BOJ intervention on the USD/JPY has failed thus far. Why? When you try to turn the market with only a days worth of order flow you will lose. Unfortunately the BOJ is finding this out and as of right now the SNB is as well. Now that doesn’t mean they won’t eventually weaken the Swissy, but if history has anything to say about it they will have a

Trend Line Test – Continuation Day Trade EUR/USD 18/08/2011

stersuhr — Mon, 22 Aug 2011 02:24:47 +0000

Sorry I didn’t get a chance to update the recent trades a little sooner. This week was a bit rough for us in the room. It was our first negative week in the day trading room in quite a while. That’s all part of trading and how you recover is what determines who will be successful in the forex market. That being said lets get into this day trade from Thursday. Thursday the EUR/USD and the GBP/USD has been trending down throughout most of the London session and into the start of the NY session. At the point of candle stick number one the market had retraced into trend line resistance. At a resistance level we look for an above average volume candle. This signals to us a possible change of direction coming up. Candle number 1 gave us that higher than average volume candle. Once that candle closed we needed the next candle to show us clear decisive selling. This is done by the second candle moving as far or further than the first candle (from high to low). The measure of high to low of a candle is the spread. Therefore the second candles spread needed to be the same or more than the first. Candle number two moved down, as far as candle number 1, but did so on less volume. Moving as far on less volume showed us clear selling. Forex volume measures ticks in price, therefore when

Forex Volume Day Trade – GBP/USD 15/08/2011

stersuhr — Tue, 16 Aug 2011 03:52:18 +0000

Coming into the forex room today both the EUR/USD and the GBP/USD had run 50 + pips. If you follow this blog you know a market that is already extended makes for difficult trading. It makes it hard to take a continuation trade because the potential for a retracement becomes higher the longer it runs, and it becomes risky to take a retracement trade because the trend is clearly strong. Personally, and what I recommend in the day trading room is to wait for one of two scenarios. First, you can wait for a large retracement of the move and then a continuation trade, or you can wait for the market to come into MAJOR support or resistance depending on the direction of the trend. In this case we waited for the market to come into major resistance since it was trending to the upside. On the GBP/USD this level happened to be a psychological round number of 1.6400 which was also a previous major resistance point from the 9th of August. When it came into this level we looked for our standard volume forex trading strategy to come together, and it did. Our volume based entry is a 2 candle entry. Normally we like to see those candles right next to each other but in this case there was a candle inbetween. The first candle in the setup is a higher than average volume candle. Simply put once the market

Forex Room End Of Week Wrap Up 12/08/2011

stersuhr — Mon, 15 Aug 2011 03:18:58 +0000

Above is a daily forex chart of the EUR/USD. Now I didn’t place this chart up here to illustrate a day trading setup, nor longer term setup. I posted this forex chart to illustrate the type of marketplace we have dealt with lately. Over the last few weeks we have seen some extraordinary price action in the forex market. I’ve been day trading for 7 years in the forex market and can’t remember seeing a daily chart that looks like this on the EUR/USD. Normally the EUR/USD is the pair that sees some of the cleanest moves in the market, and some of the nicest trending daily charts…but not lately. In this type of forex trading environment you can lose money very quickly! With the right forex trading strategy however you should still be able to turn a profit. Honestly do you think more people made or lost money last week? How has your trading strategy held up to the current market conditions? Both are good questions that some thought should be given to. Three weeks ago Chad (London trader) and I unveiled the new forex day trading strategy based on volume trading and fx price action. As I’ve said before little did we know that we would unveil it in one of the most volatile difficult markets anyone has ever seen! That being said, during a time when the majority are more than likely losing money we have been profiting. Each week since it’s release it has consistently dealt with this extremely unstable market, and dealt with it well! While you will still have losing trades, you will be able to profit overall when trading it properly. Here is a link to the new day trading strategy article entitled Forex Day Trading Strategy – Day Trade Forex Volume. I truly hope this trading strategy helps guide you through these rough markets as it has us! I look forward to seeing you all next week in the forex room, until then happy trading! 14 Day Trial To Our Live Forex Room – $299 for the ENTIRE year while available

GBP/USD Day Trading Entries 10/08/2011

stersuhr — Mon, 15 Aug 2011 02:46:58 +0000

Hey everyone. I hope trading is going well for everybody! Before we jump into the chart above from Wednesday let me just say that we ended the day -13 pips down on Tuesday. We were short the GBP/USD Tuesday before the huge 200 pip drop but it stopped that day trade out at break even by a few pip right before tanking. That’s the way it goes sometimes, anyway on to Wednesday. Wednesday we had 2 nice day trading opportunities on the GBP/USD. The first of which I did not show in the chart. The first trade we went short at 1.6245 and closed half of the trade for +20 and the other half was closed for +40 pips, making it a +30 pip trade overall. After that nice little short setup we then came into support. Once reaching any support or resistance point we then look for the first criteria in our volume based forex strategy which is an above average volume candle at support or resistance, in this case support. As you can see if you look back at your charts from Wednesday candle number one was clearly an above average volume candle. Once that candle closed we then measured it’s spread, which is the distance from high to low. Candle number ones spread was 10 pips. A high volume candle at support or resistance is the first indication that the market may turn. The increase in volume shows clearly that

Forex Day Trading Strategy – Day Trade Forex Volume

stersuhr — Wed, 10 Aug 2011 03:09:21 +0000

I’m excited to bring everyone our latest forex trading strategy! This day trading system is the culmination of a massive amount of effort. Over the last few months Chad (London Trader) and myself have spent a large amount of time forward testing in addition to back-testing this trading strategy in an effort to produce something a cut above the rest…a strategy that would have the ability to take on the toughest, most choppy price action the market could throw at it and still turn a profit. Little did we know that we would unveil this day trading strategy in just that type of marketplace! As of writing this ( Aug, 9th 2011) we are in the midst of some of the most volatile price movements ever seen in the currency market. In spite of that we have maintained a win ratio of over 70% during this time! Below is the day trading strategy that is responsible for those gains! First and foremost this day trading system is traded on the 5M chart. Because volume in the forex market does not all go through one central location we have to obtain the fairest representation of volume and we do this by using the volume from the largest retail forex broker which is FXCM. FXCM also handles a large amount of institutional clients thus giving us the fairest representation of overall volume possible. All that is needed is a demo chart of their MT4 platform. We do not recommend using them

US Down Credit Rating Downgrade – GBP/USD 08/08/2011

stersuhr — Mon, 08 Aug 2011 20:22:33 +0000

Today was the first day back after the downgrade of the US credit rating. I wrote on a question in yahoo answers about what will happen to the EUR/USD as well as the GBP/USD. As I mentioned over the weekend more than likely the forex market would sell off towards USD strength. I did not however expect the gap up which was a bit of a surprise to me. By the time we got in the forex trading room for the NY session however the EUR/USD and GBP/USD had already started to move down as expected. Therefore I was a bit more enthused about getting short on either the GBP/USD or the EUR/USD. It took a while but eventually we had a beautiful setup to go short on the GBP/USD. The GBP/USD came back into the 1.6350 area and made a smaller double top on the 5M chart. Once we hit this level again it then gave a nice volume and price action based entry short that meet our forex trading strategy criteria exactly. We took a short around 1.6344 and closed half at +20 and the other half of the trade was closed at +30 pips. This was a nice trade overall, and it added to our profit for the month. For the last few weeks we have been focusing on patience in the day trading room. Not because we want to focus on that but because we have had no

Non-Farm Payroll – Trading Forex News GBP/USD 05/08/2011

stersuhr — Sun, 07 Aug 2011 23:31:50 +0000

Friday we had the infamous Non-Farm Payroll, and it came out slightly better than expected. As I mentioned in the forex room before the news came out we will often see the GBP/USD and EUR/USD spike in the opposite direction as they should. He’s why…..for example this month the number was positive and therefore the USD/JPY spiked up nicely. Because of this the GBP/JPY and EUR/JPY spiked up as well. When the GBP/JPY and EUR/JPY spike up that cause instant EURO and Pound strength which is why you now a days often see the GBP/USD and EUR/USD often spike the opposite direction they should. After they spike this direction however they often times follow through the direction they should. Knowing this we took a short position once the spike was well over….in fact 7 minutes after the initial spike. Our short entry was when the market retested the 1.6300 level. The GBP/USD gave every indication that it was going to move down but simply didn’t see any follow through. We took 20 pips off the first half of the trade and then the other half was closed at break even. Wish we could have taken a bit more from this one but as you can see from the chart there wasn’t a whole lot to get. After that we waited a bit for the next day trading opportunity to present itself. About an hour later there was a nice shorting opportunity. At point #2 on the chart we had a volume and price based entry that meet our specific criteria for a day trading entry and therefore we took it short. Again we took half of the position off at +20 pips and the other half was again closed at break even. There was a nice long entry that I missed on the GBP/USD unfortunately. The stop loss was a bit wide for my taste (30 pips) and therefore we decided to let it go. Either way it was still another great day in the room and we had 2 very nice day trades. You never go broke taking profit!:) I hope trading went well for everyone and I will see you guys Monday with the next recent trade update! Again for the time being we are offering one full year of the forex trading room for only $299. Normally the price is $199 a month but for right now we decided to lower the price in an effort to involve those who simply could not afford the full price. I hope to see you all in the trading room! 14 Day Trial Of Our Live Forex Trading Room

