Forex - GBP/USD close to 2-1/2 year lows on U.K. outlook

The pound was hovering close to two-and-a-half year lows against the dollar on Tuesday after data showing that manufacturing output in the U.K. fell sharply in January reinforced concerns over the outlook for growth.

GBP/USD hit 1.4832 during European afternoon trade, the pair’s lowest since June 2010; the pair subsequently consolidated at 1.4891, down 0.16%.

Cable was likely to find support at 1.4832, the session low and resistance at 1.4942, Monday’s high.

The Office for National Statistics said that manufacturing production dropped 1.5% in January, missing expectations for a 0.1% increase.

The ONS said industrial output also missed forecasts for 0.1% increase, falling 1.2% in January.

The data came after a report earlier this month showed that the U.K. manufacturing sector contracted unexpectedly in February, fuelling concerns over prospects for a triple-dip recession and increasing the risk of more easing by the Bank of England.

Meanwhile, a separate report showed that the U.K. trade deficit narrowed to GBP8.19 billion in January, from GBP8.73 billion the previous month.

Economists had expected the deficit to widen to GBP9.0 billion.
Elsewhere, sterling was lower against the euro, with EUR/GBP rising 0.14% to 0.8757.

The dollar continued to be supported by optimism over the improving U.S. recovery after data on Friday showed that the economy added significantly more jobs than forecast in February, with the unemployment rate falling to a four-year low of 7.7%.

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Daily Affirmations Will Improve Your Trading

Anything  you want to achieve in this world can be attracted to you by following the core principles in this article. For those reading this who have the goal to become a better trader – please take this knowledge, practice it and harness it’s power to improve your trading and your life.

An affirmation is defined as: “The assertion that something exists or is true”. Daily affirmations are a widely practiced method for attaining success and accelerating your ability to achieve goals.

Napoleon Hill is one of my favorite authors, and in my opinion he was the best motivational coach of all-time. He became famous by interviewing many of the most successful people of his time like Andrew Carnegie, Thomas Edison, Henry Ford and others, and the one thing that they all seemed to have in common was that they “acted as if” what they desired most already existed before they had it. Indeed, this is the core philosophy of Hill’s work and is the main reason why daily affirmations are so important to long-term success in any field, including trading. Here’s my favorite quote from his work:

“What the mind of man can conceive and believe, it can achieve” –Napoleon Hill

This is perhaps the most famous motivational quote of all time, I have it on the wall in my trading office and I read it out loud to myself every day, I strongly suggest you do the same. After reading this article you can check out Napoleon Hills Videos here to learn more about his amazing work on personal development and attaining success.

Here is a list of 17 daily trading affirmations that you can incorporate into your trading plan and that you should read out loud to yourself every day. Doing this will work to keep you motivated to practice proper trading habits and generally stay on the path to Forex trading success:

1. “What the mind of man can conceive and believe, it can achieve” – Napoleon Hill

This is the most important motivational quote of all time, which is why I have it listed again. If you haven’t read Napoleon Hill’s Think and Grow Rich Book, I suggest you do so in the near future, it’s the single best piece of motivational literature ever written in my opinion, and it will likely have transformative effects on your trading and your personal life.

2. “I am a successful trader”

If you repeat to yourself everyday that you are a successful trader, it will make you a lot more likely to do the things that are necessary to become one. If you do not believe you are a successful trader, you will never become one, as with anything else in life, you have to believe in your cause or goal before you can make it a reality.

3. “I am consistently following my trading plan”

You need to approach Forex trading as a business and be strategic and logical in following your trading plan; don’t deviate. If you’ve taken the time to formulate a comprehensive trading plan based on your trading strategy, your trading will be the most effective when you follow your plan, since you were objective and clear-minded when creating it.

4. “I have a Forex trading journal and I use it”

If you have a Forex trading journal and you actually use it, you will be far ahead of most traders. It’s critical to keep a running track record of your trading performance so that you have a tangible piece of evidence that reflects your trading ability or lack thereof. A trading journal will also give you something to stay accountable too and help you remain disciplined and organized.

