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Since our last report on December 21st 2008 our ratings at Collective2 rose from 721 to 732. What does this mean? See Collective2 explanation.
We are happy to continue enjoing a status of Excellency! Annualised performance for Artex this holiday period fell from 801.0% to 765.4% - we only made 7.8% profits in last ten days We killed Jaypex at 965% p.a performance We killed Montex at 48% p.a. performance Trading more systems is depleting our resources so we decided to stay on Collective2 with one system only. Our method of trading stayed the same. Our advertising costs fell. Market analysis will take into account all majors, so you will not get less than before, that is our best. ><((((º>><((((º>><((((º>><((((º>><((((º>><((((º>><((((º>><((((º>><((((º>><((((º>><((((º>
Forexast (Forex Forecast) Artex: EURJPY will keep going north. So will EURUSD. So will EURGBP. We are still not sure about EURCHF. We were wrong the past week with opened long positions. We will be watching closely.While Switzerland is an economy surrounded by Eurozone it is the perception of CHF as gold substitute and the difference in interest rates that make decisive changes in this currency pair. It should trade in a wide range although from technical point of view EURCHF broke the lower boundary and may be susceptible to going even lower.
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I think that we have now planted roots for long term trends among major economies. Financial times asked when UK will enter Eurozone, something that was to heretical to think of a year before. UK has three possible ways of strategic long term development. While number one economy and reserve currency of 19th century it stayed close to US dollar since WWII. UK could try to rebuild its former Empire through Commonwealth, but it is likely that two major components of Commonwealth rely more on other markets (Canada to USA and Australia to Japan and China). Another direction is as an American satelite. This would make UK clearly the second fiddle – California alone has bigger economy than UK.Third and more and more likely direction for the UK is Eurozone. If UK joins Eurozone in next years it will have major voice in its development. If it waits too long, it may fell too far behind. A lot of UK investments is directed into Eurozone (Spain, Malta, Cyprus…) and EU is UK biggest trading partner. When EUR started raplacing USD as the worlds reserve currency (it still has a long way to go as 62% of world’s forex reserves are held in USD as opposed to 27% of EUR). UK has now a choice to irreversibly become a part of growing enterprise of EU or stay proud on its own Sterling until it sinks to the bottom. It will be a nice to guess this development in daily trading.
A piece of advice: When long and short term trend point in the same direction with clear agreement with fundamentals you can ride a “can’t lose trade” for big profits. Money management is the second key to the vault. We will talk about that too. ><((((º>><((((º>><((((º>><((((º>><((((º>><((((º>><((((º>><((((º>><((((º>><((((º>><((((º>
Happy trading to all!
><((((º>><((((º>><((((º>><((((º>><((((º>><((((º>><((((º>><((((º>><((((º>><((((º>><((((º> We keep most of our posts at our blog
Markssin trades forex since 1997. Our trading systems are verified. ><((((º>><((((º>><((((º>><((((º>><((((º>><((((º>><((((º>><((((º>><((((º>><((((º>><((((º>
Davorin Sadar, trader. Meet me in Facebook, LinkedIn, and/or Twitter. This is an invitation!
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(c) Copyright Markssin d.o.o., 1997 – 2008 |
4 January, 2009
13 December, 2008
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This week our ratings at Collective2 rose from 716 to 721. What does this mean? See Collective2 explanation. We are happy to have received a status of Excellency! Annualised performance for Artex this week rose from 435.2% to 578.8% Annualised performance for Jaypex this week rose from 651.3 to 792.1% Annualised performance for Montex this week rose from 142.0 to 257.5%
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Forexast (Forex Forecast) Artex: EURJPY will most likely turn north. We will be watching closely. Jaypex: GBPJPY will still be pointing south. Slight chances to stay in a range. Montex: EURCHF is turning north. We trade long positions only.
