A place to discuss the forex market

GBP-JPY 5 min. (By Anon)

2009-05-18T11:16:00.001+01:00

As nobody is sending any new posts, I thought of sharing a trading strategy I am trying out on GBP/JPY on 5 min chart setup. Basically it is a swing trading setup, with buy 5 pips above the swing high or vice versa. All buy trades are shown on the chart with a stop loss and reverse (sell) setup. Since the charting software is showing the sell price, I have to add 10 pips for spread and 5 pips above this, which explains the difference! I am trying this out from start of European session until about early US session. I am of the opinion that this pair may hit close to previous's day's high and then pull back.

Today's trades so far are 6 lots buy @ 145.02 average and a stop loss @ 145.50. If the stop gets hit, then it is 288 pips profit for today. I shall updatre the outcome tomorrow.

Happy trading!

anon

PS: Naftula - hope you are well, and can start blogging again!

GBP-JPY (by Anon)

2009-02-20T11:54:00.002Z

If the trendline (neckline) is broken, then 155 should be the price target of this inverted H&S pattern.

Thanks, Anon for sending me this, and i remind anyone else that you can send me whatever you want so i can post it and give some life to the blog.

Hope to see you soon:

2009-02-09T01:52:00.001Z

I am writing this post from my phone,
I am sad to inform you, that I will not be able to be here, and update the blog for the next month or 2,

I was involved in an accident and I am now in the hospital recovering,
I hope that until after I fully recover,
ben (or someone else) will update the blog,

have a nice day.

AUD/USD: 4 hour

2009-02-04T02:35:00.001Z

The RBA cut rates yesterday 1 BP and the AUD/USD rallied about 200 pips, so let's see what will happen today, we have a cross on the 4 hour chart,
so I am selling and my profit target will be 61% of the move.
have a nice day.

2009-02-02T10:27:00.003Z

As I said last week, if the market moves my targets will also move, and indeed the market moved so,

I have a average short in GBP/USD at 1.4400, my profit target is at 1.3900, and my average short in GBP/JPY at 130.00 the PT is 123.50, and the USD/CAD my average long is at 1.2180, my PT will be at 1.2580,

I hope to come up with new trades.
have a nice day

GBP/JPY:GBP/CHF: by Anon,

2009-01-29T10:51:00.004Z

hi this is Anon,

Yesterday 4hr chart setups for shorts on gbp/jpy and gbp/chf were much like a text book case.
Price was testing trendlines and stochs were in overbought territory with 50emas pointing down.

One could place order a few pips below the trend lines for the shorts. I placed sell order @ 129.25 on gbp/jpy and @ 1.6425 on gbp/chf which got filled. Now stops are moved to entry and I am letting the trades run until the stochs move to 25 readings.

Regards Anon.

USD-SGD Daily

2009-01-27T16:22:00.002Z

As i was saying before, here's the chart.
The 1,51 level has been rejected a few times lately.

EUR/USD: 4 hour

2009-01-27T01:48:00.004Z

I have also a sell on the EUR/JPY, and the same sell on GBP/USD and GBP/JPY, but on GBP we may have a bit more upside before the down move begins,

And the USD/JPY has not yet broken out.

see you tomorrow.

have a nice day.

USD/JPY:15 min

2009-01-26T12:22:00.003Z

I don’t know what side the USD/JPY will break, but if it breaks to the downside the target should be at about 86.30 and if it breaks to the upside the target should be at 91.50.
I am not saying it will break to the downside,
"I don’t know"

USD/CAD: 4 hour

2009-01-26T01:18:00.007Z

I will not write anything about the EUR---GBP----GBP/JPY which I had a sell on all of them, on the 1 hour chart late Friday, but what we will talk, is the USD/CAD.

The USD/CAD has fallen the last 2 days (the 23th and 24th of the month) about 500 pips and is now ready to go higher,

Now. with early weakness in mind, and if we will reach 1.2100, I will buy again, and my profit target will be at least 1.2650.

have a nice day.

EUR/USD: 1 hour

2009-01-21T14:40:00.001Z

As I said in the last post, money management is the most important thing now, not buy or sell.

EUR/USD:-GBP/USD 15 min

2009-01-20T17:53:00.003Z

Volatility is high, so money management is the most important thing now,

GBP/USD:4 HOUR

2009-01-20T01:39:00.001Z

What should I say!!!!!! Yes, the trend is down on the daily and the 4 hour and 1 hour, so this is the result. If the GBP is not reversing to the upside, then the target of this Head and shoulder will be at 1.3750,

As for today I am bearish on the EURO-----GBP-----USD/JPY-------EUR/CHF------GBP/JPY-------
and I will try to sell on every stochastic cross down above 80 on the 15 min chart, but be aware that in such volatile markets, it can take time after a cross, for the market to start the move,

I am going to bed now, will see you all tomorrow.
have a nice day.

USD/CHF:4 hour chart

2009-01-15T11:48:00.002Z

You can see in my previous post, I wrote that we are at major support on the EURO and on GBP, and a break of support will determine the move in the next week or 2.

Now we will have a look at the USD/CHF 4 hour chart, click the chart to Enlarge,

I am trying to take a EUR/CHF short on the 1 hour chart.
have a nice day.

EUR/USD:-GBP/USD

2009-01-14T02:10:00.002Z

We are at a very important "long term support now" on both the EURO and GBP so will see the next day or 2 how things are going .

EUR/CHF: 1hour

2009-01-12T14:59:00.005Z

The EUR/CHF 1 hour, is in a triangle for the last week, and we just reached the top of the triangle and are falling. If it will break 1.4930 we can see a good move to 1.4800.

GBP/USD:15 min

2009-01-12T00:14:00.009Z

I have to admit, that I am not the best export on head and shoulders, but this one is very simple, the second I look't at the GBP/USD 15 min chart I spotted this head and shoulder and if the rules is applied here, the target will be lower than 1.5000.

i will start taking profit on my short USD/JPY at 89.00.