5. “I practice proper risk management”

It’s important to remember that trading success is defined over a large series of trades, not over one or two. This means that you should not give too much significance to any one trade, and the way to do this is by never risking more than you are comfortable with losing per trade. By that I mean, never risk an amount that keeps you up at night thinking about or watching your trades. Remember to take small losses and that you are going to have losing trades; it’s just part of doing business in the Forex market.

6. “I trade according to what the market IS doing, not what I think it ‘should’ be doing”

We want to trade what we actually see on our Forex price charts, not what we “think” should happen or what we “want” to happen. At the end of the day, it doesn’t matter what you want the market to do; it’s going to do what it wants, so your job is to learn how to read its price action and take advantage of it, not fight against it.

7. “I will only take trades that give me a reward which clearly outweighs my risk”

The goal of any trader or investor is to make sure that the prospective reward of a trade clearly outweighs the risk involved. You need to gauge the market structure prior to entering a trade and make sure there is a logical reason for expecting that the risk reward on the trade is at least 1:1.5 or 1:2 or better.

8. “I will find other things to do besides watching my trades after they are live”

There’s nothing wrong with checking in on the market every 4 or 8 hours, but if you are sitting there addicted to your charts like a junkie, you are going to self-sabotage your own trades and probably end up losing a lot of money in the process. We have to learn to let the market “do the work” and just forget about our trades for a while after they are live. The set and forget forex trading strategyis something that I stand by and that I implement in my own personal trading, because meddling in your trades after they are live is an emotional decision and thus it’s usually the wrong thing to do. Find anything to do except watch your charts after you enter a trade.

9. “I am not emotionally affected by my profits or losses”

Both losses and profits have the ability to induce emotional reactions in us. A loss can cause us to want to take ‘revenge’ on the market and try and ‘make back’ the money we just lost. A profit can cause us to become overly-confident or even euphoric, which can cause us to deviate from our trading plan and take a trade that is lower probability than what we normally would take. Either way, you have to always be on guard against making an emotional trade immediately after a trade closes out, whether it was a winner or a loser. The best thing to do is to simply remove yourself from the markets for 12 to 24 hours after any trade.

10. “I try to trade with the dominant daily trend as much as possible”

I know you’ve heard this before, and I know it’s very cliché, but it’s also very true; the trend is your friend. I am often amazed at how many emails I get from traders telling me they are losing money in the markets and simultaneously asking me to comment on the chart they’ve attached to the email that shows a counter-trend trade on the intra-day charts. The easiest way to make money in any financial market is and has always been trading with the dominant trend. There are times when trading counter-trend is warranted, but until you’ve mastered trend-trading you should forget about counter-trend trading. Remember, don’t fight the dominant daily chart trend, instead, capitalize on it and ride the momentum until it ends.

11. “Instead of over-trading, I will be patient and let trading opportunities present themselves to me”

Don’t trade just because you feel like you have to or you want to…make sure there’s a real reason to do so and never trade when your pre-defined trading edge is not present. The downfall of most traders is over-trading, because most traders simply don’t have enough patience to trade forex like a sniper and not a machine gunner.

12. “I’m a professional trader and thus I will not engage in gambling my money in the markets”

Gamblers make random bets in casinos or elsewhere, and traders who don’t have trading plans or who don’t follow their trading edge are also gamblers. It’s really easy to click your mouse and put a trade on and hope to get lucky, kind of like pulling the arm of the slot machine at a casino. The difference is that you can actually develop and implement a high-probability trading edge like price action strategies when trading the markets. So, it’s up to you if you want to be a gambler or a trader.