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At this point in time financial crisis may develop according to two different scenarios. In the first scenario the government watches developement on the sidelines and prices of leveraged financial wealth continue falling for another agregate 50%. Losses are taken by the very people that purchased contaminated paper. High unemployment, deep crisis, total purgation. Fresh start without burdens. In the second scenario the government starts buying contaminated paper and assets. Prices stop falling. Losses are socialized and we all pay for this losses through a loss of purchasing power. We may be able to avoid deep and prolonged deflationary crisis but we keep “skeletons in a closet”. We think, that USA clearly took the second route. The nickname of Ben Barnanke developed from “Helicopter Ben” to “Ben B-52″ as the FED is throwing enormous quantities of new dollars to everyone in need every day. Nice capitalism, when profits are private and losses are public! As 70% of the World’s foreign currency reserves are held in USD, two thirds of the world will help in this “debt-socialization”. It looks that UK is following while EU much less. Therefore our fundamental views favor EUR against USD and GBP and CHF. We also think, that EUR will be rising against dollar faster than dollar will be falling against JPY, therfore EURJPY may start rising even when USDJPY will continue falling. We are 99% certain that USD will be falling against JPY until American government pays off a big portion of its foreign debt. Of course, we will only trade our views when confirmed by technical analysis. In unforgetable words of J.M. Keynes: “Markets can behave irrational far longer than you can stay solvent.”
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Happy trading to all!
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Markssin trades forex since 1997. Our trading systems are verified. ><((((º>><((((º>><((((º>><((((º>><((((º>><((((º>><((((º>><((((º>><((((º>
Davorin Sadar, trader. Meet me in Facebook, LinkedIn, and/or Twitter. This is an invitation!
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Have you ever invested through advertising? Click here to see how! |
6 December, 2008
This Sunday our ratings at Collective2 hit 716 . What does this mean? See Collective2 explanation:
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“ How is the Collective2 Rating calculated?
Collective2 Ratings are recalculated monthly based on the entire performance history in our database. The exact formula we use is proprietary, but there are several key variables that go into the Collective2 Rating. One of the most important factors is the length of time we have been able to observe the performance of the trader. Another key factor is the amount by which the trader over-performs or under-performs the S&P 500 index. Finally, the choppiness of the trader’s results is taken into account. Certainly a more consistent trader will be rated more highly than a trader with erratic results.
What does the Collective2 Rating mean?
In general, a rating above 500 is good. A rating above 700 is excellent.”
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We are happy to have received a status of Excellency!
Annualised performance for Artex stands @ 435.2%
Annualised performance for Jaypex stands @ 651.3%
Annualised performance for Montex stands @ 142.0%
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Forexast (Forex Forecast)
Artex: EURJPY will still be pointing south. We keep opening short positions only.
Jaypex: GBPJPY will still be pointing south. We keep opening short positions only.
Montex: EURCHF is caught in a range. We trade both ways with smaller quantities.
We are in the middle of a financial crisis that spilled over into real sector. It is bad and it is going to be worse. As long as there will be leverage in the system there will be no trust among financial institutions and companies. Exchange rates are not moving according to five factors (geopolitics, M&A, foreign trade account, carry trade, and interest rates) as normally. Instead they swing violently according to Stock Market moves. When stocks are raising GBP, EUR and CHF outperform USD and JPY. When stocks are falling, USD and especially JPY outperform GBP, EUR and CHF. We do not see a light at the end of a tunnel yet. If you see a light this is a headlight from a heavy fright train that is still due to hit. The crisis in real economy just began. We’ll say some more about that next week.
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Happy trading to all!
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We keep most of our posts at our blog
Markssin trades forex since 1997. Our trading systems are verified.
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Davorin Sadar, trader. Meet me in Facebook, LinkedIn, and/or Twitter. This is an invitation!
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Have you ever invested through advertising? Click here to see how!
9 November, 2008
Forex (as we all know) is risky but potentially also very profitable. One can approach forex markets in:
• Individual trading
– Individual trading signals generation
• Manually
• Semi-automatic (TPL + EA Signals + EA Trading)
• Automatic (EA – set and forget)
– Subscribe to trading signals
– Group Trading
• Free (Public blogs with treads like Forex Factory)
• Paid (Private groups where the leader explains all)
• Investing through trading system evaluators (C2, TM, FXT, ZT..)
• Individual forex account management
• Mutual funds investing in forex
• Quassi investing in forex (MLM schemes and other questionable ideas)
Of course, one can invest in prompt markets which mainly function as OTC markets or through futures exchanges where one can speculate about the future of currency cross values, currency baskets value, interest rates, and volatility through forward contracts (futures) and options. It is also possible to combine prompt and futures markets and play carry trade games.
Markets tend to move in cycles. It is very important to recognize trends underlying those movements. Click the photo to subscribe to Verified Forex Trading Strategies.
