Monthly Archives: December 2012

Taking a break till the end of the Year 2012. See you in 2013…

Dear all,

I will be taking a break from the markets and Blog posting till the end of the Year.

christmas_card

I want to take the chance to wish a Merry Christmas (if that makes sense in the place you are from) to you and your family. Alternatively I wish you take the chance to spend your best, happy moments with your loved ones.

I also want to wish you and your loved ones a happy New Year 2013.

Chat with you in a few days.

Giuseppe

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Analisi Euro-Dollaro, 20 Dicembre 2012 (Italian Language)

Salve,

qui sotto presento l’analisi del contratto Euro FX currency futures per oggi 20 Dicembre:

Nella video analisi di ieri  ho indicato l’area 1.3310-20 come area potenziale dove l’inizio di una breve correzione al ribasso avrebbe potuto avere luogo. Ieri il massimo si e’ affermato in 1.3321. Nel piano di trading che ho condiviso con i sottoscrittori della mia Newsletter ieri sera, ho indicato di monitorare attentamente il livello 1.3210. Sotto di esso una correzione piu’ profonda potrebbe probabilmente portare il prezzo nella successiva area di supporto at 1.3110.

Sino ad ora l’Euro sta rispettando la soglia di fallimento a 1.3210 quindi prevedo una continuazione al rialzo verso il target intermedio a 1.3360, che aiuterebbe i prezzi verso l’area 1.3430 che potrebbe essere raggiunta prima della fine del 2012.

Redico una newsletter gratuita in due lingue (italiano e inglese) ed in essa fornisco video review del fine settimana ed aggiornamenti infra-settimanali, con piani di trading per Euro, indice S&P500 ed alcune azioni, ed informazioni di dettaglio sui setup di trade nel forex (prima che avvengano). La newsletter viene di solito spedita la domenica (mentre l’aggiornamento infra-settimanale il mercoledi successivo) ed include materiale didattico, articoli, video review settimanali ed altre informazioni che non condivido sul Blog. Per registrarsi fate click sull’immagine qui sotto.

Vi ringrazio in anticipo se deciderete di sottoscrivere la newsletter. Molte persone lo hanno gia’ fatto.

Buona giornata.

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Filed under Euro FX analysis and trade setups videos, Forex, Italiano (Italian language)

Euro-Dollar Analysis, December 20th 2012 (English Language)

Good morning,

please find attached below the video-analysis of the Euro FX currency futures for today December 20th:

In my video-review posted Yesterday I have indicated the 1.3310-20 as a potential area where a brief correction lower could start. Yesterday’s highs printed at 1.3321. In the trading plan I have shared yesterday with Newsletter subscribers I have indicated the 1.3210 level that we should keep watching closely. Below this level a deeper correction would probably find support at a lower area at 1.3110.

So far the Euro is holding the 1.3210 support level so a continuation higher into the 1.3360 target, helping prices out into the 1.3430 area we could see by the end of 2012.

If you want to have  access to trading plans, watch weekly video reviews as I develop or record them, or get information on setups for the Euro-Dollar cross, the S&P500 index and some high volume  stocks (before they happen), please subscribe my newsletter. It’s free and you get additional content like market commentaries, setups, e-books, articles on HFT and program trading, learning material on my method and video-analysis that I don’t make available on my blog.

Thank you for subscribing should you decide to do so. Lots of other people are doing the same.

If you intend using this information for your trading please do your own diligence, find the advice of a trading professional and trade at your own responsibility. The information provided is for educational purpose only. Please read the Disclaimer and accept all the risks. Thank you.

Have a good day

http://youtu.be/mnjGRhD0iPg

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Article: Professionals Trade People’s Psychology Not the Markets

This is the fourth of a series of four articles titled “Key Concepts to Correct Trading Behavior – A guide to relevant concepts for trading success in a market governed by High Frequency Trading (HFT) and Program Trading”,  focusing on the most important concepts any trader should internalize in order to show a correct trading behavior, in a world where the majority of trading volume is generated by computer programs.

