Due to the buy signal received for the USD/JPY pair, my "buy" was at 120.18 today. The intent is for the pair to rise in price so I am "buying to open" my trade.
Due to the sell signal in the EUR/CAD pair, my "sell" was at 1.1514 and I am hoping for the pair to fall in price. I and "selling to open" the pair and want to "buy to close" at a lower price to make a profit.
I am sitting back on the TS trade as the markets today are showing a powerful move up. Let's wait and see.
Good luck trading.
JD
INFO FOR ME:
GLOBAL INTEREST RATES; NZD 7.5 > AUD 6.25 > GBP 5.25 = USD 5.25 > CAD 4.25 > EUR 3.75 >CHF 2.25 > JPY 0.5
38631529 FM, 38623275 FM, 38627642 FM, 38628670 FW, 38630224 FW, 57692517, 24491787, 24491775, 24491790, fx 10060819
Wednesday, May 02, 2007
Tuesday, May 01, 2007
COMMODITY CURRENCIES SHOWING WEAKNESS
I was looking at a few things on my software program. I was noticing that I am getting buy signals on two of the commodity pairs: EUR/AUD and GBP/AUD. Then I ran my search on the stocks. TS came up as a "sell." There are a lot of traders that perform intermarket analysis meaning that they look at one market - forex - and extrapolate that to another market - stocks - and base their trades off intermarket analysis. If this holds true in this situation, TS should actually go down along with the weakening commodity currency AUD. My plan is to buy puts on TS tomorrow and see if this theory holds true.
The USD sell off seems to be subsiding and so a buy signal came up on the USD/JPY pair.
EQIX came up "sell". Don't exactly have the $ to short that one.
Good luck trading.
JD
The USD sell off seems to be subsiding and so a buy signal came up on the USD/JPY pair.
EQIX came up "sell". Don't exactly have the $ to short that one.
Good luck trading.
JD
Sunday, April 29, 2007
WATCH EUR/CAD
The EUR/CAD has really consolidated in the past few weeks/months and the ADX is currently at 8. The previous 6 month trend was up, so there may be a continuation of that trend. Watch for a strong berakout in either direction.
Wednesday, April 25, 2007
UGI ON THE BUY LIST
UGI appears to be the best trade to take tomorrow. This one popped up on 3 separate searches. If one is good, two is bettter, but three is excellent. http://stockcharts.com/h-sc/ui
ANST breaking out above $33.50 would be a great trade, but be careful. This one may be very extended.
MCRS is also making more progress to the upside after a 4 month consolidation phase. Need more volume to swing it further to the upside.
AF and UEPS may now be using its 20 day MA as support after their huge breakout the other day.
ARNA has made a great 8% run in the past few days. If a stock makes this kind of run, Investors Business Daily says to hold onto this one for at least 3 months.
IYG also making a move.
TALX showing 4 straight days of buying.
Whadya think of IJH, MCO?
TWGP and IHS going nowhere fast.
ANST breaking out above $33.50 would be a great trade, but be careful. This one may be very extended.
MCRS is also making more progress to the upside after a 4 month consolidation phase. Need more volume to swing it further to the upside.
AF and UEPS may now be using its 20 day MA as support after their huge breakout the other day.
ARNA has made a great 8% run in the past few days. If a stock makes this kind of run, Investors Business Daily says to hold onto this one for at least 3 months.
IYG also making a move.
TALX showing 4 straight days of buying.
Whadya think of IJH, MCO?
TWGP and IHS going nowhere fast.
FOREX ARTICLE ON ADX TRADING SYSTEM
I was playing around one day and enjoyed this article. When a trader enters a market, s/he should have a trading system in place and follow it. This includes entry and exit signals, stop loss orders etc. I picked this article up at www.aboutcurrency.com
Steps To Create A Mechanical Forex Trending Trading System
A mechanical forex trending trading system is mainly based on technical indicators and a set of rules to enter and exit trades. Trending systems will only perform well in trending currency markets. Rarely will you get one forex system that is able to exploit both ranging and trending markets.
A mechanical forex trending trading system should attempt to accomplish 2 goals:
1. Be able to identify a new trend as soon as possible
2. Confirm this trend to avoid most false break or whipsaw signals
Step 1: Find technical indicators that help spot a NEW trend.
A very popular overlay indicator among currency traders to spot new trends early are moving averages, a simple currency trending trading system to identify new trends is the moving average cross-over system, this trading system combines 2 moving averages, the long-term and the short-term to create a buy ar sell rule, "when the short term MA crosses the long term MA from below, this will generate a buy signal, conversely, when the short term MA crosses the long term MA from above, this will generate a sell signal. In it's simplest form, moving average crossovers are the fastest ways to identify new trends. It is also the easiest way to spot new trends. The MA Cross System will work very well in trending markets but problems occur during ranging markets. It is during these trading ranges that the MA systems show their weaknesses by generating false breakout signals and eating your profits. The best recommendation is to use MA Cross Systems only during trending market conditions. How do we know the market is in a trend or not? By adding a trend confirming technical indicator.
Step 2: Find technical indicators that help CONFIRM the new trend.