Verified Forex Trading Strategies
11 October, 2008
No escape, aka “Roach motels”
The asset backed commercial paper market is basically frozen currently as no one will trust these securitized vehicles because of the potential bombs they contain. This crisis in confidence is the direct result of the structure of these products in which they offer the investor “NO OPTIONS” to exit the trade. Until a way to exit is devised, global liquidity can be expected to continue crash. Let me thank John Taylor of www.fx-concepts.com for the excellent insights below. As a long time investment manager, his handle on history is extraordinary and his clients are undoubtedly well served by his experience.
What is a roach motel? As John explains,
“a box that lured the omni-present house hold pest, the roach, with tantalizing odors into its sticky interior, where it was entrapped, unable to move. Each box would catch hundreds of roaches that died slow deaths, stuck to the very stuff they desired. The catch line of the campaign was “roaches check in but they don’t check out” For us, as money mangers the name roach motel soon became attached to an attractive but complex trade that was easy to enter but was illiquid- i.e. there was no market price except when the trade reached maturity or when (and if) the bank that created the product decided to buy it back. If the investment situation changed and the trade was no longer the one you wanted, you were stuck- or at the very least the hedge of the position would be very expensive and imperfect, often drastically so depending on the circumstances”.
This is the perfect description for the current CDO/CMO/CLO markets as they offered the potential of higher returns than usually available on quality AAA and AA paper. The buyers jumped at them just as the roaches pile into the roach motels. John goes on to say that in the forex markets liquidity is assured. To have an illiquid currency market is to have a huge financial impact on a country’s citizens.
He then says: “It is completely different when dealing with structured products. There is no expectation of liquidity as the institution that created the product has no responsibility for it and is not directly impacted if the price collapses – or more likely is unknown. It is not their complexity that is the primary problem – IBM is complex but it is valued thousands of times each day – it is the total lack of liquidity in all these structures. However, if you add the extreme level of model uncertainty – i.e. it is impossible to value these structures as their have been no previous transactions – together with the lack of liquidity, you end up with assets that might be worth anywhere between 5% and 95% of their original value, it’s anyone’s guess.
“Roach motels or totally illiquid investments only appear when investors are so confident about the future that it never crosses their minds that things might change for the worse. Why else would someone totally ignore the value of his capital and only worry about the spread over the short term funding cost. Considering that there are far more that 100,000 instances of this capital uncertainty, from hedge funds to SIV’s to money market funds to banks to pension funds, there are a lot of problems still ahead. Global liquidity will crash until the day that these assets can be traded and values established. Now while liquidity is shrinking faster than the Fed is pumping it out, the dollar will be strong.”
Thanks again John (www.fx-concepts.com).
This about sums is up doesn’t it? Think of all the institutions, pension funds, banks, mutual funds, money market funds, SIV’s (short term investment vehicles), hedge funds, etc. who have checked in and can’t check out. The biggest money in the world and they didn’t ever raise a question of controlling the risk in the trade or how to exit the investment. Now it’s time to pay the piper as there is NO WAY OUT! Due to unbelievable amounts of overconfidence and hubris, the investors who placed their futures in their hands will be forced to pay the price. This finger of instability has a long way to run. However, you can expect it to be front and center in the headlines over the next several months until a market has been developed to discover the price they should have and a real marketplace for them to be exchanged.
This is an excerpt from TedBits – Copyright © 2007 Ty Andros — Portions of this document may be reproduced ONLY with full credit and contact information to Ty Andros at tedbits@TraderView.com and www.traderview.com
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Administrator note: I like this Roach Motel comparison very much. We are subscribed to this view since times immemorial (We trade forex since 1997). We are producing more than 100% annualised returns on the most liquid market: Forex Majors. Our performance is verified by The Trading Systems Authority.
11 October, 2008
Sometimes not trading is the best trade of all. Read on.
From The GotForex Weekly Newsletter, by Rob Booker
Trading currency is risky. You can sustain the total loss of your trading capital. In the midst of one of the most volatile periods in the forex market in the last 10 years, what are you doing right now to protect your capital? What are the top 10 ways you, every day, manage your risk? Your trading account doesn’t represent just the $500, or $1,000, or $100,000 that you have deposited. It represents possible future gains (or losses, of course). If you deplete all that capital on reckless trades, what will you have left to trade with?
It’s always better to sit on your trading capital than it is to use it recklessly. Big moves in the currency markets are exciting, for sure. Everyone seems to love a trend and loves even more to talk about how they caught a big piece of it. But we all know what it feels like to take one too many trades, or to risk too much on a single position, or to try to pick a bottom (or top) in the market and then find ourselves losing a significant amount of money.
