When Should You Start Trading Forex with Live Account?

by Vahid | Forex Market Analysis and Signals | Sunday, January 13th, 2008

Last week was a good week in the Forex market. Most of the currency pairs that were trapped between several supports and resistances or were ranging for several days, broke the ice and started moving nicely. A lot of strong supports/resistances broke last week. I hope you could act on time and make a good profit.

Before I start analyzing the charts, I have to explain about some issues again. I receive a lot of emails from professional or beginner traders complaining that why I don’t give “Buy”, “Sell” and “Put Your Stop Loss Here” signals on my reports.

Although the number of such emails and comments is really negligible in comparison to the emails and comments that appreciate my efforts but I have to have an answer for those who look for easy Buy/Sell signals to make some easy money.

I had an important goal from the first day that I started publishing the reports. My goal is educating and training not giving or selling “Buy/Sell” signals. I am trying to teach the traders, specially the beginners to analyze the market, predict at least the color of the next day candlestick and take the proper position if they like.

I warn them about the supports and resistances that they may have not seen or the big changes that are on the way and may hurt them if they take a wrong position.

I warn them about trading against the market and teach them how to be careful and have patience and not to enter to any trade as long as there is no clear and sharp signal. These are the problems that most traders - including myself - have and should learn how to resolve them. I teach the traders how to trade without any attention to their fear and greed and emotions.

I receive a lot of email from traders who - for example - say “GBP/USD has been going down for a long time. Do you think that it is the time to go long because it seems it is changing the direction?” and my answer has been “No” in most cases and I am proud of it that could prevent many traders from trading against the market because the currencies kept on going on the same direction for several more days.

I do give Buy/Sell signals on my reports when I see a strong signal. If you check my reports you will find many of them but as I said my reports teach the traders how to analyze the market.

As a lot of traders use my reports, I have to do my best to create them carefully and precisely. This helps me to have better trades and make less mistakes too. I am happy about that and I appreciate your attentions and kindness.

Tip of the day:

If you have not made any profit through Forex yet and your losses are more than your gains, you have to analyze yourself to find the reason/reasons:

1. Do you know everything you should know to become a good trader?

Unfortunately most people start trading with their money even before they spend some time on demo trading. They start trading while their knowledge about Forex and technical analysis is so poor. Keep in your mind that you have to work with the demo account at least for few months to one year while you already have an especial system. You work with the demo account to learn to follow your system and its rules and signals.

One of my friends who is a good trader has a rule: You can start working with the real account and real money after you could triple your demo account. For example if you have a $10,000 demo account and you could change it to $30,000, you can start trading with a real account. It doesn’t matter how long it takes for you to do that. 2 months, 3 months or 3 years. As long as you have not been able to do it, do not touch your real account.

2. Can you control your emotions?

Sometimes your knowledge is good but you have not learned to control your emotions. You have fear and greed and you trade according to what you guess not what your system says.

Analyze yourself before analyzing the market

Ok let’s start analyzing the currency pairs (if you have already analyzed yourself).

1. Euro against US Dollar (EUR-USD):

It broke the 1.4750 resistance last week but was stopped at 1.4822. Currently is going up. It should go up because the Bulls became so strong last week. If it went down it was because some of the Bulls collected their profits because they didn’t want to have any open position during the weekend. There is a resistance at about 1.4824 which is not strong. If it went up and broke this resistance too, it means it will keep on going up much higher.

Let’s check the daily chart.

It is strongly Bullish and currently is trying to break the 1.4822 resistance. Breaking the resistance and going up is the biggest possibility because the market is Bullish and a strong resistance was broken last week.

2. US Dollar against Swiss Franc (USD-CHF)

This currency pair always moves against the direction of the EUR-USD. Currently it is going down and there is a support at 1.0970 (purple line).

The daily chart is strongly bearish. It is going down to test the 1.0970 support (like the 1.4824 resistance for EUR-USD) and if it breaks this support (which is the biggest probability) it will go much lower.

3. British Pound against US Dollar (GBP-USD)

I know a lot of traders focus on this currency pair. So I will explain about its current situation and the probable directions more.

Currently it is going down inside a channel.

Lets see what is going on at the end of the trend in the 4hrs chart. These are all the possible directions that the price can take:

Follow the small numbers on the above image:

1. Currently it is testing a small resistance (purple line). If it fails, it will go to the #1 direction. Then it will have a support (lower purple line). If it breaks this support, it will take the #9 direction and if not, it will take the #5 direction.

2. Currently, if it breaks the resistance, it will take the #2 direction and will go up and then have to fight with another resistance (thin blue line). If it breaks that line it will take the #3 direction and if it fails, it will take the #4 direction.

These are all the possible directions for now. I will not talk about the rest of the numbers now.

But what it the most possible direction?