In order to avoid most false breakouts and whipsaws, we have to confirm the new trend by adding a trend-confirming indicator such as MACD or ADX to our MA Cross trending system. Basically, adding ADX or MACD to our system is a method of determining if a market is trending or not.For example, an increase of the ADX for example signifies that the market is trending, either up or down. A decreasing ADX can indicate that the trend is decreasing or moving into sideways action. As a general rule, if the ADX > 25 for MA systems, the new trend is confirmed and the trade should be taken. Hundreds of indicators can help to confirm "new" trends, as you become more familiar with various technical indicators which you can find at our website or download section, you will find ones that you prefer to use over others, and can incorporate those into the MA trending system.How does our MA-ADX system look like?
Step 3: Define your entry rules When to enter the market? Simple, enter the market when your system signals a buy or sell order. In our MA system, entry rules would look like:
1) Buy at market if EMA(5) CrossOver SMA(200) from below and ADX>=25
2) Sell at market if EMA(5) CrossOver SMA(200) from above and ADX>=25
1) Use a trailing stop-loss to lock in profits meaning that if the currency price moves in your favor by ‘Z’ amount, you move your stop by ‘Z’ amount.
2) Close 1/2 of your position if the trade moves 'Y" pips in your favor, or close the trade completely if the price moves 100 pips in your favor.
3) Choose support and resistance levels as target levels.
4) Simple wait to take profits when your system tells you to do.
Basic exit rules would look like:
Exit the market if:
Stop-loss has been hit
The 5 EMA crosses the 200 SMA back in the opposite direction
ADX falls back below 20 indicating a non-trending market
Step 5: Define your money management rules
As a general rule: Your risk per trade should never exceed 2% of your total equity. For example, if your total equity is $100,000, your risk per trade should never exceed $2000. Most professional currency traders never exceed 1% risk per trade. Money management is very important and will keep you trading.
This trading system has been beneficial so far when paper trading fx.
Good luck trading.
JD
Steps To Create A Mechanical Forex Trending Trading System
A mechanical forex trending trading system is mainly based on technical indicators and a set of rules to enter and exit trades. Trending systems will only perform well in trending currency markets. Rarely will you get one forex system that is able to exploit both ranging and trending markets.
A mechanical forex trending trading system should attempt to accomplish 2 goals:
1. Be able to identify a new trend as soon as possible
2. Confirm this trend to avoid most false break or whipsaw signals
Step 1: Find technical indicators that help spot a NEW trend.
A very popular overlay indicator among currency traders to spot new trends early are moving averages, a simple currency trending trading system to identify new trends is the moving average cross-over system, this trading system combines 2 moving averages, the long-term and the short-term to create a buy ar sell rule, "when the short term MA crosses the long term MA from below, this will generate a buy signal, conversely, when the short term MA crosses the long term MA from above, this will generate a sell signal. In it's simplest form, moving average crossovers are the fastest ways to identify new trends. It is also the easiest way to spot new trends. The MA Cross System will work very well in trending markets but problems occur during ranging markets. It is during these trading ranges that the MA systems show their weaknesses by generating false breakout signals and eating your profits. The best recommendation is to use MA Cross Systems only during trending market conditions. How do we know the market is in a trend or not? By adding a trend confirming technical indicator.
Step 2: Find technical indicators that help CONFIRM the new trend.
In order to avoid most false breakouts and whipsaws, we have to confirm the new trend by adding a trend-confirming indicator such as MACD or ADX to our MA Cross trending system. Basically, adding ADX or MACD to our system is a method of determining if a market is trending or not.For example, an increase of the ADX for example signifies that the market is trending, either up or down. A decreasing ADX can indicate that the trend is decreasing or moving into sideways action. As a general rule, if the ADX > 25 for MA systems, the new trend is confirmed and the trade should be taken. Hundreds of indicators can help to confirm "new" trends, as you become more familiar with various technical indicators which you can find at our website or download section, you will find ones that you prefer to use over others, and can incorporate those into the MA trending system.How does our MA-ADX system look like?
Step 3: Define your entry rules When to enter the market? Simple, enter the market when your system signals a buy or sell order. In our MA system, entry rules would look like:
1) Buy at market if EMA(5) CrossOver SMA(200) from below and ADX>=25
2) Sell at market if EMA(5) CrossOver SMA(200) from above and ADX>=25
(
Notice that this is an hourly chart and this trade is lasting over 10 days so far.)
Step 4: Define your exit and target rules
When to exit the market? Basically, you have to exit the market only when the "new" trend is over, either with a loss or a profit. It is very important to understand and accept that your trending system will generate losses too. Taking profits can be done in many ways and it is just a matter of your trading style.
1) Use a trailing stop-loss to lock in profits meaning that if the currency price moves in your favor by ‘Z’ amount, you move your stop by ‘Z’ amount.
2) Close 1/2 of your position if the trade moves 'Y" pips in your favor, or close the trade completely if the price moves 100 pips in your favor.
3) Choose support and resistance levels as target levels.
4) Simple wait to take profits when your system tells you to do.
