MSI for 29.11.2007

MSI is going down today suggesting the market is bearish.

MSI for 28.11.2007

The move up is stalling suggesting we should remain neutral and watch the further development on the market.

Stress and pleasure

I think I have reached the level in foreign exchange market investment when I can say that I enjoy it. I have still worries when my position is going 50 pips down before coming back again but at the end I enjoy the trade and I have constant gains - 7 now in a row. Before restarting my life it was absolutely not clear that I would ever have such results. MSI published on this blog on daily basis is a good additional tool to see where the market sentiment is. Last weeks it was very bullish. Today it has started to become more neutral - it is my impression, exact analysis will come later. But as I said MSI is only an additional tool. I my analysis I am mostly quite technical using one very complicated theory called Market Profile to see exact support and resistance zones and very simple analytical tools to see where market is going. And according to these tools I remain bullish.

I have lot of work to do but first time since years I have time again to enjoy my hard life. I can afford it (in terms of time) to go to some nice restaurant in down town and stay 3 hrs. there speaking about philosophy and not about investment, I can have a good break sitting if front of some nice cafe having a cup of hot tea (very good for such a cold weather). Therefore you will hear more and more about this part of my life in the near future (in case everything goes like I plan it).

As for FX again: I had a good return of 2.2 per cent today on my main account and I think this is very good result.

Now I go back to work. I will be quite late back home today so I do not know whether I can put my MSI tonight on the web. But tomorrow morning it will be for sure there.

All the best.

MSI for 27.11.2007

MSI is bullish suggesting EURUSD is a buy

Note

As I have problems with uploading my picturs to the right side of my blog I will put daily updates of the Index on the main page. Next one coming soon

First MSI chart

I am putting today first MSI chart which you can see right of this post. I know it looks a bit strange but this is because it measures only last two days of MSI - price actio relation. Over the time it will become much more like a "normal" chart. To explain it shortly: MSI is going up today and price was range bound last two days.

Later I will put it on the right side of this blog bellow Son of Man and will update it on daily basis.

All the best

Market Speculation Index

As promised in previous posts I am going to put my new index on this blog. I think that the index requires a small explanation what is the idea behind and how it works.

What?: the Media Speculation Index (MSI shortly) is a part of my PhD work - it is something very new and in a testing phase. As I am working in a communication science I use a quite new approach to measure the market sentiment. I am a believer of the theory that the sentiment of buyers and sellers are one of the most important market forces which affects price action almost every minute and on every tick.

I have studied different available sentiment indicators and have found them to be not reliable for the short term (intraday traders). Therefore I was forced to create a new indicator for this exact trading style.

Why Media Speculation?: because this index measures where the sentiment of most important media sources like Wall Street Journal, Financial Times, Economist, Forbes etc and it is based on the assumption that in these media sources are represented expectations, decisions, fears and hopes of most important market players.

What does it measure? In the future this index will be applicable to every currency pair or to every market product but currently I can use it only for EURUSD pair because of limitations in time (I am working alone on this and cannot conduct daily research for many indices).

How does it measure: MSI is based purely on qualitative content analysis.

How to read it: the initial starting point for the index is zero. It can move up or down that means it can go in plus or in minus - that is reach plus 500 pints or more or minus 500 points or less. Minimal rising pint is 0.1 and minimal falling pint is -0.1. It has no up or down limits. MSI can move 100 points up or down in a single day.

Why you need it: MSI is planned to be a price action forecasting tool, it is non lagging indicator.

How to interpret it: for exact methods of interpretation more empirical research is needed. Today I can say this: When MSI moves strongly up price action will be bullish and when it moves strongly down price action is expected to be bearish. If its moves are not strong in comparison with other days then market is expected to be range bound.

I will put first forecasts tomorrow. Please use it as a sentiment took for the market monitoring and not as only tool for the trades. It is very "beta" thing and only in the testing phase. And in this phase lot of unexpected things can occur.

Good night.

