E currency Trading

Here is a beautiful set of EUR JPY trades that I took that lasted about 2 weeks. This trade begun on around March 7th. This was my view back then:

Click on the image to enlarge.

I commented to myself: ‘Daily time frame is bullish. It appears to be in wave 4 at the moment. I want to trade wave 5.’

This assumption was supported by a quick divergence analysis on the H3 time frame. A divergence will just about always happen on the peaks of waves 3 and 5 but not 1 and 3.

This is how it ended on March 20th:

Click on the image to enlarge.

This is the action that took place during those 2 weeks as seen on the H2 time frame:

Click on the image to enlarge.

I had 2 positions open (marked by ‘entry 1’ and ‘entry 2’). I took profits out along the way to cover my initial risk and exited the rest (55%) of my position at the dotted purple line marked ‘exit’.

If you are skeptical if I actually did all that, than you can verify it on my Forex Trading results page.

Want to see my Forex trading method?

If you like this page than don’t forget to let your friends know about it too,
Ruben.

Why Choose the Wave Principle?

Robert Prechter reveals why he embraced the Wave Principle.
January 4, 2012
By Elliott Wave International

Robert Prechter is the widely recognized authority on the Elliott Wave Principle.

Read how he learned about the Wave Principle and why he embraced it in the edited excerpt from his book Prechter’s Perspective below (Q&A format):

——————–

Question: What was it about Elliott that captured your attention?

Robert Prechter: I had seen some mentions of the Wave Principle in a few market newsletters and a couple of obscure books, and I decided that either this was someone’s elaborate fantasy or it was an amazing discovery. I wanted to reject it from what evidence I could find or include it as part of my growing arsenal of technical analytical methods.

Q: How long did it take you to develop your “eye” for discerning these waves?

RP: About 30 minutes — when I plotted my first hourly chart covering a few months. Apparently, there is such a thing as an eye for patterns. One person told me he had trouble finding the fives and threes. The key is to keep a chart. Most people have no trouble seeing the Principle at work.Q: You accepted it just like that?

RP: When you begin to see the five-wave impulses and the three-wave corrections unfold over and over, it does not take long for you to say either “I see, but I refuse to believe it,” or “This is obviously what’s happening; let’s see how far it continues.” It took about a year and a half of applying it until I knew that Elliott was absolutely right. I’m pretty hard-headed, and it takes substantial reason for me to accept a new idea. By that time, I decided I had seen what amounted to proof. I then said to myself, “This is unbelievable. How come no one is commenting on this? The market is pulling back to points he said it should pull back to in the patterns. It is rising up to levels he said it should, in ways he said it should.”

Q: What was it that convinced you?

RP: The Wave Principle proves itself when you merely keep a chart. Once I did that, I recognized what was going on rather quickly. The wave patterns are repetitive and at times, over protracted periods, they are easily discernible.

——————–

The basic Elliott wave pattern consists of impulsive waves (denoted by numbers) and corrective waves (denoted by letters). An impulsive wave is composed of five subwaves and moves in the same direction as the trend of the next larger size. A corrective wave consists of three subwaves and moves against the trend of the next larger size.

As the chart below shows, these basic patterns link to form five- and three-wave structures of increasingly larger size.

The Elliott Wave Principle helps to identify turning points in the trends of financial markets.

It does not provide certainty, yet the Wave Principle does provide a way to assess the probabilities of possible future paths of a given financial market.

Learn more in the free Elliott Wave Basic Tutorial The Elliott Wave Basic Tutorial is a 10-lesson comprehensive online course with the same content you’d receive in a formal training class — but you can learn at your own pace and review the material as many times as you like! Get 10 FREE Lessons on The Elliott Wave Principle that Will Change the Way You Invest Forever

Here is a very  simple yet effective
explanation of Elliott wave theory

I realize that some people find Elliott Wave Theory a bit overwhelming. Because my trading strategy refers to Elliott wave quite a bit, I wanted to put together a very short and straight forward explanation of the Elliott Wave concept. This post is the result of these efforts.