Forex Volume Based Trend Reversal EUR/USD 04/08/2011

stersuhr — Sun, 07 Aug 2011 22:26:48 +0000

Thursday we had a bit of a slow day in the forex room because Trichet was speaking. Normally anything worth saying will be mentioned during the first part of the ECB Press Conference, and quite frankly nothing worth noting, and more importantly, nothing worth trading was said IMO. While there were many insignificant positive and negative comments made, nothing that would concretely move the market was mentioned. That being said we had to wait a while for a day trading opportunity to come together. As the speech began the EUR/USD began to chop around and then drop fairly decisively. Along the way we noted support levels that could potentially turn the market. One after another the market worked through those support levels without giving a signal of reversal or retracement. Fortunately volume based entries filter out the vast majority of “fake” reversals, therefore keeping us safe. Sometimes it’s not about how much you make, and more about how much you don’t lose. With as crazy as the markets have been I think many investors would wholeheartedly agree with me. Keeping that idea in mind we always do our best to never force a trade, but rather let the trades come to us without forcing what isn’t there. That being said we finally had a day trade come together. The EUR/USD fell into some support around the 1.4110 area and then gave a volume based entry to go long. With our proprietary forex

Trend Continuation Forex Day Trade EUR/USD 03/08/2011

stersuhr — Thu, 04 Aug 2011 02:24:50 +0000

Hey everyone. Welcome back for another day of trading. I hope every one’s day trading is going good as well! Today we started off with some horrible stagnant price action in the forex market…..especially in the GBP/USD. Refer to your GBP/USD chart around 8AM EST to see what I mean. So as we sat there waiting for the market to make a move, I said I would need to see the market make a decisive more before considering a trade. Fortunately the EUR/USD did just that. Right around 9:30AM EST we saw the EUR/USD break a short term trend line to the downside on the 5M chart. This was enough to peak our interest in the forex room and get us watching. As with any trend line break I will not chase the forex market. Therefore I simply wait for the market to pull back to what I call the “point of breakout”. The point of break out is the horizontal price level the market went through in order to break the trend line. As the market came back up to the point of break out we began to look for out volume based entry. Upon reaching this price is was clear to us that the buyers were handing the market to the sellers and letting them take it. We went short and managed to take +20 pips off the first half, with the second half getting closed at break even. I probably should have closed the second half of this trade for a little profit when I saw it start to bounce off the 200EMA on the 5M but I expected a bit further downside out of this one. If you look at your weekly chart you will see a very large reversal candle off resistance showing the potential for further downside throughout the rest of the week from a technical standpoint. Even though we trade short term I believe it is important to still look at the daily and weekly time frames once a day to get a better overall perspective. This helps when setting final take profits in a big way. You may have gotten into the perfect entry for a swing trade and exit it for only +20 pips when you could have looked at the daily and seen it was setting up for something a bit longer. Even if you strictly day trade the forex market as we do…..do yourself a favor and beware of what is happening on the longer time frame charts! I will see you all tomorrow with hopefully another profitable day! 14 Day Trial Of Our Live Forex Trading Room

Euro Day Trade Short 02/08/2011 – Live Forex Trade

stersuhr — Wed, 03 Aug 2011 04:10:00 +0000

Around the lows we missed an entry long. Unfortunatly the market had been trending to the downside and this trade gave the entry to go long right at resistance. I didn’t take this day trading setup because of this an it ended up being the “trade of the day”. A little later on in the day we got a volume based entry to go short at a breakout continuation level. Essentially it was previous support that was broken and now acting as resistance. After getting into the EUR/USD short the market then went sideways. This was the first sign that we should have gotten out. The second was the 3rd candle from the right. Notice how it tests below that tight little range and then gets rejected back to the upside? This showed a clear sign that the sellers simply were not there. Because of this we should have got out but didn’t and ended up taking a 20 pip loss. There were a few more shorting oppertunities once the price hit major resistance around the 1.4280 level but it just seems like it didn’t come together perfectly. Either way there was a lot of wasted pips today to be honest. That being said we have tomorrow:) That’s the great part about being a forex day trader….you always have the next day to look forward to. I forgot to wrap up last months trade but we ended up around 2% for the month. It was a pretty slow month and we sat around break even for the majority of it until we made the major change to our new volume based day trading strategy. This forex trading strategy has been in the works for a while but we finally got enough forward and backtesting to put it into action live. This market is forever changing and if you can’t change with it you will eventually lose. There is no fx trading strategy that you can trade today, and then trade it the exact same way 5 years from now. In some way shape or form it will need adjusting. Although the Confirmation Entry – Forex Trading Strategy took a profit 6 out of 7 months so far this year I felt like we needed to filter out some of the fake out’s due to the increase we have seen in short term volatility. Using volume we have done that, and done it well. As I said yesterday I’m looking forward to seeing what this month brings, after all forex trading success or failure is not judged on a daily basis, but rather month to month. That being said this will be the first month of volume based trading for the live forex trading room, and I look forward to the results and teaching this forex trading system to everyone else as

Day Trading Strategy – Forex Day Trade EUR/USD 01/08/2011

stersuhr — Tue, 02 Aug 2011 02:37:23 +0000

Well I’ve never been so irritated about making +30 pips on a trade lol:) Let’s get right into today’s day trade! As we came into the forex room for the NY session both the EUR/USD and the GBP/USD were falling. The EUR/USD was riding a nice descending trend line down which was one reason we thought there was resistance there. In addition to that the price came back up to a previous support level, that was now broken and acting as resistance. I call these levels Breakout Continuation levels. As with all support and resistance levels…..all you can do is simply mark out these points and then once the price reaches these areas wait to see if your entry criteria is fulfilled. This is exactly what we did here. The price pulled back to that resistance and then we waited to see if our volume entry criteria was fulfilled….and it was. Our entry was around the 1.4400 area on the EUR/USD. This was an exceptional entry but I closed the second half way to early for only +40 pips. The reason I did this is because we had a volume entry up on the GBP/USD and therefore I exited the EUR/USD short and took the Sterling long. Unfortunately that did not have any follow through and this left us with a total profit between the 2 forex trades of +15 pips. I can’t complain to much about starting off the month positive. This is going to be a very exciting month. As I mentioned in the last post, our new forex trading strategy that relies on volume confirmation won 75% of the time last week. These numbers are right on track with our forward and back testing, and therefore I look forward to what this will produce live in the forex room this month. We shall see as time progresses. If you would like more information on our new day trading strategy feel free to take our 10 day trial to our live forex trading room

Counter Trend Forex Day Trade EUR/USD 29/07/2011

stersuhr — Mon, 01 Aug 2011 21:11:50 +0000

Friday we only took one trade in the forex trading room. Unfortunately when the EUR/USD and the GBP/USD took off to the upside rather abruptly following the negative GDP forex news out of the US. Initially the GBP/USD and the EUR/USD spiked down towards USD strength following a negative number. When I saw this I decided the safest option was to wait. While this kept us from taking a hit it also kept us out of the move up. We stayed patient though and finally got a day trading setup a little while later. The market ran 150 pips to the upside with really no retracement. We had resistance levels marked on the way up, but the market kept running through cleanly without giving any signs of reversal. Finally the EUR/USD gave us our classic forex volume entry short and we managed +20 on the first half of this trade with the last half getting closed at break even. It gave up about 40 points before turning back up. Overall a decent day trade. It’s important when taking counter trend trades to take some of the position off rather quickly. By doing so you insure some profit even if the market does eventually turn against you. This is exactly what happened here. Overall last week we took 9 trades with the new volume based forex system. 6 trades were profitable, 1 was break even, and 2 were losers. As time progresses with this trading strategy our R/R will be tweaked to maximize profits for this entry. With a win/loss ratio as described above it’s hard to lose money. This is also comparable to our live forward testing results as well as our back testing results on the new forex strategy.