Weeks summary

In terms of investment this past week was one of the best in my career. It could be even better but I do not complain. All in all I had five trades since coming back to the Forex and all five have had positive return. There was one failure but this was not because of false decision but because my forex platform has failed to close open positions properly. Even calculating this failure I had more than 12 per cent return this week - which is not fantastic but good result.

In terms of my research the week was ok. I was working on my index intensively and have good results. If everything goes as planned I will put the "beta" version of my index next Monday on this blog.

Now there is a time to sleep. Good night!

Best possible return

The best market to trade is illiquid market. The worst market to trade is illiquid market. Believe me, I know, what I am speaking about. It has happened to me I have had great loss because of illiquidity in the market. Today it happened to me I had best possible return. The markets in Japan were closed last day - as you know forex is operating 24 hrs. So illiquidity during Japan session was guaranteed. But since a new start in my trading it is surefire: I fallow blindly my system in any market conditions. So I did last night. In past times I would quit the illiquid market all together but not now. And I had more than 12 percent return in one day (lets say two, I ws holding these positions for two days) on my main account. EURUSD has shortly traded above 1.4950 where my limits were placed.

Now Europeans are coming into the game and they will be more rational than Japanese. I expect a quite impressive correction in the direction of first important support at 1.4850. But the long term USD weakness is still here. So I am seriously considering to enter the market during New York session again and to be long. However, that depends on price action. Let’s see, now I need to relax a bit - now I can afford to relax a bit.

Just in a sentimental mood

I am sitting in the office in down town while writing this post. At the same I am listening to the classical music, quite powerful and fast (no idea what exactly, just something from internet radio) but it does not help me to change my sentimental mood.

The entire day was so constructed that one has to be in a sentimental mood. I discovered that I still cannont understand people living around me and I will remain the foreigner for the entire life if I will stay here. You know why? I was going down to the street to meet friend of my and on the street I saw one girl and I am sure she has noticed me also. The point is we are in the same dancing class and we happen to dance together. Actually she is very friendly in the class but on the street she has ignored me completely. Actually I do not care about this but I am asking myself: why are people here so...they look so sad and so depressed. I cannot understand that. Actually I am in very, very wealthy country where most of the people have everything they need for the good life - everything but not a happiness – not a good personal communication. Even here in my office - I have noticed that we hardly communicate with each other. I often ask myself: why? At the beginning I thought it was me who was not communicating but it is absolutely not true. I am quite communicative man in society where there is a need of communication. But these people can spend entire day without saying a word and just went home to forget another senseless day.

Who cares, my decision is clear: I am what I am and sometimes these people around me can turn me in a sentimental mood´- In a mood where I miss the normal communication. But that is all harm they can cause. Important is to keep going.

Forex market was quite calm today. It hardly moved to some direction. As I have predicted EURUSD has reached the strong support at 1.4830 and was pulled back to the opening price, so I am still long without any gain or loss. I have to return to my home to make a deep market analysis but I am quite positive that I will remain long for the last trading day of this week.

Rest coming tomorrow - wish you better communication then I have had today.

Bad news and good mental shape

One of h best customers of my told me yesterday he likes to end our partnership because he did not like my quite long break in management of the accounts. That hurts quite hard but I am in a good mental shape and my reaction was actually very calm, so calm that I was surprised by myself. I wrote him a good and large mail why I needed this break and what I intend to do next – actually he must see that the returns since I have started to work are impressive and there is no rational reason for quitting. Yesterday I had 2 per cent return on my account again – so I am motivated to keep going.

Today I remain long in EURUSD acknowledging that like yesterday it can move against me before going up again. Good supports are 1.4830 and 1.4780. Lets see what happens.

At the same I am working on my index which I have promised to publish soon on this blog. I guess I can start publishing starting next week.

That is.