13. “I will not interfere with my trades without just cause”

This one is similar to number 8, but it’s so important I wanted to touch on it again. Interfering with trades is usually an emotional reaction born out of risking too much or over-trading, both of which cause you to become overly attached to any one trade, which in turn causes you to over-analyze your trades and meddle with them once they are live. There are times when there’s just cause to interfere with your trades, such as a giant pin bar reversal that forms counter to your position, or some other opposing price action. However these instances are rare and it takes time and effort to develop your discretionary trading sense to the point where you can “effectively interfere” in your trades.

14. “News and fundamentals will not influence my trading decisions”

Traders who fall into the temptation to over-analyze the thousands of Forex news variables that occur each day, usually end up losing their trading accounts pretty quickly. All market variables are reflected via the natural price movement of the market, so by analyzing and trying to “figure out” what’s going to happen by reading economic news or watching CNBC you’re simply adding unnecessary and confusing variables to your trading approach.

15. “I am happy to take a profit and I will not be greedy”

Take your profits when your targets get hit, don’t change targets in an effort to try and get “just a little bit more” profit…These attempts to get a “little more profit” are usually in vain, and they usually lead to you letting a winning trade turn into a losing trade. Traders with smaller accounts especially need to take logical profits as they come, in order to build their accounts up and their confidence. If you get a 1 to 1.5 or 1 to 2 risk reward, there’s nothing wrong with taking the money off the table. Don’t fall into the trap of hoping that every trade you take goes on a parabolic run in your favor, the markets ebb and flow, meaning they don’t go in straight lines for very long.

16. “I invest in my trading education & myself”

Investing in your own education is paramount to success in any field. Forex trading is no different; whether it’s a book on trading psychology or the knowledge of an experienced Forex trading coach, learning something each day to make yourself a better trader will only improve your edge in the markets.

17. “I believe in my trading strategy completely and whole heartedly”

It’s critical to your trading success that you learn and trade with a strategy that’s proven and that you personally enjoy trading with. You have to follow it without deviation by remembering the fact that one loss does not negate the whole trading strategy. Don’t jump from one strategy or system to the next just because you stumble upon a few losing trades; losing trades are a natural part of any trading method. The key lies in losing trades properly and making sure you are trading with a strategy that is both simple and effective.

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7 Simple Solutions to Your Trading Problems

If you’ve been struggling to make money in the markets recently and you feel like you need a “reset” button to clear the frustration and emotion from your brain, today’s lesson is for you. If you’re a struggling trader, you might think you need to drastically change your trading approach or that you need to read some “secret” book about trading that will show you the path to riches. In reality, even if you’re struggling to make money in the market or you’re losing money, you’re probably not that far away from being on the path to success. A professional trader really just thinks differently about trading than you do, and if you combine the correct trading mindset with an effective trading strategy that you’ve mastered, you really have everything you need to start making money in the market. Here are 7 very simple things that will improve your trading IF you do them:

1) Take a week (or two or three) off from trading

Sometimes the best thing to do is to simply clear your mind and get a fresh start. Unfortunately, in trading, it’s REALLY easy to turn into a frustrated, emotional trader who is glued to the screen around the clock trying to make back lost money or trying to make a quick buck. No matter how disciplined you are or how well-prepared you are, that little red “devil” on your shoulder is always competing with the little white “angel”; the angel is telling you to stick to your plan and remain patient while the devil is always telling you to trade when you shouldn’t and jack up your risk.

Sometimes the best thing to do is to take a break from trading for one or two weeks. By that I mean, completely removing yourself from anything market-related for that one or two week period. When you come back to the market you will feel refreshed, focused and a lot more likely to stay disciplined and patient. Taking a break from trading will let the “dust” settle in your mind and will give you a fresh start and a chance to regroup and trade how you know you should rather than how the little “red devil” is telling you to.

2) Sit down, figure out your dollar risk per trade, and stick to it

Many traders are confused about how much they should be risking per trade. I know, because I get emails about this almost every day. There are really two very simple ways to determine how much you should risk per trade:

1. Risk an amount that you could lose 20 trades in a row on and still have enough money in your account to continue trading.

