Juggle: verb, continuously toss into the air and catch (a number of objects) so as to keep at least one in the air while handling the others, typically for the entertainment of others.
Don’t you love the circus? All those lions with the heads of daft buggers (trainers!) in their open mouths, trailing elephants joined tail to trunk trotting around the Big Top, daring (and usually scantily clad) trapeze artists dangling away, and there are dwarves, fire eaters and the perennial favourites…the clowns.
Alas, my articles seem to be fraught with bringing you sad news: this week I read that the circus is in danger of not drawing the crowds – advertising signage must be curtailed or at least ‘adjusted’ – clown phobia has arrived!
What a load of absolute $%^&$s, I hear you cry.
Well the good news is that jugglers are alive and well and are still an acceptable face to every fine circus in the land; and it won’t be long before International Juggling Day on the 14th June! Yippee…
I recognise this guy!
Of course, you will be wondering why I ramble so much….
Well over the last few months my inbox has been swollen with letters of the ‘Dear Sir, can you help with my juggling’ variety. It would seem that there is a temptation to take the idea of forex trading to a testing degree; did the Guinness Book of Records recently offer a prize to he or she who can take out more positions than the rest?
I will give one example: a client showed me his open transactions for a two-week period. There were 43 trades outstanding, covering a total of 13 pairs with many hedges in place, and, in all cases, the hedges were locking-in losses.
The total account size was less than £20k and the equity remaining was approximately £1300.
Perhaps some of you will recognise the scenario, and while I hope not, I suspect that I may be guilty of wishful thinking!
Fund managers will normally adopt a percentage-based spread of risk and hence have many exposures across a range of risk assets, however professional traders (bank and institutional) will more usually stick to a narrower range of assets or pairs that may be of particular interest or expertise; or, at least, when looking across the market for current opportunities will limit themselves to what is manageable both is risk/reward terms and their mandate.
So why would the retail market trader think they can do differently?
I have no idea! However I can assure you I have met many and heard from others that do. Because they can.
I have asked why? Only to be given fluff as an answer.
May I offer some gentle advice? The market offers all participants the chance to succeed, and with education, patience and strict risk management you will have an edge over the majority.
Keep it simple while you are learning the trade: establish a plan, pick a couple of pairs, adopt some risk controls, and most importantly, don’t become a juggler. Trying to rule the world when Hannibal and his elephants are storming down just ain’t gonna work!
I must go and throw my balls in the air…but before I do let’s look at my recent recommendations:
The EURUSD, with a consolidating market, has started to look promising: as I am typing we are hovering on 1.3765 and there is no change to my bearish view. Today there has been some significant ongoing selling against the Aussie dollar and the pound (GBP).
The EURAUD is a bit of a favourite and when we get the signs we often see large moves; I have missed this one, some 5-6 cents!, but I could see this going another 4 cents or so without a problem.
The consolidation in equities is encouraging and my overall view for a gradually firmer USD instils more confidence in my bearish equities view mentioned two weeks ago.
The EURCHF has toyed with 1.2200 and trades just below; it will always be a buy (and hold) on dips while the 1.2000 SNB support is there.
My new position from two days ago is a modest long, looking OK at the moment, in US Oil where I bought at 99.35 (near the base of the channel) looking for a break of the last two weeks’ H4 channel. It has actually broken in the last couple of hours and as long as we get a close above I will be looking for 104-105, stop at 98.20 – a risk/reward of 1:4 approx; a close above the channel raises the stop to 98.87.
Nymex May courtesy FXCM
Happy trading!
Author: David Horton is a partner in Market Tutors Ltd in the city (www.markettutors.com). He has had a significant career in financial markets; he is a trader and trainer with a passion for coaching and mentoring.
davidhorton@markettutors.com
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