<p style="text-align: left;" align="center"><b><span style="text-decoration: underline;">1. INTRODUCTION:</span></b></p>
I just want to start this week ‘s blog by re-iterating what I have said a couple of times this week already regarding the current market trading conditions.

For about the last 4-5 weeks trading Forex has become very difficult, inter-market correlations are not working as they used to and it is very hard to get a directional trend, as we appear to be more often that not in a chop fest. If you are able to keep your head above water and survive in these difficult conditions…well done. Times will change, but for now, it is sometimes best to stay sidelined, or, if you feel that you must be in the market, trade very small position sizes.

At the start of the week China PMi missed and the AUD rallied; this should have been a huge red flag for what was to come. We seem to be in a market environment that continually requires support and stimulus to keep the wheels moving. China looks like it is going to provide market support as the GDP target that constantly seems to be revised lower and then revised lower again is not going to hit even 7%. In fact, it looks like it may be closer to 6% than 7%.

That said, plus, the fact that many inter-market correlations are not working, it has been a very difficult market to trade. I find it difficult when basic relationships do not work, i.e. Gold falls and the AUD/USD rises, relationships like this make it harder to achieve a clarity in trading, making sense of market moves can be difficult and frustrating and annoying as no real trend is established.

The Circus show at the ECB continued with several members of the ECB board speaking (before Draghi) about the continued strength of the EUR/USD and that “Negative interest rates” and “ Asset Purchases/Loans” from banks could be bought as options open to the ECB to dive stimulus through the Eurozone. Draghi’s turn came around to speak and he was weaker than the other board members all he said was that the ECB was ready to act if inflation slipped lower than expected. Verbal intervention seems to be all the ECB is capable of and quite frankly it is now “The boy that cried wolf”.

Periphery 10-year bond yields are at 8 year lows in Spain, 4 year lows in Portugal and Italian debt is low as well. Progress is being made, however, unemployment is at record highs and CPi is way below the objective. The Eurozone is suffering with deflation.

Will Draghi act this week at the ECB meeting?

The EUR/USD is painfully high for most exporters within the single currency area and Merkel and the Bundesbank are only interested in inflation, well they are only interested in Germany first, and then the rest of the Eurozone.

The target inflation rate for the Eurozone is 2%
<p style="text-align: left;">Yesterday (Friday) the following CPi figures were released: -<b>
</b><b>Saxony (German Region):            Actual 0.9%             Expected 1.2%
</b><b>Spain:                                                   Actual -0.2%            Expected 0.1%</b></p>
If you were Draghi pouring out your cornflakes at breakfast and you read these numbers you would hardly be doing a “skippity do dah walk” into the office. These numbers are crap and follow on a long line of similar crap numbers that the ECB has failed to act upon because they are incapable of action because their hands are tied by Germany.

Just do not expect the ECB to be pro-active; they will be getting several cans ready for Thursday’s press conference to kick down the road and then afterwards they will bury their heads in the sand once more.

The above numbers would have most central banks frothing at the mouth to act….not the ECB. The Eurozone CPi data has been consistently poor for sometime, I just wish I knew what it would actually take for more than verbal intervention and continual denials of deflation for intervention to take place.

The PREMIUM SERVICE continues to make a profit each month but in March, reflective of the market conditions only about 25% of the normal profits were seen. Plus, in March, I was away in Dublin for one week and did not trade. Nevertheless, the market conditions took the average monthly figures lower. I am happy with the fact a profit was made in March because at one time I thought it was going to be a zero contribution month.

In addition on Monday morning PREMIUM SERVICE subscribers will receive in the secure section of the website were this blog is found a DAILY FX POST with any trade set-ups that I am looking at. This should be ready before Wall Street opens for business each day. This will replace some of the lengthy twitter posts.