Updated: monday morning.
On the longer term charts, if support holds on the EURO at 1.3100 then we can expect it to break 1.4000, and on GBP/USD after sharp moves we can expect it to go above 1.5500.
have a nice day.

USD/JPY:1 hour

2009-01-08T01:35:00.011Z

I would rather post about the EURO at the end of the week before NFP

thank you.

2009-01-07T01:58:00.006Z

Surry I was not in my office yesterday,

I recognize that I took my positions to early,
and now can somebody please help me out, with my position, (I am not talking about my short USD/JPY, because I expected this, and I am glad that it’s going up, and if the USD/JPY will reach 96.50 I will sell it again,) but I am talking about the GBP/CHF, that I am short from 1.6060, and I am now deeply in red.
although when I look at the 4 hour chart, I am still very very confident that it will go down, but when I look at the daily chart, I see the possibility of the GBP/CHF going first to about 1.7000.

So my question is, should I close my position with a loss, and re-open it if it goes to 1.7000, or should I just add to my position if it reaches 1.7000?.

can you please look at the GBP/CHF and tell me what you think about it?
your answer will be greatly appreciated.
thank you.

USD/JPY:daily

2009-01-05T02:22:00.005Z

Hello, happy New Year, hope you enjoyed it,
we are starting a new year and I hope it will be a profitable year for you, and for me.

For my part I will do the best possible, to give my best assessment on the market, and I will work hard to do it, and hope you will do the same.

As for the market, there was the last 2 years a very big move the first day that traders came back to trade, and as I remember the last 2 years the first move was a false move, so I will rather not be over bullish, or bearish on any short term chart,
(I don’t see any trade that I should be comfertble taking, on the EURO or the GBP the next 2 or 3 days) this is on the EURO and GBP.

But on 2 pairs I am bearish, and it's the EUR/CHF on the 4 hour chart, and the USD/JPY daily chart, so am now taking a short EUR/CHF at 1.5000, and a short USD/JPY,(although it's a daily chart, and I can see it going to about 94.00, but I am still taking it) and I am also long EUR/GBP at 0.9460, PT is at 0.9710.

have a nice day.

EUR/CHF: daily

2008-12-29T01:58:00.008Z

Chart of Sunil Mangwani CEO of fibforex123.com

Hello everyone, Hope you had a great holiday season (I did), I will still stay low in the market till next week, and come back refreshed next year, since the market is mostly in a range, and I don't have anything to write about, I though I will share with you an email that I got from
'Sunil Mangwani' CEO of fibforex123.com he holds a lot of webinars at fxstreet (he is great) he also has a blog at fxstreet http://blogs.fxstreet.com/forexology/

He replied to a question that i ask't him, about the EUR/CHF on a daily chart, and this is what he wrote back,

Hi Naftula,
Firstly, I aplogise for the late reply.
And thank you for your kind words. If my webinars on Fxstreet and other information help you in your trading, I feel that my efforts are worth the while.
Regarding the Eur/Chf, yes you are correct, it certainly is a 1-2-3 pattern, which has stopped exactly at the 0.786 level.
Now the ultimate target of this down move would be the FE 161, but we could also be looking at a harmonic pattern.

I have attached a chart showing the possible moves.
A precise rejection at the 786 level usually forms a harmonic pattern. I don't know how familiar you are with harmonic patterns, but I find them to be very accurate and strong.
If you have a look at my blog, you can see that it is one of the primary technical tool for me
http://blogs.fxstreet.com/forexology/

In this case, we do have a bearish 123 pattern, as you said.
This gives us a very strong probability of a move to the 1.4780 (appr.) at the minimum.
If it breaks that, then the bearish 123 should come into play and we can expect further downmoves.

With reference to the divergence, its not a very strong divergence & one could classify this as a "Class C" divergence, which needs some confirmations for a change in trend.
That is one reason, why I would be a little careful with the down moves.
I hope these did not sound too confusing.
Please feel free to get back with your comments/suggestions etc.
Kind regards,
Sunil Mangwani
CEO
www.fibforex123.com
Email: sunil@fibforex123.com
I am short EUR/CHF and my PT will be 1.4760 as i said 3 weeks ago.

have a nice day.

chart:USD/JPY 1 hour.

2008-12-18T16:08:00.004Z

I would have liked to buy the EURO on the 1 hour chart now, -------"but I will NOT" because I have a sell on the daily chart, and I am just not comfortable baying at such high levels,
and because when I look on the 15 min chart, I am also not comfortable baying it, in fact I will try to sell it, on the 15 min chart, if it becomes a downtrend.

The BOJ Interest Rates Decision is coming up, so Trade with caution:

I would like to ask you all, if you can please answer, will anybody trade in the next week or 2? If the answer is yes, what days will you trade?

2008-12-17T02:00:00.001Z

My view has not changed so far on the EURO and GBP and CHF, as you can see on the chart of the GBP, the trend is still firmly down, and we will have a stochastic cross, in the next day or 2, and the same is with EURO and CHF,

But I recognize that it's not tradable for me, I don’t want to be in a trade so long now, especially now that the next 2-3 weeks I will be off a lot,

So what I will do is this,------------ I will trade it on the 1hour chart, if the trend is up than I will buy, if the trend is down than I will sell,

have a nice day, thank you.

GBP/USD:1 HOUR

2008-12-15T11:53:00.005Z

The EURO rose in the last 10 days almost 1000 pips, but the GBP only rose in that same time about 500 pips,
because As you can see on the GBP/USD chart above, there is a good resistance at 1.50-1.51, and I believe if we will break 1.50-1.51, we could see a good upside potential.

On the EUR/USD as I discussed in the last video, I will possibly go short in the next 2 or 3 days, I expect to see resistance at about 1.3550-1.37.

