GBPJPY Elliot Wave 4-Hourly
Rob Lee extends his Elliot Wave forex practical with GBPJPY
GBPJPY Forex: We closed our long positions as we swapped into a bearish tone on our Elliot Wave conclusion as correction took over.
We began with our 139.45 entry and added 138.00 area. We are looking for B (B3 on the chart) to extend up to 3 of the Elliot wave before adding further lots and taking away our Hedged A-B from 4 (A4 on the chart) with a targeted C at 2 (C2 on the chart).
GBPUSD compounding your analysis
Rob Lee of AiMS continues his forex educational blogs with Mastering Elliot wave.
Using Elliot wave on the Daily chart we track 1-2-3-4-5 points (points, not waves) and then apply A, B and C correction. A goes to 4, B to 3 and C to 2 giving us A4, B3 and C2 sequence and targets for taking profits both with and against the trend using a hedging matrix.
GBPUSD Elliot Wave
Putting it all together, from previous GBPUSD charts in our blog your see how we find entry and now how we exit.
Remember that there are waves within waves, the last GBPUSD action (March 2010) at the “bottom” for example is a 4-hourly Elliot 5 up to the correction which at the time of writing is at A4 of its correction. have a look on current 4- hour charts and see if you can find it, mark it up on a chart and track it.
Mastering Elliot will take you from a run of the mill trader into the world of super returns with clear trading plans and controlled compounding and positional management.
Hint: look for carry trade positions within the waves i.e. pairs that give you roll over fees in a given direction, AUDUSD long was a very good option recently until its slight bear bias.
Day trading, sentiment analysis
How many times have you been in a trade that fundamental news events say one thing and the market goes the other way, or technicals conflict fundamentals (very common), maybe to help you need to get sentimental too. Rob Lee Forex trader from AiMS gives you an overview of another form of analysis, sentiment analysis.
Many of you will know I’m predominately a technical analyst when on the Forex markets; I will use technicals as my prime analytical device of forecasting, particularly as my timing tool. Add a dessert spoon of fundamental analysis for confirmation (I do my fundamentals mainly on the USA economy when on Forex for obvious reasons) on the larger scene and I’m all set for a day’s trading.
What I don’t talk about often is sentiment analysis, a strong player on the near-term or day trading game. In my usual style I will define sentimental analysis, how we analyze it and how to use it in rational order.
Sentiment analysis, what is it?
Sentiment analysis is a broad area of processing communication channels, text, audio, visual or digital. In simple terms we are attempting to gauge the attitude of the speaker or writer and their emotional state, or more importantly the emotional state they wish to communicate to their audience, you.
Also, if you are like me cynical, you would assume that whoever is talking / writing also has a motive that may not be in line with the emotional state they wish to produce from the simple marketer who has to write something to push you towards a product (look for masses of twitters and free this and that), a Bloomberg presenter who is paid to talk (a lot) to a release from a company with an invested interest in the markets or their own share price to finally the governmental speaker that maybe voted out of the next election unless his comments are popular. All I’m asking you to do is think about it.
Sentiment analysis, doing it
Analyzing sentiment can be a science or art, computers using “bag of words” software to provide semantic orientation or appraisal theory assessing the variances of emotional reactions to a given statement or event. You can use statistical, count positive, negative of statements and then tally your results, or linguistics that produces rules and compares the statement to them.
Whatever method you use the goal remains the same, we are attempting to gauge the polarity of the text, sentence or feature and if it is positive, negative or neutral to the market combatants and project this into our forecast and timing analysis as an added confirmation.
Sentimental analysis, using it
Using sentiment, after my initial technical analysis of the near-term (the last move: daily charts) I’m looking for turning points and apply my money management strategy, from there as a cautious trader I overview my fundamentals and look to trade the same way of the last known fundamentals (also looking for early turns in technical’s for unknown fundamentals too, that’s another story) , as sentiment statements enter the data stream I begin counting positives and negatives and scan the feed for key phases or sentences along with who’s saying it and I think about why they are saying it. All fall into line and trading operations begin, if something is off set I do what a good trader is paid to do, wait, re-analyize, check and double check.
