This is a video summary of the Live Forex Trading Room session on October 11, 2007.

Today’s Summary, by Sunil Mangwani:

Lets go over a couple of situations demonstrating the use of the tools which we employ here in the FX Instructor Live Trading Room for our analysis. It is critical to know which of your trader tools to use in which situations. Getting a good result from your trade becomes secondary - if it is technically correct, you have done your job as a trader.

On the USD/CAD, 4h charts, we see a strong, consistent downtrend. For this situation - a strong existing trend - we look for Hidden Divergences. According to our “Rules of Thumb” for Divergences, we use Fibonacci Fans and Fibonacci Expansions to determine our entry points and targets, respectively.

So far prices are heading well into the range of our target and are still going strong. The point of this exercise is - we have been taking decent trades in the Live Trading Room, because we have been applying the right strategy for the right situation, according to our methodology. Any upwards pullback in such cases would be seen as simply an excuse for a better position.

Next, lets have a look at the GBP/JPY. This is another example of the correct tool being used in the right situation - namely, the CCI. We strongly believe in using CCI trendline breaks for confirmations of our entries. In this case, the CCI has given us a confirmation of a Bearish Divergence.

The CCI is the right tool for the job, because while we also saw a similar Divergence on the Stochastics, the CCI gave us resistance on a trendline, giving us an exact signal to enter Short!

Following up this trade on a shorter timeframe, we used our Fibonacci Fans, expecting price to come down along the fan channels, to our targets. The lesson is - if you are Short in a situation like this, expect price to come down to a certain fan level. Our subscribers were confident of the exit targets.

As we say often here in the Live Trading Room - exits are much more important than entries - if you don’t know how to exit well, you could end up giving up all your accumulated profits.

We’ll wrap up the recap for today with a followup on the USD/JPY from previous recaps. On the daily timeframe, we are following the breakout of a bullish Triangle formation towards the upside, and are still Long in a trade. The price is proceeding slowly and steadily upwards towards our targets. This has been a very decent technical trade so far, accumulating good profits.

Enjoy the video!

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