Have a nice trading day.

is it for real or not?

2008-12-12T01:36:00.009Z

Video:EUR/USD daily;

chart:USD/JPY 4 hour.

2008-12-09T02:23:00.006Z

Sorry for not being here yesterday I was sick:

Now about the market, my bias is for shorting GBP/USD------GBP/JPY--------USD/JPY-----on the 4 hour chart.

I expect 1 more spike above yesterdays high, in those pears and I will try to sell, in to the rally and the target will be at first %61 of the move.

On the EURO I may see signals on the 4 hour chart, of some kind of basing, and may also be starting an uptrend, but as I said a lot of times, I will not touch the EURO until I see a 'clear uptrend' on the 4 hour chart.

(I would like to try out a new trading platform, I think of using 'GFT DealBook 360' but as I read the reviews, I really don’t know, most of the reviews doesn't look good, everybody is commenting, that GFT is a scam, and they had a lot of bad experience with them,
but I don’t know if those who are commenting are like %90 of traders, that are losing money, and are angry on them ha ha,
so I would like to know if somebody in the this blog has some experience with GFT, or with any other forex broker, that is really good, i would appreciate your.)

thank you. Have a great trading day. Remember not taking a trade, is also trading.

2008-12-03T23:04:00.001Z

http://www.dailyfx.com/story/special_report/special_reports/Canadian_Dollar__End_of_Month_1187887841525.html

2008-12-02T13:26:00.008Z

The EUR/CHF is the first victim to sell it, and the next will be the GBP/CHF, I will not post the chart of it, and then the GBP/USD and USD/JPY----GPB/JPY

UPDATE

tuesday afternoon

As I said today after "a good amount of consolidation" I indeed am still waiting for the consolidation to end, especially if we hold the low of 92.85 in USD/USD, than I can see it as a head and shoulder, on the 15 min chart, and going to about 94.20 or so, then I will 'likely' sell the usd/JPY ----gbp/jpy on 1 hour chart.

Can anybody please take a good look, at the GBP/USD 4 hour chart and tell me what they see on the chart, is it a rang or what?

thank you. Have a great day.

chart:EUR/USD daily

2008-12-01T02:35:00.003Z

a new week

Since the EURO has broken above the so called triangle, I have never been really convinced, that we will go higher, for a couple of reasons.

1) The USD/CHF gave me a clear buy signal, on the 4 hour chart, indicating the USD will gain some ground not fall further.

2) I look't at the euro on the daily chart, as a Bear Flag, as you can see on the chart, that I posted.

3) The most important thing, there was a stochastic cross to the downside on the daily chart as you can see.

With those 3 reasons together, I am still not trading the euro, right now I would much rather trade pears like the EUR/CHF from the short side,
And GBP/CHF also short, on the 4 hour chart, (with caution)

(I don’t believe that the euro will brake below 1.24 or so, (but it is only a believe) so therefore I will take long the euro, at about 1.24 if I will have a signal on the lower charts, like the 15 min chart or the 1 hour chart.
Have a great day.

2008-11-25T02:14:00.010Z

Good morning.

Let's go right to the charts, although I know it is risky to go long the US dollar, but I will do it now, I will buy the USD/CHF on the 4 hour chart with a profit target of %61 of the move.

I will monitor the 1 hour chart very closely, as the 50 EMA on the 1 hour chart is still on an uptrend, and I hope it will stay on an uptrend, but as I said, I will buy it on the 4 hour chart, and tomorrow morning I will review it, and act on what I see.

As for the short EUR/CHF that I toke 2 days ago on the daily chart, I have added so far every 50 pips another sell position, and I hope I will see profit next week.

Have a great day.

chart:EUR/CHF daily!!

2008-11-21T02:18:00.004Z

good morning

As you can see on the chart, of the EUR/CHF this is a daily chart, the trend is down the trend can be determined by the 50 EMA that is firmly down, and the price spiked higher and gave us the opportunity to sell, when the stochastic crossed to the downside.

Now I know this is a daily chart and trading on a daily chart is not easy, it can take a long time to see the profit, if we would have known when the drop will began, we would have been milioners, but the truth is that we don’t know,---
so we can only do what the charts are telling us to do, and my chart are showing me now, to sell the EUR/CHF and 'wait' for my profit target, which is at 1.4600 (about 700-800 pips) to be hit.

I would like to get an answer from all of you, do you believe the EURO has moved out of its range, or is it still ranging at the lower side?

have a grate an enjoyable day

Enjoy it!!!

2008-11-20T01:56:00.004Z

Enjoy it!!!

Lets enjoy the moves, that was absent the last 2 weeks, it Doesn't Really Matter which side the market is going, at last we have some movement,

I personale enjoyed the move today, because I sold GBP every 50 pips, so later in the day I had some profit, I hope we will really start seeing some 'wild moves', on one side I really like it,

(BTW. I am still buying EUR/GBP)

I saw a great post from 'Valeria Bednarik' at fxstreet.com
I have not yet read the post, but I hope to do it soon.
The title of the post is "some more technical education" an Here is the link http://blogs.fxstreet.com/advisor/2008/11/18/some-more-technical-education/

Have a nice day!!

chart: EUR/GBP 4 HOUR

2008-11-18T11:07:00.003Z

Good morning how are you?

Anon great, as you said GBP/USD on the 4 hour chart is on a downtrend, and the stochastic has crossed to the downside, therefore I will sell the GBP until we reach 1.4820?

And RX, I know there is a possibility that it will jump to maybe 1.51 or 1.52, I don’t know, but if it will jump, I will only be able to sell at a discount price!!

The chart that I am showing, is a chart of the EUR/GBP 4 hour, as you can see we are in an uptrend, and prices gave us the opportunity to buy, the stochastic has just crossed to the upside, so I will buy with a target of about 0.8530?

