This text is from blog famous currency strategist Joel Kruger .
MONDAY, DECEMBER 24, 2012 – END OF YEAR – So this is it. The final days of 2012. Most of the major players have closed up shop and won’t be back until the second week in January. However, markets have a funny way of doing some whacky things into the end of year, and the ultra thin conditions quite often invite some wild price moves. As per my comments in the previous week, I will not be treading water in these potentially turbulent conditions, and happily stand on the sidelines. Most of my existing exposure heading into 2013 is long US Dollars, and I will be looking for significant upside in the buck against currencies like the Yen, Australian Dollar, New Zealand Dollar and Canadian Dollar. Techno-fundamentals have been supporting this view, and a combination of some longer-term cyclical highs in the commodity bloc currencies, safe haven demand for the buck, and an end to the commodity bull run, are all seen as contributing factors. But whatever you are looking to do in 2013, if you stick to these three rules, I am confident that you will be well positioned to find some profit in your pocket in 12 months.
See daily forex technical analysis video made by Joel :
1) LOVE YOUR TRADE – Make sure that you are head over heels and over the moon about whatever trade you take. If you have strong conviction in your position and love the trade, it will a) ensure that you are taking less positions than you might normally take (not overtrading) as you will be limited to only the exceptional opportunities b) create a lot less room for self-doubt and lack of confidence as you will no longer be looking back at a failed trade and regretting the decision. Trading markets requires a very healthy mind, and I can’t stress enough how important it is to make sure that you have your head on right, particularly when things are not going your way. This rule really will help to separate you from the pack and stand out above.
2) SLEEP AT NIGHT – A few years back I came up with the Pillow Test for trading. When I was working on the strategy side, people would always ask about the appropriate position size for trades. Of course no one person was the same and this answer would depend on so many different variables. After thinking about this for some time, I realized that the answer was really quite simple. If you were able to put your head down on the pillow at night and sleep soundly, then you would most probably be appropriately positioned. However, the second you found yourself up at night and unable to sleep from stress of the market, you would know that you were not appropriately positioned and should immediately reduce the size until you could in fact sleep at night.
3) DON’T FIXATE ON THE DOLLARS AND CENTS – I have found over the years that the more a trader is inclined to think about his actual profits in currency terms, the more likely they are to fall victim to greed and put their portfolio at risk. The problem is that most traders want to be making the millions but don’t accept the fact that they simply don’t have the initial capital to get them there. But the simple fact is that if you just focus on the percentages, you all of a sudden level the playing field and are able to immediately compare yourself with the best out there. If you just look at the percentages, you give yourself the incredible opportunity to be able to look back at the end of the year and pat yourself on the back for yielding the same percentage returns as some of the greatest traders and portfolio managers out there. Find comfort in the fact that FX is the largest market out there, and if you can generate a solid percentage return at the end of year with a very small amount of money, you will have no trouble doing the exact same thing with larger positions. There is simply no market out there that is more scalable than FX. So take your time and just focus on the percentages.