I have written an introduction to the series and the first three parts of it, titled respectively “The Bandwagon Theory” and “The Dangers of Asking “Why?” and  “Facts and “Truth” Do Not Make Money“. This week I present the fourth and last part titled: “Professionals Trade People’s Psychology Not the Markets”. I will keep working on the other sections of the eBook. Notice that I am also working on the most important section that illustrates a practical application of  the Bandwagon Theory, using the daily chart of the EUR/USD forex cross (the section ‘The Psychology of Trading: the Bandwagon Theory illustrated’ will only be included in my free eBook that I will make available on this Blog). This series of articles is introduced here.

Trading-PsychologyIt should never be forgotten that professional traders  trade people not financial instruments. As strange as this sentence may sound, it represents a correct assessment and critical point novices and more experienced traders often fail to comprehend. The outcome is typically confusion as of the why a market often contradicts rationality and all sense of reason. Futures, forex and stocks financial instruments cannot do anything in and of themselves; their prices are determined by the perceptions of people which, in turn, are completely determined by emotions. It is these emotions, primarily greed and fear that often cause a market to extend too far upwards or downwards, well beyond reasonable levels. Financial instruments do not behave according to neat, simple mathematical measurements of value. Rather they oscillate frequently from over depressed states to overextended ones, without rest. This behavior is what creates opportunities in larger, as well as, smaller timeframes. This is what keeps new people coming in, and the old beaten ones leaving the markets.

The professional trader, understanding this behavior, builds his or her skills around knowing when one emotional state is about to give way to another. This is trading success in a nutshell. Success is not knowing what will a futures FX currency contract reaction be to a central bank announcement or trying to guess if and when a company will announce a new product. Trading is all about people and their emotions, that is why chart reading is so important. Fundamental data contained in balance sheets, income statements and other information sources represents elements from a picture of the past, a time to which market players have already emotionally reacted to. On the other hand, price and technical analysis serve as a living map, built trade by trade, of players’ current emotional state. These are important tools for the active short-term and swing trader or those who want to time position trades or even longer-term investments.

However not all Technical Analysis (TA) tools are useful to build a living map of players’ emotions. In the days of Program and Algorithmic Trading (AT) and High Frequency Trading (HFT) the majority of Technical Analysis tools are not adequate. When TA works it provides signals too late with a sensible lag, or it does not provide signals and setups at all. Besides the lag, trade setups indications from TA are more subject to stop-losses, as well. Moreover the majority of TA tools only provide a point in time when it seems reasonable to enter a trade, often not indicating where the stop-loss should be placed and, more importantly, where profits should be taken. Thus the construction of a complete trading plan would require the use of a coordinated set of TA techniques which often provide readings that are in contrast with one another.
The author’s belief that it is very difficult to make money with traditional TA is comforted by the fact that the majority of people (more than 95%) lose money in the markets. If you don’t want to be one of them and to be part of the 5% of consistent traders it is important and necessary to start thinking and doing things differently.

Most new traders are attracted into learning classical technical analysis (TA) but to make it work strong discipline and a rounded psychology are needed. Typically a trader will focus most of his/her time and resources on the trading method while seasoned traders know that TA requires a better grasp on money management and psychology. While psychology is probably the most important aspect of trading success, the trading method is probably the less important, although critical. Time learning a good trading method is well spent, but it is better to spend time on a method that works and helps the trader to build its emotional capital, i.e. allowing managing his/her emotional state with a sound trading psychology, while providing a complete trading plan. A good trading plan is made up of 8 to 10 different elements (depending on whether you trade one or more markets) which classical Technical Analysis (TA) is not able to identify without the need of resolving contrasting readings from different TA tools.

A trading method that helps avoiding this issue is the method of Measured Moves which helps modeling price structure without the need of using TA tools. This method limits the use of TA tools because it is based upon the observation of the effects of modern Program and Algorithmic Trading on price. Computerized programs do not have an emotional component, but repeat the trading rules continuously at every setup and opportunity. When Program Trading is active price dynamics are purely based on cause and effect, because trading rules themselves are based on price levels although, as already noticed, market news and other events can temporary modify price structure on the smaller timeframes.