Have a nice day!!

a link from CVJ

2008-11-17T11:01:00.004Z

I

I saw a great post from CVJ, anybody that attended the fxstreet webinars the last 6 years knows who CVJ is, he is a really really good trader, and he knows a lot, so I thought I will share his post.

I cannot copy the post for copyright reasons, and the charts will not be visible, so I will post the link here

http://blogs.fxstreet.com/fxtoday/2008/11/17/a-woman-i-am-in-love-withare-we-breaking-up/

chart:EUR/USD 15 min.

2008-11-14T12:49:00.004Z

Good morning

The direction of the market is not so clear to me and charts are very choppy, and as anon, said it is better to look on higher time frames, but I will attempt to buy the euro on the 1 hour chart, with a very cautious approach, and small lot size,

you can look on the 15 min chart as a bullish flag, and if we brake to the upside, than my target will be the highs of yesterday,
and I will also try to buy the USD/CAD, on the 1 hour chart and will see how it goes.

chart:USD/JPY 15 min.

2008-11-13T06:02:00.005Z

Hello everybody how are you today?,

I am finally gaining confidence in the market, so that is good, after the last week that we were trading sideways, we finally have the opportunity to make some money,

so now I am selling USD/JPY on the 15 min chart, and if we continue to move up, it will be on the 1 hour chart, I am selling because the trend is down, both on the 15 min and on the 1 hour chart and the stochastic crossed to the downside, my profit target is, 1'st level 61% of the move, and the 2'nd level is 78%.

I will not be hare later today, but I will still see the comments on my phone, I hope you enjoy.

video:11/10/08

2008-11-11T01:20:00.002Z

GBP/JPY:1hour chart update

2008-11-07T12:23:00.001Z

Su25, sorry for being so late, I still don’t fill 100%, as I look't on the same chart that I posted last night, it's very interesting, the broken line is acting 100% as a resistance, and this means a good line, a line that can act as both a support and resistance is a real line, will see how the day will end.

GBP/JPY:1hour chart

2008-11-06T16:44:00.005Z

Hallo, I am back, sorry I was not able to get out of my home, due to an infection, I was very sick, so now I am feeling better,

I want to start by saying hallo nina!!! We all here at the blog, welcome you and wish you the best, and hope you are fine.

This chart is a chart of the GBP/JPY 1 hour; I see a triangle I have no idea if it will break to the upside or to the downside, but where ever we break there is a good opportunity to make money,
Although I believe it will break to the downside, but …….nobody knows what the market will do.

The Danger of Leverage

2008-11-05T15:53:00.005Z

Hi Guys !

I wanted to share with you an excellent article i read about leverage, written by Dirk Du Toit (aka. Dr. Forex).

He talks about Leverage, about how our brokers try to blind us and he even explains some of his trading strategies. I have to confess, that Mr. Du Toit was the speaker who had the most positive effect on me during the ITC.

Link: http://www.forex-trading-explained.com/BWNSL1dfx.html

Paste of the whole article:

Leverage is not even a double-edged sword, it’s a guillotine - and your head is on the block – PART 1

Dr Forex says - Let me explain to you
once and for all that leverage is not what
brokers allow you to use, it is what you decide to use.

At long last I am at the point where my Bird Watching in Lion Country Newsletter is ready for publication. If you haven’t received one before, don’t start searching amongst your spam filter emails. This is the first newsletter.

Choice of topic is a difficult matter but “leverage” was always high on the priority list for the first issue. Recently I once again realized clearly how misunderstood this vital concept was to all aspects of forex. In my mind there is no doubt that most of the trouble that forex traders have starts with leverage.

I will dedicate this first newsletter then to this concept –
leverage and its destructive power in the retail forex trading world.

A few facts

Personally I have not seen one wiped out trading account that wasn’t leveraged too high.

I have also no record of any sustained profitable trading account based on high leveraged, short-stop trading.

I ask my mentoring clients early on what they believe are the reasons for previous losses. Most answers include something to do with leverage, not understanding it at all, or only partially, or underestimating it once they have understood it.

Leverage then, is …?

I get many questions, like the one below:

I'm reading your book and I'm really enjoying it. Can you provide me with the information where I can get 1:1 leverage with the company you mention on page 108 of your book? I'm using a demo with only $1500 in the account with 200:1 leverage and I'm a bit worried about this even on 1 mini contract with one currency.

Or:

I contacted the broker you suggested where I could trade with less than $10,000 with low leverage, but they only offer 50:1 leverage and not 3:1 like you suggest.

It is very clear that leverage is misunderstood and this misunderstanding is a root cause of forex trading losses and the futile attempts to overcome these losses without addressing the root cause.

Regulatory warnings that leverage is a double-edged sword that can work for or against you go completely unheeded, just as the warning “past performance is no indication of future performance” is flatly ignored.

Leverage is largely misunderstood because the marketing wizards of forex (your friendly forex broker) have done a slight-of-hand trick that shifted the focus from the very important fact of how much the trader levers his trading capital to how much the forex marketing wizard is prepared to lend the trader.

Everything you read about leverage has to do with the maximum leverage you can achieve and very little about the prudent application of leverage in a forex trading system. In other words, the broker is telling you how much he will allow you to leverage, if you want to, not how much you should leverage, if you know better.

Warren Buffet said – “Risk is not knowing what you are doing”.

People speak about 100:1 leverage – “I trade with 100:1”, without knowing what it means. I will show below how you are your greatest enemy by being ignorant about this vital concept. I hope many of you will get a very important “AHA” experience from the newsletter.

Definition of leverage

This is a general definition:

The mechanical power or advantage gained through using a lever.

A definition found at www.investorwords.com says leverage is:

The degree to which an investor or business is utilizing borrowed money.

Closer to forex trading: www.thefreedictionary.com

The use of credit or borrowed funds to improve one's speculative capacity and increase the rate of return from an investment, as in buying securities on margin.

