Straits Times Index Update on 25/10/2015

While the markets have not been making "headline" news about falling stock prices, I do think that we are currently correcting the existing downtrend. The Straits Times Index may continue to trend up to 3,245, before continuing its slide.

Long Time, Long Time

Dear readers,

It has been a good 6 months since I've last updated my blog. I have been through lots of ups and downs throughout this period, and I would be writing them in my blog in time to come.

If you have been an avid follower of my blog, thank you for your support. I hope that my previous posts have been educational to you. If you are new to my blog, I do hope that my upcoming posts would be engaging for you.

HouTian signing off.

Seed Capital

How is it going everyone? This post will be about Seed Capital. Not exactly in the business start up sense, but more for my Forex career.

Over the past 2 years, I have been trading with my own money. Back then, I only have a few thousand dollars to trade with. I may not have shared this with my readers, but I started trading Forex with my very own $2,000. Being relatively new to this market, I was overwhelmed by my own emotions. This has eventually resulted in the loss of my own capital. While I was quite heart broken, I felt that was what I deserved, for being emotional, for not sticking to my own trading plan.

For new traders out there, start small. Because it's quite certain that you will lose your money. It's the first time you trade, and all the emotions will come haunting you. To be honest, it takes quite some time for traders to get used to the ebb and flow of the market. How many accounts you will bust before becoming successful all depends on you, the trader. If you are willing to learn, you may work out with your virgin account. If you aren't, you are going to bust as many as you can until you learn, sadly speaking.

After which, I created a new Forex Trading Account with my existing broker in Australia. This time round, I funded this existing account with another $4,000 of mine. Personally, I do not have a lot of savings to begin with, hence I was very determined to make the best of what I invest and not screw up my trading career. As lucky as I can get, just after a week of depositing the money into my account, my father has offered to give me 30 grand to trade. I appreciate his generosity as well as faith in me in trading.

In time to come, I hope that I can achieve my financial dreams with the seed money my dad has offered to me. While I understand that not all are as lucky as I am, I would like to be a part of budding entrepreneurs' business plan.

Here's a shoutout to entrepreneurs out there, if you are keen in starting your own business, please feel free to drop me a message. I would be more than happy to review your business plan and invest in you! I guess you could call this pass it forward, but I do sincerely encourage entrepreneurship, and the best way which I can do so would be providing seed capital to you, just like how my father did to me.

Signing off guys!

The Interview...

Hello everyone! Recently I have just completed an interview for a close friend of mine, relating to Forex Trading. I hope that I can inspire some of my readers here! I have posted the interview down here, but you can also visit his website! It's right here!

1. How long have you been trading currencies?

I have been trading currencies since 2013, when I first entered tertiary education. Having a major in Accountancy, it sparked my interest in the financial markets. It was a close friend of mine who introduced currency trading to me while I was still learning how to trade stocks.

2. Can you give us some background into how you began trading and how you evolved.

How has trading changed your life?
It was 2008, when I first got my iPhone. There was a stocks app preinstalled in the phone, which got me curious about stocks trading. For the next 4 years of my life, I actually learned more about how to value a company, especially using ratios, as well as using the Discounted Cash Flow analysis which is a method popularized by the famous Billionaire Investor Warren Buffett. It has made a significant impact on my life as I went from no knowledge to being relatively well versed in this market. After I entered tertiary education, I slowly shifted into currency trading. I was introduced to this market by a friend, and was also enticed by how liquid this market was. It also required far lesser money to enter this market, compared to its equities counterpart. Right now, my life revolves around currency trading, and I hope to extend my portfolio to equities as well, which requires far less intervention than currency trading.

3. Do you intend to trade forex for a living?

Absolutely! I would be more than happy to trade for a living! As I see myself as an entrepreneur, I would also want to start a business revolving around the financial markets. I would also like to give talks and teach people how to trade forex too. I do hope that I have a chance to coach you someday!

4. What's your current average return/month for the past 12 month?

After making a loss for almost a year, I have successfully trained myself to be focused and less emotional during trading. As such, I would say that I can achieve a 5% return per month now.

