Monday, December 29, 2008


Hai all readers of this blog " A very happy and prosperous new year 2009 for all of you".


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Sunday, December 28, 2008

Method, Money and Mind

Trading is a life experience , it is not like any other business.As you become a better trader, you become a better person. But as you evolve it is difficult to look back at where you were.Dr.Alexander Elder describes about three M's. Method, Money and Mind.Method refers to how you find your trades- how you decide what to buy and sell.Each trader needs a method for choosing specefic stocks, bullions, commodities, currencies, futures, or options as well as rules for ' pulling the trigger' deciding exactly when to buy and sell.Money refers to how you manage your trading capital.You may have a brilliant trading system , but if your money management is poor, you are guranteed to lose money.You have good system, money management and if you dont have the commitment and discipline to stick to your system and money management , then also you are sure to lose in the currency markets.Hence Mehtod, Money Management and your Mind are important in trading.Traders go through three stages of development.In the first stage they are more focussed on Method.Those who survive that stage get focussed on both Method and Money Management. Those who survive that stage add one more component, Mind and all the three put together the trader will be able to make consistent profits from the market.Those who reach that stage become more relaxed, quieter, not jumpy in the markes.They are focussed well on money management and risk orientation.Their trading system is in place, they are at peace with themselves and they spent more and more time thinking how to allocate their trading capital in order to reduce overall risks.This takes years of experience to reach this stage.Forex trading is not get rich quick scheme.Like any other profession in medicine, law or arts , to become an expert trader and to trade for living also takes time.Muraleedharan

Saturday, December 27, 2008

Trading Plan for currency Trading.

Your trading plan consists of your entry , stop loss exit , profit target exit and risk to reward ratio.You have a set up you trade and entry trigger signal.Before entering itself you should plan for two exits. One is a stop loss exit and the second is a profit target exit.Your risk to reward should be 1:2.5 for swing trading in my opinion.Imagine you have an entry signal where your stop loss need to be placed 2 dollars and your target is only 1 dollar. This is a high risk condition and you should pass on the trade even though you have an entry signal. You should wait for low risk entries.When a trader becomes risk oriented that is the stage in which currency trader can pull out consistent profits from the market.If you have multiple trades you can plan for two profit target exits one with 1:1.5 risk to reward ratio and move the stop loss to entry point for the other remaining position to let the profits run.By moving the stop to entry level you have cut your lossess. Here you have incorporated all the three simple rules of trading in your plan ie 1)Cut your lossess 2) Let the profits run 3) Trade selectivity.You have become risk oriented and you take only selected low risk entries.Muraleedharan

Thursday, December 25, 2008

Currency Trading Structure

You must learn to initiate and manage your own trades, nothing else is going to work.John Piper explains about the trading pyramid.The trading pyramid consists of You, Commitment,Discipline,Money Management, Risk Control, The Three Simple Rues( ie 1) Cut Your Lossess 2) Run Your Profits 3)Trade Selectively , )System Parameters , Your Methodology, Operation of your methodology in markets, The result ie profit or loss.This is the structure of the Pyramid.Each trader already has such a structure in place but if trading and losing then the pyramid needs to be rebuilt.There should be harmony with each level of this structure.The first three levels You, Commitment and Discipline are personel levels.You have never looked to any markets for these three levels.The next five levels have to do with developing your methodology.Your evolution as a trader will sum up all the levels into you inherently and you develop yourself as a expert trader with intution.This requires hours of deliberate practice in the currency markets.Muraleedharan

Tuesday, December 2, 2008

Belief in your version of the Currency Market

How you think of the currency market is unique and exists only in your head.To win in in the currency market consistently and make currency trading for your living, you have to ensure that your version of the currency market is useful and then make use of it.What you see as currency market is shrouded with in the emotional whirlwind.The whirlwind may get a lot faster when you have a trading position in the currency market.The currency trading is not difficult, although nor is it easy, but the emotional problems we bring with us to the currency market mean that few only win.
In trading environment there is no absolute truth.We never know what is the right thing to do in any one situation and what is the right for one trader is wrong for another.We therefore have to formulate 'useful beliefs' which work for us.Given the fact that nothing in currency trading is cast in iron, it is important you discover useful beliefs that will form the basis of your trading philosophy.In similar vein it is your personality which should guide you in your search for the right approach.You have to formulate your own useful beliefs and use in the market with good money management and risk control to make consistent profits from the market and to have a good living from the currency markets.Muraleedharan

Saturday, November 29, 2008

You are important in currency trading.