Basic exit rules would look like:
Exit the market if:
Stop-loss has been hit
The 5 EMA crosses the 200 SMA back in the opposite direction
ADX falls back below 20 indicating a non-trending market
Step 5: Define your money management rules
As a general rule: Your risk per trade should never exceed 2% of your total equity. For example, if your total equity is $100,000, your risk per trade should never exceed $2000. Most professional currency traders never exceed 1% risk per trade. Money management is very important and will keep you trading.
This trading system has been beneficial so far when paper trading fx.
Good luck trading.
JD
Tuesday, April 24, 2007
TALX MAKING ITS MOVE
TALX bounced off the 50 day moving average and traded higher by 2% today. This may mean a move higher after consolidating for the past two months.
ADSK has also popped up on my buy list.
Watch GLDN to see if it is going to break higher. It hit the buy list, but it has been in such a big uptrend in the past few months, it is hard to say if it will continue or not.
Since I am not seeing much "sell" signals on my searches, I believe this uptrend in the market is going to stay this way for a while barring any huge rise in oil prices or some other catastrophic event.
Good luck trading.
JD
ADSK has also popped up on my buy list.
Watch GLDN to see if it is going to break higher. It hit the buy list, but it has been in such a big uptrend in the past few months, it is hard to say if it will continue or not.
Since I am not seeing much "sell" signals on my searches, I believe this uptrend in the market is going to stay this way for a while barring any huge rise in oil prices or some other catastrophic event.
Good luck trading.
JD
Monday, April 23, 2007
SAY BACK ON THE RADAR
SAY appears to have created a cup-and-handle formation with a 30% correction over that past few months. It has popped back up on my "buy" search and I am going to get back in around $25.
Watch IHS, there appears to be a lot of buyers when the stock backs down to $41.00.
I am still seeing weakness in the USD/JPY pair and so far there has been only a move sideways. Hoping for a drop much like late February.
Good luck trading.
JD
INFO FOR ME:
GLOBAL INTEREST RATES; NZD 7.5 > AUD 6.25 > GBP 5.25 = USD 5.25 > CAD 4.25 > EUR 3.75 >CHF 2.25 > JPY 0.5
38631529 FM, 38623275 FM, 38627642 FM, 38628670 FW, 38630224 FW, 57692517, 24491787, 24491775, 24491790, fx 10060819
Watch IHS, there appears to be a lot of buyers when the stock backs down to $41.00.
I am still seeing weakness in the USD/JPY pair and so far there has been only a move sideways. Hoping for a drop much like late February.
Good luck trading.
JD
INFO FOR ME:
GLOBAL INTEREST RATES; NZD 7.5 > AUD 6.25 > GBP 5.25 = USD 5.25 > CAD 4.25 > EUR 3.75 >CHF 2.25 > JPY 0.5
38631529 FM, 38623275 FM, 38627642 FM, 38628670 FW, 38630224 FW, 57692517, 24491787, 24491775, 24491790, fx 10060819
Sunday, April 22, 2007
TALX AND IJH ARE ON THE BUY LIST, SOLD EUR/USD
My modified buy/sell search is working better since I changed it to the correct settings. Of course I get to base that on one day of trading and the market took off on Friday. Anyway, TALX and IJH popped up on the search and look like great candidates. I do think that TALX may trade sideways for a few more months to come, but we will just have to see. I bought ARNA on Friday. Again, I am keeping an eye on this one.
As for the forex trading, I sold out on the EUR/USD on Sunday so that I can dedicate more $$ to shorting the USD/JPY. The profit from my original investment of $1,000 sported me a $5209 profit. That's right. The pair moved up 520 pips for me and I am happy as a clam. The claim of my original $2,000 investment was erroneous. I opened the account with $2,000, but only traded a $100,000 lot with the $1,000. That's what margin will do for you in the Forex market.
I currently opened a trade selling the USD/JPY. This is purely a technical trade and I am banking on the Yen to start seeing more demand. Let's see how it goes.
Good luck trading.
JD
As for the forex trading, I sold out on the EUR/USD on Sunday so that I can dedicate more $$ to shorting the USD/JPY. The profit from my original investment of $1,000 sported me a $5209 profit. That's right. The pair moved up 520 pips for me and I am happy as a clam. The claim of my original $2,000 investment was erroneous. I opened the account with $2,000, but only traded a $100,000 lot with the $1,000. That's what margin will do for you in the Forex market.
I currently opened a trade selling the USD/JPY. This is purely a technical trade and I am banking on the Yen to start seeing more demand. Let's see how it goes.
Good luck trading.
JD
Thursday, April 19, 2007
ARNA, AF, IYG on the buy list.
AF has had a positive reversal the past few weeks. Beginning in mid-March, there was a lot of buying going on. It took a month to work through all of the "shorts" in order for the stock to pop back up above it's 50 day moving average on high trading volume. Today, it did just that. The ADX indicator at the top of the chart is showing a reversal pattern meaning that for now, the stock should change it's direction from down to sideways or up. The other reason it is in a buy area is that the MACD has made a positive divergence since March. However, despite all the good news, it may still take a little while longer for the stock to make a strong move to the upside so keep an eye on this one. 
ARNA has a few things going for it. After a long down turn, it has jumped back above it's 50 day moving average on high trading volume and the MACD is going to cross the zero line to the upside. The MACD is at the bottom of the chart. The other issue is that the ADX lines crossed to the upside after a long down turn. So combining 3 indicators showing positive signals, this leads a trader to believe that the stock will turn higher.