5. Can you describe your workstation setup?

As I do not have a big budget at the moment, I use my laptop with a 15” screen to trade. I do have a 23” external monitor which I connect to with a wireless keyboard and a mouse during days when I want to see a bigger picture of the entire market. Personally, I would recommend traders to use a laptop to trade because of the mobility it gives. I love to go to air-conditioned places that are quiet and trade the markets. It gives me a sense of freedom!

6. What charting service do you use?

Most forex traders should be aware of the software called Meta Trader 4, or MT4 for short. I only use this software for my charts. It’s good and reliable. It comes with lots of indicators and functions. For traders who are interested in automated trading, it is also supported on this platform.

7. What are your favourite currency pairs to trade?

I primarily trade AUDUSD, GBPUSD, and USDJPY. The reason why I trade the Aussie Dollar is due to its stability. As China is the Australian’s largest economic trading partner, the Aussie is very sensitive to news releases of the Chinese Economic Data. However, because Aussie is much more liquid than the CNH, therefore I chose to trade it over the Chinese counterpart.
GBPUSD was chosen because it is very similar to the EURUSD. It usually loves big moves and is usually in trading in a particular direction. The Euro was a big turnoff for me because there are too many economic data from multiple countries to follow.

USDJPY has been popular among new traders because of its simplicity. With the BOJ’s intervention of deflating the Yen, going long on this pair is a sure-win thing, at least for now. Analysts are expecting the Yen to reach 135 by the end of 2016.

8. How many hours/day do you spend currency trading?

I usually spend about 2 hours a day to look at the charts. Not all of the time are spent sitting in front of the computer to do so. As I use the MT4 app on my smartphone, it has allowed me to go even more mobile than a laptop, therefore I would estimate myself to be spending 2 hours a day on the screen. In actual fact, I would probably spend only 30 minutes in front of my computer to do so.

9. Describe your best trade, what currency pair, why you placed it, and how much profit did you make?

My best trade was actually a commodity. As we all know that oil prices have been plummeting, I took a bet that it would that prices would bounce back. I placed a long trade on it and I took a $1000 profit.

10. What was your biggest mistake ever?

Letting my emotions take over what’s in my head. Many successful traders have said so, and I cannot emphasize how important this is. Being emotional will make you even more so at the end of the day. Every trader needs to understand that losses are common and as long as we trade accordingly to our plans, we would definitely be profitable at the end of the day.

11. When placing a trade, do you use technical analysis, fundamental analysis, or a combination of both?

As much as I am a technical trader, I do take note of important economic news releases because these are the time when the market starts to whiplash and take everyone out of the market. But other than the times when there are news releases, I would trade solely on technical analysis.

12. How do you manage risk?

I manage my risk by using a position size calculator to calculate the amount of lots I have to take each time I want to place a trade. They take into account the currency pair that you are trading, stop loss level, and amount of risk I would take. I highly recommend any traders who wishes to be successful to take not more than 3% of risk for each trade placed.

13. What lessons have you learned that have helped you find profitable trades, and keep losses relatively small?

Following your trading plan. That is the number 1 lesson that I have learned over the years of trading. The number 2 lesson that I would like to advocate to traders out there would be not be emotional. It really does nothing but ruin your trading career.

14. Do you agree that forex trading is more risky than trading stocks? Why so?

I do not agree with that statement. To me, risk is the result of ignorance. I am sure that a successful forex trader trading equities can lose as much money as an equities trader trading forex if he does not know what he is doing. Similarly, I would not say that options and futures are riskier than forex or equities. Knowledge is power.

15. What indicators have you found most useful such as Slow Stoch, Fibonacci, ADX, RSI, etc.?

Personally, I do not use much indicators to trade as I believe in price action. However, I do use the Fibonacci tools for projection of retracement of prices as well as extensions. While I do not condemn trading using indicators, I highly recommend traders to learn more about price action trading. I believe that they are the most efficient and effective way of profitable trading.

16. What are some of your favorite resources for learning about and following the forex market?(promote your website?)

One of the websites I would recommend would be babypips.com. It is a great websites for every trader, amateur or experienced, to learn more about forex trading. You’ll never know what you can learn from there! Another website I would recommend is my own website (www.theforextrader.info). I do update my website often for readers to know more about my trading experience. You can definitely find out more about my trading experience from my website!