Enter the concept of “margin”. Let’s make sure we understand what margin is:

Definition of margin

The amount of collateral a customer deposits with a broker when borrowing from the broker to buy securities.

This is exactly what you do if you open a forex trading account. You deposit collateral in order to be able to borrow currencies to trade currencies. Actually you don’t have to borrow, but you can if you want to.

The moment that borrowing comes into play it is common knowledge that the amount that the lender will be prepared to lend has certain limitations. Obviously you can’t lend indefinite amounts.

The thing that stumps most traders is the fact that the marketing wizards use the terms “leverage” and “margin” very loosely and interchangeably. This causes a lot of confusion. I believe this is done deliberately because it is in the forex broker’s interest that traders do not see high leverage as a destructive problem but as an opportunity.

Let’s make sure we understand first “leverage” and then “margin”.

To understand leverage properly for trading purposes, let’s use a well-known concept. You want to buy a house, you don’t have the capital available, but you have a salary and can pay instalments on a regular basis, so you go to the bank and borrow money to pay for the house. So you are leveraging your income / salary.
There are limitations based on, amongst others, your income which means the amount you can borrow based on your income will be limited. There is a maximum you can borrow. Obvious, yes, but a very important concept for the lender – the maximum he should lend you in order to get the maximum return on his capital without overexposing himself to risk of default on your side.

(Just a thought from the sideline. If trading forex is mostly with borrowed funds why don’t the brokers ask interest? Think about that …. )

Remember this: The lender is focused on maximums whereas the borrower should be concerned with minimums - borrowing as little as he can but still getting bang for his buck.

Now we turn to your trading account: you want to increase your speculative capacity by leveraging your investment, therefore you borrow money to trade with from your broker.

Before your broker will lend you money you have to put down margin, which you wish to lever. Your broker, being a prudent businessman has calculated his risk beforehand and is quick to tell you what the maximum is he will allow you to borrow from him. In forex it is typically one hundred times your capital but it can also be two hundred times your capital or even four hundred times your capital. This is one part of the equation:

“Dear valued customer, you will be able to leverage your money 100:1, (200:1, 400;1). We hope we can have a long and mutually beneficial relationship.”

The other side of the equation is how much of this available borrowing you want to utilize in your speculative endeavours.

How much leverage you apply is your own decision
and not something the broker can force on to you.

Here is proof:

We are going to start with a stock market example.

You open a trading account with a stockbroker, with say, $10,000. You can buy stocks to the value of $10,000. Let’s say you did. Did you leverage your funds?

No. You didn’t borrow a cent from the broker. You have $10,000 and the value of your stocks when you purchased them was $10,000 (ignore costs for the moment).

How do you calculate your leverage?

You divide your capital into the value of your transaction and express it as a ratio of “value of transaction” : “capital”.

In the above example you divide $10,000 / $10,000 = 1:1

Well, your friendly online stockbroker one day sends you a message that they now allow margined trading and you can borrow funds to purchase stock up to the value of your current stocks. For simplicity sake we say the value of your stocks is still $10,000. In other words you can now buy another $10,000 worth of stocks while your capital input remains $10,000.

You do this after you just received a hot tip and now you have a transaction value of 2 X $10,000 = $20,000 divided by your capital of $10,000 = leverage of 2:1. Or you can choose not to, it depends on you.

Vital for the broker: Maximum leverage allowed

The maximum leverage you can apply (as opposed to how much you want to apply) is your broker’s decision:

The important thing you have to note in the above example is that you have utilized all the leverage you were allowed by the broker. This is vital. The broker takes a huge risk to lend you money and therefore they have certain rules which you must adhere to. There is a limit to what you can borrow from them. In the above example the limit is leverage of 2:1 or seen from another viewpoint margin of 50%. You must have at least half the value of your total transaction available in margin (in other words collateral in case you aren’t as hot a trader as you thought).

Margin is usually expressed as a percentage, while leverage is expressed as a ratio.

The marketing wizards of forex realized that the fact that they can offer very high leverage will be to their advantage to lure online investors from the traditional markets. Furthermore, many online investors’ portfolios where devastated by the 2000 crash and losses of up to 90% of formerly lucrative stock portfolios became commonplace – much of this leveraged through stock option schemes.

As a result they started to tout from the rooftops that leverage of 100:1, 200:1, and with the introduction of mini accounts, even 400:1 and 500:1 was available.

Terms like “trade with 100:1” leverage became the order of the day.

An unsuspecting and clueless online trading public swallowed this hook, line and sinker and were trading with “100:1 and 200:1 leverage”, not understanding what they are doing.

In reality the broker simply said “we will allow you to lever your margin up to 100:1, 200:1 or 400:1 at the absolute maximum, if you utilized all your borrowing power with us.”

But you must remember leverage is a double-edged sword. It can work for you and against you. And so a race started amongst the forex losers out there: where were the highest leverage, lowest margin and narrowest spreads being offered? As if this lethal combination would contribute to success...

So if you go to your friendly broker who offers both 100K lots and 10K mini lots you will find that on 100K lots you usually have a maximum of 100:1 leverage and on mini accounts 200:1 or 400:1.

So that is from the angle of the forex broker: They will allow maximum leverage of 100:1, 200:1, 400:1.

Vital for the trader: Minimum leverage needed

How does leverage look from your (the trader’s) side?

The question from your side is: How much margin do I need to trade a transaction of a certain value? The answer is simple, if they offer that I can lever my funds 100 times, then it is 1 / 100 = 1%, 1 /200 = 0.5%, 1/ 400 = 0.25%.

If we return to the stock market example the question of minimum leverage doesn’t play a role because if you have limited funds it would be prudent to buy low priced stocks in order to be able to invest in a basket of stocks.