2. Risk an amount that TRULY allows you to “set and forget” your trades and sleep WELL at night.

The bigger the position you have relative to your account size, the less likely you will be to stay calm and let the trade play out. There’s a positive correlation between the size of your position and the amount of emotion you feel for a trade; meaning, the more money you have at risk per trade the more emotion you will feel during a trade. This is why, after a certain dollar risk amount relative to your account size, you will probably start losing money overall. You have to keep your dollar risk per trade at a level that allows you to think clearly and rationally and not become clouded by emotion and fear. This might take some “trial and error” to figure out in the beginning, but you will soon know how much money you are comfortable with potentially losing per trade. Once you figure that out, all you have to do is not deviate from that dollar risk amount. This is a much more realistic and effective way to determine your risk per trade than using a pip or percent measurement, and it’s why I wrote an article on why you should measure your risk in dollars, not pips or percentages.

3) Don’t increase your risk per trade until you’ve doubled your account

Many traders make the huge mistake of increasing risk per trade after a winning trade or even after every winning trade. This is a very dangerous thing to do. One or two trades doesn’t matter and doesn’t really reflect your ability or inability to trade, if you don’t understand why then read here; one fact about trading you need to know. However, doubling or tripling your trading account on the same dollar risk per trade says something about your ability to trade the market. The point is this; it’s illogical to think you’re going to exponentially increase your risk per trade forever and for no reason other than you “won the last trade”. If you maintain your risk per trade at a constant dollar amount until you’ve doubled your account or more, it will instill discipline and patience in you and you’ll avoid becoming emotional about trades because you won’t have over-leveraged. This is really one of the easiest things you can do to improve your trading.

Remember; a few trades doesn’t really mean anything, so you should not increase or decrease your risk amount based only on a small handful of trade outcomes. If you double or triple your account over time via following a proven trading method and remaining disciplined, that is a solid indication that you know what you’re doing and gives you a logic-based reason to increase your dollar risk per trade.

4) Stop reading economic news

One of the biggest things that causes many traders to struggle and lose money in the market is that they simply try to analyze too many variables. Reading economic news each day is something that many traders do, and it typically only causes them to second-guess themselves and (or) enter trades they otherwise wouldn’t.

The other big reason not to waste time reading economic news or focusing on fundamental analysis is that it’s all reflected in a market’s price action anyways. So, if you just learn to read the raw dynamics on a price chart you don’t need to read anything else. Yet, many traders make trading significantly more complicated than it needs to be by trying to analyze every economic report under the sun. Cutting these variables out from your daily trading routine is another very simple way to improve your trading by reducing the number of variables you’re trying to analyze and make use of.

5) Take everything off of your charts

Similar to the above point about analyzing too many economic or fundamental variables, many traders analyze too many technical variables. If your charts look like a piece of modern abstract art because you have 10 different multi-colored indicators on them, the simplest thing to do is to just remove all that junk.

Many of you are probably still using an RSI or a MACD or something, in combination with what you’re learning from my site. Honestly, the sooner you cut yourself off from those indicators the sooner you’ll see a positive change in your trading results. Almost every trader that I know, myself included, has gone through a process of looking for the “holy-grail” trading system to gradually using less and less indictors until they finally realize that the natural price action of the market provides them with all the analytical tools they need to develop a high-probability trading method. The faster you ditch unnecessary indicators the faster you’ll start to realize that simplicity is a big part of trading success and you’ll wonder why you ever tried trading with indicators before.

6) Get off the intra-day charts

Intra-day charts (any chart below the daily chart time frame) are often the killer of many trader’s accounts. Most traders tend to over-trade primarily because they are too fixated on intra-day charts. I’m sure you have probably caught yourself sitting there staring at the 30 minute or 1 hour chart like it was your key to instant-wealth, mesmerized by its every move; this is exactly what causes many traders to trade too much. As humans, we are really good at picking out meaningless patterns in things, and especially in the markets. The more you sit there looking at the intra-day charts tick by tick, the greater your chances become of talking yourself into a trade that doesn’t really agree with your trading plan or trading strategy. Ignoring the intra-day charts is a very simple solution to getting back on the right trading path, at least until a time when you are consistently profitable on the daily charts.