According to the theory, price moves in a certain particular pattern:

 This is Elliott wave’s basic pattern:

Each wave is further divided into that very same pattern, like so:

Each sub-wave is further divided into the same pattern and so forth (known as fractals):

Examples:

The following charts are real charts of the Dow Jones Industrial Average. Please notice that each chart represents a different ‘time frame’, cycle.

Chart number 1 is a cycle that lasted for about 3 minutes;
chart number 2 lasted for about 10 days;
chart number 3 lasted for about 24 days;
chart number 4 lasted for about 9 months;
chart number 5 lasted for about 10 years;
chart number 6 lasted for about 70 years.

Our basic pattern can be seen on all of them.

Want to see an interesting 60 minutes documentary that will explain this concept a bit more visually? -Check out History’s hidden engine, enjoy.

This is just a simple explanation of the concept of Elliott Wave Theory. Elliott wave has some uncomplicated rules and guidelines but that does not have to be confusing. Do you want to read more interesting Elliott Wave Theory articles?

My A to Z Forex coaching will teach anyone how to consistently profit from the Forex market. Check out my coaching course’s curriculum.

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3 Critical Forex Trading mistakes

If you truly desire to become a profitable Forex trader than you need to avoid the following three vital mistakes.  Making critical mistakes can bring your dreams crashing to a halt, while the right decisions will allow you to enjoy great success in the Forex market.

Strike 1.  Not having a solid trading plan; nothing could be more destructive to a trader than trading without a plan!

If you trade without a plan you are going to fail. You absolutely must have a plan. Your trading plan should not just be a few lines written on the sand; you need an inclusive and well thought out plan, one that would incorporate every aspect of trading in it!

You need to answer all questions regarding your trading business before you actually start trading. You must clarify why you trade, what results you want and how you intend to achieve them.  This will help you to work towards your goals, rather than simply drift around the market hoping that you actually make some money.

Strike 2.  Bad cash management will get you into trouble in a hurry.  If you do not know how to handle your money outside of the Forex market, you will find that it is even harder to do so effectively within the market.

Take the high risks associated with trading and you have an explosive situation on your hands if you do not know what you are doing.  If you really want to be profitable, you need to learn how to manage your trading capital. Small amounts of time spent mastering the basic money management concepts and lots of discipline will be incredibly useful as you attempt to get a firm grasp of your trading methodology.

Strike 3.  Not having patience.  This is a huge problem for numerous traders; if you do not have patience, you’d better find where to get it.

You simply cannot react to movements on the market without a high degree of patience.  If you do react in a rash moment, it could be rather costly, not to mention the emotional pain that you might suffer as well.  One or several mistakes can quickly destroy your trading account and possibly end your career as a trader.  You must take the time and effort to pull yourself together. Having a well thought out plan and a trading methodology can greatly reduce impulsive urges and decrease impatience!

Avoiding these critical mistakes is not always easy; it requires some effort but it is something that is absolutely necessary. You must treat your trading as a business and not a hobby. Avoiding these three critical mistakes is a good way to ensure that you are on the right path towards the success that you want and deserve.  Proper care in the Forex market will return great rewards that you will appreciate for a very long time.

If you reading this article or any other post on my blog, please let the world know, or so that everyone can enjoy it as well!

Have a comment?
I really want to know your opinion.

Please feel free to contact me with anything that is on your mind.
Thanks,
Ruben.

Four tips to overcome fear while trading Forex.

If you want to profit as a trader, it is extremely important that you consider several factors. One of the biggest mistakes that traders make is trying to engage in transactions while attempting to overlook their fear.  If you are constantly scared of making a mistake than you are going to find it is awfully difficult to make sound decisions and pull yourself together properly.

In order to reduce your fears while trading here are four helpful suggestions that you can follow.

1. Spend sufficient time practicing on a demo account before turning to a real, live account.  This is something that is often rushed along in the quest to get started trading but it is vitally important. Take your time!