But in the forex market where the minimum transaction values were initially 100K or 10K and a shell-shocked online trading public were lured to utilize the “advantages” of the high leverage with accounts of just $2,000 - $3,000 or mini accounts of $200 - $300, the minimum leverage certainly played a role.

To make all of this stick better I am going to use a real example:

A few years ago a now defunct tip service company did a survey on the typical forex trading account trading with 100K lots. The average sized account was an account of $6,000.

There is no question that the average trader will have to borrow money from the broker, ie leverage his funds. The question is “how much”? To do a minimum transaction of 100,000 you divide the 100,000 by 6,000 and there is the answer: 100,000 / 6,000 = 16.67.

In other words, he must borrow 16.67 times his money to do a minimum transaction and thus utilize a minimum leverage of 16.67:1. Just to do one silly trade.

Trading successfully: Know your real leverage

I am not going to be too technical about the exact leverage in these examples.

In reality if you have a US dollar account you should express the transaction value in US dollars before you calculate the exact leverage. So if you trade 100,000 GBPUSD, you actually trade dollars to the value of £100,000 which is at time of writing about $190,000. There is a big difference between $100,000 and $190,000. (As Warren Buffet said: Risk is not knowing what you are doing …)

With the flexibility offered by mini lots (10K), micro lots (1K) and variable lots (any size the trader defines) it is easier these days to determine one’s real leverage because you operate within the extremes of minimum leverage and maximum leverage.

Let’s return to the questions above:

Can you provide me with the information where I can get 1:1 leverage with the company you mention on page 108 of your book? I'm using a demo with only $1500 in the account with 200:1 leverage and I'm a bit worried about this even on 1 mini contract with one currency.

“Can you provide me with the information where I can get 1:1 leverage?”

Considering that leverage is transaction value divided by capital the important aspect is your capital and the minimum position size because to be in a position to trade 1:1 you must have at least the same capital as the minimum transaction. In your case you will have to trade with a broker that offers variable lots or micro lots not larger than 1,500 units.

“I'm using a demo with only $1500 in the account with 200:1 leverage”

You refer here to the maximum leverage or the maximum amount they will allow you to borrow. This is a fixed amount (percentage) applicable to all transactions and it does not affect your transactions at all, as long as you stay within this limit.

“I'm a bit worried about this even on 1 mini contract with one currency.”

First of all there is no need to worry about the “200;1 leverage”. It simply means it is the maximum you are allowed to trade, not what you are forced to trade (it’s your choice!). To trade the maximum would really be silly. Your real leverage if you trade one mini contract with $1,500 will be in the region of 6:1 or 7:1. (10,000 / 1,500).

It is interesting that you mention one currency also, because you must know that if you simultaneously trade 2 or 3 currencies your leverage increases. Say you trade one mini lot EURUSD, GBPUSD and USDCHF, the total value of units = 30,000 (3 mini lots) and your capital is still $1,500.

Your leverage is thus 30,000 / 1,500 = 20:1. That’s high. You borrow 20 times what you have.

To trade forex profitably you need a $3.00
calculator not $300.00 a month charting service.

Here is the proof:

Let’s talk about the 200:1 “leverage”.

I hope by now you understand that this refers to the maximum the marketing wizard will allow you to borrow and that you can borrow much less to keep your leverage sane and your account afloat. But if you go to that extreme you must be really desperate or stupid and for all practical purposes you are already on the way out.

So what the forex marketing wizards call “leverage” is actually the margin requirement expressed as a ratio instead of as a percentage, which makes more sense and has absolutely no impact on your trading, unless you are already basically wiped out or about to be.

Let’s say a trader has $10,000 and trades at a broker which offers “flexible leverage”.

You can choose your “leverage”, 400:1, 200:1, 100:1 or 50:1. What they mean is you can choose your margin requirement (which will define the maximum you can borrow from them) to be 0.25%, 0.5%, 1% or 2% of the transaction value.

Trader decides to buy 5 mini lots EURUSD, ie €50,000 transaction value and the value of one pip on this transaction is $5.00. Let’s say he makes 100 pips profit which is $500 or 5% of his capital.

Does the flexible margin requirement, generally called “leverage” affect this outcome?

The answer is “no”.

Leverage = 400:1 = 0.25% = $25 X 5 = $125. After 100 pips move the Trader makes $500.

Leverage = 200:1 = 0.50% = $50 X 5 = $250. After 100 pips move the Trader makes $500.

Leverage = 100:1 = 1.00% = $100 X 5 = $500. After 100 pips move the Trader makes $500.

Leverage = 50:1 = 2.00% = $200 X 5 = $1000. After 100 pips move the Trader makes $500.

It is vitally important that you grasp this:

The only variable in this whole trading exercise is the real leverage, not the margin requirement.

In the example above the market moved 100 pips irrespective of the margin required.

The only differentiating factor is how much the trader borrows out of what is available. Depending on how much trader borrows he will have a different outcome.

In the example he borrowed 5 times his capital, was levered 5:1 and made $500.00. If he borrowed ten times his capital and was levered 10:1, he would have made on the same market move $1,000 or 10% of his capital. If he borrowed two times his capital 2:1, 2% and so on.

Margin – Leverage - Risk

People incorrectly think the risk they take has to do with the margin requirement, forex marketing wizard’s “leverage”.

How many times have you come across money management or risk management systems that say you must not risk more than x% of your capital on a trade?

Let’s say our Trader used this technique and he doesn’t “risk more than 10% of his capital” on a trade.

In the example above in the case of 2% margin (50:1 “leverage”) the Trader “uses” 10% of his capital (as margin). (Hopefully you now realize that in reality he risks his capital 10 times!)

So if the approach is that the risk is determined in terms of the margin that is being “put up” on a per trade basis the following applies: Out with the calculators!

Trader has $10,000 and is prepared to "risk 10%"

Leverage = 400:1 = 0.25% 10 / .25 = 40. That is, 10% “risk” will be 40 lots or 400K. Real leverage = 400 / 10,000 = 40:1. Pip value = $40.00.