<b><span style="text-decoration: underline;"> </span></b>

<b><span style="text-decoration: underline;">2. TRADING SUMMARY:</span></b>
<p align="center"><b><span style="text-decoration: underline;">RADAR, FLASH and FUNDAMENTAL TRADES
</span></b><b><span style="text-decoration: underline;">MARCH 2014 and YEAR to date:</span></b></p>
Below I show the up to date performances for my various trading styles. Full excel spreadsheets are in the subscriber area of the PREMIUM SERVICE.
<p align="center"><b><span style="text-decoration: underline;">RADAR TRADES – MARCH 2014:
</span></b><b><span style="text-decoration: underline;">PROFITS FROM SINGLE LOT COMPLETED RADAR TRADES:</span></b></p>
<p align="center">1 x MICRO-LOT:
10 trades at $0.10 cents each = $1.00 risk for $5.00 profit.</p>
<p align="center">1 x MINI-LOT:
10 trades at $1.00 each = $10.00 risk for $50.00 profit.</p>
<p align="center">1 x STANDARD LOT:
10 trades at $10.00 each = $100.00 risk for $500.00 profit.</p>
<p align="center"><b><span style="text-decoration: underline;">FLASH TRADES – MARCH 2014:
</span></b><b><span style="text-decoration: underline;">PROFITS FROM SINGLE LOT COMPLETED FLASH TRADES:</span></b></p>
<p align="center">1 x MICRO-LOT:
19 trades at $0.10 cents each = $1.90 cents risk for $29.80 profit.</p>
<p align="center">1 x MINI-LOT:
19 trades at $1.00 each = $19.00 risk for $298.00 profit.</p>
<p align="center">1 x STANDARD LOT:
19 trades at $10.00 each = $190.00 risk for $2,980.00 profit.<b style="line-height: 1.5em;"><span style="text-decoration: underline;"> </span></b></p>
<p align="center"><b><span style="text-decoration: underline;">FUNDAMENTAL TRADES – MARCH 2014:
</span></b><b><span style="text-decoration: underline;">PROFITS FROM SINGLE LOT COMPLETED FUNDAMENTAL TRADES:</span></b></p>
<p align="center">1 x MICRO-LOT:
2 trades at $0.10 cents each = $0.20 cents risk for $9.60 loss.</p>
<p align="center">1 x MINI-LOT:
2 trades at $1.00 each = $2.00 risk for $96.00 loss.</p>
<p align="center">1 x STANDARD LOT:
2 trades at $10.00 each = $20.00 risk for $960.00 loss</p>
<p align="center"><b><span style="text-decoration: underline;">COMBINED FLASH, RADAR AND FUNDAMENTAL TRADES PROFIT PERFORMANCE
</span></b><b><span style="text-decoration: underline;">MARCH 2014…SO FAR:</span></b></p>
<p align="center">TRADING MICRO-LOTS:
31 trades at $0.10 cents each = $3.10 risk for $25.20 profit.</p>
<p align="center">TRADING MINI-LOTS:
31 trades at $1.00 each = $31.00 risk for $252.00 profit.</p>
<p align="center">TRADING STANDARD LOTS:
31 trades at $10.00 each = $310.00 risk for $2,520.00 profit.</p>
<p align="center"><b><span style="text-decoration: underline;">COMBINED FLASH, RADAR AND FUNDAMENTAL TRADES PROFIT PERFORMANCE
</span></b><b><span style="text-decoration: underline;">TOTAL 2014…SO FAR:</span></b></p>
<p align="center">TRADING MICRO-LOTS:
140 trades at $0.10 cents each = $14.00 risk for $203.50 profit.</p>
<p align="center">TRADING MINI-LOTS:
140 trades at $1.00 each = $140.00 risk for $2,035.00 profit.</p>
<p align="center">TRADING STANDARD LOTS:
140 trades at $10.00 each = $1,400.00 risk for $20,350.00 profit</p>
The above examples are for illustration purposes only:

The profitability examples detailed above are based solely upon single lot trading, regardless of lot type. If multiple lot sizes are traded the profitability margins will be different than those shown.

Just to provide more information so you understand where I am coming from with the risk / reward statements above. All of my trades are of different sizes and different size lot types. The above does not reflect the actual trading performance. I like to add to trades, profits are taken as the trade progresses and my overall cost average moves several times. All of my trades are of different lot styles. I trade a mixture of micro lots, mini lots and standard lots across my brokers.

The above results simply display your profit or loss if you placed a single lot trade on all the set-ups suggested and did nothing else.