Trading is a life experience, it is not like any other business.As you become a better trader, you become a better person.But as you evolve it is difficult to look back at where you were.There is no right or wrong ways to trade.You cannot copy trades of others.You have to find an approach which works for and in which you are comfortable. That is the most difficult part of trading.To find out your own way to success. That requires commitment and discipline.When you think of discipline the first question springs into your mind is that how can you be disciplined? You should have found out your approach to the currency markets to be disciplined.Once you have your own approach you should be disciplined follow your approach strictly in word and spirit.This is where the discipline comes. If you don't have your approach you cannot be disciplined and you trade emotionally and loose your capital.
This is why I said you are the important factor in keeping commitment, finding out your approach, and keeping strict discipline to your approach and all the more erasing harmful personality traits which is detrimental to the success in currency trading. You, commitment and discipline are three basic ingredients to keep you consistently successful in currency markets. Muraleedharan

Thursday, November 27, 2008


It is needless to say the importance of managing risk to make money consistently in currency trading.With out risk orientation it is impossible to make money from currency markets.All successful and seasoned traders are good risk managers.Learning to manage risk leads to two important age old and most of the time ignored rules of trading one is to cut your loosess and second is to run your profits.You put two successful and seasoned traders on the opposite sides one on bearish side and the other on the bullish side.You will see both of them make money. You put in the same way novice traders on opposite sides. Invariably both of them loose money.The reason is that good traders are very good risk managers.The third important rule is to trade selectively. To trade selectively low risk trades you should become an expert in your chosen approach.Becoming an an expert in any performance field takes time.A currency trader has to undergo experiences of executing and experiencing innumerable number of trades before he gets uplifted to the level of an expert.You should practice your chosen single approach in varied market conditions to build implicitly the expertise into you.Once you have mastered the above three rules you will not have any difficulty in making money consistently from currency markets.Muraleedharan

Saturday, November 22, 2008

EURUSD Weekly Commentary 22nd Novmber 2008

Next Week for EURUSD 24th,25th,26th,27th and 28th November 2008. The Weekly Chart is showing a down trend.This week ended with a harami candle stick pattern on weekly chart with a H P 1.2812 and LP 1.2424. The Daily chart is showing an Engulfing Candlestick pattern. 20 SMA on the daily chart is showing Resistance level of 1.2682. Four hour chart price trend is flat and in the UB 1.2673 and LB 1.2430. Strategy for the next week is to sell rallies OR stand aside till there is daily price closure above daily 20 SMA resistance 1.2682.Good Trading.

Friday, November 14, 2008

Triangle on EURUSD 4 Hour Chart

The Trend is down on Weekly and Daily Chart. The Strategy is to sell rallies or stand aside.In 4 hour chart price is flat and in a consolidation.A triangle consolidation pattern is formed in the 4 hour chart.The triangle pattern is shown above.

Currency Markets.

The currency markets will either be trending or in sideways action.The other important factor is the currency markets will be trending in one time frame and will be in sideways action in another time frame.For example in a daily time frame chart it will be showing a trend and in 4 hour chart it will be showing a sideways action.EURUSD Daily time frame chart is shown above wherein the price is trending down.The 20 SMA is slanting down and price is below 20 SMA .Hence the price is trending down.The 4 Hour chart of EURUSD is also shown above where you can observe the 20SMA is flat and the price is in sideways action.

Thursday, September 18, 2008

Daily chart 20 SMA failure and hanging man

Here on the daily chart price assaulted 20 SMA broke and could not hold and closed below 20 SMA. The short term trend is also down. The good strategy here is to Sell rallies or stand aside.
The 20 SMA is slanting down.Price closed below 20 SMA . MACD is in sell Mode.Target can be the Low Price touched and Strop Loss can be placed 10 pips above 20 SMA


Most of the time , the markets are not in a trending mode but rather in a lateral range.On such occations, the market is in a relative state of harmony with neither the bulls nor the bears in charge.As previously mentioned when the markets are in a state of 'WA' , they will trade in a quiet, horizontal band.At times , however, the bears or bulls may assault a prior high or low level.
Trading opportunities can arise in these occations, specifically if there is an un sustained break-out from either a support or resistance level, it can present an attractive trading opportunity.
In such a scenareo there is a strong probability there will be return to the opposite side of the congestion band.This type of false break-out is called upthrust.If the upthrust coincides with a bearish candle stick indicator it is an appealing opportunity to short.
The opposite of an upthrust is the spring.The spring develops when prices break through aprior low.Then prices spring back above the broken support area.In other words new lows could not hold.Buy if prices push back above the old lows.The objective would be for a retest of the congestion zones upperband.The stop would be under the lows made on the day of the spring.
Trading springs and upthrust is so effective because they provide a clear target(the opposite end of the trading range) and protective stop(the new high or low made with the false break out).Springs and upthrust work very well. Muraleedharan