Volume Based Forex Trading 25th – 27th July 2011 EUR/USD & GBP/USD

stersuhr — Thu, 28 Jul 2011 04:19:59 +0000

The new forex trading system used on a daily basis in the forex trading room is volume based. However with any day trading setup there are always contributing factors that helped signify a change in direction, and thus the entry signal. This day trade setup from Tuesday was no different. To begin with each and every forex trading strategy that I use relies on the market being at some form of support or resistance plain and simple. Support and resistance has been around since the beginning of the markets for a reason….it works when used correctly. As you can see here there were quite a few reasons to believe this area would be support and thus a potential turning point. First it was already proven support as shown by the black line. Additionally there was a descending trend line coming in at this point shown by the red line, and last but not least the 200 EMA was right there. This was BTW on a 5M chart. Once these factors came together we then had a volume based entry which was the actual trigger. Being on a smaller time frame, once you identify a solid turning point and then have volume confirmation based on the new forex trading system….usually the price will continue off in the direction of the trade fairly quickly. I still look for the confirmation entry the same as always as well. That being said confirmation entries during the NY

New Forex Trading System EUR/USD 18/07/2011

stersuhr — Mon, 18 Jul 2011 20:59:39 +0000

Hey everyone, hope trading is going well! Last week we started trading our new forex trading strategy in the forex trading room. While we will continue to use all other forex trading strategies found on the site, this specific one brings special promise. Unlike other trading systems, this one will not be taught on the site…..only in the forex room. In my 7 years of forex trading I have seen many a forex system come and go. On Day Trading Forex Live you see the culmination of what I believe are the best….that was until myself and my London trader stumbled onto an anomaly in the forex market. This simple easy to learn and easy to replicate system has more potential than any other entry I have used to date including the confirmation entry. If anyone follows this blog you know the confirmation entry has been my bread and butter. In the first 6 months this year we have turned profit during 5 of them, and I give credit to the confirmation entry for this. So for me to say an entry is better than the confirmation entry should speak volumes. That being said even though I will not teach this entry except for in the trading room I will go over where we entered and the profit or loss we took. I will still continue to teach the confirmation entry on this blog as well as all other day trading strategies on the site. On to today’s day trade. I was a bit disappointed in today’s

June Forex Trading Wrap Up – Start Of Day Trading For July

stersuhr — Thu, 14 Jul 2011 03:28:12 +0000

Well it’s been a few weeks since the last recent forex trade update. I’ve been a bit busy, but things have settled down and I wanted to update how trading finished up for June, as well as the start of July. July ended +5% up for the month, which was the 5th positive month this year. The simplicity of the confirmation entry forex trading strategy is why it manages to consistently turn a profit month after month. This market has been extremely difficult lately. We have seen more consolidation during the New York Session than I can ever remember. When the price action gets tough, simplicity is key to remaining profitable. This is exactly what the confirmation entry provides, which is the key to it’s long term success. On to July! Again the forex market has still seen a great deal of consolidation during the New York session. Price action in the forex market goes in phases….right now plain and simple forex trading during the NY session has been tough. This month we have seen ups and downs, and for the moment we are currently sitting around break even for the month. The confirming entry consistently turns profit, if and only if you day trade with patience. Patience is the key to getting in the best forex setups. In this market it can take a few hours to finally get a trade setup that meets the criteria. Because of this it’s easy to

Forex Pre-News Sentiment Trade EUR/USD 21/06/2011

stersuhr — Wed, 22 Jun 2011 02:37:29 +0000

Today were just going to do a quick review of today’s trades from the forex room. The first trade of the day was a confirmation entry long on the GBP/USD. This day trade went it our favor around 15 pips, however there was quite a large retracement which came near to our break even and we got out at that break even point. If you look at the price action today in the forex market it was rather tough to get any trades. I probably sound like a broken record by now but when you see the market run coming into your trading session it will make trading much more difficult. Again this is what we saw today unfortunatly. As with anything in the forex market, things come and go. Having said that things will change and the price action during the NY session WILL return to normal, it’s just a matter of time. Before we left the forex trading room today I called a forexÂ pre-news sentiment trade short on the EUR/USD. This position was only a quarter position because I wanted to use a 40 pip stop. By using the quarter position with a 40 pip stop this allowed us to keep only a 1% risk on this trade. The last recent trade update we finished up the EUR/JPY trade that ended up +200….we counted this trade as only +100 pips though, because it was half the position size we normally use. The same is true for this trade….it is officially counted as -20 pips because it was half the size of a normal position. This trade brings our total down to +130 pips for the month. The most important part of forex trading is your mental attitude going into your trading session. It’s very easy to let the price action we have been seeing in the NY session discourage you because it does make it very difficult to trade. However this is exactly when you need to 100% stick to the forex trading strategy you know works. The confirmation entry has given us profit 5 out of 6 months this year to date. Even though it has turned profit so consistently it will still have losses within each trading month as every fx trading strategy does. The worst thing a forex trader can do is take a loss, and then change their forex trading system. I think we have all been there. You take a loss or two, then change your day trading strategy only to see the next trade you should have taken recover the losses and then some. This is a classic newbie forex trader mistake. That being said, we cannot change when and how the forex market runs, but we can dictate how we trade it. By sticking to your trading strategy through times of few trades, or even some losses you then give yourself a fair chance to turn a profit and not make that classic rookie mistake. Hopefully we will see some better price action during the NY session through the end of the week….we will have to wait and see! Forex trading isn’t for the weak….it’s a continual daily grind, day in and day out. If you cannot mentally handle the ups and downs of forex trading it’s best to simply find another profession:) Either way we will continue to stick to the proven confirmation entry forex trading strategy, and hopefully add to our +130 pip profit we have for the month. See you all tomorrow!

Forex News Trade – US Consumer Sentiment USD/JPY 17/06/2011

stersuhr — Sun, 19 Jun 2011 01:00:37 +0000

This week was one of the slowest weeks of forex trading we have had in the trading room in a very long time. It is extremely difficult to take a trade when the market has already moved coming into the session your going to trade. Unfortunately this is exactly what we saw Wednesday through the end of the week. London was quite active and thus NY was rather slow. That being said we still had a great week! As an update lets cover the forex trade that we still had open from the last recent trade update. As I mentioned before we opened a EUR/JPY short forex trade on Tuesday of this week, and let it run with an open take profit. After 2 full days or running this day trading setup turned into a swing trade. We eventually closed this trade on Thursday for +200 pips. This trade was only half the position size we normally use and therefore I’m only counting this as a +100 pip trade. This brings our total for the month up to +180 pips. Based off of only 1% risk per trade, that is +9% gain for the month so far. Ok let’s get onto what happened Thursday and Friday. Thursday will be short and sweet because there was not a single day trading opportunity that we saw. As I always say in the forex room….my job isn’t to call trades it’s to take profitable trades. Therefore if I don’t see anything worth while I happily don’t take a trade, and this is exactly what we did Thursday. Friday we only took one trade. Friday, as will the previous days before we saw a large run coming into the NY forex trading session. As I’m sure your all aware of, the forex market after making a large run will very often consolidate. This is what happened on Friday. Because of this we did not see any day trading opportunities to take advantage of. However we did have some forex news released which gave us a chance.

Forex Swing Trading Setup EUR/JPY 14/06/2011

stersuhr — Thu, 16 Jun 2011 02:19:22 +0000

Hey everyone, sorry it’s been a few days since I have been able to update the recent trades section. Monday we had two trades. One was a break even short trade on the USD/CHF, and the other was a long trade on the GBP/USD that was closed for -10 when it looked like there wasn’t going to be any follow through. This day trade would have stopped us out and therefore we saved ourselves 10 pips by getting out of this one which brought out total to +75 pips for the month. Now lets cover what happened Tuesday in the forex tradingÂ room. We had 3 day trading opportunities on Tuesday. The first was a short on the USD/CHF that ended up -10 pips. After this trade we had another setup on the USD/CHF which netted us +20 pips, bring the daily total to +10 pips after the second trade. The final trade of the day was on the EUR/JPY. I don’t trade the Yen crosses as much as the other three (GBP/USD, EUR/USD, and USD/CHF) however the fundamentals as well as the technicals were setting up perfectly! First we are all aware of the Greek debt crisis. We have seen the Euro continuing to gain strength in spite of this. If you all remember when the whole world wide crisis started equities were rallying while the world was crumbling. Similarly the EURO has been shooting up with the EURO zone in big trouble. Look at what happened to equities….they crashed eventually,and as I mentioned in the trading room on Tuesday the same will happen to the EURO eventually….the only question is when. We got the setup to go short on the EUR/JPY as shown above in the chart, and with the Greek crisis coming more to the fore we decided to hold this trade in case the EURO started that crash we were expecting, and this is exactly what happened! Additionally when there is a major economic crisis we all know the Yen strengthens. Therefore with the EURO weakening and the Yen possibly strengthening, we decided to short the EUR/JPY. Let’s walk through this setup a little more in depth as far as the technical are concerned. The forex trading strategy that we used with this day trade setup was the standard confirmation entry. Additionally the rest of the Yen crosses were all setting up to go short giving confirmation entries as well which provided the forex market correlation we always look for. The first candle in this setup came into some smaller resistance but did not close above it thus giving us a reversal candle at resistance. The second candle closed below the body of the reversal candlestick, which told us the forex market was moving down. The first two candles gave us the direction, and as always we took the entry when the third candle pulled back into the body of the reversal candlestick. We had a -40 pip stop on this position when we left the forex room, and we left the take profit open. The reason I left the take profit

