| There are trends of four types: | | | | day. |
| · the intra-session trend; | | | | Comment. How to detect the principal trend? Which |
| · the weekly trend; | | | | trend is principal (even in the framework of the old |
| · the trend of duration of several weeks; | | | | classification (the long-term, intermediate-term and |
| · the trend of duration of several months. | | | | short-term trends))? And what is about the |
| A zigzag-like movement of any currency pair at | | | | stop-loss? If the deal is open towards the "principal" |
| Forex consists of various combinations of such | | | | trend direction, whereas the retracement (correction) |
| trends. A smaller trend makes an integral component | | | | starts developing in the opposite direction. |
| of a bigger trend (either the trend wave, or, on the | | | | 45. It is obligatory to check markets before the |
| contrary, the retracement (correction) of a longer | | | | closing on Friday. Often the situation becomes clearer |
| trend towards the opposite direction). | | | | at the end of the week. The best price of entering |
| What any trader wants to know about Forex. | | | | the deal and going out of it is obtainable on Friday. At |
| An individual is interested in knowing the correlation at | | | | the stock exchange opening on the next Monday the |
| least between the first (and shortest) trends at the | | | | price is worse. In particular, this rule is important |
| beginning of the trade but not at the end of it. That | | | | when you hold a substantial position. |
| is, one wants to learn the clear and simple rules, | | | | Comment. In fact, J. Swagger admits the existence |
| according which it would be possible to regularly open | | | | of a weekly trend. |
| deals quietly and work within the intra-session trend | | | | We now attract the reader's attention to B. |
| with confidence. In addition, one is interested in | | | | Babcock's viewpoint ( see "How to trade trends"). |
| understanding of the correlation at least between the | | | | This author states that for the successful trade your |
| intra-session and weekly trends. | | | | time scale for measuring the trend must be not |
| Our aim is to gain but not to lose. One must keep | | | | shorter than 4 weeks. Therefore, you must enter |
| cool. It is of no use to spend your nerves and health. | | | | the deal towards the price movement direction, |
| Even if the currency has moved in "the wrong | | | | which remains unaltered during 4 weeks and longer. |
| direction" by 15 points, it will return in a moment. | | | | There is a good example of the strategy based on |
| Anyway, the only direction where the currency can | | | | trends. One must buy when the price of "close" is |
| go is that towards which you have opened the deal. | | | | higher than 25 days before. One must sell when the |
| The problem is just of being too late for entering the | | | | price of "close" is lower than 25 days before. When |
| deal. As regards the given situation, the | | | | you work in such a long trend, you really follow the |
| recommendations are the following:a). If there are no | | | | market, not trying to predict it. |
| signs of reversal in the currency pair movement, you | | | | Comments. Thus, it is recommended to wait during |
| must open the deal once more after the recoil | | | | 25 days, and then put the order on the 26th day. |
| (rollback).b). If there are signs of the reversal (the | | | | However, towards what direction it must be done? |
| preceding movement was the false breakout), at | | | | You look at the daily charts. For the convenience of |
| first you should open one deal towards the opposite | | | | calculating various currency pairs, one candle |
| direction. You get into the lock, where the quantity | | | | corresponds to one day. You can estimate the logic |
| of damages, being fixed (stipulated), does not | | | | of the well-known author's reasoning by yourself. |
| increase (in Masterforex Training Academy one can | | | | Chart 12.1. USD/JPY pair movement during 4 hours. |
| get a special course of training to the technique of | | | | (For view picture see notes in end of article) |
| making the lock). Further, you add deals towards the | | | | The descending trend came to an end exactly on the |
| direction of the currency pair movement in the given | | | | 26th day. After this the trend reversed and turned |
| session. First of all, you compensate your damages | | | | to the ascending one. |
| and then you gain profit. Under the condition of false | | | | There is the analogous example. On January 3, 2006, |
| breakouts of the levels of resistance/support, the | | | | the daily and weekly trends coincided at the |
| margin of the currency pair movement is always | | | | American session. GBP passed more than 200 points |
| larger than in the case of the level true breakout. | | | | during the session; EURO passed more than 160 |
| That is, the trader can gain higher profits. | | | | points. |
| What a trader who follows (sticks to) these rules | | | | There arise the following questions. |
| must see:a). faultless levels of resistance and support | | | | 3. Under the condition of the coincidence of the daily |
| with respect to each of ally currency pairs. (very | | | | trend with the weekly one and the recoil from MF |
| often they are not those mentioned in sites by | | | | zone, is the movement regular? Naturally, it is! (The |