&nbsp;

<b><span style="text-decoration: underline;">3. THE FUNDAMENTAL TRADERS OVERVIEW:</span></b>
<p align="center"><b>THE SMART MONEY IS EXITING EQUITIES NOW</b></p>
I have written many times of late regarding the markets being twitchy. We see moves up in the S&amp;P to highs and a little bit beyond. Then it pulls back a little. A day later we open up and it is sold into and we pull back. This pattern is repeated for two maybe three days and then we start again with another test of S&amp;P highs. If you look at the week just gone; Monday, Tuesday, Wednesday and Friday the S&amp;P experienced selling into market opening strength, only on Thursday did this not happen. The week before I noticed this pattern starting.

Why is this happening?

Is there something other than normal trading to consider?

I think so because I believe the smart money is selling into the strength in a very low-key way. The markets have so many correlations that are not working or changing at the moment meaning there is a general air of pullback anticipation in the markets.

If you were investing in equities right now you would have to be so selective jumping on board at these very elevated levels. What makes me more certain that the clever people are reducing their exposure is that there are many reports now that private money is coming back into equities. It is a well-known fact that private individuals (The “Ma and Pa” investor), buy at the tops and sell at the bottoms.

News events such as the Ukraine I thought may have triggered something more of a market pullback / correction. I thought the same of tapering. I mean, the U.S. FED is making a massive change in monetary policy and the market reaction is to shrug its shoulders. I do not think that the Ukraine situation is over yet and it could be the catalyst that sparks an equity market pullback / correction.

Looking ahead, we have high beta news events on the horizon from the ECB and Japan. I think that only FEAR will spark an equity market pullback now…economic data whether good or bad is irrelevant.

On 1<sup>st</sup> April Japan raises sales tax for the first time in 13 years. The last time that Japan did this we had a period of stagnation and then deflation. Shinzo Abe (Japanese Prime Minister) will be hoping for a different reaction this time and I would expect a bit of Yen volatility.

The ECB has a press conference and interest rate decision this Thursday. I have already highlighted poor CPi data and the fact there has been talk of easing in one form or another by the ECB board members. Maybe this Thursday Draghi will act, who knows?

This will be an important meeting for the ECB as the stakes are very high. This may be the catalyst that starts the USD strength (that has been talked about for months now) to come through the markets.

JPY volatility may be increased, around the sales tax increase and the cross–rate effect across most majors will get dragged in.

I am not saying that people are withdrawing money out of equities ahead of these two pieces of news. It is well documented that most of Wall Street is expecting that the grind higher in equities has to stop at some stage. There is no denying that the markets are twitchy.

If the Ukraine kicks off again and Putin decides to openly threaten to cut off the gas supply because he gets bored with the Obama and Eurozone positioning on sanctions, this would be the straw that breaks the camels back.

There are a lot of “what ifs” in this piece. The “cashing out” has started it just needs a good bite of FEAR to hit investors and the equity markets will oblige very easily with a correction.

This is just something to be aware of and to trade accordingly. The commodity currencies should come off the rails in spectacular fashion if a market correction begins. The Forex charts that are very messy to read at the moment will show clarity once again.

&nbsp;

<b><span style="text-decoration: underline;">4. TRADER TOPICS:</span></b>
<p align="center"><b><span style="text-decoration: underline;">STOP PLACEMENT:</span></b></p>
Stops are a crucial, very important tool in trading. They allow us as traders to control the amount we risk on a given trade and often prevent a loss from spiraling out of control.

It is such an important discipline when trading that I can’t imagine placing a trade without a stop. Given, that my style is to assess risk before even placing a trade, entering a stop is just completely an automatic discipline.

Inexperienced traders will often trade without stops. When you try to find out their reasons, it is difficult to understand other than there is fear that if they place a stop and are “STOPPED OUT” it is an admission of being wrong. Traders are wrong all the time. You simply cannot operate at a 100% profitable trades rate. New traders learn to place stops after a few big losses so this initial approach is soon rectified.

When placing a stop (I have written about this in several TRADER TOPIC sections of the PREMIUM SERVICE blog over the past few weeks) it is vital that it is done on the basis that the stop level and the risk tolerance involved is within your TRADING PLAN guidelines. I have started to talk about MICRO versus MINI versus STANDARD when it comes to lot sizes and will add more on this subject in the coming weeks when I write about brokers and how many to use and for what reasons.

Basically the stop is based on one or more of the following parameters: - Previous High or Low, round numbers, Average True Range (ATR), Pivot points or a Fibonacci level.

