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

Forex Trading - 5 Tips For Financial Freedom

by Rob Patterson

Because they don't go into it with the proper training, many traders are finding themselves ruined and losing all their money. This can be a frightening prospect when first entering the Forex market, but by following these straightforward, sure steps I will lay out for you, you can avoid this catastrophe. Forex trading can be a great way to make money if you follow the rules and guidelines.
Be Confident

Having confidence in your own decisions is crucial. You have undoubtedly been taught the ropes of Forex trading and have learned how to make smart decisions and investments. So trust yourself and don't rely on another person's opinions or thoughts. Of course, though, this independence implies that you take trading serious and give thoughts to a decision before you risk your money.

Don't Try Until You're Ready

Only traders with lots of experience can invest without losing money in the Forex market. Most newcomers suffer losses before they learn the intricacies of trading. This fact should not dissuade you from trying, but it should encourage you. If you wait to trade until you are certain you understand it all and are ready, you will be ahead of the game.

Determine Your Style

You can use many different methods in Forex trading. It depends upon whether you are a go-getter, or if you are patient and willing to wait. In order to advance, you have to determine what works best for you and fits your style. A good way to learn this to try your hand at trading in a demo account. This way your experimenting will not risk your money.

Familiarize Yourself With Forex Trading

Make sure you know the details and make sure you have a firm grip on Forex trading. Even if you are impatient to begin, it is critical to have an education in trading. Forex seminars are extremely helpful and will speed up your education time by far. Also you should find a mentor - someone to share their experiences and advice with you. But just be careful when choosing this mentor, for your future in Forex trading will depend on his training.

Keep on Learning

The education never stops. Even after years and years of trading, there is always more to learn. This is true of anything you do in life. There is always something new that experience will teach you. Also, you should have a continual relationship with your trainers and mentors. This will make a great difference on your trading career.

By following these simple guidelines, your Forex enterprise will flourish. Just keep in mind that what makes a professional Forex trader from a mediocre trader is the desire and will to be independent. So many traders are fooled by being taught to rely on set strategies, approaches, or signals. But this will limit the traders to only do as well as the people they are copying. Why not try to do better?

Instead of relying upon another person's ideas, elite Forex traders will take the first step. They will be independent. Their decisions will be well thought out and perfected. They will act upon these decisions firmly and confidently and manage their account in a calm, intelligent way. This can be if you follow these simple guidelines and go to the next level with your trading skills.



About the Author
Ferris Malone writes about investing and early retirement. Discover the benefits a great Forex training program and effective coach can make by attending a risk-free online seminar offered by The Forex Trading Institute. Whether you're a new trader or experienced veteran, rock-solid forex training makes all the difference. For information and a seminar schedule visit http://www.thetradinginstitute.com
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