Forex Trading Thoughts and....

It the same old thing. RSI is oversold, price is close to both a round number and S1 daily pivot. Does it ever get boring making money? Not yet for me, anyways.

I wanted to clarify how the RSI(14) is used. Start by applying the RSI(14) indicator to both the 15-min and 5-min charts. Also apply a 56ema moving average indicator to the 15-min chart. The 56ema gives a close approximation of the 14ema from the hourly chart. Here's how to use the RSI. You use it only as an alert. It's not a blindly mechanical indicator. Price needs to be at, approaching, or in close proximity to another source of support or resistance such as a daily pivot, a significant fib level, a round number, the 56ema on the 15-min chart, etc., in addition to the RSI(14) being overbought/oversold. A double bottom candle formation is helpful as are any of the typical candle formation for reversal. Check out the following post to see how well this works. I have my trade notated on the image. How many other entry opportunities can you spot? There are at least two others for exceptional short trades. I was unable to take the other opportunities as I was not at the screens y...

This was a decent trade tonight. I could have had a bit better entry at the daily pivot to gain a few more pips but it is what it is. The trade follows the rules of entry for my strategy to a tee. Discipline and patience are most of what is required to be successful. That and whole lot of screen time.

This was another fantastic trade using the RSI(14) overbought signal on both the 5 & 15-min charts. Price moved quickly upward when the market opened, most likely attributed to the strong DOW showing on Friday. I just needed to wait for price to show exhaustion and look for a signal to enter on.

This trade worked out quite well. It was a short play at close to the Asian session lunch hour. Volatility has been picking up nicely near 8-9:00pm PT into the London open. I opened the position on an overbought signal from the RSI(14) on both the 5 & 15-min charts. Closed it at +82 when the RSI(14) reached and oversold condition on the 5-min chart.

It's been a while since I posted anything. Sorry. Most blogs start off with good intentions to keep them up to date, but when you don't get any comments you tend to think it's only for yourself. On to the trade. It's the typical setup with a signal alerting of an overbought condition after a strong move up for most of the Asian session. The question was whether price was looking exhausted at the R1 pivot or was it going to head higher to possibly the 38% fib at 161.35 or even as high as the weekly low at 162.15(sort of far away)? The RSI(14) on the 15-min gave it away with divergence. This means the RSI was at higher level for the earlier spike high and a lower level for this trade when price was higher. This is classic TA(technical analysis), mainly used with the MACD indicator though with other indicators as well. Entry was a short position at 161.18. Bought back(scaled out) 2/3 of position for +53 @ 160.65. The trade is still running with a target(monthly low) of 160...

This trade was taken last session. Price had been falling for the last several hours but the overall trend was still up. The oversold condition on the RSI(14) had nearly touched 30 on the 5-min chart, but was past 30 on the 15-min chart. When the doji showed up, it was time to take action by entering into a long position at 163.72. Price never went into the negative. The trade was closed at 164.22 for +50 pips. I wish they were all this easy.

I had this trade yesterday where I used an ascending wedge formation for a short entry. It ran nicely for +20 pips.

Normally I don't find many good entries at the weeks open on Sunday afternoon, but this one was screaming for attention. The RSI(14) indicator was oversold on three time frames, two of which I've posted below with annotations. First off we had a pretty nice gap lower in price since Firday's close. Typically gaps are going to get filled, or there will be a significant effort made to fill them. The hourly chart was oversold, the 15-min was oversold and the 5-min was oversold. The question was where do I take the entry since the oversold condition looked to be in place since shortly after the weekly open? I had to wait it out for a reversal signal at a strong area or support. Daily pivot S1 was on the radar as an excellent spot for a reversal. At this point it' s time to monitor the 5-min chart for a reversal candle as price moved close to S1. A doji candle was formed which is an excellent reversal indication at this support level. An entry was taken at 155.20. Price move...

Here is an example of a perfect setup for the trading strategy I use on a daily basis. An easy 70 pips of profit. Obviously, they all aren't like this but sure would be nice if they were. You may be asking yourself: "Why did he exit the trade there? It ran on quite a bit farther." Good question. The answer is I traded the strategy where the exit point is the overbought condition of the RSI(14) indicator. I could have chosen to scale out a portion of the position, moved my stop loss down, and let the rest run. Instead I chose to go all out at +70 pips. That kind of profit is just fine by me.