IYG is an exchange-traded fund that has just broken past it's previous resistance point and is heading higher. Watch for this ETF to come back down and test the 20 day moving average and move back up. NOTE: The blue line is the 50 day moving average. Currently the 20 day moving average is at $129.36.
LVS is a buy candidate if it breaks out to the upside over $93. GRMN too if it breaks above $56 on high trading volume.
Wednesday, April 18, 2007
RELOOKING AT MY INVESTING PLAN
I was noticing during the past few weeks that my trading signals were not triggering as I expected them too so I went back to my trading manifesto to re-analyze my situation. Then going back into my MetaStock software, I noticed that I had keyed in something wrong. That is what you get for doing your own computer programming. One little mis-stroke and it changes the whole plan. So here is what I have set up
DMI = 13
ADX = 8
--------------------------------------------------------------------------------------------
Rules for TREND TRADING:
BUY when:
ADX >25 and +DMI is above -DMI
SHORT when:
ADX >25 and -DMI is above +DMI
Notice that the ADX is above 25 in both buying and shorting!!! The only difference is the position of the DMI. This is a trend-trading system so the number of signals will be few and far between. If you are trend-trading, DO NOT TRADE AT ALL IF ADX(8) IS LESS THAN 25.
--------------------------------------------------------------------------------------------
Rules for NON-TREND TRADING:
BUY when:
ADX <25
SHORT when:
ADX<25 and +DMI is above 25
---------------------------------------------------------------------------------------------
Rules for trading BREAKOUTS:
ADX less than 25
ADX less than both +DMI and -DMI
Better if ADX < 15 Draw trendlines to confirm breakouts Better is ADX < 25 for more than 30 time periods Also wait for move back to 20 d EMA to purchase
BUY when:
+DMI breaks above 25 AND the trendline is broken to the upside.
SHORT when:
-DMI breaks above 25 AND the trendline is broken to the downside.
-------------------------------------------------------------------------------------------
Quick synopsis:
TRENDING:
BUY:
ADX(8) >25 and +DMI(13) above -DMI(13)
SHORT:
ADX(8) >25 and -DMI(13) above +DMI(13)
----------------------------------------------------
SCALPING IN NON-TRENDING:
ADX(8) Buy when -DMI(13) > 25
Short when +DMI(13) > 25
Good luck trading.
JD
DMI = 13
ADX = 8
--------------------------------------------------------------------------------------------
Rules for TREND TRADING:
BUY when:
ADX >25 and +DMI is above -DMI
SHORT when:
ADX >25 and -DMI is above +DMI
Notice that the ADX is above 25 in both buying and shorting!!! The only difference is the position of the DMI. This is a trend-trading system so the number of signals will be few and far between. If you are trend-trading, DO NOT TRADE AT ALL IF ADX(8) IS LESS THAN 25.
--------------------------------------------------------------------------------------------
Rules for NON-TREND TRADING:
BUY when:
ADX <25
SHORT when:
ADX<25 and +DMI is above 25
---------------------------------------------------------------------------------------------
Rules for trading BREAKOUTS:
ADX less than 25
ADX less than both +DMI and -DMI
Better if ADX < 15 Draw trendlines to confirm breakouts Better is ADX < 25 for more than 30 time periods Also wait for move back to 20 d EMA to purchase
BUY when:
+DMI breaks above 25 AND the trendline is broken to the upside.
SHORT when:
-DMI breaks above 25 AND the trendline is broken to the downside.
-------------------------------------------------------------------------------------------
Quick synopsis:
TRENDING:
BUY:
ADX(8) >25 and +DMI(13) above -DMI(13)
SHORT:
ADX(8) >25 and -DMI(13) above +DMI(13)
----------------------------------------------------
SCALPING IN NON-TRENDING:
ADX(8) Buy when -DMI(13) > 25
Short when +DMI(13) > 25
Good luck trading.
JD
Tuesday, April 17, 2007
STOCKS ON BUY AND SELL LIST
Quick notes on buying since the market is back into an uptrend:
MCO, UEPS, IHS TWGP is questionable.
Short EWT, RATE
MCO, UEPS, IHS TWGP is questionable.
Short EWT, RATE
Thursday, April 12, 2007
WOOF IS MAKING ITS MOVE AGAIN
Patience does pay off and it appears as if WOOF is going to return to another move upward. Just have a peek at the chart and go long.
UGI popped up on my sell list. (i.e. short the stock or buy puts)
FX TRADING:
BTW, my EUR/USD trade is holding up still. Across the board, the USD is getting hammered and I wish I hadn't closed out my short USD/CAD position a few days ago. My current profit on the EUR/USD pair is $4,500 on an original $2,000 investment. Bought at $1.3057 and currently $1.3507. A 500 pip move, but I have had $500 in interest payments since the USD has a higher interest rate than the EUR.
Good luck trading.
JD
UGI popped up on my sell list. (i.e. short the stock or buy puts)
FX TRADING:
BTW, my EUR/USD trade is holding up still. Across the board, the USD is getting hammered and I wish I hadn't closed out my short USD/CAD position a few days ago. My current profit on the EUR/USD pair is $4,500 on an original $2,000 investment. Bought at $1.3057 and currently $1.3507. A 500 pip move, but I have had $500 in interest payments since the USD has a higher interest rate than the EUR.