The old saying “There ain’t no such thing as a free lunch” is an important quote to remember, humans by nature have their own goals, amplified by the fact you are in the market with some of the most capitalist, competitive, skilled and cunning people on the planet who will and do everything possible to make money, their communication with you is important and you should take note.
Take care in the information you receive, analyze it: who, why, when, positive, negative, effect
The British Pound is going up on Monday, join my free online dating website here >>>
Rob Lee
Senior Analyst Arriba Capital off-shore
Consultant Analyst and Investment management school London
Forex education: order types
Order Types
Basic Order Types
There are some basic order types that all brokers provide and some others that sound weird. The basic ones are:
- Market order
A market order is an order to buy or sell at the current market price. For example, EUR/USD is currently trading at 1.2140. If you wanted to buy at this exact price, you would click buy and your trading platform would instantly execute a buy order at that exact price. If you ever shop on Amazon.com, it’s (kinda) like using their 1-Click ordering. You like the current price, you click once and it’s yours! The only difference is you are buying or selling one currency against another currency instead of buying Britney Spears CDs. - Limit order
A limit order is an order placed to buy or sell at a certain price. The order essentially contains two variables, price and duration. For example, EUR/USD is currently trading at 1.2050. You want to go long if the price reaches 1.2070. You can either sit in front of your monitor and wait for it to hit 1.2070 (at which point you would click a buy market order), or you can set a buy limit order at 1.2070 (then you could walk away from your computer to attend your ballroom dancing class). If the price goes up to 1.2070, your trading platform will automatically execute a buy order at that exact price. You specify the price at which you wish to buy/sell a certain currency pair and also specify how long you want the order to remain active (GTC or GFD). - Stop-loss order
A stop-loss order is a limit order linked to an open trade for the purpose of preventing additional losses if price goes against you. A stop-loss order remains in effect until the position is liquidated or you cancel the stop-loss order. For example, you went long (buy) EUR/USD at 1.2230. To limit your maximum loss, you set a stop-loss order at 1.2200. This means if you were dead wrong and EUR/USD drops to 1.2200 instead of moving up, your trading platform would automatically execute a sell order at 1.2200 and close out your position for a 30 pip loss (eww!). Stop-losses are extremely useful if you don’t want to sit in front of your monitor all day worried that you will lose all your money. You can simply set a stop-loss order on any open positions so you won’t miss your basket weaving class.
- GTC (Good ‘til canceled)
A GTC order remains active in the market until you decide to cancel it. Your broker will not cancel the order at any time. Therefore it’s your responsibility to remember that you have the order scheduled. - GFD (Good for the day)
A GFD order remains active in the market until the end of the trading day. Because foreign exchange is a 24-hour market, this usually means 5pm EST since that that’s U.S. markets close, but I’d recommend you double check with your broker. - OCO (Order cancels other)
An OCO order is a mixture of two limit and/or stop-loss orders. Two orders with price and duration variables are placed above and below the current price. When one of the orders is executed the other order is canceled. Example: The price of EUR/USD is 1.2040. You want to either buy at 1.2095 over the resistance level in anticipation of a breakout or initiate a selling position if the price falls below 1.1985. The understanding is that if 1.2095 is reached, you will buy order will be triggered and the 1.1985 sell order will be automatically canceled.
Always check with your broker for specific order information and to see if any rollover fees will be applied if a position is held longer than one day. Keeping your ordering rules simple is the best strategy.
Technical analysis, what is it?
Rob Lee Senior Analyst of the AiMS Forex Trading and Training club describes technical analysis, its rationale, theory and mind-set.
To study technical analysis we need to define what it is and separate it from other methods used, such as fundamental analysis, to determine market movements and direction.