Breakout Confirmation Entry – Day Trading System

stersuhr — Wed, 15 Jun 2011 00:51:20 +0000

As a general rule of thumb, I never chase a breakout. Over the years I have found chasing breakouts to be a trading strategy that is overall negative. When they workout it can lead to a lot of profit! However more often than not, all the smaller negative trades from chasing false breakouts end up eating up any profit from the few bigger winners you do have. Because breakouts can lead to large profits I didn’t want to avoid them all together. What I have done is come up with a forex trading strategy that allows you to catch breakouts, yet still filter out the majority of false breaks. I would highly recommend that you understand the standard Confirmation Entry – forex trading strategy before looking at the Breakout Confirmation Entry. This breakout strategy uses the same 3 candle formation as the normal entry, only the confirmation candle goes the opposite way…which is in the direction of the breakout. To begin lets walk through the chart above. In a normal Confirmation Entry, candle number one would be the reversal candle which is the first candle in the normal setup. The criteria for a reversal candle is that it touches either support or resistance and then closes above it in the case of support or below it in the case of resistance. As you can see candle number one meets that criteria. The reversal candle for the Breakout Confirmation Entry and standard Confirmation

Forex Exhaustion Reversal Setup – Day Trading Strategy

stersuhr — Sun, 12 Jun 2011 18:25:58 +0000

High Risk Reward Day Trading Strategy Before we get into todays forex lesson, we wanted to let you all know, we have changed the live trading room membership fee to to just $299 Per Year.Â We also offer a 14 Day Free Trial here for those interested in checking out our service. The trading room is doing well and we now have a large following of traders from all parts of the world. There are now 2 traders running the room. If your serious about learning to day trade forex, it’s worth checking out. As a day trader in the forex market you are always looking for high risk/reward (R/R) setups. However there is a balance between having a high R/R and your win loss ratio. As a general rule the higher the R/R for any given day trade setup, the lower the win/loss ration will be. The same is true for traders who seek a high win/loss ration, that is they usually have a lower R/R per trade. Finding a the correct balance between your R/R and win/loss will vary for each forex trading strategy, and/or your method of trading weather that be long term position trading or short term day trading. In this forex trading article we are going to cover a forex trading strategy that relies on a high risk/reward, yet still has a win/loss ratio of 60% or higher when traded correctly. To begin I call this forex trading strategy the “Exhaustion Reversal Setup”. Not only do I rely on the forex market to be offering a high risk/reward scenario, but also I look for a market that is running out of momentum. Later in this article I will discuss how I determine these overbought and oversold conditions which are critical to the Exhaustion Reversal Setup, but first we are going to cover what levels to look for. While there is no 100% mechanical method of determining which levels to take this trade setup off of, there are common sense clues we can look for. These clues in addition to practice trading this method will lead to the proper support and resistance levels being selected. How To Determine High Risk/Reward Setups The key when determining these high risk/reward setup levels can be summed up with one question. Does this level figuratively jump off the chat at you? Levels such as the previous days high and low, and other clearly identifiable overall highs and lows are the levels to look for. Additionally I prefer to trade off previous levels where the market bounced off of it quickly rather than a slow turn. For example if the market came into resistance and

Intra-Trend Day Trading Confirmation Entry EUR/USD 10/06/2011

stersuhr — Fri, 10 Jun 2011 23:16:52 +0000

After yesterday’s day trade during the ECB Press Conference it was important for me and the rest of the forex trading room to have a good day going into the weekend. It’s never good mentally when you do not recover a loss going into the weekend. This is exactly what we did! If someone is going to become successful at day trading it is going to require unshakable confidence in not only your forex trading strategy, but your ability to execute it as per the rules. It’s not how much profit a day trader makes that will determine his level of success in the forex market, it’s how they recover from a loss. A professional forex trader who used to work on the Floor of the CME as a market maker said, “it’s not how much you make as a trader, its how much you don’t lose”. It becomes much easier to make a mistake after you have already made one, which is why he said those words above. With those words in mind we came into today looking to get back some of the profit we gave back yesterday. In the trading room today we took 2 trades, both of which were profitable. The first trade was on the EUR/USD, and it was a short position. Anyone who follows this blog is more than likely very familiar with the confirmation entry, however this is what I call the intra-trend confirmation

ECB Press Conference EUR/USD 09/06/2011

stersuhr — Fri, 10 Jun 2011 22:28:47 +0000

Thursday we had the ECB interest rate decision, and then the ECB Press Conference that follows at 8:30. As expected interest rates were left unchanged Thursday for the Euro zone, but then the press conference with Trichet that followed brought some interesting price action to say the least. Trichet is great at following ever negative statement with a positive one, and any positive statement with a negative comment. This is done in an effort to create price stability on the Euro while the speech is taking place. Trichet has always used the words “strong vigilance” to signal a rate hike the following month, and this is exactly what was said on Thursday. In my 7 years of watching Trichet speeches, and trading them I have never seen the EUR/USD go down after he uses those words. Essentially the market hears those words and the price shoots up very similar to when they hike rates unexpected. This was the first time I have ever seen the EUR/USD move down after essentially they said rates will be raised next month. In the forex market nothing is a “sure thing”, which is why an good forex trader plays probabilities. This is exactly what we did with this trade. As I mentioned before I have never seen the EUR/USD go down after the words “strong vigilance” are used, and therefore we went long upon hearing this. The market shot up as normal, however as

Day Trade Entry On EUR/USD 08/06/2011

stersuhr — Thu, 09 Jun 2011 16:25:05 +0000

Here is yesterday’s trades. Throughout yesterday we had 2 setups in the forex trading room. The first trade never had any follow through and therefore we took an exit for -10 pips when it looked like it wasn’t going to move in our direction. The second trade of the day was a bit more clear of a day trading setup. Both the GBP/USD and the USD/CHF in addition to the EUR/USD were setting up to move towards USD strength. Because of the clear market correlation this was an easy trade to call. As with every confirmation entry we first look for the market to come into resistance or support depending on the direction the forex market happens to be moving. The EUR/USD had been moving down towards USD strength and then started to retrace, finally ending at resistance. The market came into the previous support that was not acting as resistance, and then closed below it. This meet the criteria for the reversal candlestick in the confirmation entry. The reversal candlestick gives you an indication that the sellers are indeed coming into the market, however the next candle confirms it. The 2nd candle in the setup is called the confirmation candle, and it has one goal. In the example of a short setup as we had here, the confirmation candle must close below the body of the reversal candle. Candlestick number two very clearly meet that criteria. The first 2 candlesticks told us the EUR/USD was at least short term going to move down. The third candlestick in this forex trading strategy is what we use for entries. When the third candle pulls back into the body of the reversal candle (candle #1) this is where

Forex Trading Strategy – Confirmation Entry USD/CHF 07/06/2011

stersuhr — Wed, 08 Jun 2011 04:11:38 +0000

Hey guys and gals….hope every one’s trading day went alright. Very strange day for us in the forex trading room this today. Half of the 6 pairs we watch were stuck in tight ranges of 25 pips or less and the USD/CHF broke correlation to the USD for most of the session. As a general rule of thumb when the Euro and the Pound are going up the USD/CHF should move down and vise versa when the Euro and the Pound are going down. Today however the USD/CHF blatantly broke that correlation and everything moved to the upside during our forex trading session. Seeing the USD/CHF run out of correlation to the rest of the market is not very common as of late and therefore we saw some strange price action, and in part I believe this lead to the stagnant movement in the GBP/USD and EUR/USD. Correlation is a massive part of my forex day trading style. In fact when the market breaks correlation I usually will not place a trade until it comes back in all pairs, or at the very least most. I think of correlation as a filter of sorts. SomeÂ traders use forex indicators as a way of filtering out lower probability day trading setups, but I have found correlation is far superior. Very often retail forex traders try to complicate trading with every form of indicator there is. At the end of the day, trading really boils down to one very

New York Session Trend Continuation Day Trade GBP/USD 06/06/2011

stersuhr — Mon, 06 Jun 2011 23:25:54 +0000

We only took one trade in the forex room this morning, and it was a GBP/USD short. Unfortunately the price sputtered around for to long and we took a break even exit, only to later see it fall. Sometimes that’s the way it goes in day trading. Either way lets walk through this forex day trade setup and break down why we got in this position. The black line in the chart above represents a small intra-day breakout continuation level. As the market was falling from earlier in the London session this level acted as support. The Pound came down to this level, broke through it, and then closed above it…thus showing this level was support. This previous support level was broken to the downside, and then it provided resistance as it very often does in the forex market. This is where the setup began. Notice how candle #1 comes into that resistance area and then closes below it, thus giving us the reversal candlestick which is the first candle in the confirmation entry forex trading strategy. The second candle of this trading system is what we call the confirmation candle. In a short setup as shown above, the confirmation candle must close below the body of the reversal candle (candle #1), and candle #2 very clearly did that. The first two candlesticks in this trading method are used for confirming the direction of the trade, and the third candlestick is used for triggering the actual entry. During