17. What do you feel as a currency trader that new traders starting out in the market should focus upon?

Learn the dynamics of the market. Understand how price action works. When you have successfully master and understand how price action works, start trading using a demo account. Once you get the hang of it, start trading using live accounts. This is where your discipline comes into action. Trust me, every new trader thinks that they can manage their emotions, but more often than not, it takes a few trading accounts to do so. You need to stop greed and fear from interfering your trading decisions. If you can’t master this, then no matter how profitable your trading plan is, you will still lose money at the end of the day.

First Withdrawal

Hello readers!

Firstly, I must apologize for not updating my blog for such a long time. I have been rather busy with my personal life recently, henceforth the hiatus.

It has been quite a fruitful month of January, as you can see, I have achieved a 13% return on my portfolio, and I hope to do the same for the month of February. According to myfxbook, I have already achieved over 4% return for the month! Way to go! I hope that I am able to keep this performance consistent so that I can build a career out of trading forex.

Anyway, I have finally made my first fund withdrawal from my broker. Emotionally, I felt really happy because it is a milestone achieved as I am able to "touch" my returns from the market. This would certainly be a source of motivation for me to be emotionless (no puns intended) when trading the market in order to perform well.

I have to bring this message across to the fellow traders out there, that you need to reward yourself after reaching a certain milestone in your trading career. Because ultimately, you trade for the profits. If you persistently refuse to take out part of the profits in order to reinvest the money, it can work out both ways for you.

One, you REALLY grow your money faster, thanks to the compounding effect. However, more often than not, you will end up burning your account because greed comes into play as you want to see your money grow even more before you actually cash out. Trust me, this has happened to me before, and I believe that it would happen for most traders out there. Hence, it is really important that you take out a small sum of money after reaching a milestone in your trading career, in order to be less emotional when trading.

2015, a good year for everyone.

Hello everyone! This post will not be about trading, but rather, what I hope to achieve in 2015. I have just graduated from Basic Military Training Center last weekend, and I am currently enjoying my block leave before I embark on the next journey in my National Service life.

I hope that this will be a good year for me, as I plan to inject more funds into my trading account, and withdrawing a fixed amount of it every month to invest into other financial products. I am currently looking into savings-investment plans offered by banks such as the one offered by POSB and OCBC. You may click on the links to find out more!

To you guys out there, are there any other types of investment products which I can place my money into to grow them? Leave them in the comments section!

Traders Enjoy Best Year Since 2008 as Swings Return: Currencies (Bloomberg)

Good news for Traders like you and me!

"Currency traders will be starting 2015 on their hottest winning streak in a decade.

An index of foreign-exchange returns has risen for the past six months, the longest stretch since 2005 and turning this year into the best since 2008. That marks a comeback for traders who, as recently as September, were facing a fourth year of losses as record-low volatility limited opportunities to make money.

The catalyst for change came with a divergence in monetary policy, helping the dollar burst higher while pressuring currencies such as the euro, Norwegian krone and Australian dollar. First, European Central Bank President Mario Draghi said the central bank was ready to act to counter slower inflation. Next, the Bank of Japan expanded the supply of yen via its quantitative-easing program. Now, Federal Reserve Chair Janet Yellen is preparing to raise interest rates next year.

“The second half of the year has been much more encouraging for us from a perspective of generating returns from currency,” said Gordon Ibrahim, a money manager at BlackRock Inc. in London. “We are always cautious about whether this is sustainable but we are more optimistic. We have been increasing our risk allocation to currency within a number of our funds.”

Jackson Hole

Prior to Draghi’s Aug. 22 remarks during a speech at the Fed Bank of Kansas City’s annual economic symposium in Jackson Hole, Wyoming, the Parker Global Strategies LLC index that tracks the performance of 14 top currency funds had fallen 2.7 percent from Dec. 31. It has since climbed more than 5 percent, set for a 2.6 percent annual increase.

The measure had fallen in 2011, 2012 and again in 2013, losing a combined 8 percent in those years.