| "respectable" analysts (but not traders));b). clear | | | | methods of determining the levels of the weekly |
| criteria of the true and false breakout of these levels | | | | trend beginning are explained in the educational |
| and the intra-session trend beginning;c). the | | | | course at Masterforex Trading Academy). |
| synchronous (or non synchronous) character of the | | | | 4. According to "classics" of Forex, a trader must do |
| ally currency pair group movement;d). the time, | | | | the following:a). DeMark recommends to wait at least |
| velocity and type (manner) of the currency pair | | | | till the end of the day;b). B. Babcock advises to start |
| movement;e). the next level (the intermediate goal), | | | | to count out 26 trading days in the current month;c). |
| to which the currency pair is tending;f). the reserve | | | | J. Swagger recommends "not to be engaged in the |
| (margin) of the currency pair movement for the | | | | intra-day trade". If the total trend is descending, one |
| trading session;g). the point of the intra-session trend | | | | must stake on "sell" with GBP and EURO against USD |
| end (surely, one must know the clear criteria of the | | | | and install the stop-loss at a "reasonable point of the |
| movement finish; when such signs appear, one must | | | | damage arrest". |
| fix (register) one's profits);h). the point that confirms | | | | 3. Now let us see what advices the analysts of |
| the beginning of the intra-session trend retracement; | | | | "respectable" sites gave to traders that very day. |
| at this point one can also work with the correction | | | | Forex Brokers Alpari made a review of the Asian |
| against the trend at the super- short distances - in | | | | session on January 3, 2006. Specialists of this center |
| particular, you can make the lock narrower if you | | | | stated that the principal event of the day was to be |
| have got into this lock at the trading session | | | | the edition of the protocol of FOMC meeting |
| beginning. | | | | dedicated to rates on December 13. Participants of |
| According to B. Williams, it is the fifth highest degree | | | | the market were going carefully to study FOMC |
| of the trader's qualification. Reaching this stage, the | | | | minute charts. The reason was the following. For the |
| trader is not nervous but he feels satisfaction at his | | | | first time after a long period from the text of the |
| work | | | | final (concluding) instruction the Committee withdrew |
| The reasons why the majority of traders never | | | | an important phrase about the stimulating character |
| reach this fifth highest degree of trading | | | | of the currency policy. In the past year the last |
| The reason consists in the classical Forex dogmas, | | | | trading day was finished with the positive sentiments |
| according to which the technical analysis starts at | | | | towards USD. The latter still has chances to win back |
| least from daily charts. | | | | losses at the Asian session on Tuesday (December |
| In his "The Technical Analysis as a New Science", T. | | | | 13, 2005). |
| DeMark writes the following. | | | | Comments. The analysts from Alpari, are they Guru? |
| 1. The daily information is the most accessible; for | | | | How can one know where and by how many points |
| dozens of years analysts work mainly with daily | | | | the currency will go in the forthcoming session? And |
| charts. | | | | what is more, the estimation is made issuing from |
| 2. Making use of daily charts, a trader must not | | | | the data that are to be expected on the basis of the |
| continuously keep an eye on the market intra-day | | | | fundamental analysis. |
| behavior. The trader runs less risks of being trapped | | | | You can imagine how such analysts can confuse |
| because of price corrections. Not at all rare in the | | | | traders with the help of the fundamental analysis by |
| intra-day database, such corrections make the real | | | | suggesting who and where will "regain" the money in |
| pest of it. | | | | the next trading session. |
| 3. There is the probability of making a deal at a price, | | | | Here about the same day it is written the following. |
| closest to the value stipulated in the order. This | | | | Dealers note that, generally speaking, currency rates |
| probability increases if the trader uses the market | | | | still have not left the ranges established recently. The |
| signals, based on the intra-day information. | | | | pressure on USD rate is explicable by the following |
| Here I would like to mention J. Swagger's rule #44 | | | | fact. Under the condition of low activity some |
| from his book "The Technical Analysis. Complete | | | | investors start to close long positions in USD rate. |
| Course". The author claims that intra-day solutions are | | | | Expectation of an increase in the American stock |
| almost always wrong. He does not recommend to be | | | | indices gives a certain support to USD rate. The |
| engaged in the intra-day trade. | | | | investors' attention is concentrated on the issue of |
| Below I submit other rules developed by this | | | | protocol of the last meeting of Open Market |
| "classicist of the technical analysis". | | | | Committee of USA Federal redundant system (FRS). |
| 7. Looking at the chart, you should follow your | | | | Comments. How should a trader open the position? |