Day Trading Forex Confirmation Entry USD/JPY 03/06/2011

stersuhr — Sat, 04 Jun 2011 03:33:25 +0000

In the last post that covers Wednesday I talked about when the market comes into resistance or support. This chart shows very clearly what I mean by touching the body of the candle at resistance or support….in this case resistance. Notice how the market never touches the exact overall high but rather it touches the body of the candle at that resistance. At any turning point (resistance or support) there is the candle that touches that level and then the candlestick that bounces off that level. I choose the candle with the smaller body and as long as that candle body is touched then I consider that resistance as hit. As you can see in this example I wrapped the smaller of the two candles at the previous resistance….candle number one then touched the body of that candle and closed below it thus meeting the criteria for a reversal candle. The confirmation entry forex trading strategy requires the second candle to close below the body of the reversal candle in a short setup. Candlestick #2 clearly meet that criteria. As always we took the entry on the third candle when it made a pullback to the body of the reversal candlestick. As you can see the third candlestick never quite made it to the body of the reversal candle. However this entry short was setting up so clearly that we took it a bit early when it looked like it was going to break out

Confirmation Entry Day Trade Short On The GBP/USD 01/06/2011

stersuhr — Sat, 04 Jun 2011 02:37:17 +0000

Wednesday was the start of the new month! Finally we saw some decent price action during the NY session which was a nice change from the last few weeks. Over the last few weeks NY has been nothing but choppy, tight ranges during our 3 hour forex trading session. Wednesday was going quite slow until the market retraced into resistance which offered us a potential day trading setup. As with any confirmation entry, we wait for the market to retrace into resistance in the case of a short setup. The first candlestick, in the case of a short setup, must touch the resistance and then close below it. Candle #1 meet that criteria. As you can see the GBP/USD did not touch the overall high. I consider the resistance or support to be hit when the market touches the body of the candle at that support or resistance, not the overall high or low. This is exactly what happened here. Candle #1 touches the body of the candle at that resistance at then closes below it which is all that I require for a reversal candle in the confirmation setup. Candle #2 is the confirmation candle. The confirmation candlestick for a short setup must close below the body of the reversal candlestick (candle #1) in order to be considered a confirmation candle. Candle number two very clearly closed below the body of candle number one thus confirming the

Trend Continuation Confirmation Entry GBP/JPY 27/05/2011

stersuhr — Tue, 31 May 2011 01:55:35 +0000

First I want to apologize for not doing any recent trade updates for the last week. I’ve been quite busy over the last week, however all is normal now and the trade updates will continue (3 to 5 of them a week). We took 3 trades last Friday in the forex trading room, with the first trade being a nice short on the USD/CHF for +10 pips and the next was break even. The last trade was turning out to be a nice trade but then we got hit by a freak move on the home sales number from Friday. If you look back at that report you will see that is never moved the market more than 10 pips in the last 2 years….however it just happened to move the GBP/JPY down quite a bit today which caused us to take a -20 pip hit. This trade was about +15 pips in profit when the news came out. I didn’t really worry about that news because as I said it hasn’t moved the market more than 10 pips in 2 years, and therefore this move was WAY out of the normal price action following this forex news release. Let’s break this trade down. As you can see the GBP/JPY was working up nicely and broke through the previous resistance, which then became support after the push up. You can see that candle #1 touched that support and then closed above it, therefore giving us a nice reversal candle off of support which is the first candle in the 3 candle forex trading strategy. The next candle in the confirmation entry is what we call the confirmation candle….it confirms that not only is the market stalling but it is indeed going to reverse. In order for candle #2 to be a confirmation candle it must close above the body of the reversal candlestick. As you can see from the chart it very clearly did. After those candles closed we then knew the direction we wanted to entry which was long. For this forex trading strategy we wait for the third candle to pullback into the body of the reversal candle, and this is where we take the entry long. As you can see the market moved up in our favor nicely, but then as I mentioned before a freak move off of a normally un-tradeable forex news release caused the GBP/JPY to switch direction and stop us out for -20 pips. Overall for the day we therefore ended up -10 pips total. See you all tomorrow after the NY session!

Forex Day Trading Confirmation Entry – EUR/USD 18/05/2011

stersuhr — Wed, 18 May 2011 16:58:49 +0000

Today turned out to be a pretty decent trading day in the forex trading room despite the large run coming into our trading session. There was a confirmation entry to go long on the GBP/USD right around 8AM EST this morning that we took in addition to the day trade shown above. This trade ended up coming down a bit more and stopped us out at -20 pips. Overall it was a quality day trading setup that simply did not have any follow through. In your spare time give that trade a look. The second day trading opportunity wasen’t long after the GBP/USD trade, and it was a long position as well but on the EUR/USD. This support level was very strong because of 4 points all coming together around the same level. 1.) It was a psychological support round number which was 1.4200 2.) The 61.8% retracement of the move up from yesterday. 3.) The daily pivot. 4.) This level was an already proven level of resistance from yesterday. And as always resistance when broken will become support more often than not. The more reasons you have supporting where the market is turning the better, and with this example we had 4 great reasons this level was going to hold. When the market came into this support level we were looking for it to touch it and then close above it.

Ascending Trendline Support Break – USD/CHF Day Trade 17/05/2011

stersuhr — Wed, 18 May 2011 02:01:10 +0000

Yet another day trade on the USD/CHF. Just seems like the USD/CHF has been the currency pair giving the best entry between the three forex pairs that we focus on (USD/CHF, GBP/USD, EUR/USD). This was a simple confirmation entry that just so happens to break the trendline support it had been holding. I use the closing price of a candle to determine if a support or resistance level is holding, and once candle #2 closed below that ascending support I liked this day trading setup even more. Let’s walk through this day trade. Candle #1 hit resistance (the resistance was a decending trendline) and then closed below it, giving us a nice reversal candle off of resistance. For a short setup the second candle must close below the body of the reversal candle and this is exactly what happend here. I really liked the confirmation candle down (candle #2) because it not only closed below the body of the reversal candlestick, but it broke below clear support that had been holding very well. Once those two candles closed, that gave us direction, which was down. Candle number three is where we look for the entry. Normally we wait for the third candle to pullback into the body of the reversal candle. However on this day trade setup the rest of the forex market started to push towards USD weakness and therefore we took the entry as soon as candle number three opened. The market did eventually pullback to

Major Intra-Day Support Day Trade USD/CHF 16/05/2011

stersuhr — Tue, 17 May 2011 01:25:43 +0000

Going into today’s NY session we had some very large moves. Seeing this price action prior to our session always makes for a tough day, and usually quite a boring day in the forex trading room. This was exactly the case with today’s forex trading session…..boring. When the fx market has ran a large amount coming into the session you trade, there is higher risk to a continuation trade because the market is already extended. Additionally there is a higher risk to a retracement trade because it is fighting a clear trend with momentum. Because of this we normally become much more selective about any day trade setup that occurs. Anyway….on to today’s trades! The chart above shows the USD/CHF. As I mentioned before the market had been making a large move coming into our day trading session towards USD weakness. The USD/CHF ran 140 pips with almost zero retracement into Friday’s low. This is a setup we have seen a few times over the last few weeks, with last Friday being the most recent. There are two major requirements for this type of day trading setup. 1.) The market must have ran 75 pips or more with very little and preferably no retracement during the move. Any healthy trend will have retracements, and when there are no retracements within a move the probability of a reversal becomes much higher once the price reaches the next major resistance of support depending on the direction of the move. 2.) At the end of the large run the market must hit a major intra-day resistance of support level such as the previous day’s low or high, or another VERY clear major S/R level. If the criteria above is meet, the trade is taken when the support or resistance is touched (On this trade we took the entry roughly 8

Forex Trading Strategy – Day Trading Confirmation Entry GBP/USD 13/05/2011

stersuhr — Sat, 14 May 2011 22:43:06 +0000

The first day trading setup of the day was one that doesn’t occur very frequently. Additionally I do not have a forex trading article that covers this setup as of yet. Over the weekend I will try to quantify a set of rules for this specific trade setup and create a forex training article. Essentially this setup is based on a very high risk reward. In addition to that you must see the market running 50 pips or more with no retracement, into a major intra-day support or resistance. This is exactly what we had on the USD/CHF. During the London session the market started to move towards USD strength in the USD/CHF and ran 100 pip with almost zero retracement into the previous days overall high. With this trade setup weÂ took the entry when the market touched the resistance. This is one of the rare occasions that I do not wait for a confirmation candle. Doing so insures that you have an extremely high risk/reward day trade setup, and that is the huge advantage to this trade. The USD/CHF did exactly what we were looking for. It touched the resistance and bounced immediately back down. The great part about this setup is that even if it eventually is going to move through the resistance or support it will give you at least one bounce off of it which allows enough time to at the very worst have a break even trade. Overall on