That’s a million dollar question! To answer this question, we have to take a look at the bigger time frame (daily):

The price is testing the 38.20% Fibonacci level right now. This level is acting as a support. It is a very strong support that was tested unsuccessfully three times in the past.

The 38.20% Fibonacci level tells me that the price will go up because it has not been successful to break it by now. The daily doesn’t give the answer we wanted:

So by now, the best thing is waiting for few hours and if in the 4hrs chart, it breaks the small resistance (purple line), it means the 38.20% level in the daily could not be broken and the price will go up by now: #2 direction

If it can not break the purple line, it will go down (#1 direction) and breaking the 38.20% level will have the biggest possibility.

You can take your position according to the above explanations. I think everything is clear. If you have any question, please leave a comment and I will answer at the earliest convenience.

4. US Dollar against Japanese Yen (USD-JPY)

In my last report, I predicted that it will break the triangle and will go down. Hope you went short when it succeeded to break the triangle. If so, you should have about 40 pips in your hand by now.

I think it will keep on going down. I say “I think” because we analyze and predict and then take risk. Nobody can say “I am sure it will go down” but God.

5. British Pound against Japanese Yen (GBP-JPY)

As I said in the last report, the daily shows a reversal signal (High Wave) that needs confirmation. The signal was not confirmed and the 11 Jan candlestick is formed a strong Bearish candlestick. So it should keep on going down. We will have a support at about 211.00 then.

Let’s check the 4hrs chart too.

It has not broken the channel yet but it will. I’d better to say it is almost broken. It will be confirmed in the next 6 hours or even sooner (it is 13th Jan, 9:12pm EST).

6. Euro against Japanese Yen (EUR-JPY)

Hope you went short after reading my last report. If so, you should have about 100 pips profit in your hand. In the 4hrs chart, it is testing the Bollinger middle band as a resistance (it went up to test) but it seems it will be unsuccessful and will keep on going down. It is possible that this time it succeeds to break out of the channel to the down side.

The daily chart looks Bearish but there is a support at about 160.25.

7. US Dollar against Canadian Dollar (USD-CAD)

It broke out of the wedge to the upside and then went down to test the wedge. It has been unsuccessful to break the wedge and goes down and so it will keep on going up.

The daily chart shows something a little different. It is testing the 61.80% level as a resistance and it is possible that it goes down. If you want to know what will happen, you have to check the 4hrs chart in the next 6 to 8 hours. If it couldn’t break into the wedge again, it will go up and so the 61.80% level will be broken.

8. British Pound against Canadian Dollar (GBP-CAD)

It has broken the channel to the top and now it is testing the 50% level. It has not been able to break the 50% level and go up. So it will go down. We have to wait for about 4 hours to make sure.

The same situation can be seen in the daily chart too.

9. Euro against Canadian Dollar (EUR-CAD)

It broke out of the channel and went up. It seems it wants to go down and test the channel:

10. Australian Dollar against US Dollar (AUS-USD)

It broke the channel and went up and then went down and broke inside the channel and finally formed a symmetrical triangle. Currently it is testing the upper side of the triangle. We have to wait by now.

The daily shows that it is on its way to up.

11. New Zealand Dollar against US Dollar (NZD-USD)

It is 11:33am EST (14th January 2008).

NZD-USD is a nice currency pair to trade. The movements are so big and the spread is not that high. In the past few hours, it broke out of a small pennant and went up. As you know, pennants are continuation patterns and if the price has been going up strongly and then makes a pennant in most cases it breaks the pennant to the upside. If you don’t like to take a risk, you have to wait until the pennant is broken. Then you can go long.

About the NZD-USD, this happened few hours ago and I already have a long position. Although the Doji makes me a little worried but I am waiting for the last candlestick. If it becomes a Bullish candlestick and goes higher than the Doji high price, then it will go up for sure. If not, I will have to close my trade and take my profit by now.

The daily is strongly Bullish and it seems it is going up to test the channel resistance (thick red line):

13. Euro against Swiss Franc (EUR-CHF)

So similar to GBP-CHF. The 1.6322 support is broken.

14. British Pound against Australian Dollar (GBP-AUS)

This is a good currency pair mainly for swing trading because the spread is a little high. Of course its movements are so big and sometimes it is good for intra-day trading too because it covers the high spread.

Because of GBP crisis, this currency pair went down and has broken a lot of strong supports. This is what we had predicted since long time ago.

It seems we have a support at 2.1736. If you don’t have any short position, you have to wait and see if it will go down and break this support or not. It is not also a good time to go long because although some Bullish signals are appeared, it is too early to go long.

I think it will keep on going down.

In the one hour chart, you can see a Descending Triangle. The rule says that Descending Triangle at the end of a downtrend breaks down.

In the one hour chart it is also testing the Bollinger middle band which is so close to the triangle upper side (resistance). Wait for one more candlestick and if it couldn’t break the Bollinger middle bad and the resistance, go short. Then be careful when it touches the triangle lower side (support). If it went up, close your trade. If it broke the support and went down, keep your position and move your stop loss few pips (plus spread) above the triangle lower side.

