Discipline that bring success

"Discipline to stay to the rules and the plan that bring success. Otherwise we trade emotionally"
Phillip Nel.

Success Formula

"I've learned (the hard way) that...
the success formula looks something like:
Quality Input + Hard Work + Discipline + Some Originality = Success in trading

if you're just starting out, be aware that no matter how much you learn from other people, no one will be able to do the hard work for you, especially in the key areas of trading psychology and discipline."
(bluemeasure, 16 years experienced Trader)

Are stops as effective as we think?

This is a controversial topic but what I want to do in this video is present another point of view behind the real value of a stop loss. Although it is conventional wisdom to use stop losses as essentially an exit order, it can add significant disadvantages to your trading. These include smaller winners, larger trading volume and transaction costs and disadvantageous exits. Risk control is critical but every trader should understand the costs and benefits of all the tools available to them not just one suboptimal option.

To see the video, click here: http://www.pfxglobal.com/index.php?o...297&Itemid=117

Article Source:
http://www.forexfactory.com/news.php?do=news&id=57269#post1727335
(Analysis by Profiting With Forex (PFX))

Pivot Points 14/11/07

Currency Pairs:

1) eurusd :

• R3 = 1.4704
• R2 = 1.4660
• R1 = 1.4633
• P.P = 1.4589
• S1 = 1.4545
• S2 = 1.4518
• S3 = 1.4474

2) gbpusd

• R3 = 2.0919
• R2 = 2.0825
• R1 = 2.0767
• P.P = 2.0674
• S1 = 2.0580
• S2 = 2.0522
• S3 = 2.0429

3) gbpjpy

• R3 = 233.71
• R2 = 231.66
• R1 = 230.40
• P.P = 228.36
• S1 = 226.31
• S2 = 225.05
• S3 = 223.01

How to Trade with Pivot Points

Breakout Trades

The pivot point should be the first place you look at to enter a trade, since it is the primary support/resistance level. The biggest price movements usually occur at the price of the pivot point.

Only when price reaches the pivot point will you be able to determine whether to go long or short, and set your profit targets and stops. Generally, if prices are above the pivot it’s considered bullish, and if they are below it’s considered bearish.

Let’s say the price is hovering around the pivot point and closes below it so you decide to go short. Your stop loss would be above PP and your initial profit target would be at S1.

However, if you see prices continue to fall below S1, instead of cashing out at S1, you can move your existing stop-loss order just above S1 and watch carefully. Typically, S2 will be the expected lowest point of the trading day and should be your ultimate profit objective.

The converse applies during an uptrend. If price closed above PP, you would enter a long position, set a stop loss below PP and use the R1 and R2 levels as your profit objectives.

Range-bound Trades

The strength of support and resistance at the different pivot levels is determined by the number of times the price bounces off the pivot level.

The more times a currency pair touches a pivot level then reverses, the stronger the level is. Pivoting simply means reaching a support or resistance level and then reversing. Hence, the word “pivot”.

If the pair is nearing an upper resistance level, you could sell the pair and place a tight protective stop just above the resistance level.

If the pair keeps moving higher and breaks out above the resistance level, this would be considered an upside “breakout”. You would also get stopped out of your short order but if you believe that the breakout has good follow-through buying strength, you can reenter with a long position. You would then place your protective stop just below the former resistance level that was just penetrated and is now acting as support.

If the pair is nearing a lower support level, you could buy the pair and place a stop below the support level.

article source:www.babypips.com

Pivot Points, Support & Resistance 09/11/07

Currency Pairs:

1) EudUsd 2) GbpUsd 3) GbpJpy 4) UsdJpy

R3:1.4748 R3:2.1187 R3:240.35 R3:113.88
R2:1.4717 R2:2.1137 R2:239.20 R2:113.44
R1:1.4698 R1:2.1105 R1:238.49 R1:113.16
PP:1.4666 PP:2.1055 PP:237.35 PP:112.72
S1:1.4635 S1:2.1005 S1:236.20 S1:112.28
S2:1.4616 S2:2.0973 S2:235.49 S2:112.00
S3:1.4584 S3:2.0923 S3:234.35 S3:111.56

How to Calculate Pivot Points

The pivot point and associated support and resistance levels are calculated by using the last trading session’s open, high, low, and close. Since Forex is a 24-hour market, most traders use the New York closing time of 4:00pm EST as the previous day’s close.

The calculation for a pivot point is shown below:

Pivot point (PP) = (High + Low + Close) / 3

Support and resistance levels are then calculated off the pivot point like so:

First level support and resistance:

First support (S1) = (2*PP) – High

First resistance (R1) = (2*PP) – Low

Second level of support and resistance:

Second support (S2) = PP – (High – Low)

Second resistance (R2) = PP + (High - Low)

Don’t worry you don’t have to perform these calculations yourself. Your charting software will automatically do it for you and plot it on the chart.

Also keep in mind that some charting software also provides additional pivot point features such as a third support and resistance level and intermediate levels or mid-point levels (levels in between the main pivot point and support and resistance level).

These “extra levels” aren’t as significant as the main five but it doesn’t hurt to pay attention to them. Here’s an example:

(source:babypips.com)