This quarter, the ruble is the worst performer against the dollar among the 31 major currencies tracked by Bloomberg, dropping 32 percent, followed by the Colombian peso’s 15 percent decline and the krone’s 13 percent plunge. Only the New Zealand and Hong Kong dollars have strengthened.

The Parker gauge’s performance in the first half coincided with a drop in price swings that pushed the JPMorgan Global FX Volatility Index to a record low 5.29 percent on July 3 based on closing prices. The JPMorgan index was at 9.98 percent today, and Europe’s common currency is more than 8 percent weaker since Draghi’s speech, set for its first annual decline since 2011. It declined to a two-year low of $1.2124 yesterday, and was at $1.2146 today.

Gaining Momentum

Fluctuations may increase with policy makers in Frankfurt studying additional stimulus measures.Japan’s monetary policy will also be under scrutiny with strategists surveyed by Bloomberg predicting the yen will weaken in 2015.

The divergence in monetary policy that has boosted returns in the foreign-exchange market is set to continue, according to Jane Foley, a senior strategist at Rabobank International.

At the conclusion of the Fed’s meeting on Dec. 17, Yellen said officials were on course to raise the overnight target rate from close to zero and suggested a “patient” approach may translate into an increase by the middle of 2015. U.S. gross domestic product expanded at a 5 percent annual rate in the third quarter, the most since the same period in 2003, revised government data released last week showed.

“It’s fairly normal to have a heightened amount of volatility at the turn of an interest-rate cycle,” Foley said in an interview from London on Dec. 22. “Certainly for investors there can be opportunities in volatility. The people who are going to find it more difficult are those who have to set pricing policy, people who have to hedge, even policy makers and central banks.”

Lull Over

Away from the largest currencies, geopolitical tensions and a collapse in commodity prices helped trigger the greatest moves in foreign-exchange markets this year.

The lull in volatility also ended as a conflict between Russia and Ukraine escalated and crude oil tumbled to the lowest since 2009. The ruble slid more than 40 percent against the dollar and the krone dropped 18 percent.

“Volatility is here to stay and that will present opportunities for currency investors,” Paresh Upadhyaya, Boston-based director of currency strategy at Pioneer Investment Management Inc., said in a telephone interview on Dec. 23. “It will make it a little trickier to use some of these currencies as funding currencies because with that volatility you can’t rest too easy for the whole year long.”

Upadhyaya, whose company oversees about $250 billion, was referring to carry trades, in which traders attempt to profit by exploiting differences in interest rates.

“You have to be a bit more tactical and strategic as to when to put on carry-trade opportunities,” he said."

Credits: Bloomberg

http://www.bloomberg.com/news/2014-12-31/traders-enjoy-best-year-since-2008-as-swings-return-currencies.html?hootPostID=98b501d5bbbbf5fdc3d232b7378b5b4a

How To Trade and Profit Consistently (Even if it means not touching your account at all)

During the one week which I was out in the jungle, for field camp, I took a profit from going long on the USDJPY. The position hit my Take-Profit level which meant a $300-odd profit for my account. Of course, any trader would be happy to see a profit going into their account, especially when they are away from their trading desk.

However, I lost the $300 faster than I could count to 3 (days)... Yes, that was how fast it took me to lose all the profits I gained during a week which I was away. You might be thinking, how do you call yourself a professional trader if you can let that happen to you?

Firstly, I'm far from being a professional trader, but if I could train myself to think and act like one, I can be one. I believe that those traders who made it big went through similar steps as I did. They won more than they could count, but they lost even more due to their greed. They start a new account, and the whole process starts again. 

The only way you can stop losing money like this and start profiting is only if you choose to. As much as I may be preaching it, being disciplined and sticking to your trading plan is the ONE AND ONLY way to go. You do not have to lose money if you choose not to. The reason why I lost faster than I profit, was because the fact that I lost control of myself while trading. During that 3 days, I over-traded, opening and closing positions unnecessarily, and all sorts of things you can think of when a savaged trader hunts for profit.

What I'm trying to say here is that more often than not, the factors that affect your portfolio performance are not what you think of (E.g. market performance, strategies that don't work, etc.). What really affects your portfolio performance is usually you, yourself, as the trader. The only way to earn more profits than what you lose, is to be strict on yourself. Be firm in believing that your strategy will work, especially when you have backtested it. Be stringent on yourself that so that you will execute trades when you need to, not when you want to.