Good luck trading.
JD
Tuesday, April 10, 2007
LESS RISKY TRADE AND LONGER TERM
I have to mention a stock that is a buy-and-hold if you are into that thing. In fact, there are two of them: BRK.A and BRK.B
These are the famous stocks of Berkshire Hathaway (Warren Buffet's baby). One drawback, BRK.A are trading at $109,800.00 and BRK.B are trading at $3,665.00 per share. That's right!! Over $100,000 for one share. Good luck buying that one. If you have the cash, go for the BRK.B
The reason why I am mentioning it is that I read the prospectus from B-H today and they had a banner 2006. I noticed that he ventured into Forex trading also and lost out on only 2 currencies out of the 12 he traded. Not too bad. He did note that he is still bearish on the US dollar, which means he still expects the value to decrease since the Federal Reserve may keep interest rates the same. If the Feds increase the interest rate again to stem inflation, the US dollar will get stronger. I'm glad I am on the side of Buffet with my current trade of being long the EUR/USD. As of now it is trading at $1.3420 which is giving me a profit of $3600 on an initial investment of $2000. Yes, that's right. It is a 175% increase in one month. My stop loss is sitting at $1.335 where my trend line is sitting. I get to move it up about 10-15 pips a day.
On my beginning trend search ADSK popped up so watch for a trend-change to the upside on this one as long as the overall stock market holds up, too. Keep a big eye on BSM as it appears to be creating a "bull flag". If it breaks out to the upside of high trading volume, make it a buy above $9.15.
Good luck trading.
JD
These are the famous stocks of Berkshire Hathaway (Warren Buffet's baby). One drawback, BRK.A are trading at $109,800.00 and BRK.B are trading at $3,665.00 per share. That's right!! Over $100,000 for one share. Good luck buying that one. If you have the cash, go for the BRK.B
The reason why I am mentioning it is that I read the prospectus from B-H today and they had a banner 2006. I noticed that he ventured into Forex trading also and lost out on only 2 currencies out of the 12 he traded. Not too bad. He did note that he is still bearish on the US dollar, which means he still expects the value to decrease since the Federal Reserve may keep interest rates the same. If the Feds increase the interest rate again to stem inflation, the US dollar will get stronger. I'm glad I am on the side of Buffet with my current trade of being long the EUR/USD. As of now it is trading at $1.3420 which is giving me a profit of $3600 on an initial investment of $2000. Yes, that's right. It is a 175% increase in one month. My stop loss is sitting at $1.335 where my trend line is sitting. I get to move it up about 10-15 pips a day.
On my beginning trend search ADSK popped up so watch for a trend-change to the upside on this one as long as the overall stock market holds up, too. Keep a big eye on BSM as it appears to be creating a "bull flag". If it breaks out to the upside of high trading volume, make it a buy above $9.15.
Good luck trading.
JD
Sunday, April 08, 2007
ETFs AND GETTING BACK INTO FOREX
I had the weirdest thing happen to my by chance. After trading in stocks a while, I took a course on trading foreign currencies in what is called "forex" which is short for foreign exchange. I was doing well applying my trend-following practices since currencies trend better than stocks, but I hit a major roadblock. The company I was trading with, RefCo, filed for bankruptcy. Talk about losing a lot of money that I cannot get a hold of any more. It left a sour taste in my mouth and after 18 months of waiting, I finally got the nerve enough again to venture back into forex. To make this story shorter, the EUR/USD was range trading in February. I used my range trading indicator (stochastic) and entered a long contract since the previous trend was up and the pair was in oversold territory. My initial buy point was $1.3051 and it is currently trading at $1.3364. That is a move of 313 pips in a 45 day span. Since each pip is worth $10, those pips have given me a $3130 profit on my initial $2000 investment. I'll try to keep you updated.
Anyway, the other thing I was doing this weekend was playing around and looking at ETFs since ETFs trend better than stocks eventhough they don't make the large quick moves like a stock can. I noticed that in the ETF category, there were ETFs that followed the currency pair much like one would be able to trade the currency. Confusing? I'll bet. There is a lot of terminology in this blog that may overwhelm you. If a trader cannot understand this terminology, I don't believe you would make a good forex trader.
So here are the correlative ETFs to a currency pair:
FXA = AUD/USD. (If FXA moves up, the AUD/USD will rise, too). In fact, in late October, 2006 my indicator crossed over to signal a buy in FXA a couple of days before the signal presented itself in the AUD/USD pair.
FXB = GBP/USD (If FXB moves up, the GBP/USD will rise, too)
FXC = USD/CAD (This one is the exact opposite of the previous two. If the FXC rises, the USD/CAD pair will decline. The reason why is that if the FXC is getting stronger, the CAD is getting stronger and thus the denominator is increasing bringing the USD/CAD down in value.)
FXF = USD/CHF Same scenario as the FXC. If FXF rises the USD/CHF pair wil fall.