Day Trade Off Support GBP/JPY 12/05/2011

stersuhr — Sat, 14 May 2011 21:28:22 +0000

Here we had a nice setup on the GBP/JPY in the forex room on Thursday, unfortunately there was never more than 10 to 15 pips of follow through. Either way I would like to go through the setup because it was a good example of the confirmation entry. With any losing trade there is always something that can be learned and this trade was no exception. The main problem I see looking back on this day trade is the consolidation prior to the entry. The market had been in about a 25 pip range for 3 hours and therefore we should have waited for the market to close above or below this range before placing a trade. Keeping track of your trades is extremely important. By doing so you can notice patterns of mistakes. Once you recognize a pattern you can correct it. You cannot correct what you don’t see, and therefore I recommend keeping track of trades to any aspiring forex trader so you can recognize those patterns. On to the setup. As you can see the market came into the previous support, and did not close below it. Candle number one touched that support and closed above it. This meet the criteria for the reversal candle which is the first candle in the setup. Candle number two is the confirmation candle. The confirmation candle (candle #2) needs to close above the body of the reversal candle, and it very clearly did that. The first two candle are what give you direction, and therefore after these two

Large Risk/Reward Setup Off Support EUR/USD 11/05/2011

stersuhr — Thu, 12 May 2011 00:33:15 +0000

Today was a fairly boring day during our NY trading session. We only took one trade and it took a few hours for it to come together. Everything had been pushing towards USD strength when we came into the forex room, and had been for the last 3 days. As the market came into yesterday’s low on the EUR/USD at the 1.4270 area we were looking for a potential long setup. The basis for this trade was similar to the trade taken on the EUR/USD from the 2nd of May. Essentially there was a very high risk/reward scenario, in addition to the market being very over extended coming into major support. The EUR/USD since today’s London session was down over 150 pips with no retracement. Because of this the most likely place for it to bounce was the major low from yesterday. When the market touched this level we looked for it to slow down and start to bounce. This is exactly what we saw, and therefore we went long from 1.4282 Had the market slipped through this support and closed below it we would have not taken the trade or exited it. Normally we would have waited for the market to meet the criteria of one of our forex trading strategies, but in situations like this where the risk/reward is the main cause for the trade, we take the entry as close to the proven support or resistance as possible to therefore give us the highest risk/reward as possible. This trade went about +30 pips in our direction before closing us at break even. Going into this trade I said it would be something we would hold until tomorrow’s NY session. If you look at the daily chart on the EUR/USD there were two great reversal candles prior to today. Essentially there was a confirmation entry to go long on the EUR/USD daily chart, and therefore I wanted to hold this one for a day or longer. However the market wanted to slide more than therefore we were closed out at break even on this trade. Hopefully we will see more day trading opportunities tomorrow, as today was rather dull. Patience is key during days like this. The good setups are there on almost a daily basis and waiting for them is the key! See you all tomorrow with the next update.

Trend Continuation – Forex Day Trading Setup USD/CHF 10/05/2011

stersuhr — Wed, 11 May 2011 01:07:22 +0000

Seem like we have been hitting the USD/CHF a lot lately. Forex market correlation is very constant on a day to day basis in the forex market, however some pairs will give better entries than other’s and it just so happens the USD/CHF has been that pair the last few days. What I mean by better entries is…..how wide is the stop? What is the risk vs. reward of the forex trade setup? ECT… Breifly I will mention the trades taken in the forex trading room and then we will more on to the educational part of the recent trade update. Overall we took 3 trades today. Two ended up break even, and by the consolidation of the USD/CHF during our trading session I think you can understand why. The final trade we took was a long on the USD/CHF from .8783 and currently that trade is up around +30 pips with a break even stop and a take profit of +100 pips. I selected that take profit level because it gets us out ahead of the psychological barrier of .8900, it’s previous support that could be resistance on the way up, it is the 100% fib expansion for the first 4H move up, and I choose that take profit because the 200 EMA on the 4H chart is right around .8900 and again I wanted to be out well before the 4 points I just mentioned. I’m going to be covering a confirmation entry that occurred outside of our trading times, however it gave the same entry we

Breakout Continuation Forex Trading Strategy USD/CHF 09/05/2011

stersuhr — Tue, 10 May 2011 02:07:09 +0000

Today there were quite large moves in the forex market during the NY trading session. Unfortunately the fx market took off towards USD strength and never looked back. With the GBP/USD and the EUR/USD both falling aggressively, we expected further continuation up out of the USD/CHF as per normal forex market correlation, but yesterday’s overall high was just to tough to break. Anyway, let’s break down this trade and hopefully my mistakes with this one will help others not repeat them:) First notice the previous resistance that becomes support once the market breaks above it. This level is shown by the black line. The large bullish candle breaks through the resistance and then closes above it. Immediately after that the market pushes back down to this previous resistance level, which now acts as support. Candle #1 touches this support level and then closes above it thus giving us our reversal candle off support. The next candle closes above the body of the reversal candle, therefore giving us a confirmation candle up. These two candle gave us our direction we wanted to enter which was long. Because the Euro and the Sterling were both moving down so fast I did not wait for the third candle to pull back into the body of the reversal candle as I normally would. This would have given us a much better entry and more than likely would have offered us enough to take some profit out as it came into the overall highs. Looking back on this day trading setup I see two things that I should have spotted before taking the trade. #1 the market was way to close to yesterday’s highs. The previous day’s high and low is almost always major intra-day support or resistance, and should be respected as such. The second mistake made here was not waiting for a pull back. This forex trading strategy in my opinion, gets a lot of its overall profitability because entries are taken on the pull back. When you do this you are not only getting a tighter stop loss but additionally a much better risk/reward. Therefore when you do not wait for the pull back you eliminate a part of what makes this forex trading system so profitable overall. Currently for the month we are still hovering right around break even. Last week did not offer the quantity of opportunities normally seen in any one given trading week and we only ended up with a small profit. This trade ate up that profit, but its still early in the week. The important thing to remember in forex trading is that it is not a sprint, it’s a marathon. That being said the confirmation day trading strategy always wins the marathon each month by turning profit, and therefore the key is to simply keep your head down, be patient, and take only the best day trading setups that meet the criteria for entry. I hope trading is going well for everyone! Â I will see you all tomorrow for the next recent trade update!

Using Correlation To Day Trade The Forex Market

stersuhr — Sat, 07 May 2011 23:41:39 +0000

Whether you are trading equities, metals, of currency you need to be aware of correlations. Correlation is defined by one source as a, “mutualÂ relationÂ ofÂ twoÂ orÂ moreÂ things,Â parts,Â etc”. In the forex market we see this type of “mutual relation” between currency pairs on a daily basis. By effectively recognizing this correlation in the forex market you will be able to not only keep yourself out of more bad trades, but equally important get yourself into good trades you might have otherwise missed. Losses as a forex trader are unavoidable, however with a quality price action based forex trading strategy, in combination with the correlation found in the forex market, you can be overall profitable. In the forex education article we will discuss how to use correlation to improve your existing forex trading strategies performance. First and foremost is your chart setup. One person can only effectively trade a few pairs. If you were to try and look at 20 different currency pairs you no doubt will miss many good day trading opportunities due to a excess of pairs you are trying to manage and trade off. Because of this I watch 6 major currency pairs that drive the majority of volume in the forex market. These currency pairs are the GBP/USD, EUR/USD, USD/CHF, GBP/JPY, EUR/JPY, and the USD/JPY. In total I watch 6 currency pairs. I have my charts setup with all 6 pairs viewable at the same time, as you can see in the chart above (click on the chart above to

Non-Farm Payroll – Day Trading Forex News Setups GBP/USD 06/05/2011

stersuhr — Sat, 07 May 2011 22:30:29 +0000

Today’s chart is going to be a bit more “crowded” than usual but it shows a few good examples of the forex trading strategy we use most frequently in the forex trading room. Well Friday as you all well know was Non-Farm day. The one day a month that is sure to produce price action only the brave would enjoy. This last Friday was no exception! Our first day trading opportunity came on the GBP/USD. Going from left to right look at the first candle marked #1. If you look back at your chart you will see this candle came into previous resistance and then closed as a nice reversal candle. It touched and went through the resistance, and then came back down and closed below it. This is exactly what I like to see when a potential short trade is setting up. Additionally if you look back at your charts you will see that this candle #1 was a nice reversal candlestick formation, however the chart above cuts off the wick to this candle. Long story short candle #1 meet the criteria for the first candle in the 3 candle confirmation entry setup. After this we then looked for what we call the confirmation candle. Candle #2 meet the criteria for this by closing below the body of the reversal candle (candle #1). Once these two candle formed we then knew we wanted to go short and simply waited for the pullback candle (candle #3) to touch the body of the reversal candle. Notice the pullback candle never quite touched the body of the reversal candle, however it got close enough for us to enter and we managed to take +15 pips off this one.