7) When in doubt, stay out

Finally, perhaps the simplest solution for most of your struggles in the market is to simply not enter a trade if you have even a tiny bit of doubt about it. Professional traders know when they should enter a trade and they know when they shouldn’t, that might be thee biggest difference between a pro and an amateur trader. The easiest way to make sure you don’t lose money in the market is to simply not enter a trade. The majority of people who keep losing money in the market do so because they don’t really have a trading strategy that is effective and that they’ve mastered. They continue to look at the market with no real plan and no real strategy, entering trades on a whim; they are over-trading. If you are not 100% confident in your trading strategy and your ability to trade it, yet you still enter trades, you are probably over-trading.

A professional trader doesn’t over-trade because they have mastered their trading strategy to the point where they no longer have any doubt. Also, if there are no trade setups that qualify according to their trading strategy, then they are fine with not trading; they have the discipline to not trade. Having the discipline to simply do nothing in the market is perhaps one of the toughest things that you will face. 

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Pressure on the EUR should remain intact, and rallies should be seen as sell opportunities

The JPY took center stage overnight as the USD/JPY came close to the resistance level of 96.70 as traders expect further easing to come from the Bank of Japan. Comments from BOJ deputy governors helped to push the JPY lower. Deputy governor nominee Iwata said the BOJ can achieve the 2% inflation target within two years if it buys long-term bonds.

He also said that the BOJ needs to achieve “decisive easing”. Another deputy governor nominee Nakaso, stated that the BOJ could expand the size of asset purchases. These comments, added to the comments made by BOJ governor nominee Kuroda yesterday that the BOJ would pursue aggressive easing if he’s confirmed kept the pressure on the JPY.

The technical levels show support at 96.00 and 95.80 and resistance at 96.70 and 97.00. As stated yesterday, the direction for the USD/JPY remains higher, with traders looking towards to the 100.00 level. Some traders have commented that this level could be attained as early as the end of this month.

The GBP continues under pressure as economic data from the United Kingdom continues to pressure the currency. Industrial Production fell -2.9% in January, far greater than expectations that the decline would be -1.1%. The recent downtrend of the British Pound has given sellers renewed confidence and the break through the support level of 1.4850 suggests the possibility of testing 1.4800 in the near future. Technical support is at 1.4830 and 1.4800, with resistance at 1.4880 and 1.4910.

After rallying yesterday the EUR finds itself once again trading near the 1.3000 level after testing support at 1.2990 in overnight trading. Italian CPI rose 1.9% in February which was in line with consensus, although lower than January’s 2.2% number. Spanish bond issue has had mixed results as the 12 month bond improved to 1.363% from 1.548%, while the 6 month declines to 0.794% from 0.859%.

There doesn’t seem to be any reaction on the EUR based on these results. The move yesterday in EUR fell way short of the resistance level at 1.3115 and the direction for the single currency remains downward. The next newsworthy item is the EU Council meeting on Thursday and Friday of this week. Traders will be looking for any “press releases” ahead of the meeting.

For the moment, resistance for EUR/USD is at the 1.3060 level and 1.3080. Support remains at the 1.2990 level, followed by 1.2960. With the pressure on the the British Pound and the Japanese Yen, the EUR could find some buying interest in cross trading that could support it in the near term.

The pressure on the EUR should remain intact, and rallies should be seen as opportunities to sell the currency.