If one wishes to track the USD alone, use a USD index. If you want to USD to rise, buy the UUP which stands for USD UP. If you want to dollar to decline, BUY the UDN which stands for USD DowN.
I am going to spit out more ETFs in the next few blogs.
Now let's discuss the most common currency pairs that are traded. They include:
1. EUR/USD
2. USD/JPY
3. GBP/USD
4. USD/CHF
5. AUD/USD
6. USD/CAD
7. NZD/USD
8. AUD/JPY
9. EUR/JPY
10. GBP/JPY
There is also "cross market analysis" meaning that certain currencies are in close correlation with certain markets.
EUR/USD use TNX. If EUR/USD rises, TNX falls (an inverse relationship)
USD/CAD use CRX. If USD/CAD rises, CRX falls (inverse relationship)
USD/CHF use CSR. If USD/CHF rises, CSR falls (inverse relationship)
USD/JPY use NIK. If USD/JPY rises, NIK falls (inverse relationship)
GBP/USD use OIX. If GBP/USD rises, so will GBP/USD (notice this is the only positive relationship between the currency and the market.)
If you are studying ETFs and using them in retirement porfolios, realize that one cannot short a stock in retirement accounts. So if you can't short, BUY a reverse ETF. These reverse ETFs go up in price when the market goes down. Here are the symbols.
QID - the inverse fund of the Nasdaq.
SH, SDS - inverse of the SP-500.
DOG, DXD - inverse of the DJ-30.
TWM - 2x inverse of the Russell 2000.
MYY, MVV - inverse of the MidCap 400.
INP - India
FXI - China
EWZ - Brazil
EWM - Malaysia
EWW - Mexico
EWT - Taiwan
ILF - Latin American
FXP - Ultra short China
EEV - Ultra short Emerging Markets
EWV - Ultrashort Japan
GLD - Gold
OIL - Oil
SLV - Silver
Anyway, the other thing I was doing this weekend was playing around and looking at ETFs since ETFs trend better than stocks eventhough they don't make the large quick moves like a stock can. I noticed that in the ETF category, there were ETFs that followed the currency pair much like one would be able to trade the currency. Confusing? I'll bet. There is a lot of terminology in this blog that may overwhelm you. If a trader cannot understand this terminology, I don't believe you would make a good forex trader.
So here are the correlative ETFs to a currency pair:
FXA = AUD/USD. (If FXA moves up, the AUD/USD will rise, too). In fact, in late October, 2006 my indicator crossed over to signal a buy in FXA a couple of days before the signal presented itself in the AUD/USD pair.
FXB = GBP/USD (If FXB moves up, the GBP/USD will rise, too)
FXC = USD/CAD (This one is the exact opposite of the previous two. If the FXC rises, the USD/CAD pair will decline. The reason why is that if the FXC is getting stronger, the CAD is getting stronger and thus the denominator is increasing bringing the USD/CAD down in value.)
FXF = USD/CHF Same scenario as the FXC. If FXF rises the USD/CHF pair wil fall.
If one wishes to track the USD alone, use a USD index. If you want to USD to rise, buy the UUP which stands for USD UP. If you want to dollar to decline, BUY the UDN which stands for USD DowN.
I am going to spit out more ETFs in the next few blogs.
Now let's discuss the most common currency pairs that are traded. They include:
1. EUR/USD
2. USD/JPY
3. GBP/USD
4. USD/CHF
5. AUD/USD
6. USD/CAD
7. NZD/USD
8. AUD/JPY
9. EUR/JPY
10. GBP/JPY
There is also "cross market analysis" meaning that certain currencies are in close correlation with certain markets.
EUR/USD use TNX. If EUR/USD rises, TNX falls (an inverse relationship)
USD/CAD use CRX. If USD/CAD rises, CRX falls (inverse relationship)
USD/CHF use CSR. If USD/CHF rises, CSR falls (inverse relationship)
USD/JPY use NIK. If USD/JPY rises, NIK falls (inverse relationship)
GBP/USD use OIX. If GBP/USD rises, so will GBP/USD (notice this is the only positive relationship between the currency and the market.)
If you are studying ETFs and using them in retirement porfolios, realize that one cannot short a stock in retirement accounts. So if you can't short, BUY a reverse ETF. These reverse ETFs go up in price when the market goes down. Here are the symbols.
QID - the inverse fund of the Nasdaq.
SH, SDS - inverse of the SP-500.
DOG, DXD - inverse of the DJ-30.
TWM - 2x inverse of the Russell 2000.
MYY, MVV - inverse of the MidCap 400.
INP - India
FXI - China
EWZ - Brazil
EWM - Malaysia
EWW - Mexico
EWT - Taiwan
ILF - Latin American
FXP - Ultra short China
EEV - Ultra short Emerging Markets
EWV - Ultrashort Japan
GLD - Gold
OIL - Oil
SLV - Silver
XHB - Homebuilder ETF
DISCLAIMER; this blog is for information only for investors and traders. This is not a recommendation to buy or sell securities, nor an offer to sell securities. The principals are neither stock brokers nor investment advisors and are not acting in any way to influence the purchase of any security.
The information provided is obtained from sources deemed reliable, but is not guaranteed as to its accuracy or completeness. It is possible that the principals my own, buy or sell securities presented. The principals are not liable for any losses or damages, monetary or otherwise, that result from the content of this blog.