ECB Press Conference Day Trade – USD/JPY Long 05/05/2011

stersuhr — Sat, 07 May 2011 21:58:07 +0000

Tuesday were pretty boring days in the forex trading room this week, and therefore not posted. The lack of day trading opportunities on those days was in part due to the large moves during the London session. Anytime I see a large move coming into our NY trading session I always use and talk about being cautious with any trade. After a large move there is much higher risk to either direction. As a day trader we use 20 pip stops the majority of the time. When the market has moved 100 or more pips the possibility of a retracement becomes higher and thus a, “trend trade” carries more risk because of this. Additionally there is a high risk to a continuation trade because the market is already extended and may be out of momentum, and thus enter a tight channel. Having said this we only took 2 day trades on Tuesday and Wednesday. On to Thursday! Three hours before we got into our position on the USD/JPY the market came down, set a low, and bounced. A few hours later the market tried to retest this level but set a higher low, and formed a reversal candlstick pattern after making a test lower. This gave us some indication that the market had simply run out of interest in pushing lower. Often times you will see the market not retest the exact overall low, or overall high in the example of a shorting opportunity. This is exactly what happened here. I saw in the trading room all the time

Two EUR/USD Shorts – High Risk/Reward Day Trade Setup 02/05/2011

stersuhr — Tue, 03 May 2011 00:45:06 +0000

Here we had 2 trades on the EUR/USD. One was a day trading confirmation entry short and the next was a high risk/reward trade setup that came together towards the end of our New York trading session. The first trade was a standard confirmation entry short. Again the confirmation entry is a 3 candle day trading setup. To even begin looking for this trade setup the market must be at some level of support or resistance. On the first trade the market came into resistance, touched it and then closed below it, thus showing that the resistance for the time being was holding. Therefore candle number one satisfied the criteria for the reversal candle, which is the first candle for the forex trading strategy. After the reversal candle formed at resistance we then looked for the 2nd candle in this trade setup which is called the confirmation candle. The goal of the confirmation candle in a short setup is very simple, it must close below the body of the reversal candle (candle #1). The reversal candle shows you the market is stalling, and then the confirmation candle shows that not only is the market stalling, but it is in fact reversing off this level. The first two candles of this day trading strategy give you your direction and the 3rd candle is where we actually pull the trigger. When the 3rd candle pulls back into the body of the reversal candle this is where we took the entry short. Unfortunately the market didn’t give us any follow through to the downside and it went up and stopped us out for -20 pips. Whenever you have a losing trade you should be able to say, “that is a trade I would take every single time”. This was one of those trade setups. Every forex trader will have losses, however those losses should not come from a bad trading decision, rather they should be very simply a good forex trade setup gone bad. That was exactly

USD/JPY & GBP/JPY Breakout Continuation Resistance 28/04/2011

stersuhr — Mon, 02 May 2011 23:43:18 +0000

Sorry I’m posting this one a little late. I got a little backed up on the recent trades section for last week, but here is Friday’s trades and I will do today’s trades right after this. Anyway to start off the day we had a -35 pip loser on the GBP/JPY. It was a quality setup however it never gave more than 10 pips of profit before turning on us. I should have taken a break even exit, but it is what it is and we moved on. After that trade we stayed patient and waited for another setup and we got one. I’m covering the USD/JPY trade because it is a more “traditional” day trading confirmation entry and therefore a better chart it illustrate this forex trading strategy. Anyway….looking at the chart above you can see the previous support that was broken, and when the market moved back into this previous support it became resistance. We call these levels breakout continuation levels. For more information on that please check out the article entitled Forex Breakout Continuation Setup – Day Trading Strategy. Back to the chart above…..as it came into this level we then waited for a confirmation entry short. The first candle in this 3 candle setup is what we call the reversal candle. All the reversal candle must do in the case of a short position is touch the resistance, and then close below it and this is exactly what candle #1 did. Candle #2 gave a solid confirmation candle down. A confirmation candle must close below the body of the reversal candle to meet the criteria. Notice candle #2 very clearly does that. The first two candles in this setup give you your direction and then the third candle is where the entry is taken. In the case of a short setup you would sell when the 3rd candle pulls back into the body of the reversal candle (candle #1), and this is exactly what we did. We took +15 pips off the first half of this trade and +35 pips off the last half. The first trade was just a half position, but on this trade setup we went in with a full position of 2% risk. Therefore overall we ended up netting +15 pips overall on the day. Not to bad considering we had a loss to cover from earlier in the session. Overall for the month we did ok, and ended up +5% for the month overall. I say it was only ok because I went through a 5% draw down during the last week or so of trading. That being said any month that ends in the black is a good month in my book. This business isn’t a get rich quick scheme, it’s a long term business and must be thought of that way if you are to become a professional forex trader. I hope you all had a great month, on to May!

USD/CHF Long – Day Trading Confirmation Entry 26/04/2011

stersuhr — Tue, 26 Apr 2011 21:49:18 +0000

We had a nice trade on the USD/CHF this morning in the forex room….could have taken a bit more out of it, but I tightened the stop loss to break even a little to quick and the last half of this day trade got closed out at break even with the first half gaining +10 pips. Overall for the day we were +5 pips. Nothing spectacular today, but the market really didn’t give up any large moves during out 3 hour NY trading session. The trade setup in the chart above was a standard day trading confirmation entry. The market came into support from 2.5 hours earlier and then closed as a reversal candle. In order for a candle to be considered a reversal candle,Â it must touch support and then close above it in the case of a long trade setup….that is the only criteria. Candle #1 satisfied this criteria. After the reversal candle we then wait for a confirmation candle. Candle #2 closed above the body of the reversal candle thus meeting the criteria for a confirmation candle. Candle #3 is what we call the pull back candle, however there was no pull back on this day trade setup. Because we look at other pairs for correlation (EUR/USD, GBP/USD, USD/CHF) we took the entry without seeing any pull back. If you go look at your charts, at the same time you will see that the GBP and the EUR were both moving down nicely already and therefore I did not expect the USD/CHF to pull back. Correlation is a must when day trading forex with the confirmation entry. It keeps you out of bad trades and gets you into others you may have missed. I noticed today that I don’t have any forex trading education on how to use correlation. So….I’m gonna go ahead and do an article and video showing how I use correlation to take better trades. I think correlation is a majorly overlooked sector of forex trading among the average retail trader. Hopefully thatÂ forex training article and

Forex Market Holiday 22/04/2011

stersuhr — Fri, 22 Apr 2011 22:39:11 +0000

Hello Traders! As I mentioned yesterday I wanted to at least show up in theÂ forex roomÂ and see what type of price action the forexÂ market would offer today, being it is a banking holiday. During holiday’s the forex market will give you one ofÂ two types of price action. One is what we saw today, which was a stagnant marketplace with not much movement or conviction in either direction. The other is a fast moving volatile fxÂ market. WeÂ willÂ be trading MondayÂ even though it is a banking holiday as well. In my opinion it is at least worthÂ seeing how the market is moving before completely throwing it away as a lost trading day. Most viewÂ holidays as only range bound daysÂ and therefore simply dismiss them. However think about this. When there is less volume in the market it takes lessÂ money being moved to push the price through support or resistance because there are less orders around these levels. Therefore as mentioned above, you get the occasional bank holiday with great intra-day price action. Weekly Wrap Up : Overall we ended +2.5% up for the week, which brings us to +9.5% up for the month of April currently. This week in specific, even though we were net positive forÂ the week,Â was a very rough trading week in my opinion. There was a lot of strange price movements, various false breakout, and general lack of conviction during the US trading session. Because of this we mostly used smaller positions this week, which helped maintain a modest profit for the week. It’s tough trading weeks like these that make me think of golf and how much alike forex trading is to it. Think for example of Tiger Woods, and what makes him the best. It’s not Tiger’s swing, his putting, or his great short game that make him what he is….but rather it is his super human ability to never break mentally. Look at what happened a few weeks back at the Master’s. Rory goes into Sunday with I believe a 4 shot lead and completely implodes, endingÂ the dayÂ way back of the winner. It’s not thatÂ Rory isn’t a great golfer because he is, its that he doesn’t have the sameÂ mental ability to stay composed in the face of adversity as Tiger does. Keeping that analogy in mind, lets apply that to the forex market. As a day trader you must remain poised. The first initial reaction after a losing trade for most new traders is to double the trade size and “get back at the market”. Often the result is double the loss. The point is you have to be able to stick to your trading plan and money managementÂ no matter what happened with the previous trade or trades. For example on Wednesday we had 2 small losing trades before the +130

Confirmation Entry Day Trades GBP/USD & EUR/JPY 21/04/2011

stersuhr — Fri, 22 Apr 2011 02:12:06 +0000

Early on in the tradingÂ session we had a day trading opportunity on the GBP/USD. The market came into resistance and then gave a nice confirmation entry down. However we didn’t see any follow through to the downside after the dayÂ trading entry, and this ended up -20 pips. Still and all I would like to go over this forexÂ trade as it was a solid confirmation entry. The only thing I can say about why I shouldn’t have taken this trade was the market correlation. At this point in time the USD correlation was out of sink and the USD/CHF was moving down towards USD weakness, and therefore we should have waited for the entry on the GBP/USD. Candle #1 touched resistance and then closed back down below that resistance, thus giving a nice reversal candle off of resistance. Candle #2 closed well below the body of the reversal candle. In the case of a short position candle #2 must close below the body of the reversal candle, which it did. Candle #3 is the entry candle. The entry is taken when it pulls back into the body of the reversal candle, and this is where we took the entry. Unfortunately there was no follow through to the downside.