Are you currently riding losing positions? Here are some thoughts. I can’t tell you whether you should open or close any specific trades. But as you think about your trades, consider the following questions: How does your current loss compare with what you expected to lose, based on the testing of the system you are trading?
If your system is not tested, and you do not know what the expected rate or size of losses should be, what can you do right now to find that information?
Have you shown your account to someone that you trust, an experienced trader, who can help you look at your positions and talk about them?
If you feel ashamed of having lost a great deal of money, consider what you can do to face that embarrassment head-on: it is better to deal uncomfortably with a loss in the open than it is to privately blow your entire account. Any pride you feel that you are protecting by not talking openly about your mistakes will, in the end, be a very expensive investment.
Remember that everyone has experienced losses. Even significant ones. Warren Buffett’s company Berkshire Hathaway is named for the textile company he invested in that became a sinkhole for money and cost him a great deal of time, effort, and capital. Any successful trader you speak to will frankly discuss the worst trades they’ve made and what they learned. These experiences have been, in some cases, more instructive and meaningful than even their most profitable trades.
I take a lot of flack at times for suggesting that you are better off speaking openly about your trading mistakes with other people. I don’t say that because I delight in hearing about your mistakes. I do it because if there is any possible way that you can find your way out of the losing trades you’re in, isn’t it worth it to actively and openly try to find that solution?
Are you currently experiencing unusually large gains? Here are some thoughts. There is nothing quite like the joy of making a good trade. We like to be right. We enjoy the thought that we planned, executed, and closed a position successfully. Here are some thoughts if you’ve recently found yourself in this fortunate circumstance:
Well done! Congratulations on the profitable trading!
Remember that your profits are only “on paper” until you take them out of your account. A close friend of mine accomplished the nearly unbelievable feat of earning profits of over $60,000 in his trading account earlier this year. He sadly lost all but $3,000 of that money, in a margin call, in just a couple of weeks – as he let the entire account slip away by making trades that were far too big. Princess Leia once told Grand Moff Tarkin, “the tighter your grip, the more star systems will slip through your fingers.” Substitute “pips” for “star systems” and you have yourself the beginning of a good book about trading psychology.
It’s easy to fall prey to the worry that you did not hold onto your winning positions long enough. Be careful about being ungrateful for the winners that you do have. Don’t let what you didn’t get spoil what you did get.
Just because you’ve had some good trades does not mean that you have “figured it out.” There is no holy grail of trading. Every trading system has its weaknesses. Be careful not to concentrate so much on the good points as to not pay attention to what can go wrong.
Consider using part of your profits as a “Research and Development” budget. With your profits, you may have bought yourself some time to test, fine tune, or otherwise improve your trading skills. I’m not saying you should spend your money on education, or books – or spend any money at all. Perhaps the profits simply give you some breathing room to sit back and deeply think about what you did that got you to this point where you have experienced some success. Learn from your success!
Most of all, please don’t become so accustomed to this huge market movement that you expect these huge trends to come along every week of the year. We are experiencing volatility that is off the charts, that is higher than anything we’ve seen in a long time. Most of the time, the market does not move like this – so please do not start to expect that the GBP/JPY is going to move 1,000 pips every day for you.
Remember: We’re here for you. You can call or chat with the IBFX offices anytime you have a question about your demo or live account, or even if you don’t have an active account with us right now at all. Although the representatives can’t tell you what to trade or how to trade it, they love to hear from you and to talk with you about how you are doing, what questions you have, and more. Thank you for taking this journey into trading with us.
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Administrators note: IBFX is respactable forex broker using MT4 trading platform . I have one of my accounts there. I recomended them already in my first post.
28 September, 2008
When we invest in retail forex we have quite a few different possibilities and each one of them carries different risks. We can decide to invest trough our forex broker alone. We can trade completely manual, semi-automatic or fully automatic (set and forget). We can buy (subscribe to) trading signals. We can join a trading group that can be free or payable. The best chance to invest is through trading systems’ evaluators. You can also have your funds individually managed by a registered account manager. You can send your money to a forex fund, managed by registered account managers or by forex brokers. You can also give your money to somebody that claims (s)he or the group she works for have found a holly grail of forex investing and promise you 10% profits per month or more. Although the last is forbidden in the UK and USA there are still places where the practise is completely legal.
Trading On Your Own
If we decide to work on our own through retail forex broker we have the least risks, and they are many. Forex is the biggest market on earth. Forex is a zero-sum-game. For every win there is a loss. There is no growth like the one in stocks. Off-exchange foreign currency trading carries a high level of risk and may not be suitable for all customers. The only funds that should ever be used to speculate in foreign currency trading, or any type of highly speculative investment, are funds that represent risk capital; in other words, funds you can afford to lose without affecting your financial situation.