15. Euro against Australian Dollar (EUR-AUS)

Almost the same story as the GBP-AUS but the difference is that the movement is a lot slower and slighter because EUR has not lost too value like GBP.

The same triangle as what you could see in GBP-AUS can be seen here too:

The last candlestick in the 4hrs chart has a big upper shadow formed at the middle of the Bollinger lower band. It means Bears are still strong but we have to wait and see if it break the Bollinger middle band or will go down.

The daily is right at the bottom of a channel. This channel can be known as continuation pattern and as the price has been going up before it, it should break up. The current day candlestick is formed above the 38.20% level but it still has about 5 hours to become completed. We have to wait and see if the price will break down through the channel or will go up. Then we can take the right position:

16. Euro against British Pound (EUR-GBP)

Euro has been getting much stronger against GBP during the past several months. It has broken several resistances.

The only thing I can say about it is that if you already have a long position, just keep it. I do not recommend to take any new long position because the market is over-bought and it can go down at any time. On the other hand it can keep on going up for several more days, weeks or even months.

I think it will keep on going up for a while and then has to make a correction:

17. British Pound against New Zealand Dollar (GBP-NZD)

It looks so similar to GBP-AUS.

This one seems to keep on going down too. Please refer to the GBP-AUS explanations if you like to trade this one.

18. Euro against New Zealand Dollar (EUR-NZD)

It broke down the wedge, went down and was stopped at 23.60% Fibonacci level. It is trying hard to break it and keep on going down.

To take any new position, we have to wait until it breaks down the triangle. Then we can go short. We have to wait for few hours and see.

19. US Dollar against Swedish Krone (USD-SEK)

In the 4hrs it is testing the support of a very small channel. We have to wait and go short if it can break the channel to the downside.

The daily says that it will keep on going down. There is a support at the 6.3098 which is not broken yet. We have to wait and see if it can be broken or not.

The weekly also says that it will keep on going down. So it is highly possible that the 6.3098 becomes broken.

20. Euro against Swedish Krone (EUR-SEK)

If you already have a short position, just keep it. If not, wait until it breaks the purple thick line and then go short.

22. US Dollar against Norwegian Krone (USD-NOK)

It is still going down but is so close to the 5.2426 support. If it breaks this line, you can go short (if you are not short already).

22. Euro against Norwegian Krone (EUR-NOK)

Nice pattern! I has been going down and just now is testing the 61.80% level as a support. Don’t think about going long as long as it is inside the channel. If it can not break the 61.80% level and continues to go down, you can go short.

23. US Dollar against Singapore Dollar (USD-SGD)

Still strongly Bearish. Do not go long as long as it has not broken the thick purple line.

Further Reading:

6 Comments:
post a comment

Comment by elyaz

2008-01-13 18:50:23

Hi Vahid…

just ignore those guy that disturb your good work.for me they are not professional trader if they want your signal in the report, and actually your report help a lot to upgrade my system and help me to know better about the market and how to read those senior richest trader or institutional broker or Big Boys,i love your report Vahid

and the good things, i can get a lot of pips, not less than 100 pips a day with trade by confident

i hope you can keep on your good work

i very very appreciate your work Vahid, your report gave me a guide and a good lesson during trade or a past trade to study…

Reply to this comment

Comment by Vahid

2008-01-13 19:34:04

Hi Elyaz,

Thanks for your kindness. I am glad that you like my reports.

Yes; if traders follow my analysis, they can make several hundreds of pips every day. I made 1569 pips between 2th to 3th of the current month using the same signals and analysis you see in my reports.

Reply to this comment

Comment by paul

2008-01-14 01:54:52

Hi Vahid,
I too love reading your report and am learning a lot from your analysis.
Keep up the great work
Paul

Reply to this comment

Comment by Chris

2008-01-14 03:13:06

Hi Vahid,

Thank you for taking the time to publish your analysis, I find it very helpful especially in confirming my own analysis. You explain things very well and show much I had not noticed myself.

I find myself tuning in to your site everyday now and as a consequence my own analysis is improving greatly.

Again thank you for sharing and please keep up the excellent work.

Regards,

Chris.

Reply to this comment

Comment by paul

2008-01-14 04:44:10

Great calls today Vahid - wish I’d acted on them! Still watching and learning. Look forward to reading your next post later tonight (UK time).

Reply to this comment

Comment by Ikpo

2008-01-15 15:16:12

Dear Vahid,
Very little did you know what impact your daily post have made to people like me
I must say a million thanks to you for sharing your god`s given talent so freely,
Please, do not be discouraged by criticism, as sticks and stones are thrown only
at the good trees.
Kindly send to me,the links where i can get free forex training in the internet.to enable me horn
my skills.
God Bless You,
Ikpo

Reply to this comment

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