Trading rules used by Program Trading were born and improved upon from the analysis and observation of price subdued to the actions provoked by human emotions (mainly fear and greed) and having the effect of dynamically altering the balance between demand and offer. Such rules became very efficient with time and, with the continuous rising of technology and computer-based trading in the stocks, forex and derivative markets, as well as, the increased trading volumes, they bring about price behavior that materializes in a truly self-fulfilling prophecy. This is what happens on the markets nowadays and it is somehow similar to what happens when price approaches some important moving average (like the 100-day or the 200-day moving averages), i.e. there is always some sort of reaction. When measured moves are applied backwards to price data going back to the last 100 years (for instance using Dow Jones end of day data) it is disconcerting to see how well the related trade setups work, offering valid entry and price target areas. This is a very significant fact because it shows that the logic of computerized programs, which was initially derived from the study of the psychological response to price dynamics of average traders’ groups, evolved in a direction that correctly manages money, risks and profits while taking the important psychological aspects into account. Moreover the application to market price of the method of Measured Moves (largely employed by Program Trading) shows that the basic rules implemented by computer algorithms nowadays worked before computer technology was even invented.

In conclusion, not only Professionals trade people’s psychology but nowadays also Program Trading does that. Program Trading and Algorithmic Trading (AT) along with High Frequency Trading (HFT), are conquering more and more volume on the stocks and futures markets. A recent research shows that more than 30% of the UK stocks market volume is traded by HFT; same figures reach more than 70% in the US markets.

Please let me have your feedback. Thank you

If you think this series of articles is of interest please share it with your friends and fellow traders. Thank you!

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Filed under Articles, Program Trading, Trading Method, Trading Psychology

EUR/GBP review, December 19th 2012 (English Language)

Hello traders,

this morning I worked on a video-review of a new forex pair: EUR/GBP.

When analyzing the EUR/GBP I quickly realized that this pair shows the same technical pattern of a few of other forex pairs (as it would be expected), especially those related to currencies trading against the US Dollar. Let’s get onto the analysis. Please find hereunder attached the video analysis for EUR/GBP:

As anticipated this pair is in a huge bull flag in the weekly timeframe, very much like the EUR/USD pair. The long-term support comes at the 0.7750 area that was tested successfully in July this year.

On the daily timeframe EUR/GBP traded the half-way back at the 0.7960 area that the EUR/USD pair never traded. This support and long entry area is pushing prices into the 0.8260 first target area and the second target at 0.8415-20 lines up with the long-term resistance coming at the same levels.

The EUR/GBP pair also respected another measured move at 0.8060 area, in fact price never dipped below the stop level 0.8030. This additional long setup has a first target in the 0.8180s helping price into the larger 0.8260 target. Price traded extensions longs recently with support at 0.8120 and I would anticipate no more than a shallow correction. A good stop-level to enter new longs seems to be 0.8110 and I would definitely remove longs at the 0.8420 resistance level and wait to see what price will do, once there.

Tonight I am going to send the Mid-Week Update to all my free Newsletter subscribers. This is an anticipation of what you will read in it. You can subscribe my newsletter here.

If you want to get access to trading plans, watch weekly video analysis and reviews as I develop and record them, or get information on setups (before they happen) for the Euro-Dollar cross, the S&P500 index, some forex pairs and some high volume stocks , please subscribe my newsletter. It’s free and you get additional content like market commentaries, setups, e-books, articles on HFT and program trading – from which I derive my trading edge –  learning material on my method and additional video-analysis that I don’t make available on my blog.

Please, subscribe my free newsletter below so I can include you in the distribution list for updates on a few forex pairs:

Thank you for subscribing should you decide to do so. Lots of other people are doing the same.

If you intend to use this information for your trading please do your own diligence, find the advice of a trading professional and trade at your own responsibility. The information provided is for educational purpose only. Please read the Disclaimer and accept all the risks. Thank you.

