Weekly Review 02/28/2010

Good afternoon.

As we do every weekend, we are going to analyze the market and review the success of our techniques over the past week, month and year to date.

OVERVIEW

For the first two months of the year, for MiniSP trades, we have earned a profit of 68.75 points per contract, which is the equivalent of $3,237.50 per contract, in spite of the fact that February has not been a good month, a fact we will analyze later in this review.  The gains from February were so poor that they impeded us from reaching 100 points for these first two months which is our goal if we are to arrive to at least 150 points for the trimester. The Morning Technique gave us an especially poor performance, even though during 2009 it was one of our best techniques.  Now, as you can see, we can hardly operate this technique basically because the SP Futures is not active during normal market hours.

With regard to Forex, we have also had a complicated start of the year with only 230 pips of gain in these first two months which, as you can see, is substantially inferior to the profits we had in earlier months.  We will review the possible reasons for this later on in this document.

In any case, we would like to make it clear that our techniques are solid yet we can’t produce miracles.  We simple try to do a good job and, above all, we ensure that our subscribers don’t lose money.  It is normal to have drawdowns.  In fact, we have had them for several our techniques since at the beginning of the year.  None-the-less, our balance is still positive and we haven’t registered an overall loss.

This week +121 pips

This week +121 pips.

We don’t want to be another Forex “Miracle Web Page". We don’t transform micro accounts into millionaires, but we will never provoke unrecoverable losses for our subscribers. We also are not only about making money, we are a group of professional traders who are friend and who have lived off the markets for years and we hope to continue for many more. DrawDown (1 or 2 per year) is approximately 300 pips with monthly returns of twice that amount. I would dare to assure that that is about the best you can find. 

Review of the third week of February

Good afternoon.

We want to bring your attention to the main difference between our service and others:

At DailyMarketAdvice, we believe the only way to continually beat the market is to adapt your strategy to market conditions and to use techniques that can be applied daily.  If you discover a market pattern that repeat itself at least 70% of the time and where the amount gained when the pattern holds is greater than the amount lost when it doesn’t, don’t think twice; you have found the ideal way to beat the market.   Finding and exploiting market patterns has been precisely our philosophy for years.  We don’t try to break the bank in one or two sessions.  Instead, we beat the market little by little but daily and, by the end of a year, we have achieved profits you won’t believe.  What is challenging about our philosophy is that, when the timing, tendencies or volumes change in the markets, past techniques many times no longer work.   That is why we at DailyMarketAdvice are constantly refining our techniques.

Our signals ALWAYS HAVE A STOP that never moves.  Therefore, when you execute one of our trades you know the maximum risk you are assuming.

A while ago, I had a subscription in another day-trading service that offered a profitability of practically 100% according to their Forex statistics.  I was quite surprised by this and decided to follow them for two months. And it was true; they had 100% profitability on closed operations.  The problem is that each day they left open many operations (all without any stop or target) and they would close them when they became positive.  The problem is that the negative ones were accumulating losses without being closed.  After following them for two months, I discovered they had accumulated 12 open operations; one with -800 pips and another with -650 pips.  Strikingly, all the gains they had accumulated through closed operations during that period didn’t add up to half the pips of losses they had accumulated with these two open operations. 

As we do every weekend, we are going to analyze the market and review the success of our techniques over the past week. 

The following are the operations for this past week. Let’s review them to see what would have happened had we executed all of them.

DAY	TECHNIQUE	OUTCOME	COMMENT
Monday	Morning	0	US markets closed.
	Opening
	Evening
Tuesday	Morning	+0.75	Here we entered with trade type C (counter-tendency).  We got within 0.5 of the target (6 points) twice and closed at +0.75.
	Opening	+5	Did not hit the stop by only 0.25 and reached the target of +5.
	Evening	+2.5
Wednesday	Morning	+1.5	Missed the target of +4 by 0.25.
	Opening	-4	Entered short, arrived to 3 points, then hit stop.
	Evening	+0.25
Thursday	Morning	-4	Entered short and hit stop.
	Opening	+5	Did not hit stop by 0.25.
	Evening	-0.25
Friday	Morning	+4	Would have gained 4 points after being down 3.
	Opening	-4	Would have entered long, hit the stop and then arrive to the 5 point target.
	Evening	-1	We executed this trade but there was little movement at the close.