Good luck trading.
JD
DISCLAIMER; this blog is for information only for investors and traders. This is not a recommendation to buy or sell securities, nor an offer to sell securities. The principals are neither stock brokers nor investment advisors and are not acting in any way to influence the purchase of any security.
The information provided is obtained from sources deemed reliable, but is not guaranteed as to its accuracy or completeness. It is possible that the principals my own, buy or sell securities presented. The principals are not liable for any losses or damages, monetary or otherwise, that result from the content of this blog.
Good luck trading.
JD
Friday, April 06, 2007
GREAT ARTICLE I READ ON TRENDING STOCKS
Let me give credit where credit is due since I don't want to be accused of plagiarizing. This article is from Options Trader magazine which you can get for free via email. Just Google Options Trader magazine and ask to be sent the e-mag. I have shortened the article and added my own layman's terms.
USING RSI IN TRENDS
Although it sometimes seems as if trends consist of smooth, orderly up or down moves, prices usually zigzag up and down even during strong trends. If the longer-term trend is up, price will rise from a shorter-term oversold state to an overbought state and back again, repeating this cycle until the market tops, then moves into a downtrend.
To spot opportunities to buy in an uptrend or short in a downtrend, we must first select a method to define the trend. The moving average is probably the most popular trend-defining tool, but it is not the only one. Knowing that, there are indicators that are used when stocks are not trending. These are called "oscillators." Oscillators are usually thought of as tools for identifying overbought/oversold conditions or divergences, not as trend indicators.
This difference allows traders to create simple definitions for trend direction, such as the one we will use here: If the moving average is rising, the trend is up; if the moving average is falling, the trend is down. Using the direction of the moving average to define the trend, we can then move on to the next step of qualifying the nature of intratrend price swings. We then use the oscillator of your choice whether it be the CCI (commodity channel index), Stochastic or the RSI. (In the article that talk about using the RSI, but the Stochastic is my personal favorite)
Let's use an example: ICE
Since October ICE had been above its 30 day EMA until it was broken in late February.
A proper buy point occurred when the RSI turned back above 50 after falling below it. This happened in early October, early November, early December, late December. After last buying in December, one would have held onto the stock until it broke under the 30 day moving average in late February.
My opinion right now is that the 30 day moving average may act as resistance as ICE "corrects".
A simple guideline can be derived from this information: If the 30-day moving average is rising and the RSI drops below 50, buy on the next close above 50; place your stop below your entry point. This is a good example of how an RSI can be used to identify swing trade opportunities in the upward zigzags of a rising trend.
Good luck trading.
JD
USING RSI IN TRENDS
Although it sometimes seems as if trends consist of smooth, orderly up or down moves, prices usually zigzag up and down even during strong trends. If the longer-term trend is up, price will rise from a shorter-term oversold state to an overbought state and back again, repeating this cycle until the market tops, then moves into a downtrend.
To spot opportunities to buy in an uptrend or short in a downtrend, we must first select a method to define the trend. The moving average is probably the most popular trend-defining tool, but it is not the only one. Knowing that, there are indicators that are used when stocks are not trending. These are called "oscillators." Oscillators are usually thought of as tools for identifying overbought/oversold conditions or divergences, not as trend indicators.
This difference allows traders to create simple definitions for trend direction, such as the one we will use here: If the moving average is rising, the trend is up; if the moving average is falling, the trend is down. Using the direction of the moving average to define the trend, we can then move on to the next step of qualifying the nature of intratrend price swings. We then use the oscillator of your choice whether it be the CCI (commodity channel index), Stochastic or the RSI. (In the article that talk about using the RSI, but the Stochastic is my personal favorite)
Let's use an example: ICE
Since October ICE had been above its 30 day EMA until it was broken in late February.
A proper buy point occurred when the RSI turned back above 50 after falling below it. This happened in early October, early November, early December, late December. After last buying in December, one would have held onto the stock until it broke under the 30 day moving average in late February.
My opinion right now is that the 30 day moving average may act as resistance as ICE "corrects".
A simple guideline can be derived from this information: If the 30-day moving average is rising and the RSI drops below 50, buy on the next close above 50; place your stop below your entry point. This is a good example of how an RSI can be used to identify swing trade opportunities in the upward zigzags of a rising trend.
Good luck trading.
JD
Wednesday, March 14, 2007
FUNNY THING....
Every single stock that popped up on my sell list yesterday went up in price today. Some with good trading volume, but none of them worth saying "close the position." Question is - is there bargain hunting going on in the market or are we truly in a "correction." I am trading based upon indicators only so my trades still say sell. If you want the market to go down, but still BUY a stock try these two: SDS and QID. What these ETFs do is go UP if the market goes DOWN. Sounds really weird doesn't it.
Here is what my stock search brought up today:
BUY: PRFT
SELL: RVSN, TALX
It would be really hard to sell TALX seeing how there was a huge trading volume to the upside 3 weeks ago. Seeing how RVSN also broke out of a cup-and-handle, it too would be hard to put this one in a sell category. (See how trying to logically explain why I wouldn't sell a stock can leave a trader with a "deer-in-the-headlights syndrome" if I refused to follow my signals. We will just have to see how these are going to turn out.