Have a good day

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Analisi Euro-Dollaro, 19 Dicembre 2012 (Italian Language)

Salve,

qui sotto presento l’analisi del contratto Euro FX currency futures per oggi 19 Dicembre:

Ieri l’Euro ha toccato il target in 1.3250 che ho indicato nella mia video analisi del 13 dicembre. C’e’ stato profit taking a quei livelli durante le fasi finali della sessione di ieri. Oggi il prezzo ha continuato a muoversi verso l’alto e sappiamo che e’ diretto in area 1.3430, e credo che il prezzo puo’ raggiungere questo livello alla fine di Dicembre (o la prossima settimana).

Il prezzo dell’Euro non continuera’ a muoversi verso l’alto lungo una linea diritta ma ci saranno profit taking e correzioni, anche se anticipo che tali correzioni saranno molto superficiali. Il prossimo livello dove il Program Trading  potrebber incominciare a prendere dei profitti e’ l’area 1.3310-20. Qualora cio’ dovesse accadere il prossimo livello di supporto potrebbe presentarsi in area 1.3250-60 (con uno stop-loss sotto 1.3230) per una nuova spinta al rialzo venerdi o all’inizio della prossima settimana.

Questa sera, come ogni mercoledi, inviero’ il mio aggiornamento infra-settimanale (Mid-Week Update) a tutti i sottoscrittori della mia Newsletter gratuita. Qui potete leggere una anticipazione di quanto leggerete (solamente in lingua inglese). Potete sottoscrivere la Newsletter qui.

La newsletter gratuita e’ redatta in due lingue (italiano e inglese) ed in essa fornisco video review del fine settimana ed aggiornamenti infra-settimanali, con piani di trading per Euro, indice S&P500 ed alcune azioni, ed informazioni di dettaglio sui setup di trade nel forex (prima che avvengano). La newsletter viene di solito spedita la domenica (mentre l’aggiornamento infra-settimanale il mercoledi successivo) ed include materiale didattico, articoli, video review settimanali ed altre informazioni che non condivido sul Blog. Per registrarsi fate click sull’immagine qui sotto.

Vi ringrazio in anticipo se deciderete di sottoscrivere la newsletter. Molte persone lo hanno gia’ fatto.

Buona giornata.

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Filed under Euro FX analysis and trade setups videos, Forex, Italiano (Italian language)

Euro-Dollar Analysis, December 19th 2012 (English Language)

Good morning,

please find attached below the video-analysis of the Euro FX currency futures for today December 19th:

Yesterday the Euro hit the 1.3250 target I have indicated in my December 13th video-analysis. There was some profit taking at this level at the end of Yesterday’s session. Today price keeps moving higher and we know it is headed towards the next target level at 1.3430, and I believe this can happen by the end of December (or next week).

Price of the Euro will not move upwards on a straight path but there will be some profit taking and corrections, although I anticipate these corrections being very mild. The next level where Program Trading may start getting some profits off the table is the 1.3310-20 area. Should that happen the next level of support could come at 1.3250-60 (with a stop below 1.3230) for a new push higher on Friday or early next week.

Tonight I am going to send the Mid-Week Update to all my free Newsletter subscribers. This is an anticipation of what you will read in it. You can subscribe my newsletter here.

If you want to have  access to trading plans, watch weekly video reviews as I develop or record them, or get information on setups for the Euro-Dollar cross, the S&P500 index and some high volume  stocks (before they happen), please subscribe my newsletter. It’s free and you get additional content like market commentaries, setups, e-books, articles on HFT and program trading, learning material on my method and video-analysis that I don’t make available on my blog.

Thank you for subscribing should you decide to do so. Lots of other people are doing the same.

If you intend using this information for your trading please do your own diligence, find the advice of a trading professional and trade at your own responsibility. The information provided is for educational purpose only. Please read the Disclaimer and accept all the risks. Thank you.

Have a good day

Leave a comment

Filed under English language, Euro FX analysis and trade setups videos, Forex