Good morning/afternoon.
As we do every weekend, we are going to analyze the market and review the success of our techniques over the past week: the first week of April. These first days of April were unusual as the European markets were closed for the Easter holiday, so we really only started trading this past Tuesday.
FOREX
As you may remember, here are the results for Forex for Q1, 2010.
And here are our results so far this month.
For Forex, we have been a bit unlucky in these last few sessions. For example, allow us to remind you of what happened in Thursday’s session.
These were the signals for the European Morning trades:
First of all, for the Eur/Jpy, we had a target of 123.43 which, not being a round number, generally helps prevent a problem. Can you imagine what the low for the day was? 123.435. Only 0.5 pips from our target. In the end, the price went the other way to hit the stop-profit of +10 points. It was a shame this trade didn’t go our way as we would be up +110 for the month having added 40 pips if it hadn’t been for that darned half a pip.
Also, look at what happened with the European Morning trades:
These were the entry prices and both hit the target but, before doing so, the market made us sweat it out. The Eur/Jpy target was 124.72 and you can see in the chart below that between 19:48 (10:48 EST) and 19.58 (10:58 EST) the price went to 124.71 three times before finally hitting the target at 20:30 (11:30 EST).
And for the Pound, the target was 1.5259 and you can see in the following chart that the price reached 1.5258 at 17:06 (8:06 EST) and 17:07 (8:07 EST) before finally reaching 1.5259 at 17:57 (8:57 EST), 50 minutes later.
It appears this market isn’t making it easy for us and luck is not always on our side but we continue to work hard to protect our capital.
Let’s analyze what happened yesterday.
First, we gained +38 pips with the European Morning Technique GBP/USD without any difficulty.
For the USA Morning session, the following were our signals:
For the GBP/USD, the short trade was placed at 1.5331 and the price went to 1.5315 until new rumours about Greece surface and, as you can see in the chart below, in a span of only 15 minutes we hit the stop. News regarding Greece gave us trouble with several trades three weeks ago, also on a Friday, and yesterday afternoon they resurfaced to cause us problems.
But, here is the best example. We took a chart from Netdania which will help us illustrate our point. Some subscribers yesterday who trade using Fxcm entered short by 0.5 pips while other subscribers who trade with Ib did not enter short by 0.5 pips. Even so, we are going to call this a valid trade.
After the new came out about Greece, the trade hit the stop, triggering the long operation which came within 10 pips of the target.
Therefore, the long operation was at 125.74 when the market closed on Friday. We’ll hopefully close this operation with a gain this Sunday.
As you can see, in these last three sessions we have seen things that had never occurred and they demonstrate the importance of 1 pip or even of half a pip. We hope this is a passing occurrence so that we can go back to making solid gains in more normal market conditions.
MINISP FUTURES
Now let’s review the Sp, where our techniques have had difficulty due to the fact that market conditions have changed and now price ranges are much narrower than they once were. This makes it impossible to reach 4 point targets in the morning, 5 at midday and 4 in the evening because the market simply does not offer these opportunities. The following chart shows a statistic which will help you understand current market activity: it is the number of consecutive sessions in which the Sp has not varied more than 1% in recent years. This year alone, we have had 24 sessions which meet this criteria and this has not happened in this same time period since 2007. As you can see, we are faced with truly abnormal market conditions.
Let’s now analyze the results our techniques as designed (normal) as well as how we would have done trading exactly the opposite (inverse) of what our technique prescribed.
| DAY | TECHNIQUE | OUTCOME Normal | OUTCOME Inverse | |
| Monday | Morning | 1 | -1 | |
| | Opening | 0 | 0 | |
| | Evening | 0 | 0 | |
| Tuesday | Morning | 0 | 0 | |
| | Opening | 5 | -4 | |
| | Evening | 0 | 0 | |
| Wednesday | Morning | 1 | 1 | |
| | Opening | -4 | 5 | |
| | Evening | 2 | -4 | |
| Thursday | Morning | 0.25 | 0.25 | |
| | Opening | -4 | 5 | |
| | Evening | 0 | 0 | |
| Friday | Morning | 0.5 | -0.5 | |
| | Opening | -4 | 5 | |
| | Evening | 0 | 0 | |
| | | -2.25 | 6.75 |
From this analysis, we see that our problem has been the Opening Technique. In any case, the numbers aren’t good and this is also due to the fact that, both for the Morning and Evening Techniques, there was little we could do to make gains of 4-5 points in this market completely lacking volatility.
As always, we continue to work hard to improve our techniques, as best we can, for you.
Have a great weekend!
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