After the GBP/USD trade above we waited for another day trading opportunity, and eventually the EUR/JPY gave us just that. The black line is theÂ support level we were looking for the market to hold

Forex Trading Strategy – Live Day Trade On The EUR/JPY 19/04/2011

stersuhr — Wed, 20 Apr 2011 01:11:24 +0000

HeyÂ FxÂ traders! Today we have a nice little half position long on the EUR/JPY from 118.05 that is currently about +100 pips up as of writing this. I now have the stop loss moved to +40 pips and the final take profit is set to 119.35 which is +130 pips.Â Before we get into this FxÂ trade I think it is only fair to point out the bad. First we had a half position long on the GBP/USD that stopped us out for -20 pips. I’m just gonna come out and say it….that trade was a stupid mistake on my part. In no way shape or form had it given a confirmation entry, nor had it meet the criteria for any of my other forex trading strategies. The USD/CHF was giving a confirmation entry to go short and the GBP/USD had only a reversal candle to go long. I jumped the gun and didn’t wait….and I paid 20 pips for my error.

I’ve been dayÂ trading forexÂ for over 6 years, almost 7…and still from time to time my patience fails me….and this was a good example of that. This just shows why it is so important to wait for the market to meet ALL the criteria of your forex trading strategy before taking your day trade. Equally important it shows how to recover from a stupid trade! We have all been there, and what is your first reaction….to get right back in and “show the market who’s boss” right??? Doing that will only result in further losses. After this trade we keep our head down, didn’t lose our cool, and more importantly stayed patient and waited for the next good day trading setup! Additionally todayÂ there was a AUD/USD short. This trade on the other hand was a double confirmation entry short, and is a trade I would take every single time! The market gave us +15 pips at one point, but after seeing other correlating forexÂ pairs start to head up we decided to exit this one for -4 pipsÂ plus the spread. That’s the beauty of the confirmation entry….even when the market isn’t going to move your direction, because your taking entries on pull backs you usually have time to get out at break even or a small loss. The reversal candle was at 8:30 AM EST if you would like to go back and look at that confirmation entry. Finally we had our EUR/JPY long

Day Trading Forex Strategy – Confirmation Entry

stersuhr — Tue, 19 Apr 2011 12:52:02 +0000

Day Trading Forex Strategy – Confirmation Entry, a simple strategy to trade forex on the intraday chart. The confirmation entry is an extremely powerful forex trading strategy. This method is based purely on raw price action, and is a great day trading strategy the produces consistent monthly returns. Since the beginning of 2011 the Confirmation Entry and other variations of the strategy has been the staple day trading strategy used in the forex room. I hope you all enjoy this forex education video, and more importantly makes some pips with it!

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Day Trading Confirmation Entry On The AUD/USD 18/04/2011

stersuhr — Mon, 18 Apr 2011 19:14:14 +0000

Â At around 9:00 AM EST this morning, Standard & Poor put a “negative” outlook on the U.S AAA credit rating. As you might imagine this created a massive USD weakening effect initiallyÂ that was most evident in the EUR/USD, GBP/USD, and the USD/CHF. As you can see we had a day trading confirmation entry on the AUD/USDÂ right before this economicÂ news was released. Candle #1 was the candle that touched support. Not only was this level a horizontal support level, but additionally it was a ascending trend line that began forming on the 12th of April. Candle #1 was the reversal candle in the 3 candle confirmation entry trade setup. The following candle was the confirmation candle. In a long setup the confirmation candle must close above the body of the reversal candle in order to meet the criteria of a confirmation candle. After these 2 candles formed we now know the direction and simply waited for candle #3 (entry candle) to pull back into the body of the reversal candle (candle #1). We were watching the other pairs when the third canlde pulled back into the body of the reversal candle (candle #1) and didn’t take the entry at that time. This was because the other majors were not setting up in the same way. However once the news was released the GBP/USD, EUR/USD, and USD/CHF allÂ took off in

Forex News Trading – US CPI Short Trade On The GBP/USD 15/04/2011

stersuhr — Fri, 15 Apr 2011 22:04:14 +0000

Overall today we took 3 dayÂ trades, and ended the day break even unfortunately. The first trade we took was right after the US CPI forexÂ news release this morning. Core CPI came in -.1% worse than expected and then CPI Y/Y came in +.1% better than expected. The most important of the two numbers was the core number and thus why the first initial reaction was USD negative. However after seeing the conflict I knew this would retrace, and that is exactly what it did. We waited for the GBP/USD to move into resistance to see if it would hold and then start back down. After seeing this happen we went short and took +15 pips off this trade. Additionally there was a GBP/USD short that ended up break even. I should have held onto this trade but after seeing the USD/CHF close below some major short term support I began to not like it quite as much. Based on forexÂ market correlation, if the USD/CHF is moving down the GBP/USD should move up. Now that is an over simplification ofÂ forex market correlationÂ but seeing the USD/CHF slip through support is what caused the exit. The final trade was on the EUR/USD. Plain and simple the EUR/USD broke the market correlation that it had been holding all day. Every other pair (GBP/USD and then USD/CHF) moved towards USD strength with the exception of the EUR/USD. This caused us to get closed out for -15 pips, and thus ended the day break even overall. Overall we had a great week and ended up

Stop Run Reversal Day Trade & Confirmation Entry Long On The GBP/JPY 14/04/2011

stersuhr — Thu, 14 Apr 2011 23:47:26 +0000

When we first came into the fx trading room for the morning we had a nice stop run reversal setup on the EUR/USD. This trade was based off the 1H chart on the Euro. A stop run reversal setup in the case of a long position must move through the major support by at least 5 pips and preferably 10, and this trade setup went through the previous swing low by 13 pips thus meeting that criteria. After breaking the low, the market must then close back up above that support area, and this clearly did. Additionally it closed as a nice hammer reversal candle. When the market went through theÂ support it came downÂ and touched the 200EMA which supported the long position even further. We went long after the stop run reversal candle formed and took +10 pips out of this trade. OverallÂ this day tradeÂ has given up 100 pips off this setup. My exit was the mistake of not keeping in mind the longer 1H setup. After the entry I went to the 15M chart as normal and got shaken out. It’s important to rememberÂ thatÂ this forex trading strategyÂ normally produces very large moves in the forex marketÂ and thus you should stretch your take profit beyond normal. Lesson learned, andÂ on to the next trade! For more information on day tradingÂ the stop run reversal set upÂ check out the article entitled Day Trading Stop Run Reversals In Forex

After our first dayÂ trade we had anotherÂ setup on the USD/CHF that ended up break even, and then towards the end of the session we had this nice confirmation entry long on the GBP/JPY. As with every single confirmation trade we take the FxÂ market must be coming off of some type

Failed Day Trade On The GBP/USD Short 13/04/2011

stersuhr — Thu, 14 Apr 2011 02:33:30 +0000

Here we have a good example of a nice intra-trend continuation dayÂ trade. The GBP/USDhad been channeling for a few hours going into this trade. Normally I don’t like to take a dayÂ trade in a channel due to the fact that there is never much to be made. However this channel was +50 or more, therefore allowing plenty of room to take profit. As I said earlier this was what I call a intra-trend reversal candle. The market had already started its move down and this Fx dayÂ trade setup was not coming off of resistance or support, rather it was simply continuing the move down. Candle number one was the reversal candle. Anytime I take a trade in an already established move the first setup candle must be a reversal candle (shooting star or hammer formation). This is a requirement because I want to see the market try to push against the already established short term move and then get rejected. As you can see candle #1 makes a move up trying to work higher only to get rejected down. Candle number 2 is your standard confirmation candle. Again in the case of a short position the confirmation candle only has to close below the body of the reversal candle. Candle #2 did that very clearly. Once these two candles closed we now knew the direction we wanted to take, and when candle number three made a pull back close to the body of the reversal candle (candle #1) we took the entry short on the GBP/USD. This trade gave up about 20 pips at one point only to turn around and close us out for -20 pips. I got a bit greedy on this one in hindsight. Given the momentum of candle #3 and the hugely bearishÂ candle closeÂ I expected to see it run through the lows. Additionally the 4H chart was looking bearish as well, and had setup as a shooting star formation off a short term high. All in all we took 3 trades today and I had 3 loser. Fortunatly the other 2 were only -8 pips each. One was on the USD/JPY right after US Retail Sales. The number came out pretty close to expectations, however the revision to the previous month was enough to warent a long position. It went in out direction about +10 pips but after a failed test of the highs we decided to get out. All in all today was down -35 pips and was the first losing day of the week. Overall still having a great week and sitting right now around +4% for the week. Today however was a great example of why I preach sound money management. I don’t care how good of a forex day trader someone might be, or how profitable your forex trading strategy is, you will have loses from time to time and I’m no exception The key is monthly profit, and this should be the judge of success. Every month this year we have been profitable (knock on wood) and I attribute this in a big way to using solid money management principals. By risking a safe amount per trade no one trade is going to make or break you, and thus you tend to trade more based of facts rather than emotions. Check out the article entitled Money Managment – A Day Traders Key To Success. In that article I go over my money management principals and hopefully they can help you be a successful forex trader!