Market Update – USDJPY + AUDUSD

Wow an interesting week.

I suppose every week is interesting, that is what I love about the financial markets. Like what I was writing about within the blog on tailoring trading plans, it is like detective work, collecting clues and making hypothesis.

USDJPY Market Update:

The Dollar-Yen is very nicely moving out of the low of the 15 week cycle, but even more excitingly the 10 month cycle – which means there should be more power in this rally upward.

Isn’t it amazing how the market turned within our 15 week cycle zone… 1 day later and it would have been outside of the bands time period… so it just scraped in.

On Friday the USDJPY also gave us a 4th Long pending entry opportunity with the pull back bar.

Dont forget…

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How much are you really risking?

Today I am going to talk about the correlation between your risk calculation and position sizing in a strategy that I find the most logical.

Prior to placing any trade it is important that you work out how much you are prepared to risk on each trade.
How much are you comfortable to lose using a worst case scenario?

Rather than looking at a worst case scenario as a per trade basis, eg; 100 pips per fixed number of lots, you need to look from a broader sense, eg; how much of your account is affected on each loss, because 100 pips valued at $10 per pip could wipe most of your account.

And with the entry and stop loss strategy we have been discussing throughout these posts the distance of the stop varies, therefore the $dollar amount does too if you dont control your position size.

The most logical calculation to me is working backwards first from your account balance… Knowing exactly the dollar amount you feel comfortable losing – which is worked out as a percentage form.

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Tailoring a Trading Plan


To date we have looked at the foundation of cycle analysis for the AUDUSD, JPYUSD and the GBPUSD, but rather than go onto more markets just yet I want to start showing you how to tailor a Trading Plan to any market.

At the moment we can be relatively certain, through its behaviour, that the USDJPY is embarking on a new trading cycle (15 week cycle), so we will hone in on this market and look at some of its unique, distinctive behaviours and idiosyncrasies that make up this individual market, and characteristics that can help us make more profitable and reliable trades.

Tailor making a trading plan to a market is very much like becoming a detective. A super sleuth of the financial markets.

Each market has its own personality and therefore recurring characteristics. By finding these you can fine tune your entries and exits. This is done by searching for items that consistently appear around the markets turns.

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Automated Trading… the future of trading?

I want to bring up a bit of a discussion on Automated Trading.

What is it?

It is the utilization of technology where all trade functionalities are done on behalf of the trader by a computer script.

My take on it… it’s pure brilliance.

But, yes I know there are many traders out there who have been burnt. And that is because, like with any product on the market place, there is the good, bad and the ugly.

Look, I really think we have to get real and know there is shonky stuff in all investments and business dealings, that is why we need to take responsibility to do our own due diligence and ensure the product is worthy.

Better still create your own trading plan and get a programmer to program the systems criteria. Then you will have a true understanding of the system and what exactly the robot should or should not be doing.

What I find interesting, is that people are burnt because they have the wrong expectations. In life we are only ever disappointed or angry when our expectations are not met. Now Im not saying the answer is to lower your expectations of things, of course you need to shoot for the stars, but again you need to be level headed and realistic.

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