Short Selling Day for Both Pound and Euro

Euro made a fake breakout at the beginning of London session. A temporary support was found at pivot point 1.4006. The breakdown from the descending triangle pattern gave away the true intention of the market - downward. Pivot point also shifted as resistance after the breakdown. Euro reached its second downward goal at 1.3892 (average daily range + 1sd).


Pound had a similar behavior as euro. There is a strong resistance from 1.66 (on daily point and figure charts, pound formed a triple top pattern at 1.66). After breakdown the top of former day 1.6474, it changed as resistance as well. The downward momentum found a temporary support at the confluence zone of pivot point (1.6379) and 10-day EMA (1.6368).



The forex trading strategies for a short selling day is to follow the downward momentum and establish short positions. For both pound and euro, the high probability and low risk forex trade signal was given at the breakdown of former day's high and pivot point respectively.

Timing the Entry for Intra-Day Forex Trading

Timing the entry is the key factor to the success of currency forex online trading. The first step to time the entry is to have a decent forex day trading system, be it trend trading, forex swing trading, or forex scalping. The second step is to have the patience waiting for the maturity of whatever setup your are ambushing. Since you already know what exactly you are expecting, timing the entry will make cutting loss and riding winner much easier.

Timing the entry doesn't need to predict the market. On the contrary, it requires to follow what the market is leading at the present.

Timing the entry also means you are willing to stay flat if there is no forex trading signal triggered by your forex day trading system.

In a single trading session, there might be only 3 ~ 5 high probability low risk forex day trading setups. So most of the time, shrewd day traders just stand aside and watch how the market unfold its structure.

Take June 17, 2009 British pound as an example, after pound found support at 1.6233, which is clearly shown on hourly point and figure charts, there is an ascending triangle pattern formed around 10-day EMA 1.6296. Under this circumstance, a seasoned day trader is willing to make a long commitment only after pound breakout the resistance of the ascending triangle. So why not just long after pound found support? The support alone didn't trigger the long trading signal. It might just be a temporary pause of the downward momentum. Remember, to be succeed in currency forex market trading, there is no need to predict the market direction. Once pound breakout the overhead resistance of the ascending triangle, we have confidence that a long position is a high probability low risk trade. By the way, there is a malicious shaken-out after the breakout. The 40-pip dip found support at the 10-day EMA.



So be advised to time the entry for your next currency day trading. You are right on your way to remain disciplined.

June 11, 2009 Forex Market Recap

British pound made its first attempt to breakout the high of June 10 (1.6473) during London session. This breakout lacked follow through price action, which is a typical trick for a narrow range day play ( NR7). Nevertheless, this dip was still above the pivot point, and formed a higher low, which indicated the uptrend is still intact. After the 8:30am event, pound made another breakout, long at this spot would be a high probability trade. On hourly point and figure charts, pound made a double top breakout pattern at 1.6466.



After the 8:30am event, euro formed a pin bar and higher low on hourly chart, which sat on the upward trend line. There is a confluence of pivot point (1.4010) and 10-day EMA (1.4012) for euro. After breakout this confluence zone, the upswing surpassed another confluence area of downward trend line and 200 EMA on hourly chart. Euro rallied the most of US session and reached its daily range (the green horizontal line).



Japanese yen offered two great swing opportunities. The first opportunity happened in London session after yen crossed the pivot point 97.91. The up swing met resistance around the high of June 10 (98.43), and formed a pin bar on hourly candlestick chart. This resistance was also reinforced by the downward trend line, which offered a great short swing opportunity. The down swing ended at the 200 EMA on hourly chart.

Day Trading Rules

Like any other endeavors in life, there are certain rules needed to be aware of in day trading business. Regardless which market you are participating, be it forex trading, stock trading, or futures trading, or which day trading strategies you are applying, be it trend trading, swing trading or scalping, these rules need to be followed by the pixel to get ahead in this tough business. On their journeys to achieve consistency, lots of day trader pleaded guilty to break some of these day trading rules listed below,

Rules #1 Trading on the Edge

The first and most important day trading rules is always trading on the edge. No matter how experienced you are or how confident you are about a specific trading setup. Day trading is a profession incurring substantial financial risk. Market can and surely it will do whatever it likes at anytime. Day trading is kind of like swimming in the shark infested water. So day trader should always be alert. Even experienced pros can't afford to let their guards down. Market seems have a magic power to catch people whenever they are pants-off. Most day trader have paid their tuition and learned this lesson in a hard way. It's much better to be prepared upfront to psych up with the merciless reality of day trading.

Rules #2 Preserve Precious Capital

When talking about trading, most people heard a lot about "cut loss short, let profit run". What exactly does that mean? It precisely captures the essence of preserving precious capital. There is a quote in Reminiscences of a Stock Operator which gives us a vivid example of applying this rule in real trading, "I did precisely the wrong thing. The cotton showed me a loss and I kept it. The wheat showed me a profit and I sold it out. Of all the speculation blunders there are few greater than trying to average a losing game. Always sell what shows you a loss and keep what shows you a profit."

Rules #3 Trading with An Edge

In Art of War, Sunzi said, "Every battle is won before it is ever fought." Everyone evolved in the market wants to win that's for sure. In a tough arena like day trading, it is believed that only 5% of people consistently taking money out of the market. Day trader definitely need an edge to surpass the rest 95%. So what exactly is a trading edge? Generally speaking, whatever can get you ahead of the game to achieve consistency that's your edge, be it technical, fundamental, psychological, or physical. For example, if point and figure charts helps to make your forex pips, then PnF is your technical edge.

Rules #4 Know Yourself - Know the Market

Obviously this rule is borrowed from the Art of War - "know your enemy, know yourself, and you will win the whole 100 battles". The first half of this rule is to know yourself. Before the starting of each trading session, before initiating a new transaction, after each trade, by the end of each trading session, there are certain questions to ask yourself - Did I remain COOL & CALM & DETACHED? What a professional trader would do under the same circumstance? Did I follow my rules? What might be done differently? What did I learn from today's trading? This self-analysis process will help day trader to stay at their peak performance by avoiding negative self-sabotage psychological trap. The other half of this rule is to know the market. Cause different market situations require different approaches, it's vital to know what the market is doing now - uptrend, downtrend or sideways. It's a wild dream to achieve 100 victories in a row, but by mastering yourself and the market will definitely put odds in day trader's favor, hence significantly help to improve their trading performance.

Rules #5 Plan the Trade, Trade the Plan
Day Trading is a serious business. Like any normal business, day trader need a complete business plan to succeed. Specifically, they need a daily battle plan to operate their small business day in and day out. A trading Plan is day trader's map to success.

Rules #6 Trading at the Present

The only truth in the market is the current PRICE. That's the only information professional day trader need to make a trading decision. So forget about the news, forget about other people's opinions, and forget about any personal biases, and Trade what you see not what you think.

That's the end of the first part of day trading rules. The second part of another six rules will be discussed in the next post.