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For newbies to forex, or more conservative traders, you can scale back and cherry-pick the best trades. Simply use the model as your guide, and take the guesswork and emotion out of trading. You will always be buying dips in a bull run, and selling rallies in a bear run, to initiate new positions. You are letting the market tell you when it has had its little contra-trend rally/break. That, in essence, is what a MOMENTUM tunnel is all about. It creates a visual space for you to see these contra-trend opportunities as they are being created. When they turn, you can pounce on the trade, and now it’s time to continue the medium-term trend. You’re not going to hit every one perfect, but you will definitely get your share if you stay patient and wait for the optimum time. Even if you screw up the entry, the trend will probably make the trade a profitable one.

I hope you can see why trading MOMENTUM tunnels [4 hour] are better than trading PRICE tunnels [1 hour]. You will have less losing trades, and there is no chop around the MOMENTUM tunnel. If the market continues to go against the trend, within a very short period of time you will only have 2, possibly 3 losing trades before the weekly trend would change. This is a very acceptable tradeoff for the new information being given to you by the market: i.e. a weekly trend change. At least for us, this means closing old option positions [at just the right time], and creating new ones [at just the right time].

Remember the old trading proverb: price = information. That’s exactly what’s happening when you get a trend change from the weekly charts. Of course, remember that there is a lag of 1 week from knowing when the high or low reading comes, because you won’t know until Friday’s close if last week’s reading was the high/low or not.

Let me just add, that MOMENTUM tunnels should work particularly well with other financial markets. Stock indices, oil, and interest rates should trade very profitably with the new method. Some of the currency crosses [eur/jpy, eur/gbp, eur/chf, eur/cad], in theory, should also work well. Vegas Jr. is going to look at these particular crosses in a few weeks to check them out, so I’ll withhold my opinions on them until he is finished.
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The Guppy Multiple Moving Average (GMMA) indicator was first mentioned in Trading Tactics in 1997. Since then the use and application of the indicator has been refined. In response to requests from readers, this series of notes brings together these modifications and improvements.

Aggressive traders attempt to identify a change in the downtrend – an up trend breakout – as soon as it happens, or even before it happens. This is aggressive trading because it carries a higher level of failure. Unless the trader has excellent trading discipline there is the danger of holding onto a stock as it continues to go down in the hope that it will eventually rebound.

A more common, and in some ways, safer approach, is to trade the trend breakout in the days or weeks after it has happened. This does reduce profits when compared with an earlier entry, but this reduction is counterbalanced by the increased probability that the trend break will develop into a sustainable new trend. Few traders are content with joining these trends at any price point. Most try to get the best entry possible, based on a pullback in price. If we understand the nature of the trend and the breakout using the techniques discussed last week, then we can take advantage of these points of price weakness because we are confident in our analysis of the developing trend.

The GMMA is applied in real time to assess the best entry opportunities after the breakout is confirmed. It gives us an answer to the question: Is this price collapse part of a general new trend collapse, or an entry opportunity? This is a significant question because young trends are weak. There is a higher probability of trend collapse.

Breakouts come in two important formats. The most common is the “V” shaped breakout where a clear downtrend develops into a clear up trend. This is clear retrospectively, although at the time the process can be frightening and many traders delay the entry because they are worried about a trend collapse.
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At times, prices can be pretty wild. Sometimes we see large choppy Trading Ranges, abbreviated trends that fail to continue for more than a short duration. Lots of explosions and collapses make markets difficult to trade, even for the very best traders.

It seems that at times only the innovative and adaptive traders can consistently take money out of their trading. Sometimes all that is needed is a simple set of tools. Let’s look at just such a set of tools, that from a technical point of view are proving themselves successful in trading the kinds of charts we encounter from time to time. In the illustrations that follow, we will be using a fifteen bar exponential moving average of the close, along with a simple forty bar moving average of the highs and lows. With the forty bar simple moving average of the highs and lows we will attempt to create a channel.

When prices move beyond the bounds of the channel, we will attempt to trade pointy places. We will never attempt a trade when prices are within the channel. The exponential moving average will be a filter used to keep us from trading when the moving average is flat. So, even though prices are out of the channel, as long as the fifteen bar moving average is flat or relatively flat, we will not attempt to trade.
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Ichimoku has become one of the major technical analysis tools and has recently gain popularity. Its features were introduced in Chartpoint September/October 2002 issue. It is a very graphical chart designed by Ichimoku Sanjin (non de plume) in Japan where 5 calculated lines were overlaid on a candle chart. These 5 lines were used to determine the trend, support and resistance, as well as the time element.
In this article I will introduce a new style of Ichimoku using a modified candle. This new style Ichimoku is more visual and much easier in determining the trend. Modified candle is the same as an “Averaged Candle Chart” so called “Heikin Ashi” in Japan.
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Foreign Exchange as a Financial Market

Currency exchange is very attractive for both the corporate and individual traders who make money on the Forex – a special financial market assigned for the foreign exchange. The following features

make this market different in compare to all other sectors of the world financial system:
• heightened sensibility to a large and continuously changing number of factors;
• accessibility to all traders in the major currencies;
• guaranteed quantity and liquidity of the major currencies;
• increased consideration for several currencies, round-the clock business hours which enable traders to deal after normal hours or during national holidays in their country finding markets abroad open and
• extremely high efficiency relative to other financial markets.

This goal of this manual is to introduce beginning traders to all the essential aspects of foreign exchange in a practical manner and to be a source of best answers on the typical questions as why are currencies being traded, who are the traders, what currencies do they trade, what makes rates move, what instruments are used for the trade, how a currency behavior can be forecasted and where the pertinent information may be obtained from. Mastering the content of an appropriate section the user will be able to make his/her own decisions, test them, and ultimately use recommended tools and approaches for his/her own benefit.
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