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EUR/USD March 12 – Struggling to Stay Above 1.30

Eur/USD remains under pressure, and is struggling to remain above the 1.30 line in Tuesday’s European session. It is another quiet day as far as economic releases. In the Eurozone, today’s only releases are German inflation figures. Final CPI came in as expected, but WPI fell below the estimate. In the US, today’s highlight is the Federal Budget Balance, and the markets are bracing for a large deficit for the March release.

Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.

EUR/USD Technical

• Asian session: Euro/dollar edged lower, touching a low of 1.3012. The pair consolidated at 1.3016. In the European session, the pair has dipped just under the 1.30 level.
• Current range: 1.2960 to 1.3000.
• Further levels in both directions: 
  • Below: 1.2960, 1.2880, 1.2805, 1.2746, 1.27, 1.2660 and 1.2587.
  • Above: 1.3000, 1.3030, 1.3100, 1.3130, 1.3170, 1.3255, 1.3290, 1.3350, 1.34, 1.3486 and 1.3588.
  •  The pair is testing 1.30 on the upside. 1.3170 remains a key line of resistance.
  • 1.2960 is the next support level. 1.2880 is stronger.
  Euro/dollar continues to test the 1.30 line – click on the graph to enlarge.
  EUR/USD Fundamentals
  • 7:00 German Final CPI. Exp. 0.6%. Actual 0.6%
  • 7:00 German WPI. Exp. 0.4%. Actual 0.1%
  • 11:30 US NFIB Small Business Index. Exp. 91.3 points
  • 18:00 US Federal Budget Balance. Exp. -200.0B
  For more events and lines, see the Euro to dollar forecast
  EUR/USD Sentiment
  • Euro goes for a ride: The euro took traders for a roller coaster ride last Thursday and Friday. The continental currency shot up after the ECB maintained interest rates at 0.75%, and gained over one cent against the US dollar. On Friday, the euro coughed up almost all of those gains, closing the week just under the 1.30 level. The catalyst for the sharp drop was outstanding US employment numbers, which gave a boost to the dollar. As well, the euro was hurt by German Industrial Production, which came in at a flat 0.0%, well below the market estimate. The euro has quieted down this week, as it trades very close to the 1.30 level.
  • US employment numbers shine: US employment indicators looked very sharp last week. Unemployment Claims dropped to 340K, well below the estimate of 354K. Non-Farm Employment Claims hit 236 thousand, smashing past the forecast of 162 thousand. The Unemployment rate fell nicely, dropping to 7.7% from 7.9%. Has the US recovery entered a new phase? The strong figures helped the dollar post sharp gains against the euro at the end of the week, and we could see the greenback make further gains if US number numbers continue to shine.
  • Fitch downgrades Italy, Spain: On Friday, Fitch Ratings downgraded the debts of Italy and Spain, as well as Belgium, Cyprus, and Slovenia. All these countries are members of the Eurozone, and Fitch warned that European leaders were not acting decisively enough to combat the debt crisis affecting the continent. Markets pay close attention to such downgrades, as countries with lower ratings generally are forced to pay more to borrow funds. Italy was lowered to a rating of -A, and Spain was lowered to A. Fitch also placed a negative outlook on all five members, meaning that there is greater than 50 percent chance of another downgrade in the next two years. The downgrade is likely to exacerbate Italy’s severe political and economic problems. The country is embroiled in a political crisis, and is struggling to contain a massive debt of 1.9 trillion euros.
  • Fed  may revisit QE: The US has posted some solid economic releases lately. Last week saw employment numbers go way up and the Unemployment Rate drop to 7.7%, its lowest level since 2008. The improving economy has led to speculation that the Fed might wind up its current round of QE, which involves the purchase of $85 billion in assets each month, earlier than expected.  Federal Reserve officials are now mulling over the possibility of allowing the trillions of dollars in securities they have purchased to mature, rather than drowning the market with huge sales of securities. The economy continues to recover slowly, and has had a lukewarm response to the Fed’s massive purchase of assets. This “new exit” strategy could take place as  early as June, and would be a dramatic shift in the Fed’s current monetary policy.

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