Each currency pair trades at a different volume and therefore it is not a standard amount of pips for each stop. Research is required and risk is assessed before the trade is placed. So you will know before placing a trade:
<ol>
	<li>The Pair you are going to trade.</li>
	<li>Examine the RISK TOLERANCE you have via your TRADING PLAN</li>
	<li>Check where the entry and exit levels should be. (Fibonacci Level, Pivot Point, Trend Line Support or Resistance) I always add a few pips +10/+20 depending upon the pair to cover stop loss runs to the levels chosen.</li>
	<li>Count the pips</li>
	<li>Calculate the amount of lots you can trade.</li>
	<li>Maybe enter on a lower number of lots and decide when you will add to your position. This also limits risk (initially) this approach should be documented in your TRADING PLAN.</li>
</ol>
I am NOT a lover of trailing stops. They do not cover whipsaws in the market unless they are huge and then my point is why trade with massive trailing stops?

One point that I have not mentioned when placing stops is that if you have calculated your stop on key technical data you can walk away from your computer knowing that you have done your homework to the best of your ability and if you are STOPPED OUT well that's just it…. what more could you have done given your research.

There are times that I move my stop but very rarely. It is a bad practice and reflects poor judgment at the outset of placing a trade.

With regards to my FUNDAMENTAL trades I do allow for hedging on these trades and I enter them on the basis that they will be trades of months rather than days and as such I am entering these trades establishing core positions to add and remove lots until I am happy. FUNDAMENTAL trades would normally have stops wider than monthly ATR’s and I hedge if required.

When I place the vast majority of my stops, I will primarily use Fibonacci levels and/or Pivot points. Some other thoughts weigh in (depending upon the currency pair) such as significant highs/lows and trend lines. Trend lines are great and chart patterns around trend lines. More often than not Fibonacci levels offer great placing of stops levels, but not all the time. The thing to do is not to get too subjective when placing stops. Being objective is more important.

Setting stops is not always easy, and being honest it is the most subjective aspect of our trading methodology. I hope that this short piece shed some light on what I look for when placing stops.

<b></b><b style="line-height: 1.5em;"> </b>

<b><span style="text-decoration: underline;">5. MY CURRENT LIVE TRADES:</span></b>

<b><span style="text-decoration: underline;">FLASH TRADES:</span></b>

I have no LIVE FLASH trades at the moment.

<b><span style="text-decoration: underline;">RADAR TRADES:</span></b>

I have no LIVE RADAR trades at the moment.

<b><span style="text-decoration: underline;">FUNDAMENTAL TRADES:</span></b>

<strong>FUN14 (This trade is hedged from -150 pips)</strong>
<strong>GBP/NZD</strong>
<strong>Long</strong>
<strong>Cost Average: 1.9950</strong>
<strong>Stop Loss: 1.9000</strong>
<strong>Limit / Target: 2.2350</strong>
<strong>My Position Size: 7.5%</strong>
<strong>Closing Weekly Position: 1.9197</strong>
<strong><span style="line-height: 1.5em;">My present Profit/Loss position: - 753 pips</span></strong>

<b><span style="text-decoration: underline;">6. TRADES THAT ARE ON MY RADAR:</span></b>

There are not a great number of trades on my radar this week. These will hopefully evolve as the week progresses. I am not trading for the sake of trading.

<strong>USD/CAD</strong>
<strong> Long  </strong>
<strong> Limit order entry: 1.0970</strong>
<strong>Stop Loss: 1.0940</strong>
<strong><span style="line-height: 1.5em;">Limit: 1.1600 (Long Term)</span></strong>

<strong>CAD/CHF</strong>
<strong> Long  </strong>
<strong> Limit order entry: 1.7950 (50% fib retracement)</strong>
<strong>Stop Loss: 1.7900 (just below 61.8% fib level)</strong>
<strong><span style="line-height: 1.5em;">Limit: 1.8090</span></strong>

<strong>EUR/CAD</strong>
<strong> Long  </strong>
<strong> Limit order entry: 1.5050</strong>
<strong>Stop Loss: 1.4950</strong>
<strong><span style="line-height: 1.5em;">Limit: 1.5600 (initial target)</span></strong>

&nbsp;

<b><span style="text-decoration: underline;">7. LOOKING FORWARD…THE KEY SUPPORT &amp; RESISTANCE LEVELS WITH THE USD MAJORS:</span></b>

<b>EUR/USD: Closing Price 1.3752.</b>  We are definitely heading for a breakout with this pair. We are trading in a nice range that once broken should only give clarity to this pair but by being the most liquid pair in the Fx market it should help the whole market move. Beware of false breakouts, but the range is 1.3700 to 1.3795. Above 1.3795 and we are back with 1.3970 being resistance.

