Today is the last day of 2009! I’d like to close out this year of blogging with a handful of trading resolutions I’ve made for 2010. New Year resolutions without context or a plan are little more than wishful thinking. I like to begin with a retrospective look at the prior year to determine what worked, and what should be improved in the New Year. Then it’s time to lay out a plan for making it happen in the New Year. After reading my list, consider what you need to improve in 2010. Create a plan with specific, measurable goals you can realistically attain to hold yourself accountable in the New Year. I think it would be fun if you shared your goals with us by commenting on this article below.

Improve my Skills When Adding to a Winning Trade

I’ve never been efficient at adding to a winning trade, or “stacking” as some traders call it. I’ve always been a traditional risk-to-reward based trader, but I see the value of starting a position off small and adding to it as the market confirms your trade hypotheses. Unfortunately, I stink at stacking.  This year I have developed a couple of ideas about how to fit stacking into my current trading strategies, but I’m still not 100 percent confident in my ability to execute them properly. In 2010, I plan to mirror my live trades with a demo account which will allow me to practice stacking a trade in real time, alongside my live money trades. That will help me determine whether or not my techniques will work, or if I need to go back to the drawing board.

Maintain a Consistent Trading Journal

In 2009 my personal record keeping was horrible. I slacked off from keeping a regular trading journal, and I’m confident that lack of discipline crept into other areas of my trading. I need to take my own advice and ensure my trading journal is kept up to date in 2010. Trading journals are important tools regardless of your trading skill level because they offer a wealth of information beyond profit and loss.

Stick to My Profit Targets

This year I closed a lot of trades prematurely, which hurt my overall risk-to-reward ratio. This could be due to an overall lack of discipline this year, or it could have been an emotional reaction to the volatility we saw in the spot market. Even experienced traders can get into ruts of bad behavior now and then. Whatever the reason is, in 2010 I need to be vigilant to select a high probability profit target, and ensure I stick with it through the very end of the trade.

Diversify into other Markets

I’ve been interested in trading currency ETF’s and options for a little over a year now. I meant to get involved with those markets earlier, but got wrapped up in writing my book this year. In 2010 I’d like to explore some covered call strategies and much longer term currency plays using EFT’s and spot monthly charts.

Trade Very Long Term Charts

The majority of my trades in 2009 were planned using daily charts. The longer I trade, the less interested I am in spending time with charts. In 2010, I intend on trading with a much longer term view. The majority of my trades will be planned and executed using weekly and monthly charts.

Continue Improving my Blog

This isn’t necessarily a trading goal, but definitely something that is very important to me. In the New Year I will finally develop the educational section I’ve wanted online for a long time. I will begin a series of free webinars on the weekend so people who work full time can attend. Finally, I look forward to writing more content, more frequently and closing the week out with a video every Friday.

In closing, I would like to thank all the readers who visit this blog, post comments and send me emails. Without your interest and involvement, this blog would be awfully boring to maintain. Since starting this blog in October, 2007 it has grown to a community of over 1,300 traders, from twenty-five countries, who visit every month. Thank you for sticking with this blog through the slow months while I focused on finishing my book. I’m looking forward to helping develop your trading skills in 2010, and hopefully I’ll have the chance to meet some of you next year as well.

My best regards to you and your family on this New Years Eve. I wish you a healthy, peaceful and prosperous New Year!

Ryan

The United States Dollar Index monthly chart is the most interesting chart I’ve looked at today. The dollar has successfully beaten up most major currencies in December, and appears to be ending 2009 with a solid bull pattern along demand established in 2008. The market appears to be content betting on an accelerated recovery in the United States, but the question remains, will this trend continue or is this a dead cat bounce? The Dollar Index is trading at resistance near $78.00, and could easily turn lower from here.  So far, it appears the market has pushed above this resistance on the weekly chart. With the markets in holiday mode, and volumes thin, it is hard to tell at this point whether the break above resistance at $78 has teeth or if dollar is simply benefiting from thin volume.

Personally, it is hard for me to picture a long term trend of dollar strength. The United States Congress seems set on “saving billions, by insuring millions” through health care reform, while aggressively spending every dollar they can collect or print. That being said, price is never wrong, so if the market wants to go higher in the short term I’m happy to ride along. This week, the market will get data on United States third quarter GDP, durable goods, and existing and new home sales.  Considering the current sentiment seems to be banking on an accelerated U.S. recovery, any shockers in this data could take the wind out of dollar’s sails. So how could we play this?

