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Firstly I’d like to wish all our Safety in the Market students a very Happy New Year, and all the best for 2010. I wish you all the joy, happiness and winning trades you could ever ask for!
Early in 2009 I was looking for a big year from the Euro futures contract (EC-Spotv in ProfitSource) and it certainly didn’t disappoint. As expected, the best quarter to trade the Euro was the second quarter.
Chart 1 below shows the market action on the Euro from its October 2008 lows.
Chart 1
click chart to enlarge
While October 2008 was the lowest price the Euro traded at in 2008, the market didn’t really take off until early December. Even then, we still saw the market struggle to hold on to its gains.
Early March 2009 provided a nice trade, but the cleanest, easiest to trade move came from the April 22nd low at 1.2878. This gave us a nice, 1300 point run into early June.
While the market still went higher from here, it was tough trading, and I can certainly say that the first half of 2009 was more profitable for me on the Euro than the second half of the year.
Going back over a year like this and noting in hindsight where the best trades of the year occurred will help you in your continual growth as a trader.
David Bowden said “the biggest advantage you have got is that you don’t need to be in the market all the time.” He also felt that that as traders, we too often forget to take advantage of this. Looking back at 2008, when would be a good time to be in the market? When would it be a good time to be short? And most importantly, when would you just be happy to be out of the market?
Each year I will look at a market and prepare a roadmap in advance. David Bowden would look for three or four really strong pressure dates for a year, and then look to turn these pressure dates into between six and eight really good trades – ie trading both into and out of each pressure date.
The first date I am watching on the Euro is in early March, around the 10th or the 11th. At this stage, I am looking for a low to occur in the Euro, followed by another relatively strong up year.
At time of writing, the Euro has made a low on the December seasonal date at 1.4215, and has been tracking in a sideways range ever since. This is shown in Chart 2 below.
Chart 2
click chart to enlarge
I am relatively happy with the price the Euro is currently trading at, but I am not convinced the time is right for the next bull market to commence.
WD Gann and David Bowden both believed that time is more important than price, so I will look for confirmation of my Pressure Date before looking to trade heavily.
It’s important to remember that a forecast is just a forecast until it is confirmed. While many traders focus on whether they are right or wrong, what is much more important is how much money you make when you are right, and how much money you lose when you are wrong.
Make it your definite aim to make 2010 a winning year for you, manage your risk, and take the opportunities when the market gives them to you!
Be Prepared!
Mathew Barnes
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