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Alan Rich Online

Alan's Trading Update

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Remember I told you a couple of days ago that the EURO was strong.

 

In trading you never listen to opinion but rather watch what’s going on. Is this the start of something bigger in the first part of next year for the EURO?

 

That big stall we had in the US session before Christmas due to Fiscal Cliff negotiations breaking down has started interesting moves.

 

The US Dollar has suddenly strengthened and is holding. Underneath the EURO is still strong against weaker currencies but for the moment the US Dollar is king.

 

So Whilst EURJPY is moving up, USDJPY is flying. Whilst EURAUD is moving up AUDUSD is falling hard.

 

So for the moment I’d be more interested in USDJPY rather than EURJPY.

 

If all of this is a reaction to the Fiscal Cliff then it’s safe to assume that nothing will get done over the Christmas period so the US Dollar could continue its strength and I’d look to trade it against weaker currencies.

 

If they sort out the Fiscal Cliff and the US Dollar weakness then I’d switch back to the EURO against the weaker currencies.

 

I spent all day Christmas day with my family. I spent half of Boxing Day with my extended family yet I still managed to follow and trade the markets. I just fitted it in and around my life style for those 2 days. All the time managing positions with stops based what was going on intraday when I could check my screens.

 

Anyone can do that during their normal working life.

 

The EURUSD wants to move up because the EURO is strong but the weak S&P futures keeps holding it back by strengthening the US Dollar. That’s its big problem at the moment. That’s why its lagging other EURO crosses.

 

This is how I played the strong Euro.

 

eurusd-5min1.gif

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Remember I told you a couple of days ago that the EURO was strong.

 

In trading you never listen to opinion but rather watch what’s going on. Is this the start of something bigger in the first part of next year for the EURO?

 

That big stall we had in the US session before Christmas due to Fiscal Cliff negotiations breaking down has started interesting moves.

 

The US Dollar has suddenly strengthened and is holding. Underneath the EURO is still strong against weaker currencies but for the moment the US Dollar is king.

 

So Whilst EURJPY is moving up, USDJPY is flying. Whilst EURAUD is moving up AUDUSD is falling hard.

 

So for the moment I’d be more interested in USDJPY rather than EURJPY.

 

If all of this is a reaction to the Fiscal Cliff then it’s safe to assume that nothing will get done over the Christmas period so the US Dollar could continue its strength and I’d look to trade it against weaker currencies.

 

If they sort out the Fiscal Cliff and the US Dollar weakness then I’d switch back to the EURO against the weaker currencies.

 

I spent all day Christmas day with my family. I spent half of Boxing Day with my extended family yet I still managed to follow and trade the markets. I just fitted it in and around my life style for those 2 days. All the time managing positions with stops based what was going on intraday when I could check my screens.

 

Anyone can do that during their normal working life.

 

The EURUSD wants to move up because the EURO is strong but the weak S&P futures keeps holding it back by strengthening the US Dollar. That’s its big problem at the moment. That’s why its lagging other EURO crosses.

 

This is how I played the strong Euro.

 

eurusd-5min1.gif

 

Hi,

 

Can you please create one thread and post all your messages as replies to that thread?

 

Thanks!

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Sure where is the best place, I did look for like a treading journal section but didn't find one...

 

Maybe you could add one?

 

That's a good idea. Let me see if we can add that! Will get back to you asap. Thanks Alan.

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Naa - just keep it simple - I suggest Alan just adds this thread to his last thread on the Euro. No need for a new thread for every new comment on the Euro.

 

Too many sections and sub sections make the site harder to navigate.

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Naa - just keep it simple - I suggest Alan just adds this thread to his last thread on the Euro. No need for a new thread for every new comment on the Euro.

 

Too many sections and sub sections make the site harder to navigate.

 

For now, Alan, how about you just create a new thread "Alan's EURO analysis" and keep adding to that? I think I can move the other posts of yours to that thread, too. Thoughts?

 

TheDude: any suggestions on forum re-orgs? We want to simplify the existing setup further and structure it better if possible.

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For now, Alan, how about you just create a new thread "Alan's EURO analysis" and keep adding to that? I think I can move the other posts of yours to that thread, too. Thoughts?

 

TheDude: any suggestions on forum re-orgs? We want to simplify the existing setup further and structure it better if possible.

 

the admin can merge all his threads into one thread, and change the title too.

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Today is all about if the Dollar weakens

 

I got stopped out of that last multi day trade on the EURJPY near the black line.

 

I re-entered the market when the US started its afternoon run near the red arrow.

 

If the S&P futures rise then the Dollar will weaken but the winner yet again seems to be EURJPY. So watch what happens to the S&P futures on Friday. Is all this the start of a new move for Friday?