Practice accounts are great because you can identify how changes in the market might impact your profits or losses.  Knowing that you are not losing real money means that you are able to spend the time necessary to make a few risky decisions, discover the implications and also determine your most comfortable investing style.

Working on a demo account does not in any way mean that you can make foolish trades simply because you cannot lose real money; on the contrary, treat your demo account as if it was a live account. Keep in mind that if you can turn a profit over a six months period (for example) on your demo account than when you start trading on a live account you merely have to duplicate your actions!

2. Know what you are doing. This simply means that you are fully aware of what you are getting into.  Do not buy or sell a pair of currencies unless you know exactly why you’re doing it!

I am amazed by the number of traders (almost exclusively losing traders) that trade without any particular plan. They are not sure about the reasons for entering a trade; once they are in the trade they don’t know when to get out or how to manage their trade. They lack a plan. This lack of knowledge is dreadfully scary, how would it not be??

The details of one’s plan might seem really minor, but they have huge affect on a trader’s bottom line as well as one’s state of mind! If you want to truly reduce the stress and anxiety that you have than you need to take your time before you get started.

3. Don’t trade money that you cannot afford to lose. If you trade money that will substantially hurt you if you lose it you will make bad decisions that will be the result of fear. Don’t do it!

4. This is an obvious one yet extraordinarily overlooked. Learn how to trade from someone who is qualified and actually trades as well also known as a Forex coach or a Forex mentor.

It is necessary to have a solid foundation in the Forex market before you get started trading.  If you are already familiar with the manner in which the Forex market operates, you will find that it is much easier to actually make a profit and ease your fears.  Trading without the proper training can make you extremely anxious and nervous as you try to make sense of what is best for you to do; especially when there is money on the line.

Taking the time to ease your fears is not only important but vital as well. “Every battle is won or lost before it’s ever fought” was written many hundreds of years ago by Sun Tzu yet it still applies to trading (or any other task).

Ruben.

Fellow traders, I see a tremendous opportunity coming up. Me and my latest student have been observing this possible entry for the last month and I believe that an entry will happen in the next 24 hours.

Here is the complete analysis from the weekly time frame to the 20 minutes chart.

Make the best out of it!

AUD USD

Weekly time frame

O.K., whether you like Elliott Wave or not, let’s state the facts:

1. The last 3 waves (A, B and C) look corrective;
2. The trendline for wave C is broken;
3. We have a divergence at the end of C;
4. Wave C is just short of 100% of wave A.

These facts are undisputable.

Daily time frame – closer look at wave C

The above is a compressed screen shot of the Daily time frame.

Daily time frame – Wave C of C only:

Now it becomes clearer. By looking at the longer time frames (look at the weekly time frame or Daily compressed), we know that we are expecting a big move down sometimes in the near future. Possibly at the end of the current wave C, unless there is more complex correction coming.

By looking at the above screenshot we see that it is quite likely that wave C is over, therefore we should expect at the very least a sizable correction to wave C or some big move down.

It would make sense to enter short at the end of the correction to the last wave down.

Let’s focus on the move down:

H4 time frame

So, what do we see?

1. An impulsive move down breaking the trendline (the exact Elliott Wave count is not clear);

2. An ABC correction that retraces to 61.8% of the move down;

3. Wave C equals 100% of wave A;

4. Retracement goes up to 78.6% fibo fan;

5. Trendline that was support is mow resistance.

6. This correction might be over although there is a possibility that this ABC correction is only an A wave of a yet more correction to come.

7. There are two likely possibilities:

- The correction is over and the last impulsive move down (follows the C) is the beginning of wave 3. Look at the next screenshot

- Only wave A of the correction is over and we are currently in wave B.

The point is that no matter which option is correct, we should expect a move down, the continuation of wave 3 or wave C of B. That move down should take place right after the current correction (labeled on the last screenshot wave B of B).