EURUSD - All time high again but still a buy

Well, well, well, while I was taking my dancing class and enjoying a cup of green tea with my very cute dancing partner USD fell to the record low against dollar again. Actually I was expecting this fall and I have good gains on my accounts. About 4 per cent return today. The question is: what should we do now? My trading methodology is strongly supporting the idea that we should continue buying Euro against Dollar. Now I think 1.5000 is quite achievable target. So I go long tonight again.

Currently I am doing a research for the doctor title at one Central European University. It will be no surprise that subject of my research is Central Bank communication and EURUSD price action. I now plan to do the impossible. I am going to introduce a new EURUSD index which is supposed to have a forecasting ability. Actually this index is a part of my trading methodology and I am using it every day. But the problem is my trading methodology exists only in my head. Well, it is not actually a problem. Probably I will never write it down because I want to keep details for myself. Only part of this methodology which I will offer to the audience is this index. The index is based on assumption that daily speculations about the future action of FED are a driving power of EURUSD price and it is measuring that exact speculation strength in order to forecast the future price development. I am planning to publish the index every day on this blog (I mean changes in this index). But some patience is needed as I have to systematize everything. I do not plan to put great details of this index in coming months or so - I like to keep it for myself for a while. However the complete description of this index will be published in my doctor thesis sooner or later - I am willing to make it free for everyone.

Details will fallow in this diary - I am working alone, allow me some time.

I was just looking on my profile and saw 40 visitors. Just wondering, who are you guys? Whoever, my warm greetings.

Sports and the life

I am very tired at the moment of this writing. I was fencing for the three hours in the fencing club first time since three weeks or more. I lost lot of parties and that brought me to the idea: I should do things like my character – I have to fence as I feel it and not like French guys do – because I am not French. So I have changed the strategy my last fights and I was fighting very aggressively – like man of the south. What does it mean like? I am a main of the south. I think my biggest problem is I have spent years in the Central Europe. I was always trying to adjust my character to the character of people living here. It actually never worked. I have to abandon this strategy. You know why? Because as I have returned to my national “roots” I won the fight.

I love sports. I do lot of sport because it is always teaching me what strategy would be better to use in my life. Thanks to sport I have learned that there is a time to attack, there is a time to defend, there is a time to change tactics, there is a time to use your emotions and a time to control them. Last thing I’ve learned is that I have to use the origins of my character to my advantage and not suppress it.

Well let’s see how I will apply this theory to my life starting tomorrow – I will report the progress.

As for forex: I am still in my long trade in EURUSD and waiting for breakout. 1.4660 is a very strong resistance once break occurs it has to go to the levels of 1.4720 without any problem.

I will discuss the forex market next day in greater details – now I need to sleep.

I remain.

Irony of Life or how forex brokers deal with you

Last night I went home from my University office in very good mood. I was working hard whole day and have closed positions in all my accounts in plus. I thought I did. At university office I cannot use java applet that is why I always relay on my web-based forex trading platform. After noticing that USD is struggling to go down through 1.4580 level but is failing I have decided to liquidate all my positions on the level of 1.4590 – herewith generating profit with 6 per cent return this week. I think this is a reason to be in good mood. At midnight I’ve turned on my Laptop and wanted to check how much gain I had exactly: and there was a big surprise – I had quite big unrealized loss in my accounts because positions were still open and moving against me. My broker has not executed my order and I was still in the same trade. Nice, I do not know how that can happen, but that has happened. I will surely report this to the dealer but I am quite positive they will find some good reason to explain me what I did wrongly – despite the fact that I have seen message on my screen that positions were liquidated. Whatever, I am looking for other solutions of this problem – the problem is EUR is a buy for next Monday – that means I am against my trading system in the trade. There are two options to consider: I can hedge the position with other good correlated pair as USDCHF or realize the loss. Second option is painful but less risky. That is why I will take first: I like to take risk and I would not let my broker to be a winner. All in all I must take these orders in plus now.

But life has once again reminded me that it has incredible sense of humor and irony: you are sure you did everything correctly but surprisingly you see that in fact everything went wrong and you have to work hard to correct mistakes you are not fault of. That is ok – it has happened in my life many times and it will happen in the future again - life is life.