Forex dealers can set their own minimum account sizes, so you will have to ask the dealer how much money you must put up to begin trading.
Most dealers will also require you to have a certain amount of money in your account for each transaction. This security deposit, sometimes called margin, is a percentage of the transaction value and may be different for different currencies.
Keep in mind that a security deposit acts as a performance bond and is not a down payment or partial payment for the transaction. Let s use an example of a dealer requiring a 1% security deposit. The formula for calculating the security deposit is:
The current price of the base currency X transaction size X security deposit % = security deposit requirement given in quote currency
Looking at the Euro example, multiply the current price of the base currency ($1.2178) times the transaction size of 100,000 times 1%. Your security deposit would be $1,217.80.
$1.2178 X 100,000 X .01 = $1,217.80
Security deposits allow customers to control transactions with a value many times larger than the funds in their accounts. In the previous example, $1,217.80 would control $121,780 worth of Euros.
This ability to control a large amount of one currency using a very small percentage of its value is called leverage. In our example, the leverage is 100:1 because the security deposit controls Euros worth 100 times the amount of the deposit.
Since leverage allows you to control large amounts of currency for a very small amount, it magnifies the percentage amount of your profits and losses. A profit or loss of $1,217.80 on the euro transaction is 1% of the full price but is 100% of the 1% security deposit.
The higher the leverage, the more likely you are to lose your entire investment if exchange rates go down when you expect them to go up or go up when you expect them to go down. Leverage of 100:1 means that you will lose your security deposit when the currency loses or gains 1% of its value, and you will lose more than your security deposit if the currency loses or gains more than 1% of its value. If you want to keep the position open, you may have to deposit additional funds to maintain a 1% security deposit.
For example, assume you buy or sell a contract worth $100,000 and it moves against you by $2,000. No matter how much money you put up, your dollar loss will always be the same “$2,000″ but the percentage loss varies with the amount of leverage. At 100:4 leverage, you will have lost half of your investment. At 100:2 leverage, you will have lost your entire investment. And at 100:1 leverage, you will have lost twice your investment and owe the dealer $1,000.
You should check your Account Agreement with the dealer to see if the Agreement limits your losses. Some dealers guarantee that you will not lose more than you invest, which includes both the initial deposit and any subsequent deposits to keep the position open. Other dealers may charge you for losses that are greater than your investment.
A forex broker can trade against you. A forex broker can file for bankruptcy. Both cases are risky for your funds. There is no central authority that would exclude the risks of delivery.
We did not mention, that you have to know when to go long, when to go short (entry trade signals), how big a position to open (money management), when to close the trade (take profit, trailing stop, stop loss) and all the things needed to make money. We call the above risks “basic risks of retail forex”.
Trading Using Paid Trading Signals, Trading Software or a Group
The risk of trading on your own using paid trading signals and semi-automatic software are reduced because trading signals providers should know when to go long or short, how big a position to open and when to close out. Unless they are crooked or ignorant which is another risk you are taking. Semi-automatic trading software is probably better but you need to know how to set it up. If fully automatic trading software was profitable when created, market conditions have most likely changed since its creation or they will change in the near future. Then you will suffer a loss that can be a complete wipe out of your trading account.
When trading semiautomatic you have a chance to set the parameters of your trading software to match market conditions. Although nothing and nobody can guarantee you profits on forex there is high probability that trading with correctly set semi-automatic software will put you in better position then trading fully automatic or completely manual.
Of course, your e-mail or phone can be out of order when you get important signal from your provider or your internet connection might fail when software tried to send orders to your retail forex trading platform. These are additional risks you are taking on if you trade like described above.
Trading groups are as good as their leaders are. Above mentioned risks with combined with the group leader’s style of trading and draw down tolerance can be added to the rest.
Trading Through Account or Fund Managers
If we give our funds to account manager we expect to profit from managers expertise. But again it depends on our contract. Account managers may be compensated for each trade they enter and as a part of profit they make. In the first case account managers can make huge profits even if we are even or take loss. The second case is much more favourable to investors. If they make money account managers make money. If they are taking a loss, account managers at least do not get paid for their “performance”.
Putting money in a fund will join the destiny of your investment with destiny of many others. Usually it looks like account management in first case. Fortunately, there is an easy way out. Withdraw the funds if fund performance is below par.