This trade follows the strat outlined in the third post in this blog. Not a bad haul: +30

The cable internet service in my area went down last session. My ISP said it would be a couple of hours before it was up again which would have been about 3:00am, so I closed up and went to bed. Normally my ISP is very stable and not a problem at all.

If you haven't already read it, here's a good article on where the currency markets are at this time: www.dailyfx.com/story/special_report/

The signal showed itself earlier tonight and I took it. Notice where the RSI is showing a better than 70 signal. When I see a strong bullish move, I tend to wait a candle or two to make sure price is weakening. Price was still 8 pips from the 50% fib retracement level from 160.95(08/14) to the recent low of 149.22(08/17). Many times the 50% retracement is a strong resistance level.

I see that the charts are a little hard to read with the colors I've chosen. I'll be experimenting over the weekend with some different colors for easier viewing. The market received some unexpected news this morning in the form of the Fed lowering it's overnight rate from 6.75% to 5.75%. This action by the Fed is what a lot of traders have been looking for as it shows someone in the Fed cares about what's going on in the turbulent markets of the past two weeks. I've added a World Market Hours, CNBC World, Volatility Index (VIX), and Commitment of Traders links. Check 'em out, they come in pretty handy. Have a great weekend and I'll be back posting on Sunday.

Over the years I've been trading currencies, I've been fortunate to come across some wise veteran traders who have imparted some good advice which I would like to pass on to any readers of this blog. Here you go: "We can not control the market. The market can not control us. But we can control ourselves." Trade what you see, not what you think. Maintain discipline - Never consider a random entry just because price appears to be doing something. There must be a valid reason every time you step up to the plate, otherwise you're exposing yourself to too much risk. Never chase losses. Ever. Plan the trade - trade the plan. Log all trades.

Here's tonight's trade. Take a look at the RSI indicator. I have it circled where it hits the 70 overbought condition. At the end of that candle, I entered short knowing it didn't have much left in the tank. Prior resistance is at 156.25 as shown by the spike candle to the left. There was an earlier opportunity approx. three hours earlier as shown on the RSI. Unfortunately, I was not at the screen to take advantage of it. Early bird catches the worm, eh? This is how the trade ended. Closed my short position at 155.44 for a +69 pip profit. The strategy worked like a charm....again.

Here is the way I trade to make money. I apply this strategy to the four currency pairs I monitor. The strategy: Open a cable(gbp/usd) 5-min chart, set it to candlesticks, apply pivot indicator with standard(R3, R2, R1, P, S1, S2, S3) and mid-pivots(M1, M2,...) enabled. Apply the RSI(Relative Strength Index) indicator to the chart. Set it to 14. Set levels to 30, 50 and 70. 70 is overbought and 30 is oversold. Change chart to hourly peridocity and determine the dominant trend. It will be one of three things: ascending, descending or ranging. If the trend is not apparent, change to the daily chart and determine the trend. Mark it on your chart with a trend line. While at the daily and hourly charts, make note of support and resistance(s/r) levels. You can use previous highs/lows, fibonacci retracements, pivots, round numbers(00 or 50) or all of the above in any combination you find price reacts to. You can mark previous high/lows and round numbers on the chart with horizontal lines. As...

People always want to know what software and hardware you're using for trading, what's your trading environment like, etc. Here's a bit of information about my trading area: My office is in the loft area of our home. It's quite comfortable and far enough away from the normal hullabaloo of what ever else is going on in the house. Usually, that's not too much since I'm based in California, eight hours difference to GMT. Though forex(foreign exchange) or currency trading is a 24-hr market, my trading session runs from near the end of the Asian session (10:00pm PT) to approximately a couple of hours into the London session (1:30-2:00am PT). I've found this zone provides plenty of entry opportunities if you stay focused and don't dilly-dally surfing on the net, watching YouTube, etc. If you need to read trading related news or find out what fundamental data will be released during your session, try to do it before the session commences. Make notes, whatever i...

Wow...it's been a while since I posted anything regarding trading. I've got a new strategy(for me anyway) that's quite simple and so far, has been quite successful. I'll be posting images of live trades as they come along starting tonight. Trading is a tricky business to master. Typically it's the psychology of trading that's the most difficult area to progress through. The next most difficult area for me is trade management, of which 50% of that falls under trading psychology. I'll be adding my thoughts of why I entered a trade, thoughts during its progression, and why I exited the trade to my posts. My hope is that folks who visit this blog will get an understanding and possibly a bit of education as I progress toward my goal as a full time currency trader.