Leverage = 200:1 = 0.50% 10 / .50 = 20. That is, 10% “risk” will be 20 lots or 200K. Real leverage = 200 / 10,000 = 20:1. Pip value = $20.00

Leverage = 100:1 = 1.00% 10 / 1.00 = 10. That is, 10% “risk” will be 10 lots or 100K. Real leverage = 100 / 10,000 = 10:1. Pip value = $10.00

Leverage = 50:1 = 2.00% 10 / 2.00 = 5. That is, 10% “risk” will be 5 lots or 50K. Real leverage = 50 / 10,000 = 5:1. Pip value = $5.00

This same risk management strategy then usually says, don’t risk more than x% of your capital in potential losses, therefore calculate your stop-loss point beforehand as a percentage of capital. So a stop-loss is typically set at 2% or 3% of capital.

In this case, if 2%, the maximum loss value will be $200 (2% of capital of $10,000). But as you have seen now, the first part incorrectly calculates pip value based on a bogus principle (for the leveraged trader), while the trader supposedly “risks” 10% of his capital in all four cases.

Leverage = 400:1, Pip value = $40.00, “risk 10%”. The stop-loss of 2% must be 5 pips.

Leverage = 200:1, Pip value = $20.00, “risk 10%”. The stop-loss of 2% must be 10 pips.

Leverage = 100:1, Pip value = $10.00, “risk 10%”. The stop-loss of 2% must be 20 pips.

Leverage = 50:1, Pip value = $5.00, “risk 10%”. The stop-loss of 2% must be 40 pips.

The above clearly demonstrates that a misunderstanding of leverage can be devastating to your chances of success.

It also demonstrates that many so-called money management systems are absolutely bogus - spreadsheet theory - and have nothing to do with real profitable trading.

Suffice it to say that while the “400:1 and 200:1” options aren’t utilized that much you will be tempted by the 100:1 and 50:1 options as suggested by almost all the experts out there, accompanied by the necessary 20, 30 and 40 pip stops that are hit all the time (followed by the inevitable market movement in your initial anticipated direction).

Summary

What is usually referred to as leverage is actually the margin required expressed as a ratio if you use all the borrowing power the broker will allow.

Real leverage is determined by dividing your capital into the value of your positions.

Real leverage can differ from trade to trade and increases with multiple simultaneous trades.

Margin required has no influence on your risk if you trade properly with modest leverage within your means and is not to be used as a risk calculating principle.

4 hour GBP and GBP/JPY

2008-11-04T02:05:00.005Z

My profit target for both the EUR and the GBP (from last week) has met the target, as you can see, I took profit on the gbp just now, with 600 pips on each lot, I had 5 lots,

The 2nd chart is the GBP/JPY where I believe we still have more downside to go, my profit target is 146.70, I hope we get there,

I would like to apologize for not taking any new positions the last 2 days, because I was so heavily invested in all my positions, that I had to concentrate on them, but now that I have taken profit on most, and on GBP/JPY and usd/jpy I moved my stop to break even, so new I will start taken new positions.

GBP/JPY:1hour chart

2008-11-03T12:49:00.003Z

What I noticed first, is the trend line on the GBP/JPY 1 hour chart; we tasted the trend line about 6 times, I would watch it, and see if it will break, and what fallow through there will be

Education lesson # 1 from; 'Anon

2008-10-31T14:13:00.007Z

Hi Everybody this is, anon,

This is my first attempt to blog, so please bear with me. To start, I would like to share my thoughts on how to stay focussed in trading.

Let me start by stating that I consider myself to be a technical trader. And, in trading, I find that quite often I get distracted by several factors, and I refrain from entering trade signals given out by the system. I follow naftula's system exclusively, therefore, any future reference to "system" should be read as "naftula's system as I understand it".

Few of those distracting factors are:- Opinions of "non-technical" analysts - such as fundamental analysts, Dr. SS and his (mis)reading of operators' intentions, few technical analysts who analyse charts based on their own past experience without any supporting indicators, etc.;- Slew of opinions expressed on TV by anchors and their guests;- Print and electronic media, splashing news with the sole aim of increasing their viewership/readership through sensationalism - xxx index tanks, yyy currency hits multi-year lows, etc.;-

Everyody at workplace, dinner parties, shopping malls, and complete strangers expressing their views on global economy and currencies; and- Last, but the mighties of them all - Private Bankers making calls to take all your money (or whatever is left) - either to top up margins, or, if you are one of those lucky few who is not leveraged, then he/she will drip honey all over you in anticipation that you will invest in another exotic product to skim whatever is left of the naive investors by buying distress assets, or something similar, while explaining his view on the finacial crisis with the primary purpose being to justify the investment in that exotic product.
Amidst all this how do you stay focussed? How do you justify a short eur/usd on 4hr chart when somebody is calling a bottom in eur/usd, while another is busy "cutting and pasting" his readings that this upward swing is a multi year (or is it month-end or season) trend reversal?
How do you get yourself to hit the sell button amidst all this gibberish?

Well, one solution is to visit this blog and be in the company of naftula and his readers, to make some money. And, if your system is different then I suggest you do the following (which I had read somewhere, but cannot remember to give appropriate credit):-

Make the background white or any colour where you don't see the candlesticks;- Black out currency pairs and prices to avoid getting biased by the distractions. Then you don't know whether you are trading eur/usd or gbp/usd or chinese remenbi; and- If you get a signal to trade - hit the appropriate sell/buy button and then wait patiently for account balance to increase.I have tried backtesting - and it works. But have not used it for trading on demo a/c :)Ok, somewhere in the midst of reviewing and editing this rant I lost focus and patiece on the primary topic. More when I regain my focus. Anyhow, hope you got the message - stay focussed while trading, and be patient too.

By none other than Anon!