Thankfully, I made another chunk of profit last week. This was possible because I was patient enough to wait for the market to give me the signal I was waiting for, and I acted upon it without hesitation.

I hope that this article would be helpful enough to prove to you how important it is to be disciplined to carry out trades when you have to, and not to trade when you don't need to. Please feel free to leave comments if you have any!

Coming back to Forex Pip Trader

Hello everyone.

After a hiatus from this blog, I will be coming back to write more posts about Forex, as well as Financial Planning. Of course, the main focus of this blog will still be about currency trading, but rather than providing you readers with trading signals, I will be writing more about how to trade, the dynamics of trading, so on and so fourth regarding trading as a whole.

On top of that, I will also be touching on personal finance, wealth management, and topics related to money management.

While some of  you may not be aware, I'm now serving the nation, which means that I will only be able to get access to my computer on weekends. With such little time every weekend, I will still try my very best to update this blog so as to provide you with invaluable information on trading and wealth management.

All the best!
HouTian

GBPUSD 30/12/2013

The pair rallied on Friday, just hours before it came crashing down, creating a bearish dark cloud cover signal on the 4-hour chart. On the 1-hour chart, the market has closed just slightly below 18 December’s high ($1.6480), as well as below the Fibonacci Extension level of 0.618.

With the bearish candlestick signal on the 4-hour chart, rally of the DXY, along with the market closing just slightly under $1.6480, it is a good opportunity to short this currency pair. For those who are more conservative, I would suggest waiting for the 10SMA to cross below the 20SMA before shorting it. 

GBPUSD H4 Chart

GBPUSD H1 Chart

US Dollar Index 30/12/2013

The US dollar index has bounced strongly from the low on 10 December just before the markets closed for the weekend, indicating strength in the USD. The bullish USD can be exploited by shorting GBPUSD and AUDUSD for the upcoming week. Kindly refer to their respective charts for a more in-depth analysis.

AUDUSD & USDJPY 26/12/2013

Merry Christmas everyone!

Today's post will be on AUDUSD & USDJPY!

AUDUSD

This pair has been rallying for the past week or so, forming a bullish trend line. While the pair has corrected itself on 23 Dec, it is supported by the 38.2 Fibonacci retracement level along, and is now cruising along the trendline. With the 20SMA just about to cross the 50SMA on the H4 charts, I would give say that it is a good time to long this currency pair when the market resumes operations.

USDJPY

I believe that this pair has been on the 4th wave of the Elliot Wave, and is resuming its rally on the fifth leg of the wave. I believe that this pair will continue its rally to 105.72 before correcting itself.

Update to the blog!

Hello everyone. It has been sometime since I have posted an entry in this blog. I apologize for doing so because I haven't been all free to post a new entry. The previous readers of my blog will know that I usually take screenshots from MetaTrader and post the links here to view. After discovering a new website called Trading View, I will be using charts from that website to showcase my trading plans.

That being said, let's move on to the technical analysis!

USDJPY

This pair has been rallying for the past few weeks and it seems like it is not stopping! On Tuesday (10/12/2013). the pair reached 3 December's high and retraced back to the 0.618 level before hitting a daily high of 103.908. The Yen then ended the week back around the 0.236 Fibonacci level of 103.221. Being a strong believer of Fibonacci retracement and extensions, I would say that this pair would continue its rally to the 1.618 Fibonacci level, which is still some distance from last week's closing. The projected take profit price would be around 104.740 (Fibonacci Extension Level 1.618).

Click here to view on Trading View.

AUDUSD Forecast

The currency pair started the day dropping till the 0.89455 level which is a significant support level on the hourly chart. That being said, I would recommend a BUY for this currency at these levels; 0.89455, 0.89770, and 0.89900. The first resistance level would be at 0.90150, followed by 0.90548, and 0.90918. If you had followed my previous posts, my ultimate target price for this currency pair is 0.90918. Given that the currency has hit a significant support level on the hourly chart, a BUY would be strongly recommended. On top of that, there is a large trading volume at the support level of 0.89455, thus making it a good time to buy this currency pair.