 

I took some profits off the table here on the chart below on this new EURJPY move for my full days Friday profits. Now the rest is a free run.

 

What a week!

 

eur-jpy-5min.gif

 

UPDATE!

 

I suppose really today is all about if the Dollar weakens, the S&P futures rises and the EURO strengthens.

 

You can see its the EURJPY that benefits if this happens. (Unless some news hits it.) That’s where the momentum is.

 

You can also see why I took something off the table at the highs in the last post at the ellipse before I caught a few hours sleep. I’ve already banked today’s profits. Today is a bonus.

 

Its been a brilliant week for traders. Enjoy today, lets see how it works out.

I’m in a no loose position, partial profits banked and a free run on the remaining position. I’m taking it easy.

 

eur-jpy-5min2.gif

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BlueHorseshoe hates Golden C.......sell..sell..sell :)

 

nobody hates a vendor for being a vendor.

 

there are vendors who sell value,

and there are vendors who scam.

 

there are vendors who come right out and explain what they offer for sale,

there are vendors who pretends to be a friend, but only to ask for money later.

 

there are vendors who say they have nothing to sell,

there are vendors who pretend to offer a discussion, but only to lead to a product and or pay service.

 

some vendors don't just sell, they offer help.

free help on an anonymous forum,

genuine help that asks nothing in return, not even a thanks.

 

nobody hates a vendor for being a vendor.

but nobody likes to be taken for a ride either.

 

I have no knowledge or experience with this vendor,

we should all give him a chance to explain himself.

 

good luck.

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90% of Ringlefinch's hate the golden C.

 

There are very few vendors of educational products for traders based here in the UK.

 

The two who run the larger and more successful businesses have long since learned that their profits lie in converting the non-trading public, and not in trying to jag forums full of those who have already discovered the limitations of trying to buy such an education ( or are jaded and cynical old trolls like myself :) ).

 

If Knowledge to Action and Trading College can work this out Alan, why can't you?

 

BlueHorseshoe

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They think more about the moves in the market than they do their account.

 

They don't manage risk and they don't step aside when the game changes. We all have our rules. My first one is to make days money.

 

I've made a good days money on the US market in the first 5 minutes of the day and gone out for a coffee, come back, not done much and then gone home. I would get into trouble with the company the next day but find out that I made more than most people on the floor for that day.

 

It's not what's happening or how much work you put in its how much profit your account shows at the end of the day and end of the week.

Yesterday was like that for me. I had a day's money banked at midnight and managed my risk on a remaining position. I walked away all day and left my screens, a day's money banked and brilliant week's trading. Job Done.

 

Another thing you have to watch out for is this.

 

You have to be very careful when you either do very well or very badly. You can chase moves and over trade either by thinking you can walk on water or by trying to make back any losses. You have to chill out slightly, take it easy even if it's just to get your emotional mind back to its equilibrium again.

 

Start every new week looking at your account with the last weeks profits in it and you'll feel good about your trading.

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So you can't see that one goes up while the other goes down or vice versa?

 

As the dollar gets cheaper you can buy more US shares for that dollar...

 

Please tell me you can see that...

 

Any one else? One goes up the other goes down. No?

 

Hi Alan,

 

Sorry I only just spotted your reply.

 

I can see exactly what you mean.

 

But it isn't correlation . . . It's anti-correlation.

 

Setting aside the fact that you got your terminology wrong, which is perfectly forgiveable given that you're a trader and not a maths teacher, then this seems to be a useful observation.

 

Anti-correlation does not imply causation, but I am certainly happy to accept your explanation of the cause - as the dollar cheapens it makes perfect sense that interest from buyers of US stocks would increase. I have known others make the same point relating to the dollar index and US commodity futures.

 

For this relationship to be tradeable using directional positions in just one market, however, it is necessary not only that the two instruments be anti-correlated, but that one 'leads' and the other 'lags'.

 

Here is an unassailable example of a perfectly anti-correlated pair with a permanent coefficient of -1:

 

Eur/Usd - vs - Usd/Eur

 

Knowing that when the one is rising then the other is absolutely certain to be falling isn't of any use, as I'm sure you realise. You'd need to know that when one is rising at a time t, the other will be falling at a time t+1. The relationship would then have predictive value. (Note that in this rather silly and extreme example this is mathematically identical to knowing that just one of the crosses has a perfectly negative coefficient of auto-correlation).

 

In simple terms, what we need to know is whether US stock prices today are highly anti-correlated with the value of the dollar yesterday, or vice-versa. Do you want to work out whether or not this is the case, or shall I?

 

BlueHorseshoe

Edited by BlueHorseshoe

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