Wednesday, September 17, 2008

The Line of Least Resistance

The Price always move through the line of least Resistance.The traders task is to identify and determine the speculative line of least resistance at the moment of trading and trade in the direction of least resistance.A trader should wait for this moment when the line defines itself and that is the traders signal to get in.
In other words by crossing a support or resistance the line of least resistance is established.It will not be difficult to make money if a trader always stick to his speculative guns, that is waited for the line of least resistance to define itself and began buying only when the price said up or selling only when the price said down breaking key levels of support or resistance.
The major task of the trader at this point is to find out real break-outs.Most of the time the break-outs are false and there is a high possibility of traders being caught in false break-outs loosing both material and mental capital.

Thursday, September 4, 2008

EUR/USD Daily chart Failed Hammer pattern

The hammer pattern that on 3rd September is a failed pattern.The price broke the hammer HP of 1.4523 and touched 1.4544. But could not sustain the break out and fell below the break out point signalling a false break out.The price retraced and broke below the LP of hammer1.4384. Ten pips below is a good place to short the market. The daily chart is given for illustration.This another example of MACD positive divergence which did not get a trigger signal by a real break out from hammer HPLevel.Some time pattern failure give better set ups and opportunity for entry point.Lowest Price reached after the break down is 1.4222 and closed below the break down level indicating dollar stength and EUR weakness.The days sentiment is buying of USD and selling of EUR. Strategy is to short EUR/USD pair on rallies or stand aside.Muraleedharan

Wednesday, September 3, 2008

EUR USD Hammer pattern on BB Low Band

A hammer pattern is formed on the EURUSD daily chart and the chart is shown below for readers of this blog.MACD 5/32/5 is shown on the chart .The price is going down and the MACD is rising up ,an instance of positive divergence.After a series of down days a hammer is formed inside the circle.You may also notice the price is closed inside the Lower Band.The set-up is the following 1) MACD is showing a positive divergence in the oversold zone.2)There a series of down days to reverse. 3)A hammer pattern is formed on the Bollinger band ,Lower band and closed inside the lower band. This is a set-up which signals the short term reversal of the price.The USD is going to be weak against EUR in the short term.Hence the theme in the comming sessions will be USD selling and EUR buying as per the set-up.
Entry trigger and confirmation is, if the price breaks above 1.4523 , that confirms the USD weakness against the EUR and a long position can be initiated with a stop loss 10 pips below the Low Price of the hammer and targer 10 pips below the UB of the Bollinger band.
The Risk for the day is the news items, USD mortgauge deliquencis, EUR Europen Central bank rate decision.Both events can cause high volatility in the market. Muraleedharan

Tuesday, August 26, 2008

EUR USD 27th RSI Positive Divergence

There is a positive divergence appeared in the EUR USD graph.The graph is posted here.The price is gone down but the RSI(14) is is gone up indicationg a positive divergence.This positive divergence is occured in the oversold area.The selling is reduced.This is an indication for liquidating the short positions in the market.However based on the divergence alone entering the long position is dangerous.Wait for other confirmation of further USD weakness before entering long positions.Murlaeedharan

Tuesday, July 29, 2008


Traders love patterns. We trade chart patterns,oscillator patterns,historical patterns-you name the pattern, chances are there is some one trading it.Much of trading boils down to pattern recognition and the ability to to quickly identify and act upon possible pattern as they occur .Processing market patterns in the midst of our own emotional patterns our tendencies toward impulsivity, hesitation,frustration and regret is one of the greatest challenges of active trading.

EURUSD This currency pair is still timid in moving up.Eventhough it broke HP 5753 of 25th and touched 5767 .The price moved down and closed on 5743 below 20 SMA resistance on 5775.If it breaks today the price target is 5949.The inherent buying strength continues. Buy a break above 5775 or stand aside.

Monday, July 28, 2008

Game of Averages

When a trader first enter in the arena of trading with full of energy, enthusiasm, and hopping to make good money looks for perfect methods which will give success every time.He changes from system to system just like searching a black cat in a dark room. It is nowhere. He gets dssipated of all his enrgies.
There is no holy grail in trading.It is a game of probability and averages.If you can find a method which gives you 40 and above winning percentage with a good risk reward ratio and you can trade the method day out and day in you make good money in trading.Easily said but very difficult to practice
EURUSD pair in a tight range .Broke HP of 25th July 08 ,1.5753 to touch 1.5769.There is no follow through of the break-out.Be on the side line waiting for a clear direction this week.