Have you got any trades lined up for this week yet? I’ve got a few lined up where I’m taking a very simple, stress free approach and I was thinking that you might be able to benefit from having a look at them too.
Now, before I highlight these I just want to make it clear that I’ve done no research into any of them other than taking a quick look at their charts.
I also want to point out that if you know my style, you’ll know I don’t really give too much thought to the positions that I open, and I tend to let the market tell me where to go, rather than hatch some elaborate grand plan based on stats, fundamentals, news or ideas.
My trading style is very simple:
Admittedly, my ‘style’ is continuing to evolve on a monthly basis and, since March 2012, has been through several different phases as my own experiences and interests shift; Guessing, Robotic, Mechanical, Emotional, Spontaneous, Organic.
For the last 3 months, I’ve made more profit than I ever have done in all the previous months put together and I believe this is due to a culmination of experiences that are lending themselves to my current way of trading in a very simple, stress free but PROFITABLE manner.
I am continuing to target a 30% return on a monthly basis – which means I play a high risk trading game risking larger positions sizes with my trades.
A quick review of how I look to trade right now:
- Like a ball in a rushing stream, I trade with the trend and let it take me wherever it goes.
- I dip my toe in first with a small position (5/10% of my capital because my account size is small), and if things start to go my way, I increase the position size.
- I try and ride the flow until the previous high or low point in the trend has been passed and then I get out.
- I use STOPS and LIMITS so that I can open a trade and then go away to do something else – this takes me about 5 mins.
I thought I’d post up some possibilites for this coming week and give you an idea of when and how I’d enter each.
Trade 1: Spot Gold
I’ve mostly been trading this for the last few months so have a good ‘feel’ for it at the moment. It has been in a downward trend on the daily chart since October and as you can see from the image above, price has been moving in a downard pattern (like a slanted W) fairly consistently.
What I’ve noticed (without really paying any attention to anything other than the price) is that whenever there’s a financial announcement (US Payrolls, central banks, unemployment, interest rates etc.) the price spikes up – as if people remember how fucked up the world’s economic situation is – and this acts as a catalyst for a price spike.
Then, a few days later, the ‘line of least resistance’ or ‘flow’ starts to take over again and the price returns to its previous downward W pattern.
So what trade can I see here? Well, using rule no. 1 of always trading with the flow, I’m first and foremost looking for an entry point to get in SHORT.
If the pattern persists, I’m expecting a price rise back up to between 1650 – 1680 (I’ll use 1670 as my point of interest), before we see a return to the downward trending pattern all the way back down to 1600.
I’d be looking to get in at around 1670 when it feels like things are turning bearish – how do I know when that is? I don’t really, but technical people would tell you to look for a simple entry signal that shows a lower low and a lower high than the previous day’s price (2 in a row to be even more sure).
The only thing I’d need to be careful of here is that if the price reaches this point at a time that is close to an economic announcement – which could be the catalyst to send it higher and over my STOP. I use Hargreaves Lansdown’s financial diary if I want to check announcement dates.
After entering at around 1670, I’d see how the trade goes for a couple of days and if things start to turn my way and I feel confident about it, I’ll increase my position size.
Using rule no. 3, I’d plan to hold the position until the previous low in the trend (1598) had been breached and then look to get out.
When would I get out? Any time after 1598 sounds good to me!
Trade 2: EUR/USD
I’ve not really been trading anything other than gold for the past few months (in my effort to ‘become an expert in one market’) but as I am unable to enter gold at the moment due to the trade just not being there, I felt the time was right to add another couple of markets to my potential trade pool.
Using nothing more than a quick look at the chart, I spotted this one which looks like a no-brainer (which is probably a sign to stay well clear :-)).
You can see from the image above that an upward trend is clearly in place and has been since September 2012 (the trend goes back to July off the left side of this image).
This means I’d be looking to get in LONG here on the reaction – which it currently looks like it is close to finishing. Using a simple trend line annotation, I’ve drawn an up-trending line on the low points of the price and you can see that based on this very simple method, an apparent pattern exists (of course this is not true as the market couldnt care less about your pattern – however, other traders probably will) which suggests that in the next week we might see an opportunity to open a position here.
Like gold above, the entry signal would be a very simple signal where the price has a higher high and a higher low than the previous day. From here, I’d dip my toes in before committing a larger position size when I felt confident that I was with the trend.
In this example, I’d be looking to open a position at around 13250 – 13270.
Again, I’d only be looking to get out after the previous top had been breached which looks like a potential 300 pips or so on this trade.
Trade 3: France 40
This one looks promising for the next week but admittedly, it is a market in which I know NOTHING! This trade would be based purely on how the chart looks and that the index appears to have had a recent price reaction.
By drawing a simple trend line on recent lows, I can see some sort of pattern and this leads me to believe that a few more days of price falls might happen before an effort by the market to return to the previous trend.
Of course, I’d be looking to go LONG here and ride the price up by about 100 pips, although it does look like a longer term trade.
Things to be wary of here which might stop you out quickly though – again using the Financial Diary from Hargreaves Lansdown, is there are a number of European announcements in the next couple of weeks which will undoubtedly remind people that we’re all fucked – so I’d expect some further price falls on the back of these catalysts before returning to flow.
Maybe keep an eye out for an entry at around 3620 LONG.
…that in all of this, the market does not care about your signals. It is merely the result of the culmination of random, spontaneous events that can happen at any time, so every trade you place is, at best, a guess, so don’t get too disheartened if you guess wrong – at some point, you have to be wrong to be right.
Just sit back, relax and never try to out-think any of it.
Your needs are coming into harmony with the requirements of the Cosmos.
Blending brilliantly with the Dance of Life, you are becoming an actual element of Cosmic Law.
Your goals will now be realized because you no longer cut against the Cosmic grain; you are no longer swimming against the flow of the Tao.
You are acquiring an intuitive sense of what can and cannot be, and aligning your efforts accordingly.