Tuesday, February 23, 2010

Learning to swing trade

I have stopped posting in groups and even in my blog ..the last post (besides the one pointing to the new Amy MacDonald album) was that 1.48 Euro short call, which is still valid and which points in the direction I’m taking in my trading. Last fall I got involved in some commercial community affairs, which is a lot of fun, my law office picked up at the same time, so I need to find a new way of trading, which I trust, which no longer takes as much time as in the past. I still follow the charts as much as I can, but now I go for 2 or 3 days without a trade, if other matters are pressing. So I need to do swing trading to cover for that and I have some good general sense how currencies move.

So for the time being, until I refine it, I follow these ideas with my money by doing cash currency trading…currently I went from long USD to 40% USD and 40% AUD, the rest being in the currencies I trade futures in (GBP, HKD, Euro).

The Euro may have more room to break, but the USD is not as safe either…with Gold being on the way to 13xx I see the AUD profiting from that (together with the CAD btw, as oil is picking up as well) Being right is not as profitable now, but I can sleep sound and have no heart attack, when I have no way to check the markets for a day. Once I have it nailed down again, I will swing trade futures or currencies on leverage again…for now it’s learning a new way to trade, as I found interacting with people too much fun to shut it all out in my solitude as day trader.

A trader called Ira (http://tradingone.wordpress.com/) got me on the path of my current trading, as his ideas got me thinking some time ago. On his charts you see price, candles and target lines and there is that comment of seeing price showing buying or selling pressure. These charts spoke to me, they were clear and simple. Any chart, which speaks to you, is worth investigating.

Who has learned more, the student, who is told that 1 + 1 equals 2 and who accepts it or the one, who takes 1, adds 1 and suddenly really understands that 1 + 1 equals 2. If a chart speaks to you, it usually uses only concepts you already understand, so to understand a chart from a fellow trader the first step should be to try to get an idea what his charts are showing you….

A trading range, trigger levels and targets to the upside and to the downside.. actually a relatively simple concept

Let’s look at the Euro

Here is a long term inside view where we are with the Euro


Now that is interesting, but not what Ira is showing us

Let’s see if that move in 2009 to 1.37 can tell us something meaning full Ira style…


Now that looks interesting…We have a retracement from 1.37 right into a nice reversal zone shown on the chart, some wiggling to give us time to go long into the first extension target marked with an x on the chart..but not only that…that first Target line is still valid a year later acting as resistance on a retracement from a strong down-move

All fabricated you say, let’s apply the same concept on the move from 1.29 to 1.43, which was the second up-leg


opps...now we see selling pressure applied right below our first Target line marked with a T (the retracement lines worked as well as you can see) and we a right in the middle of that buffer zone again on our down-move, which means, we might stay there for a while before the next move unfolds

Let’s see what to expect on the downside


but I think it’s time to get a more detailed picture, so let’s leave the big picture and let’s concentrate on the downside move


We made the first target of that move (The retracement from 1.42 was a classic btw…showing how much selling pressure there was on the Euro at the time)

The extension target is around 1.33 and the secondary target is around 1.27

Once we see the next retracement we will have a better picture to asses where that down-move might take us, but making that first target got me thinking and looking for an alternate currency, which I found in the AUD

(btw if you ask yourself, why short 1.48 in December…that was a classic range break to the downside http://globetrader.blogspot.com/2009/12/eurusd.html )

While the Euro broke down, the AUD returned into its old range Globetrader_06

Applying the same concepts I did looking at the Euro, I get this picture


Trigger to the long side is a break of the previous highs, trigger to the downside is a re-break of the 0.86 level (actually now 0.85, as we broke that 0.86 level already creating a downside zone instead of a line. Nonetheless I went long AUD around 0.8750 after that one day retracement as support looked to be holding. If we break down again…so what…it’s cash, losses will be limited…gains as well, but I am just moving into that swing trading concept and even 1 AUD future would be too much right now and being long from support is a lot more rewarding, if we really make that upside target.

So I will for a while trade cash, then move into ¼ cars to end at one and multiple cars later..the markets will be there and my account as well, when I’m ready to swing trade and have fun working other things as well.

Wednesday, February 17, 2010

Long time waiting for a new song