As long as account managers and fund managers are registered and your money is held by forex brokers, the funds are separate from the funds of broker or account or fund managers. They are held separately and all the accounts are audited. It is less likely that you lose your money through a staged bankruptcy or broker folding.
Trading Through Trading Systems’ Evaluators
If it is hard to measure real performance of individual forex account managers there are companies that rate participating trading systems through their performance. You can have your account traded automatically according to trading system or a mix of trading systems of your choice. I will mention Collective2 as being best in my opinion, compared to Tradingmatica, FX TradeLine or ZuluTrade. Additional risks are the scale of trades that make different money management procedures if your account is not the exact match of providers account and the risk of “ego trades”. Trading systems trade with hypothetical results. Although some of them trade real money, many just trade virtually. It is easy to lose demo account. It hurts much more if you lose real money. If you see a system with huge draw downs it usually means that it is trading with “funny money”. They are not to be completely trusted.
Throwing Your Money Trough a Window
The last possibility mentioned multiplies your risks immensely. If you give your money to somebody to invest in forex and promises you high return you can never be sure if your money went on forex or somewhere else. Is it funding illegal activity like drug trafficking or arms smuggling? Your government will confiscate it if it participated in illegal activity! Will the guy that you sent your money to be still around in six months? Who is auditing trading accounts? Is your money held separately from the companies funds? If the company goes bankrupt, are your funds separate? Is your contract enforceable in your country or it needs to be presented in some exotic jurisdiction? In a language you do not understand, under the law you are not familiar with?
There are profits to be made on forex, even on retail forex market. But every investor or speculator should be aware of inherent risks. Even issuers of the safest, mortgage backed securities sometimes do default. Forex has so many risks that you have to be prepared for the possibility of losing your entire investment at any time. Nobody likes losing but it is a part of the game. So invest in forex only the funds that won’t change your lifestyle if you lose them.
15 September, 2008
Patience means that we need to wait until trading signal fully forms or to check all the variables when adding to a position. A lot of times we have seen reversals if only five out of six required conditions were met. If you trade manually you should take great care to be consistent and thorough. Namely, as long as you are patient you stay on the sidelines and your portfolio is safe. Once you enter you lose control. Now you can only exit as market will allow.
If you are right and market moves your way, do move your stop loss on your entry point or a few pips better. You never know (and nobody else, for that matter) what can change the market sentiment in your cross to opposite direction. You do not want a winning trade to become loser again! It is adviseable (we did not say must, although we mean it) to have trading logbook. Information should include the reason (trading entry signal) for opening the trade,stop loss (why 23 and not 35 or 16), follow up strategy when your cross moves to positive territory (stop loss move, trailing stop, take profit, partial take profit, doubling a position etc….)
Gamblers should never gamble under influence or when emotionally disturbed. The same goes to forex traders. Forex is unforgiving. Each mistake costs money. Therefore, trader should have at least some help from a machine. A machine is 100% patient. Human is not. Human will unconsciously try to outsmart the market. Machine will not. Human will judge, machine will not.
To every trader we recommend a semi-automatic expert advisor. Semi-automatic means that trader checks daily fundamental and technical analysis results and setup entry conditions for an entry signal. Let then the machine monitor the market and enter a trade when all the conditions are fullfilled. When positions are open a human trader will make better decissions, so let her/him follow up. Yes, we firmly believe in semi-automatization.
15 September, 2008
Why we do not use trailing stops? We like trailing stop. It is very useful function for automatic trading. When we are not able to actively watch the market we would certainly let trailing stop to take us out in profit.
The only thing preventing us to use trailing stop in our daily trading is that we can not tell our computer in advance to watch all the variables we can, and to judge things accordingly.
As we described in Third Bite, it is far better to move stop loss manually, because curency trading is not a smooth ride. It jumps, dips, rises, tread water, wave, breaks resistance, or falls through support.
Trailing stop is just a predefined number of pips that cant take into account playing around support and resistance levels, sudden quick reversals etc. It is higly probable, that a cross will retrace after breaking through support forcefully but it is also much more probable that it will test former support as new resistance. We are much safer if we stay above resistance than below even if it only means 10 pips difference.
Trailing stop does not take into account these bumps in a road. It tends to close the trade prematurely. If we are able to monitor market movements on hourly bases, manual movement of stop loss makes far better strategy than trailing stop.
If, on the other hand, you are away then let the machine do it`s work and let it close the trade at trailing stop.