I will enjoy my weekend first. I know some great blues bar in the down town where I will go tonight to chill out – but at first I have to do some statistical analysis and find a date – it is not funny to go out without a good date. Will report later whether I have managed that or not.

Take care.

Forex Signals - Worth to buy?

First time since months I have decided to go short in EURUSD - this is actually only pair I trade on regular basis. I am in insignificant plus right now but still will keep my positions open.

By the way: second key to the forex market is patience. Sometimes you can earn a fortune in Forex in several minutes (I assume you are news trading) but sometimes you need days, weeks or even months to come to your money. It is up to you which trading style better suits to you.

Today I was thinking about forex signal providers. I tried lot of them and I would like to share my experience with them.

First question which has to be answered is: why and when are we buying or using such signals? 1. When we have no experience in forex market 2. When we are failing to generate income. That is ok. I used to use forex signal providers for both of the cases.

Now second question: Who and why sells forex signals what are reasons behind? Well answer on this question is quite difficult. I cannot understand why should I bother and sell signals writingSMS and mails everyday when I have some methodology which helps me to push a button and earn 3000 pips monthly? When this is true, I must be so incredible rich in coming months that I do not need to sell signals for additional money. That is why I have decided to never buy any signals ever in the future. Before I came to this logical decision I tried some signals - I would not name these companies here because what is not working for me can work for someone else - but biggest losses of my life were generated while using their service. None of them has generated some profit.

But it is not whole story. There are signals which are free. There are lot of people or group of people which are providing such "service." I’ve tried them also. Imagine: they are much more better then paid services. Why? It is logical: these people have a good trading methodology which works for them and they would like to share it. Like me - I like to share my experience with everyone.

The best free signal provider I have ever seen on the net is Cindy. I do not know her full name and I do not remember her Web Address but if you Google Cindy and Forex you will find her easily. She is very good but nothing for me. Because her signals are swing signals. That means she can hold positions for weeks and go in 300 - 400 pips minus. I am a person who likes to see what he or she has right now. I open positions today and like to close positions today does not matter with loss or gain. But I still encourage everyone to take a look at Cindy’s web site. Even if you do not use her signals you still can gain a good experience.

As for other free signals: as said, there are a lot. Just Google them and take a look on their performance. Mainly they are very honest as they do not need to sell anything.

That is all for today. See you again in coming days.

Back to the life - I mean this blog

I do not know why this blogs surface is communicating with me in German. Actually I speak German but I still would like to see it in English. Whatever. I am back. I have revised my life once again and I needed some break.

I have no idea whether someone is reading this blog or not but I do not care. I like to have it as my diary. I will read it later.

Since last post (quite a time ago) I have decided not to place my signals here as I cannot generate any concrete signals any more. I have started simplest ever trading with forex last night and it cannot have signals in its usual terms. Results for this day are very impressive. 4.5 percent return in several hrs. on my main account. I hope it will continue like this in the future. Actually I am sure that it will continue like this in the future because what I am doing is quite logical.

I have detected that in forex market it is very important to find the underlying logic. The logic is very simple and that is why it is very difficult for many to find it. I was using very complex trading method for this market for years and thinking the more complex the method the higher return. For me the opposite is true. Simplest trading methodology gave me best return jet.

It is amazing to fallow the path of my trading development: I have started it very simple (I actually bought signals - do not do this EVER!), after disappointment I have started to trade by myself and had good performance all in all. With the time my trades have turned to be very, very complex with lot of modelling and my performance was decreasing. At the end I was unable to generate any profits, because I lost trust in myself. I couldn’t understand the market any more. It was frustrating. That helped me to move back to the simplicity. The market forced me. Now I am back to the simplest method ever and I feel myself satisfied.

To remember: to be successful you need several keys to the market: the first is simplicity. the rest will fallow in next post.

O yes, actually I have decided to improve my dancing skills. I really enjoy it.