I was looking at LIFC and was seeing that this one would be a good CONDOR play. I may enter into this one to expire in April.
I'm still in the attitude of a down market based upon my indicators, but I have been proven wrong before.
BTW, I played a bear call spread on CHAP today. So far I'm down on that trade.
Good luck trading.
JD
Here is what my stock search brought up today:
BUY: PRFT
SELL: RVSN, TALX
It would be really hard to sell TALX seeing how there was a huge trading volume to the upside 3 weeks ago. Seeing how RVSN also broke out of a cup-and-handle, it too would be hard to put this one in a sell category. (See how trying to logically explain why I wouldn't sell a stock can leave a trader with a "deer-in-the-headlights syndrome" if I refused to follow my signals. We will just have to see how these are going to turn out.
I was looking at LIFC and was seeing that this one would be a good CONDOR play. I may enter into this one to expire in April.
I'm still in the attitude of a down market based upon my indicators, but I have been proven wrong before.
BTW, I played a bear call spread on CHAP today. So far I'm down on that trade.
Good luck trading.
JD
Tuesday, March 13, 2007
LET THE MELTDOWN CONTINUE
I said earlier that I did not like the looks of the market and today it let us know that it is not a good time to be in the market. My stock searches are pulling up sells all across the board. So, here are your choices:
1. Get solely into cash
2. Sell covered calls realizing that you will take some loses in the stock only to make up for it in selling the covered call and getting a premium off that.
3. Buy puts or place put spreads if you are into options.
My search showed sell on these stocks:
CRS, BOT, CHAP, CME, EQIX, VTIV and PCU.
Plain and simple. I am going to utilize bear call spreads for credit and then buy put spreads for a debit. (in simple stock trader terms - I am expecting the market to "correct" itself.
1. Get solely into cash
2. Sell covered calls realizing that you will take some loses in the stock only to make up for it in selling the covered call and getting a premium off that.
3. Buy puts or place put spreads if you are into options.
My search showed sell on these stocks:
CRS, BOT, CHAP, CME, EQIX, VTIV and PCU.
Plain and simple. I am going to utilize bear call spreads for credit and then buy put spreads for a debit. (in simple stock trader terms - I am expecting the market to "correct" itself.
Saturday, March 10, 2007
XXIA IS REPORTING EARNINGS ON MON
XXIA is reporting after the bell and the stock looks good to buy.
Check out WW. It's heading back up to a buy point.
WOOF also bouncing off support.
Check out WW. It's heading back up to a buy point.
WOOF also bouncing off support.
Thursday, March 08, 2007
NOT LIKING THE LOOKS OF THE MARKET
Got to admit, now that the panic has left the market, I am not comfortable with how it is heading. By that I mean that the market has come back up for the past three days, but trading volume has declined. What a trader wants to see is a rise in price with a rise in trading volume (or a decline in price while trading volume is declining). Another problem I have is that the MACD histogram was getting smaller and smaller for the past 3 months (see attached chart of SPY) denoting a consolidation phase. Since the markets broke to the downside, I personally believe that we are in for a correction. The indices I am looking at is SPY, DJIA and the QQQQ. Type those into www.stockcharts.com and you will see what I mean.
The best thing to do at the current moment is to get into cash. That means - sell your stock. If you are into options trading, the best thing to do is start playing bearish trades such as a calendar put spread since volatility is so high right now in the near month expiration.
Personally, I am bearish now and am going sell my stock in my retirement accounts and play the short side with my personal money. Of course, with any market there are caveats. CME has bounced back above its 50 day moving average on higher than average trading volume. I personally don't have the $$ to invest right now. AGR might sneak back down to its 50 day moving average and move higher. LHCG has also held up well and has sat around some support. Again, if RVSN breaks $23.30, go in.
MCO appears to be spitting out a bear flag. I'm gonna short it if it breaks down below $64.00.
This next bit of text is for me personally or for any advanced trader that can follow the jargon:
I am trying a new technique with options that center around earnings announcements that was described in aMarch,2007 options magazine that I get. Basically, I take a short-term calendar spread around the day of earnings announcement. Since it is hard to determine direction, I am going to play a double calendar spread around the day of earnings. Trade set up is like this:
1st leg: STO near month OTM call, BTO one month out same-strike call.
2nd leg: STO near month OTM put, BTO one month out same strike put.
Other rules:
1. EPS release within 3 days since volatility is the highest in the near month option.
2. Volatility skew must be greater than 20% (near month versus far month).
3. Don't pay more that $1.50 for both legs together.
4. Use only a one month spread.
5. Even more desirable if far month delta is higher than near month.
Let's see how this works. Today, I bought CMTL calendar call spreads only since my directional bias after EPS releases was up. Bought 50 calendar call spreads at strike of $40 for a debit of $0.25. After placing the trade, I realized I should have also put on the second leg. Oh, well. Let's just see what happens. But first, why I bought:
1. overall CMTL has done well and risen after each EPS release
2. volatility skew as 67%
3. Delta for Mar 40 call was 0.07 and for Apr 40 it was 0.14.
Good luck trading.
JD
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