CAD is the only major currency that hasn’t been totally slaughtered by the dollar over the last few weeks. It has remained stuck in a consolidation range just above the key price pivot of $1.04. This morning the market saw retail sales data from Canada that wasn’t on par with the expectations of a hot recovery in progress. The retail sales numbers came in on target, but core retail sales slipped 0.2 percent. Automotive sales at new car dealers rose 3.6 percent however non-automotive retail sales slipped 0.2% in October. Declines were also seen in food and beverage (-1.2%), pharmacies and personal care (-0.9%), and beer, wine and liquor store sales (-2.2%).  I suppose one could argue if the economy is improving, the need for Crown Royal or Grey Goose Vodka would indeed drop. Canada will release GDP data on Wednesday, but that is it. With the retail data at expectations or below, that may open an opportunity for the dollar to gain ground fundamentally on the loonie this week. It is worth noting, all of the gains made by the loonie overnight were erased by dollar bulls during New York trading today.

Keep an eye on the USD/CAD, this pair is bound to breakout at some point.

Best of luck,

Ryan

We all know the dollar has accomplished quite a comeback on the heels of positive jobs, and retail a sales data, the question is will it continue? Looking at the EUR/USD this weekend the currency appears to be at a decision point. If the euro is going to find its footing technically and avoid a full blown assault by the dollar it needs to happen soon. Today’s EUR/USD chart shows the currency is clearly poking at a demand level which corresponds with a minor trend line on the daily chart. The top of this demand zone sits at $1.46 which provided support for the recent run to $1.51. If the euro has hope of a comeback, this is a demand zone of interest. If not, I think the euro could be vulnerable to fall further toward support at the bottom range near $1.4450.

I spent the morning scalping USD/CAD following the news Canadian building permits rose 18.0% in October versus an expected gain of only 1.1%. The increase accounts for $6.1 billion in permits, primarily in non-residential construction, although single-family dwellings grew as well. Overall, non-residential sector construction permits were up 42.4% after declining 9.2% in September. When I read this, I have to admit my first thought was “government projects”, but the report states non-commercial permits were primarily driven by construction intentions for office buildings, retail stores and warehouses. Perhaps a sign businesses are more interested in infrastructure investments, given the recent numbers in retail sales.

Bank of Canada Rate Decision

USD/CAD has ranged for nearly four weeks, and the larger picture paints tighter consolidation on the daily chart. Today’s price action ended decisively lower with a potentially bearish price action pattern. The pair needs a major fundamental kick in the pants to break from its current trading range; the rate statement may be just what the pair needs. Support is seen near the daily chart range low and again at $1.40, although I believe $1.40 is probably minor support by now. There are no major economic reports for the dollar tomorrow, so this currency pair is definitely one to watch. Anything can happen with a rate statement announcement, so be prepared for a long or short opportunity. I’ll be watching tomorrow morning for a fundamental bargain hunting opportunity.

Best of luck,

Ryan

The Labor Department’s Non-Farm Payroll report was released this morning, and the numbers surprised the market. According to the Labor Department, the United States lost 11,000 jobs versus and expected loss of 119,000 while the unemployment rate fell 0.2 percent to 10 percent even. The numbers are being touted in media reports as a sign of hope “for a sustained economic recovery”, but does anybody really believe the Labor Department? The underlying data still paints a difficult picture for job seekers. The number of people unemployed for at least six months rose last month to 5.9 million. The average length of unemployment is now more than 28 weeks, and there are still 15.4 million unemployed people.

On Wednesday, ADP released their employment report which is a stark contrast to the Labor Department’s report posting a lost of 169,000 jobs. Deviations between the ADP data and the Labor Department’s data are common but this is one huge deviation.According to ADP the services sector lost 81,000 jobs while the Labor Department reported a gain of 58,000 jobs. Manufacturing jobs were similar with ADP reporting a lost of 44,000 an the Labor Department reporting a loss of 41,000 jobs. The Labor Department counts 7,000 government sector jobs that ADP does not.

The market’s reaction to the Non-Farm Payroll data is the most interesting I’ve seen in a long time. Initially the reaction in the equity markets was predictable with futures shooting up and equities up over 100 points in early trading, but the Dollar was bought aggressively during this equity rally which in my opinion is counter intuitive. If the market was truly adverse to risk in the wake of positive job numbers I would expect to see Dollar sold against the risk pairs such as AUD, NZD. As it turned out, Dollar rallied and the Dow is currently trading in negative territory.

I think the initial rally was a knee jerk response. I don’t think anybody believes the Labor Departments numbers. Anybody that doesn’t realize the government routinly cooks their books worse than Enron should spend some time reading what qualifies as “non-farm job”, but this report in particular has left a lot of traders scratching their heads. I think the market is generally not as confident in the so called “path to recovery” as the government and media is, and opted to take profits this morning instead of pushing higher.

What do you think? Share your comments and let me know.

Ryan