To summarize, having executed all of the Morning trades, we would have gained +2 points, with three positive and one negative trade.

For the Opening, we would have had 2 positive and 2 negative trades for a gain of +2 points.

For the Evening, we would have had 2 positive and 1 negative trades for a gain of +1.5 points.

Having executed all of the operations, we would have gained 5.5 points, but the market completely lacked fluidity.

Now we will review our Forex techniques for the past week. We executed 10 operations, of which 7 were positive and 3 negative for a total of 164 pips gained.

Let’s review the week, technique by technique.

Gbp/Usd.  This week -17 pips. For one reason or another, the technique did not really get going but sometimes a lack of luck has its influence.  Look at yesterday’s example:

Macroeconomic data was announced at 4:30 EST and, in the majority of brokers, the minimum was between 1.5348 and 1.5350, meaning we were only 2-3 pips from the target.  At that same time, we raised the target 1.5357 and the price went to 1.5358, 1 pip from the target but, in the end, we hit the stop.  Because of only a couple of pips, in two separate instances, we failed to gain between 42 and 35 pips and we hit the stop of 42 pips. We obviously lacked a bit of good luck.

The last week gave us 53 -50 +30 +34 +89 = 156 pips of profit.  So far, this is much better than January, which was the worst month of the last 12 months.  But, as you can see, we are still far away from the results of other months and even from the second worst month, November of last year, when we earned 185 pips.

It is strange but, as you can see, the beginning of 2010 has been irregular for this technique which normally gives us an average of at least 300 pips per month.  We hope that it begins to work better next week.

European Morning Technique EUR/JPY at 3am EST. We did not use this technique neither on Monday nor Tuesday because of an excessive range during the previous nights.  On Wednesday, we earned 20 pips. On Thursday and Friday the trades were canceled because they overlapped with the evening technique. Therefore, we had only 1 operation this week, using this technique, and we gained 20 pips.

In the case of the Evening Technique Eur/Jpy, the week went quite well as we executed 5 operations; 4 positive and only 1 negative (yesterday’s operation that later was covered by the reverse. We earned +161 pips this week with this technique. 

Have a nice weekend and we will back with you again on Monday!

Here is a reminder of our current trading schedule:

I.                Our Current Trading Schedule

A.    Stocks:  We are not currently trading stocks as market conditions are not favorable.  We will advise you when we begin these trades once more.

B.    MiniSP Futures:

1.    Morning MiniSP Futures- 3:00am EST

2.    Open MiniSP Futures- 9:30am EST

3.    Evening MiniSP Futures- 3:00pm EST

C.     Forex

1.    European Morning Technique GBP/USD- 3:00am EST

2.    European Morning Technique EUR/JPY- 3:00am EST

3.    USA Morning Technique EUR/JPY – 9:00am EST

This week +206 pips

What is happening with the SP?

We would like to send you a short commentary today regarding what is happening with the SP and why we are executing few trades, as we commented this past weekend.

In February, thus far we have executed only 11 operations when in January we had made 23.  In January, all of our operations were profitable but in February we have had 5 negative operations.  What is happening this month? And what is motivating us to be more cautious in our trades?  It is the low volatility in the SP during normal trading hours.

Here we can see the last 5 session for the SP futures where the price went from 1060 to 1100.  But, as you can see, the rises happened in off hours.  For example, on Friday, after the markets had closed, the SP 7 points; On Tuesday at 2am EST it rose 6 points.  And then, we have had sessions like the one yesterday where the SP spent the entire day in a range of 5-6 points.

With ranges so narrow, it is difficult for any technique to function.  If we have a stop of 4 points, we need larger for our techniques to work well.  We can’t trade like yesterday, for example, with the Evening Technique with a 4 point stop only to have to fight to close the operation with +0.25 points.  That is what is happening with the SP right now.

Tomorrow, SP options will expire therefore it is normal that, starting tomorrow, the market will begin to move a bit more “normally” than it has these past two weeks.

