How to trade the Australian dollar

A change of pace today people and possibly the best bit of free forex trading information you will ever find online. I must apologise for my lack of posts over the last few days, not because I haven’t been trading or making pips, I just felt like a break from making charts and typing.

Anyway before I post details of a fantastic place to learn how to trade the daily charts I will post this mornings bread and butter trade that pays my bills. A cable long trade for a quick  30 pips. It was just a breakout trade as shown on my chart below.

This was a very straight forward trade, you can see my descending trendline, the moving averages were all pretty close together acting as support below the price, the cci 21 and 63 were crossing from below zero to above, I entered long at 1.6396, my stoploss at 1.6377, I banked 75% at 30 pips profit and will leave the rest on .

Dan Armitage one of the forex mentors / teachers in the www.fx500club.com  had different ideas to me, same trade just a different and deffinately safer entry at the break of the old high at 1.6412. The theory was the same so I am pleased with my analysis.

Ok on to the fantastic daily trade that I found whilst doing my weekend forex trading research.  The link to the thread about how to learn how to trade the longer term timeframes like the daily and weekly is below, just in case you are bored with my ranblings.

http://www.forexfactory.com/showthread.php?t=155459

Strat, the guy that the thread belongs to is a truly amazing forex trader and proved his huge knowledge of the forex markets by taking multiple trades at once and he trades with big money, I cannot remember exactly how much but $100 a pip wouldn’t surprise me. So 100 pips is ten thousand dollars. I have copied and pasted his trades from his thread below. It takes real balls and incredible forex knowledge to take just one of those trades let alone all of them simultaneously.

STRATS TRADES

“AUDJPY entered long above 7/13 hammer/BUOB and cycle bottom
AUDUSD ditto
CHFJPY ditto
EURJPY ditto
NZDJPY ditto
NZDUSD ditto
USDJPY ditto
EURCAD short from 7/1 BEOB on Sunday bar and again below 7/13 BEOB and again below 7/14 bar (broke support)
GBPJPY entered long above BUOB on Sunday bar at cycle bottom and confluence with other JPY pairs
GBPUSD ditto
USDCAD short as per previous post”

I will show you my charts for the aud/jpy trade to explain his entry.

Strat trades many different styles and systems but in order to keep thing simple for novice traders his thread is about how he trades the daily charts using price action at support and resistance using candlestick and pricebar analysis along with moving averages. Strat describes how to use hammers, shooting stars (inverted hammers), and outside bars to signal his entries on the daily charts. There are two types of outside bars he uses, the bearish outside bar / candle ( beob ) and the bullish outside bar / candle (buob ).

The two moving averages that strat uses for his daily chart analysis are the daily 20 ema and the daily 50 sma, he also uses the weekly 20 and 50 moving averages (the daily 100 and 300). Strat refers to the daily charts as the WORKER and the weekly charts as the BOSS. Don’t quote me on any of these technical settings, go and read his thread YOURSELF.

Do yourself a favour and read, read and then re-read his thread, it will make you very wealthy.

Cable Update now over 100 pips in profit from this mornings trade, THANKYOU www.fx500club.com .

Back to Strats charts and his aud/jpy trade from a hammer candle which also happened to be a bullish outside bar (beob) on the daily chart.

As you can see from the daily aud/jpy chart above the verticle red line shows an inside bar on the 12th, an inside bar usually signifys uncertainty, the buyers and sellers are unsure which way to go. The next bar is a hammer, checkout my candlestick analysis videos at this link, http://www.forex-experts.co.uk/acatalog/Candlestick-Videos.html .

A hammer candlstick has a long tail or wick below a short body, this shows that the sellers tried to push the price down and got beaten by the buyers, a very bullish signal when at a strong support level, as you can see at this stage we had three daily bars that had tested the 71.00 level, a triple bottom another strong bullish signal. I dont know exactly where Strat took his long entry but anywhere after the colse of that daily hammer is good at about 72.98, the target would be the descending trendline at about 76.00 300 pips away.

Ok I am going to add my 2 pence worth and show how I should have taken this trade had I been watching the daily charts. It’s based on the 2b. It enables you to get a very tight entry with a very small stoploss, in this case 71.40 with a stoploss at 70.50.

The two red X’s are the most recent tests of the 71.00 level a double bottom , part of the triple bottom i refered to on the daily charts. The red horizontal line is the previous low which represents swing 1 of the 2b setup, the bar that this cuts through represents the trigger bar, once the price moves up and closes above the triggers high we can then enter a long trade.  The initial target for this 2b would be the high of swing 1 at about 73.00. The 2b is a brilliant price reversal pattern that give tight stops and good targets, brilliant for a profitable reward risk ratio, normally 3 or 4 to one.