Is the down move in GBP or gbp/jpy over?

2008-10-31T10:17:00.005Z

The same question goes to the USD/JPY, The answer to the question is; do you own analysis, and look at your own charts, but since I am posting on the blog, I will give my opinion The answer to the question is, NO, what the 2 charts (15 min charts) that I am posting indicates to me is, the 50 EMA (red) moved below the 200 SMA (green) and this is an indication that the downside is gathering momentum, so I anticipate more downside, I can be wrong in my analyses so do you own research,

Good morning

2008-10-31T01:24:00.007Z

Good morning how are you today? anon, you ask't me why I have not posted yesterday at least something, because my market view has not changed, in the last couple of hours, and you know what it is,---- I would gladly appreciate, if you can write sum market analyses, and sand it to my email, than I will post it, At the end of the day, it's your blog, you are making the blog going,

Rx,
it's funny that you bring up Tony Juste, I remember the last month or 2 before he left fxstreet, his blog look't like the dr's, blog is looking now, all the comments war fire against him, he always said the EURO will go down, and the EUR want from 1.25 to 1.45, and after 2 months he was fourest to leave

Our good friend ban, is at the "FXstreet.com’s International Traders Conference" he will be back on Sunday,Francesc Riverola,CEO & Founder of Fxstreet, is posting a lot of pictures from the conference, I Though it's a good idea, to gave a look at the pictures and his blog, http://blogs.fxstreet.com/francesc/ if anybody recognizes ben, from the pictures, please 'please' tell me who he is,

chart of the USD/JPY, and the GBP/JPY

2008-10-29T01:24:00.001Z

Now is Tuesday night, and I see a "lots of money" in the market, to go short on all the pears that rallied yesterday, 2 of them still have room to go ,
But on the USD/JPY, I will take a short, on the 4 hour chart and my profit target will be 61% of the move, and on the GBP/JPY I will place a order to sell at 161.50, profit target will be 61% of the move, and I hope to sell tomorrow the EUR and the GBP

video: 10/28/2008

2008-10-28T11:03:00.000Z

chart:USD/CAD 1 hour

2008-10-28T10:28:00.000Z

The USD/CAD is very very overbought on the daily charts, but I will held trout to my indicates, and I just toke a long trade based on the 1 hour chart, the trend is up and the stochastic crossed to the upside, my profit target will be 61% of the move, now it is at 1.2935

Hello Everyone !

2008-10-27T16:15:00.001Z

Hi,

I'll be helping Naftula with his new blog about FX.
I think we should use this blog for all kind of purpose related to forex, in order to learn from as many sources as we can.

Anyone that wants us to post something can send an email to Naftula (6279611@gmail.com) or me (hotcha3@gmail.com), and we will post it.

With my first post i'll suggest 2 great recorded webinars i've watched recently, the first is Sam Seiden's, about CCI and the second one is Andrei Pehar's, about Stop Losses.

Links: http://transcripts.fxstreet.com/2008/02/using-cci-and-s.html
http://transcripts.fxstreet.com/2008/04/monthly-webin-1.html

Good luck to everyone !

EUR/USD 15 min chart

2008-10-27T12:28:00.000Z

I will take a short EUR/USD based on, that the 50 EMA on the EUR 15 min chart is in a downtrend and the stochastic will cross to the downside

2008-10-27T01:50:00.001Z

test

A place to discuss the forex market

GBP-JPY 5 min. (By Anon)

GBP-JPY (by Anon)

Hope to see you soon:

AUD/USD: 4 hour

GBP/JPY:GBP/CHF: by Anon,

USD-SGD Daily

EUR/USD: 4 hour

USD/JPY:15 min

USD/CAD: 4 hour

EUR/USD: 1 hour

EUR/USD:-GBP/USD 15 min

GBP/USD:4 HOUR

USD/CHF:4 hour chart

EUR/USD:-GBP/USD

EUR/CHF: 1hour

GBP/USD:15 min

USD/JPY:1 hour

USD/JPY:daily

EUR/CHF: daily

chart:USD/JPY 1 hour.

GBP/USD:1 HOUR

is it for real or not?

chart:USD/JPY 4 hour.

chart:EUR/USD daily

chart:EUR/CHF daily!!

Enjoy it!!!

chart: EUR/GBP 4 HOUR

a link from CVJ

chart:EUR/USD 15 min.

chart:USD/JPY 15 min.

video:11/10/08

GBP/JPY:1hour chart update

GBP/JPY:1hour chart

The Danger of Leverage

Leverage is not even a double-edged sword, it’s a guillotine - and your head is on the block – PART 1

Dr Forex says - Let me explain to youonce and for all that leverage is not whatbrokers allow you to use, it is what you decide to use.

I will dedicate this first newsletter then to this concept –leverage and its destructive power in the retail forex trading world.

A few facts

Leverage then, is …?

Warren Buffet said – “Risk is not knowing what you are doing”.

Definition of leverage

Definition of margin

Vital for the broker: Maximum leverage allowed

Vital for the trader: Minimum leverage needed

Trading successfully: Know your real leverage

To trade forex profitably you need a $3.00calculator not $300.00 a month charting service.

It is vitally important that you grasp this:

Margin – Leverage - Risk

Summary

4 hour GBP and GBP/JPY

GBP/JPY:1hour chart

Education lesson # 1 from; 'Anon

Is the down move in GBP or gbp/jpy over?

Good morning

chart of the USD/JPY, and the GBP/JPY

video: 10/28/2008

chart:USD/CAD 1 hour

Hello Everyone !

EUR/USD 15 min chart

Dr Forex says - Let me explain to you
once and for all that leverage is not what
brokers allow you to use, it is what you decide to use.

I will dedicate this first newsletter then to this concept –
leverage and its destructive power in the retail forex trading world.

To trade forex profitably you need a $3.00
calculator not $300.00 a month charting service.