Weekly Review : up +199%/mth so far

Sunday, 28 July.

This was an excellent week, capping an excellent month-to-date (my month-end will be next week). The system results for the week are as follows:

EURUSD: -111 pips.

EURJPY: +227 pips

USDJPY: +236 pips

GBPUSD: +229 pips

AUDUSD: +49 pips

Total for the week = +630 pips

At the start of this month I had stopped trading real money and focussed on training myself. I need to develop the discipline to follow my system rules. After a couple of weeks I felt comfortable enough to start trading real money again in a few trades; and this week all the system trades have been mirrored with real money.  My real money account has increased 5x from its low in mid-June, albeit from a tiny base. Still, it’s a big confidence booster. I feel I have made significant progress in this goal of trading discipline.

Starting next week, which is also the start of a new month, I am re-setting all the  performance tracking accounts. I will trade only the system in my real money account. Therefore I will not need to track the system trades separately from the real trades.

As for my market views: A long-time follower of this blog emailed me asking for my views on what the yen pairs might do in the coming days and weeks. My trading philosophy is expressed well in my reply to him. Here is a sanitized version of that reply:

” Thanks for your message. Hope this trend of big pips continues for me:-)

Regarding your Qs: You need to understand that I absolutely do not ‘forecast’ the market. I follow the market, go wherever it takes me. At each price level where the market comes to a pause or seems to be turning, I catch the turn and go with the flow. So I don’t really know where the market will be next week, I just hope to catch the swing. Having said this, following are the best answers I can give at this time (remember the answers become invalid if the market shows us different action).

$/Yen: ‘The dollar/yen has broken decisively lower and such a move on a Friday presages further falls early next week. ‘ This is true in almost 90% of the cases. What happens is that many retail traders and crowd followers see the news over the weekend, see the price action of Friday and that makes them go in the same direction early on Monday morning. So Monday will see $/Yen down, at least until the NY morning session. The professionals then move in, buying when the retail crowd is selling and hence most Monday moves see a turnaround on Tuesday. The exception is when there is some news or event that moves prices.

The last 4 years have been the years of the GFC and of Yen strength. Before Abenomics, $/Yen was the most sleepy pair, sometimes only moving 25 pips in a day or around 40 pips / week! Something fundamental has been changed by Abenomics. These days $/Yen and Euro/Yen are the biggest movers most weeks. For long term yen watchers this is a huge change in the basic nature of the pair. I would expect the current year range to be much greater than the average of the past 4 years.

I really cannot say if this is the start of the big retracement in yen. The charts currently seem to be in consolidation mode, painting a pennant on the daily chart. This usually indicates a pause before another leg higher. The lowest it may go in this consolidation is around 96 ($/Y) and then it may break to the upside targeting 110 over a few weeks after the upside break. IF 95/96 breaks lower decisively, we may see it go back to 90, but only some extra-ordinary event might cause that to happen.

GBP is very well bid right now, it may go upto 1.56 before a retracement. I don’t look at GY ever, so I don’t know the levels offhand.

Your reasons for the ‘gamble’ sound more like a hopeful prayer than facts, so be careful ;-).

My advice is the same as before – take the loss and clear the decks. You will trade much better after that. But of course the final decision is up to you.

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