Strat must have made 1000’s of pips from all those trades he took, that in it’s self is astounding, but what is even more astounding is that he took them all at the same time, true genius and thankyou Strat if you ever read this for taking the time to try to teach others how to trade the daily charts FOR FREE, NO PERSONAL GAIN WHATSOEVER.

I make my charts after every trade I take, I post some to this and other websites and blogs in order to help other learn to trade. It also helps me to improve my trading, so not totally selfless, lol. Onwards and upwards folks, we are here to beat the brokers.

Commission free managed forex accounts Click here to see how Zulutrade do it and take the free trial demo

Click here to join my newsletter and receive information of Zulutraders that I am trading real money with. I will also be providing other useful FREE help and info to aid your profitability and help us all beat the brokers. 

They also have a school for learning how to trade longer term charts at www.fxmonkeyschool.com.

The fx500club and fxmonkeyschool, forex trading school don’t just trade charts and indicators alone, they teach us to use correlation of the whole market before entering a trade. It truly is the best place to learn how to trade forex properly, safely and profitably. It’s all about the pips and about protecting your capital.

CLICK HERE To join my mailing list where I will be sharing my extensive result from trading with the fx500club and Zulutrade automated trading and other Expert Advisors automated trading systems

Click Here to get a FREE days entry into the fx500 club live trading room

This wasn’t an aussie dollar trade because there haven’t been many good australian dollar trade setups recently.

Dan Armitage of the www.fx500club.com live online trading school was suggesting caution again this morning due to the lack of any clear direction in the forex currency markets. This is the second morning that we have done this and I cannot fault his logic in keeping the less experienced of us out of risky trades. It takes great discipline to stay out when things are not clear so there was a great lesson for us all again today.

However me being the cheeky little trader that I am becoming I couldn’t resist a pair of high probability low risk trades off the 5 minute charts. They were both trades that Dan had pointed out as possibilities but not ones he wanted to call as live trading signals for all to trade (because they were not strict fx500 club setups).

They were a euro usd and a gbp usd trades.  They were both long and they were both breakout trades taken off support and through descending trendlines. The trendlines were part of a triangle chart pattern. The euro usd trade chart is below.

As mentioned this was a breackout trade, you can see from the chart all the moving averages were bunched up together acting as support under the price, the daily pivot was also below which is the ideal place to put a fairly safe stoploss. The target was the old high at 1.4006. I entered at 1.3982 my stoploss was just 16 pips away, just a 1 to 1 risk reward but worth a punt with a 50% normal stake.

I closed 75% at target and let the other 25% run, as you can see it retraced almost to my stop then went back up, I wish I had added again at that point and nearly did but chickened out. My last 25% got stopped out but it could have flown up, oh well worth a punt and if you aint in it you can’t win it!

The other trade was gbp/usd chart below.

Almost identicle to the euro usd trade but with a better profit target. Once again bunched moving averages below acting as support, clear air above with a recent resistance level / old high as short term target. Just another punt on the 5 minute chart. A small 20 pip stop with a 45 pip target so worth a go. As usual I closed 50% at 20 pips profit, closed another 25% at the old high and target, 1.6290 and let the rest run. It retraced almost immediately so this time I did add 50% back on at my original entry 1.6246 and closed that again when it hit my original target. A perfect trade in a very tricky market.

Click Here to get a FREE days entry into the fx500 club live trading room

Always Remember.

Keep your risk as a percentage of your capital low (1%), equals stress free trading.

Always work out potential losses before potential profits.

We are paid to take risks, if you aren’t in a trade you cannot win a trade!!

Buy off support and sell off resistance.

Bank partial profits early and move your stop loss to break even as soon as you can.

I am learning how to trade these setups and indicators across all time frames with the help of the fantastic team at the www.fx500club.com They have a live forex chat room and share their charts so that you can watch them find potential trades in real time.

They also have a school for learning how to trade longer term charts at www.fxmonkeyschool.com.

The fx500club and fxmonkeyschool, forex trading school don’t just trade charts and indicators alone, they teach us to use correlation of the whole market before entering a trade. It truly is the best place to learn how to trade forex properly, safely and profitably. It’s all about the pips and about protecting your capital.

CLICK HERE To join my mailing list where I will be sharing my extensive result from trading with the fx500club and Zulutrade automated trading and other Expert Advisors automated trading systems

Click Here to get a FREE days entry into the fx500 club live trading room