Technical analysis is the study of market action using primary charts to forecast the future price of a given market or security. Market action is a term that includes the three principal sources of information used by a technician:
- Price
- Volume
- Open interest
Price action is a term that is not to be confused with market action, price action refers solely to the open, high, low and close (OHLC) prices of a given period of time for a given market or security.
As technicians our philosophy states that:
- Market action discounts everything
- Price moves in trends
- History is repetitive
Market action discounts everything
Market Action, the foundation of our study of the markets, which is primary to understanding our analysis, is that everything that can affect price fundamentally, political, psychological, geographical, acts of god or otherwise is built into the price of that market.
A technical analyst is stating that by studying the market action of a security they are actually studying the shift in supply and demand, if demand exceeds supply the price will raise and conversely if supply exceeds demand the price will fall, the basis for all economic and fundamental analytical work.
A technician reverses the conclusion by stating that if market action is rising then the fundamentals must be that demand is exceeding supply and that if the market action is falling then that fundamentally the supply is out striping demand and must be bearish.
A technical analyst then can state that all that needs to be studied is Market action, to forecast the future direction of a market. A technician is not overly concerned with the “why” a price rises or falls, but more “when” a price turns at a critical point often when no one really knows why in the early stages of a price trend.
The logic is that the market discounts everything, everything that affects price is already reflected in the market from grass roots up. By studying the market action the wealth of knowledge in the Market is telling the technician which way is the likely future direction. There are reasons why the market moves up or down, but as technicians do not feel that knowing the reasons are necessary to forecast direction, not why but when.
Price moves in trends
The concept a technician understands is that price moves in trends. A technical analyst has to believe price moves in trends to make his predictions. This theory is key to identifying the crucial stages of a price trend change, the optimal point at which to trade in the direction of a trend. An out come of this is bastardised from Newton’s first law of motion, a trend is more likely to continue then reverse.
Simplified, a trend will continue until it reverses, therefore a technician will ride a trend until it shows signs of reversal, the basis of our work as technical analysts / traders.
History is repetitive
Technical analysis is the study of market action, which is effectively the study of human psychology. Patterns emerge in a chart for that very reason as human psychology, which tends not to change, repeats its self. The study of the past will give us insights of the future.
Technical vs. fundamental
Fundamentalists concentrate on the laws of supply and demand, which moves price up or down. All the relevent factors are dialled into their analysis to produce an intrinsic value, what it is worth. If the value is under priced then it must be bought, likewise if intrinsic value is over price, or overbought, then a selling order would be correct.
Both technical and fundamental analysis is attempting to answer the same question, the direction of price albeit with different tools. Fundamental analysis looks at the cause while the technician looks at the effect. A technician believes the effect is all that is required to reach a conclusion, whilst the fundamentalist always has to know why.
In real terms there is a lot of overlap, fundamentalists for example use basic technical analysis and the technician will have at least a rudimentary awareness of the fundamentals, economic news for example. A problem arises, often at the beginning of a critical move in the markets the fundamentals do not correlate with the actual market conditions. This presents a conflict as technical analysts contradict fundamental analysis.
The only conclusion we can reach is that the market trend tends to lead the fundamentals, in other words market action is a lead indicator for the known fundamentals. Unknown fundamentals are working of which the market has yet to discount from price, often major moves in the market begin with little or no change in the known fundamentals and the move is well underway before the fundamentals come into the conscious knowledge of the market masses.
As a technician we become at ease in positions where conventional wisdom disagrees, we just don’t need or are unwilling to wait for fundamental confirmation.
Timing
Leverage demands excellent timing, futures markets for example with high leverage requires accurate timing of execution as we take on positions with low margin requirements. A small move in price can realise profits or more importantly force a trader out of the market and produce a loss. Unlike stocks where we can buy and hold, we can be, as a futures trader, the correct side of the market and still lose as timing becomes important.
Technical analysis is the only discipline we can employ to accurately deploy entry and exit points. Although we can use fundamental or technical to forecast in the primary stage, technical is the only choice we have to execute efficiently in the futures markets.