So let’s focus on the last move down and its correction on the Hourly time frame:

And lastly, let’s look at the 20 minutes time frame and observe a beautiful divergence in the making. Obviously the divergence is not there yet because price did not make a higher high yet but when it will than the MACD is set up for a divergence.

Great trading!

What is trading Forex successfully all about?

Is it about knowing what the currency market will do in the future?

Many new and unsuccessful traders believe (among other false beliefs) that trading Forex is a game of forecasting what will happen next, a game of knowing the future. It is not. Although this might be a surprise to some, the future cannot be predicted, at least not to the great majority of us.

So, if it is not predicting the future what is trading Forex successfully all about and more importantly, can one profit even if he or she cannot foresee what the market will do?

Trading Forex successfully and profitably is solely a matter of identifying a favorable market condition, an ‘edge’ and repeating it over and over whenever it presents itself. In order to come out ahead a trader needs to develop a strategy that when repeated again and again will win more than it loses, in other words, to put the odds on your side.

This does not in any way mean that it will win every time, far from it. It only means that it will have more wins than losses. In fact, any level headed Forex trader expects to lose from time to time; it will be boring any other way…

Sound money management principles should be practiced in order to prevent small and inevitable losses from being big and catastrophic events.

Trading Forex profitably is about determining in advance what market conditions represent a favorable opportunity; mapping out what your exact actions will be when does opportunities occur and following your predetermined plan of action patiently and religiously.

An aspiring Forex trader should desire to become an observer. In fact the word “speculate” comes from the Latin word “specular” which means “to observe”. This is no coincidence; traders are not in any way gamblers. Unlike gambling who play a game where the odds are stacked against them, profitable Forex traders have learned to patiently observe the market and seize favorable conditions, or, play a game where the odds are stacked in their favor.

Unlike gamblers who play their game and remain hopeful and even anxious whether today will be their lucky day, we speculators know that regardless of whether we will win today or not, as long as we follow our predetermined plan, we will surely come out ahead over time. Under those circumstances we are able to remain calm without the need to be hopeful or anxious!

To put things plainly, I will write this: strive to become an observer not a gambler!

Do your due diligence, determine your advantageous ‘edge’, write out a complete Forex trading plan, observe the market patiently and be disciplined, follow your plan to the letter. Being a successful Forex trader is not up to chance!

If you reading this article or any other post on my blog, please let the world know, or so that everyone can enjoy it as well!

Have a comment?

I really want to know your opinion.

-Want to get information about my A to Z personal Forex coaching program?

-Want to see the full course’s Curriculum?

Please feel free to contact me with anything that is on your mind.

Thanks,
Ruben.

A Four-Chart Lesson in Spotting Trade Setups

June 29, 2011

By Elliott Wave International

You can find low-risk, high-probability trading opportunities by trading with the trend. The trick is to find the end of market corrections, so you can position yourself for the next move in the direction of the trend.

This excerpt from Jeffrey Kennedy’s free 47-page eBook How to Spot Trading Opportunities explains where to find bullish and bearish trade setups in your charts and how to zero-in on these opportunities. If this lesson interests you, the full 47-page eBook is free through July 6.

On the left-hand side of the illustration below, there are two bullish trade setups. As traders, we want to wait for the wave (2) correction to be complete so we can catch the move up in wave (3) – this is the trade. What we are trying to do in this bullish trade setup is anticipate the potential for profits on the buy-side as prices move up in wave (3). Another bullish trade setup is at the end of wave (4).

As traders, we are looking to buy the pullback and position ourselves within the direction of the larger up-trend. Remember, three-wave moves are corrections, which means that they are countertrend structures. On the other hand, five-wave moves define the larger trend. As traders, we want to determine what the trend is and trade in the direction of the trend. Our buying opportunity to rejoin the trend is whenever the trend pauses and forms a correction.

Now, let’s look at the right-hand side of the illustration where we see two bearish setups. When a five-wave move is complete, it is retraced in three waves as a correction. The end of the five-wave move presents the first trading opportunity that we can take advantage of the short side (or the sell side) as the wave (A) down begins.