August 26 Technical Forecast (AUDUSD, USDJPY)

AUDUSD Forecast

As covered in previous post, this currency pair is currently in the consolidation phase as prices hovers around 0.89421 and 0.90372. Despite so, there is a very strong support at 0.89812, and this has been further confirmed by yesterday's price action, where there is a surge in price at 0.89812, along with a large increase in volume. However, there is a also a significant resistance at 0.90372. That being said, I would expect this currency pair to trend up next week given that Ben Bernanke will not be attending Jackson Hole symposium 2013 today, probably indicating that there will not be any significant news being released over the weekends. 

Based on fundamental analysis, the 20-period SMA has crossed the 50-period SMA, but has much remained flat. Nevertheless, a downtrend reversal is very likely since the market closed at the support level of 0.90125, where there has been several Dojis forming at this area. 

USDJPY Forecast

This is one of my favourite currency pair. There was a sharp drop in the price of this pair yesterday, accompanied with a large volume traded. This is probably due to the psychological resistance level of 99.00 causing the drop. The pair corrected itself from 98.479 to 98.471, with the market closing at 98.677. While the 20SMA has yet to cross the 50SMA, the drop in price along with correction to 98.471 and closing at 98.677 indicates that a downtrend looms ahead of this pair. A short position for this pair would be good when the markets open on Monday as the market corrects and prepare itself for the downtrend. 

Once again, before I end my post, please follow me on twitter @fx_warrior. Thank you!

Before the week ends, I would like to conclude that most of the major pairs are in the consolidation phase and I do not recommend a BUY or SELL. I would recommend that if you have any open positions, please close them as there might be a possible trend reversals for most of the pairs next week. 

Also, do note that there would be a major event next Friday, where the Fed would be having their meeting at Jackson Hole. Enjoy your weekend guys!

PS: Please be sure to follow me on Twitter @fx_warrior, or click on the "Follow" button at the right side!

For this post, I will be discussing about the AUDUSD currency pair.

Recently, this pair has ended its downtrend after the US released its Unemployment claims data. It failed to meet the expectations of analysts as the actual unemployment claims were 336,000, while analysts expected 329,000. It is also more than the unemployment claims data released previously of 323,000. That being said, it sent this currency pair along with other major pairs into consolidation phase as market participants are probably hesitant whether the US economy is improving as expected due to the tapering of the Quantitative Easing. Fundamentals aside, the H1 chart shows that this pair is in the consolidation phase as prices hovers around 0.89905 and 0.90431.

As the price is now nearer to the 0.89905 mark, I would recommend a buy for this currency pair as the 20-SMA has crossed the 50-SMA, signalling a BUY for this pair.

Due to the market's uncertainty of the conditions in US, I would recommend a TAKE PROFIT at 0.90431.

It has been quite some time since I have updated my blog. But since I have finished my exams, I will start posting once again! Hurray! Anyway, please follow me on twitter @fx_warrior.

My apologies for not updating this blog for quite some time.

Anyways, next week (10/6/2013), I will be focusing on the EURUSD pair as well as XAUUSD.

EURUSD seems to be facing some support after it tried to test it on Friday's closing. I feel that this pair would continue to rally up.

For XAUUSD, a doji has appeared on the H4 chart. However, do note that the daily chart's stochastic is signalling a downtrend. I would long this pair if there is a bullish candlestick forming on the next H4.

Hello!

Believe it or not, I just lost 12K due to the lack of self-discipline! Made 2 loss trades on EURUSD today.

Anyway, now I am holding 3 positions in EURUSD, GBPJPY, and GBPUSD. These 3 has finally gave me signals to long/short.

For EURUSD, I have shorted the pair as it showed a short signal right after hitting the Bollinger Bands, however, it seems that the 1.29391 support level is hard to break. But based on my indicators, I think it would be good if I were to stand on the short side.

The 1.5280 support level for GBPUSD has also been broken during the day's trading. Therefore, I have decided to short the pair. Stochastic also gave me a good signal to do so, even though it is now roaming at below the 20 level.