We don’t want you to think we aren’t operating because we don’t want to.  We aren’t operating because the market is not providing us clear opportunities to do so.  For example, this morning, following our normal technique we would trade short 1094.5 but, as you see, right now the market is at 1098, simply because we are at the same range as yesterday and almost without trading volume.  

Review of the second week of February

As we do every weekend, we are going to analyze the market and review the success of our techniques over the past week. 

With regard to our Forex techniques, our European Morning Techniques have earned 96 pips this year to date and the USA Morning Techniques have earned 108 pips.

Let’s review the week, technique by technique.

Gbp/Usd. Monday -30, Tuesday +38, Wednesday -45, Thursday -45 and Friday -61. Week summary -143 pips.

Last week, our results were 53-50+30+34+89 = 156 pips of profit.  As you can see our results have been inferior to the historical ones.  They have been better than January which was the worst month since the beginning of 2009 but the results have been far below a typical month as demonstrated by the fact that our second worst month was November of last year with a profit of 185 pips.

Below you can see the green line (series 3) marks the maximum amount in our account and the red line (series 2) marks the periods of loss before we overcame new maximums.

The start of 2010 has seen atypical results for this technique (GBP/USD European Morning) which normally gives us a profit of at least 300 pips a month. Therefore, we hope that the technique begins to function this next week as it did during all of last year.

European Morning Technique - Eur/Jpy.

On Monday, we didn’t trade but, had we traded we would have gained 10 pips.  On Tuesday and Wednesday, the maximum price ranges were exceeded, so we didn’t trade.  On Thursday, we did trade and, on Friday we didn’t but we would have gained 50 pips.  It is a shame we didn’t trade short on Friday as we would have easily gained 50 pips.  Following our technique for the week, we would have gained 110 pips but, because we started on Thursday and Friday we didn’t trade, we gained 50 pips this week.

USA Eur/Jpy Morning Technique with reverse.

Monday -81

Tuesday +91

Wednesday +30

Thursday +46

Week summary +86 pips.

As you know, this technique is very risky because of the reverse but this week went well for us.

With regard to our SP Futures Techniques, here are results so far this year.

And here are the operations we executed this week.

As you can see, we have operated very little because we have tried to be very conservative given the recent state of the market and, as it turns out, we were correct because, had we executed all the possible operations, our numbers would have been worse.

The following is an exercise to see what would have happened had we executed all possible operations last week.  This past week was a difficult one for our techniques due to the fact that the market was relatively stagnant, without any tendency and with rapid movements at specific points in time.

DAY	TECHNIQUE	OUTCOME	COMMENT
Monday	Morning	-4	We hit the stop.
	Opening	-4	Would have hit the stop.  We didn’t trade.
	Evening	+0.25	Market very stagnant.
Tuesday	Morning	+1	Counter-tendency trade that didn’t breakthrough.
	Opening	-4	Just like the previous day.  We didn’t trade.
	Evening	0	Would not have hit the entry price. Market stagnant.
Wednesday	Morning	0	Would not have hit the entry price.
	Opening	+5	After three sessions hitting the stop, today it would have made it to 5 points. We didn’t trade.
	Evening	-0.25	Similar to previous days without movement at market close.
Thursday	Morning	-4	We didn’t trade. Had we, there was a false upward break and we would have lost -4 points.
	Opening	-4	Just like previous sessions, movement without a tendency.  We entered short; the price went down 2 points and later bounced.
	Evening	0	No movement.
Friday	Morning	4	The short would have been triggered at 4:59am EST.
	Opening	-4	We didn’t trade but, once again, there was no movement at the opening.  A strange week for the SP.
	Evening	+0.25	We hit the entry point and we exited after making the stop profit of 0.25 in a dormant market.

 To summarize, it was a difficult week for our SP techniques because, as we’ve discussed, the market this past week lacked a general tendency, was overall inactive and had rapid movements, both gains and losses.

We hope that the next week the markets, taking advantage of the fact that next Friday options expire, start to move more forcefully increasing volatility and the tendency we need.

Keep in mind that Monday is a US Holiday (Washington’s Birthday) and the US markets will be closed therefore WE WILL BE NO SP FUTURES TRADES even though that market is open because on holidays normally it is not worth it to operate.