Finally, a technician can adapt to almost any market they wish, very quickly allowing the bigger picture to been seen with inter-market analysis across various key factors, from Stocks buy and hold to fast moving futures. This a key strength of technical analytical practices, which is not matched by a fundamentalist who requires large amounts of data in their specialist field to forecast, a technician simply pulls up a chart and begins work without specialist knowledge in the given sector.
Forex trading club and training from AiMS London Bedfordshire Hertfordshire Cambridgeshire UK
What is Financial Spread Betting?
Financial Spread betting is one of the most exciting and fastest growing ways of speculating on the movement of an underlying share or index and for many investors it has become a flexible and cost efficient alternative to trading ordinary shares.
Advantages of Spread Betting
* No Stamp duty is payable (saving 0.5% compared to a traditional share purchase.
* Tax Free Profits: Profits on spread betting are not subject to capital gains tax.
* No direct commissions or fees are paid to the spread betting company.
* You can profit from falling or rising markets.
* They are traded on margin therefore bets can be placed with a relatively small initial outlay.
* A single account can give you Access to far greater range of financial markets.
* You can limit your risk using a “Stop Loss”.
* The ability to place very small bets, some companies let you place a trade of as low as 1p per point.
* Tax Laws are subject to change.
Drawbacks of spread betting
Financial spread betting is less suited to the long term investor,if you hold a bet open over a long period of time the costs associated increase and it may be more beneficial to have bought the underlying asset. You have no rights as an investor, including no voting rights and you will not benefit from dividends.
From Rob Lee of AiMS Trading Club and Forex training courses
London Hertfordshire Bedfordshire Cambridgeshire UK
Forex Intra-day trader, are you looking at the right info?
Dear Intra-day trader
Whenever I think of the Intra-day trader I think of the home trader primarily, that’s more than likely you, I’m going to aim this with an assumption, most of you work at home with limited live news information and most have not received an economics degree or study, and if you do you simply do not have the tools at hand to compute a complex Marco-economic news event, so why try? If you do have all required then ignore this post.
The Intra-day trader has a relatively simple task, find a trend and trade it for a short period of time, so why do Intra-day traders concern themselves with economic news and it under-laying properties?
Working on 15 minute or even 1 hour charts is akin to looking through the eye of a needle and then stating the view IS the entire world. The information gathered in the candles gives you very small decision processes that determine markets over all direction, trend or sentiment. Frankly a market does not decide to change its sentiment on a single 15 minute candle; it accumulates its decision over many, many 15 minute candles which build up into larger time frames and so on until eventually the market is in total agreement.
What about news and the intra-day trader? The Intra-day actually does not need to know what the News is; he only needs to know the time it is released and the fact that it could change the small trend he is currently trading. Whatever direction the News takes the market is of little concern, major news accumulated may drag the market down or boost the market up, but and it’s a big but, the Intra-day trader is not concern with tomorrow or even the next few hours, its right now they have the eye on.
Very often I see Intra-day students overly concerned with news and spend much time debating its effect, the near-term effect as I’m sure you all have seen, may be very different on a 15 minute chart to its overall effect on the daily charts, why concern yourself with it, Intra-day traders need to specialize in defining a trend and trading it, not becoming a 15 minute economist.
The first piece of advice I give every Intra-day student is very simple, Trade what you see, not what you hear, you are trend specialists not economists.
EURUSD on target
From AiMS Forex Trading Club London, Hertfordshire, Bedfordshire, Cambridgeshire and Buckinghamshire.
The EURUSD hit our target set on Saturday well at 3645, this morning we expect a decision after yesterdays climb, a retracement before.
Usable chart here
EURUSD and GBPUSD
Hedging Matrix in place, monitoring the local term trends now for continued direction.
EURUSD Intra-day
Interesting Hourly close on the EURUSD in the 3445 area, hourly gives us a slow progressive high low on hourly’s. Tentative Entry on low lots in place.