With daily ATR's falling on average 15% across most of the majors and the crosses, along with several inside days, the price action chop fest has begun as the markets digest the Himalayan sell-offs, we have witnessed over the last few months.

This was intimated by how the intraday Ichimoku Clouds have gotten very finicky, like college students on triple espressos waiting to take their final exams.

Taking a look at the chart below, we can see how the Clouds or 'Kumo' have started the flipping contrast. Notice how the white portion of the cloud goes from top to bottom to top Mexican jumping bean style all over the charts for the last several days.



Remember according to Ichimoku theory, the cloud represents support and resistance levels. The thicker the cloud, the thicker the support/resistance it should offer. If its constantly flipping from thick to thin, then that basically is communicating an opportunity is right around the corner for the pair to reverse instead of continuing on in any particular direction.

Thus, if you are looking to catch any substantial move, the floor might drop right out from under you at any moment. This requires a more nimble trading approach as the flipping of the cloud results from the price action being direction less or zombie like bouncing from pillar to post looking for fresh meat. When I see this kind of chart formation, I generally result to the following tactical methods:

1) Drill down to smaller time frames (i.e. 1 or 5 minute charts) *we only suggest doing this if you've had practice/success at these levels and are choosing pairs with smaller spreads.

2) Super-size the time frames up to the larger parameters, aka the 4-hour or daily charts. This will create a pseudo-smoothing method and help one to see the larger ranges in play and play for rejections off the Bollinger Bands or 20EMA's with correlating flat Momentum readings (12 period.)

3) The last option is to stay out which has been my more enjoyable method besides the 1min time frames. Sometimes, there just are not too many ladies for me to dance with on the dance floor. When that happens, I usually re-evaluate whether I am in the right environment or or whether I want to dance at all. I do Tango dancing so if there are no ladies around, then I'm generally not dancing. There will always be another Tango Milonga to go to and there will always be another trade in the markets.

Remember the markets have a close relative called Las Vegas, and you want to make sure you are not always playing hands just because you have time and money to play. In the same fashion, you want to pick your games, tables and times to play where you are most likely to succeed. Based upon the current price action, this trader suggests smaller targets, trading pairs with tighter spreads, perhaps using Bollinger Bands and pivots if you are looking for a rejection play, and being more selective.

The chart below gives an example of such plays using the Bollinger Bands on the 1hr charts.



Chris Capre is the Founder of Second Skies LLC which specializes in Trading Systems, Private Mentoring and Advisory services. He has worked for one of the largest retail brokers in the FX market (FXCM) and is now the Fund Manager for White Knight Investments (www.whiteknightfxi.com/index.html). For more information about his services or his company, visit www.2ndskies.com.

Tuesday, September 8, 2009

FAP Turbo Review - Anyone Making Money?This review will look at the FAP Turbo Expert advisor (EA) for the Metatrader 4 Forex platform.

This review will look at the FAP Turbo Expert advisor (EA) for the Metatrader 4 Forex platform.

I've been reviewing this product since January 5th 2009 on a live account.





My Experience

It's fair to say this EA has had its up and downs. Luckily however as of this writing i am in profit. You can follow my daily progress here.



This is the first EA i have ever used and i am impressed. Whatever people are saying about it, i'm having some success. There have been a few days this month where i've been skeptical, however after researching the forex markets i've realized that these losing trades have been down to volatile trading pairs.



My Strategy

As you may well know, FAP Turbo has a short and long term strategy. The long term strategy on EURUSD currency pair has not been very good. Although with some tweaking i have made it profitable on my demo account. The short term strategy on EURGBP and EURCHF have been pretty good. EURGBP being the clear winner by a long stretch. I will make all settings available here.



What i have learnt, is that although FAP Turbo is marketed as being self reliant (which it is to an extent) on extreme days it is worth turning the EA off or reducing your risk.



Visit my blog for the low down.



About the Author
Hi, my name's Hank and i'm here to help you help yourself. I hope this article has inspired you and given you the necessary information to make a better informed decision if you decide to purchase it. It's important to understand that my review and blog are totally unbiased; i'm not going to personally sell you a thing.
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