| instinctive impression - especially if you do not mind | | | | Should it be done at the beginning of the session |
| to what kind of the market this chart relates. | | | | trend? Or, maybe, it is better to do this after the |
| Comment. What about the discipline and following the | | | | issue of "FOMC meeting protocol". That is, the |
| strict rules? | | | | position is to be opened after the careful study of |
| 8. The fact that you have missed a substantial part | | | | this protocol by participants of the market. |
| of the new trend must not keep you away from | | | | As a trader to a trader, please, explain to me the |
| trading within this trend - as long as you can detect | | | | following. Are such "analytical" reviews, edited on the |
| the reasonable point of the damage arrest. | | | | eve of the trading, useful or harmful? If such reviews |
| Comments. How must one understand this | | | | are detrimental to a trader, what for do Forex |
| statement? Seemingly, the author admits uselessness | | | | Brokers prepare them? |
| (non operability) of his TRADING SYSTEM.a) How to | | | | I'll give no further comments upon such nonsense and |
| detect the reversal point not only within the trading | | | | dogmas written by "classics" of Forex and their |
| day but in longer trends as well?b) What does the | | | | followers - "analysts" from various Forex Brokers. |
| notion "the reasonable point of the damage arrest" | | | | Better let us dwell on trading systems developed by |
| implies?c) What are the criteria of the trend | | | | up-to-date working traders at Forex. Their |
| change?d) About what kind of trend does one talk - | | | | descriptions are available in Internet. |
| the long-term, intermediate-term or the short-term | | | | As a trader, I'm convinced that Trading System, |
| ones? (We have dwelt on the difference between | | | | developed by a real trader, can be much more useful |
| such trends in the previous chapter).e) Even a | | | | to a trader-beginner in his learning how to really gain |
| trader-beginner can give a dozen of examples of a | | | | profit. Any Trading System must be profoundly |
| situation like this. The stop-loss ("the reasonable point | | | | comprehended by a student. Its application must be |
| of the damage arrest") was located at a peak of the | | | | brought to perfection. The trader must work |
| short-term trend. Then the currency again rushed | | | | according to this system almost automatically. Under |
| along the intermediate-term trend. | | | | these conditions, the work with such Trading System |
| 14. The newly-formed price models (or the market | | | | will be much more useful than reading of dozens and |
| behavior) can tend towards the direction opposite to | | | | hundreds of books written by the "classics" of Forex |
| your position. In this case, you must immediately go | | | | (not-traders). A thoughtless observance of advices |
| out of any deal - even if stop points are not reached | | | | given by such "respectable" analysts can be |
| yet. You should ask yourself: "If I need a position at | | | | disastrous. Such analysts, writing nonsense one after |
| this market, what its direction must be?" If the | | | | another, serve for interests of various Forex Brokers |
| answer does not coincide with the direction of the | | | | but not for those of traders. |
| real position that you hold, you must close it. Actually, | | | | I'll give no further comments upon such nonsense and |
| if values of the contrary indices are rather substantial, | | | | dogmas written by "classics" of Forex and their |
| you reverse the position. | | | | followers - "analysts" from various Forex Brokers. |
| Comments. How to combine (reconcile) this thesis | | | | As a trader, I'm convinced that TRADING SYSTEM, |
| with the words "do not be engaged in the intra-day | | | | developed by a real trader, can be much more useful |
| trading"? | | | | to a trader-beginner in his learning how to really gain |
| 21. Let us suppose that you cannot watch the | | | | profit. Any TRADING SYSTEM must be profoundly |
| market during a time interval (maybe you are | | | | comprehended by a student. Its application must be |
| traveling). Under these conditions, there are two | | | | brought to perfection. The trader must work |
| outlets. First, you can liquidate all positions. Otherwise, | | | | according to this system almost automatically. Under |
| you must make sure that active stop-orders are | | | | these conditions, the work with such TRADING |
| placed in all open positions. | | | | SYSTEM will be much more useful than reading of |
| No comments. If one can earn money not watching | | | | dozens and hundreds of books written by the |
| the market, what profits can gain those individuals | | | | "classics" of Forex (not-traders). A thoughtless |
| who sit in front of their monitors during the trading? | | | | observance of advices given by such "respectable" |
| 31. Do not fix a small quick profit gained at the deals | | | | analysts can be disastrous. Such analysts, writing |
| the direction of which coincides with that of the | | | | nonsense one after another, serve for interests of |
| principal trends. In particular, if you are fully confident | | | | various Forex Brokers but not for those of traders. |
| in the deal, you should not fix the profit in the first | | | | |