Notice the second bearish trade setup gives us another shorting opportunity as wave (B) tops.

So, within the classic wave pattern of five waves up and three waves down, we have four high-probability trading opportunities in which we are either positioning ourselves in the direction of the trend or identifying termination points of a trend. I want to share with you some tricks I have picked up over the years about how to analyze corrective waves and their termination points. The single most important thing I’ve learned from analyzing corrections is that corrective or countertrend price action is usually contained by parallel lines.

As shown above, draw the parallel lines by beginning at the origin of wave A and going to the extreme of wave B. You draw a parallel of that line off the extreme of wave A. So basically you have a small, slightly angled downward price channel. This will show you the containment region for wave C. It also shows you an area toward the bottom of the lower trend line where you can expect a reversal in price.

Here is another example. Again, you draw the parallel lines off the origin of wave A, the extreme of wave A and the extreme of wave B.

Toward the upper end of the upper trend line, you will usually see a reversal in price.

This example shows how countertrend price action is contained by parallel lines in the British pound, 60-minute, all sessions. Why is it important to know parallel lines contain the corrective or countertrend price action? Number one, it will increase your confidence that you are indeed labeling a countertrend move properly. Number two, it identifies areas where you will likely see prices reverse. For example, we see this reversal up near the top.

This brief trading lesson is just a small example of the opportunities you can find once you learn to identify key market patterns. Learn more in your free 47-page eBook, How to Spot Trading Opportunities. This valuable eBook is regularly $79, but you can get it free through July 6. Download your free copy of How to Spot Trading Opportunities now.

The Personality of Stock Market Waves

Elliott waves don’t merely reflect prices plotted over time. Each wave has its own “personality.” Listen to this video by EWI’s Wayne Gorman to learn more about the psychology behind the waves and how it affects your investment decisions.

This video was taken from the free Club EWI video series: Learn the Why, What and How of Elliott Wave Analysis. This 3-video series is a great way to get started with the Wave Principle. You can get these videos free with a Club EWI Membership.

Watch your free videos now >>

Already a Club EWI member? Access the video series Learn the Why, What and How of Elliott Wave Analysis here.

A Complete Trading Plan is simply not optional.

In order to trade Forex profitably and successfully, a trader must possess a complete Forex trading plan that will include everything that must be addressed while trading is in progress; all the way from identifying favorable market conditions prior to the entry right through the exit and naturally, everything in between.

Unfortunately, many trading books and courses hand pick a few ‘examples’ that unsurprisingly ‘prove’ that the system being taught is profitable and an excellent way to trade the markets, that is too bad.

I was always turned off when educators say things like: “You could have bought at around this price…”, or “right there was a good place to exit…” and other fuzzy statements. Trading Forex is not a matter of looking at the charts after the move is over and determining what was good in hindsight.

Forex traders either trade with a Forex trading plan on not!

What do I mean by a complete trading plan?

• A complete trading plan should specifically detail the following:
• How to identify the most advantageous trade setups;
• A mechanical entry system once a favorable setup is identified;
• Precisely where to put the stop loss;
• How to manage the trade in a logical manner;
• Stop loss adjustments while the trade is in progress;
• Money management rules;
• A strategy approach such as buying multiple units;
• A mechanical exit strategy.

In my upcoming inclusive weekend Forex trading webinar this is exactly what I will teach.

A trading plan must be precise. It must spell out specific actions that are based on logic that the trader must take. It should spell out exactly when these actions should be taken. It should be crystal clear and address all of the possible issues that you might incur while actual trading is in progress.

If you reading this article or any other post on my blog, please let the world know, or so that everyone can enjoy it as well!

Have a comment?

I really want to know your opinion.

-Want to get information about my A to Z personal Forex coaching program?

-Want to see the full course’s Curriculum?

Please feel free to contact me with anything that is on your mind.

Thanks,
Ruben.