<b>GBP/USD: Closing Price 1.6638. </b>The cable is operating in a very tight range like the EUR/USD, 1.6600 support to resistance 1.6650.

<b>AUD/USD: Closing Price 0.9250</b>. All of the USD majors are in tight ranges. The AUD/USD is 0.9210 to 0.9300. We are attempting to play out an inverted head and shoulders pattern, which, the whole world has on their radar at the moment. The measured move to play this pattern to completion is a move up to 0.9500. I hope that it gets there although if the past few days are anything to go by it will neither be easy or straightforward. But, should this pair reach the dizzy heights of 0.9500…what a great place to re-enter short back to 0.8000.

<b>NZD/USD: Closing Price 0.8656</b>.  We are in areas that have only been seen once before. Resistance is at 0.8700 (52 week high 0.8693). Support is a long way below the present levels at 0.8575.

<b>USD/CAD: Closing Price 1.1059.</b>  I was hoping for a supporting trend line re-test before this pair would resume a move to the long side.  Yesterday it bounced off 1.1000. I was looking for a move to above 1.0950-70 as being the area to enter long. We will have to wait and see what happens next. Support is at 1.0970 and resistance initially is at 1.1080.

<b>USD/CHF: Closing Price 0.8867</b>.  Last week we witnessed a savage rejection at 0.8900 after a very bullish move to try to take that figure. It has pulled back to consolidate once again. The range to watch out for is 0.8815 to 0.8900.

<b>USD/JPY: Closing Price 102.82.  </b>What a pointless pair to trade. No movement and a tight range. Maybe the sales tax hike this week will spark life into the pair? The range is 101.70 to 103.50.<b></b>

<b> </b><b style="line-height: 1.5em;"><span style="text-decoration: underline;">
</span></b>

<b><span style="text-decoration: underline;">8. MAJOR FOREX NEWS THIS WEEK THAT INTERESTS ME:</span></b>

SUNDAY: N/A.

MONDAY: EUR – CPi.
MONDAY: CAD – GDP.
MONDAY: CNY – Manufacturing PMi and HSBC Manufacturing PMi.
<span style="line-height: 1.5em;">MONDAY: AUD – RBA Rate Statement and Cash Rate.</span>

TUESDAY: N/A.

WEDNESDAY: USD – ADP Non-Farm Employment Change.
WEDNESDAY: AUD – Retail Sales, Trade Balance and RBA Stevens speaks.

THURSDAY: EUR – Interest Rates and ECB Press Conference.

FRIDAY: USD – Non-Farm Employment Change and Unemployment Rate.
FRIDAY: CAD – Employment Change, Unemployment Rate &amp; Ivey PMi.<b></b>

<b><span style="text-decoration: underline;"> </span></b>

<b><span style="text-decoration: underline;">9. FINAL THOUGHTS:</span></b>

There is a big week ahead with high-level news events in Australia, Japan, China, Europe, Canada and the USA.

Personally, I will not be in as many trades as usual and those trades that I am in will be smaller position sizes to reflect the poor trading conditions that we have at the moment.

This is not a time not to be a hero. Do not try to pick tops or bottoms just go with the flow and trade if you see an opportunity. Do not force trades let them come to you? The market will change and things will revert to more normal trading conditions again but in the interim period if you can stay out of trades, take a break. There will be plenty of opportunities in the future to trade without getting heavily involved when the risks associated are with trading Forex are elevated.

Take care and good luck. Be careful with position sizes.

Scott Pickering
The Pip Accumulator
Saturday March 29th 2014

EMAIL / FOLLOW ME AT:
premiumservice@weeklyfxdrivethru.com
Twitter: @pipaccumulator
Twitter: @ThePremService
<span style="line-height: 1.5em;">Google+/scottpickering
</span><span style="line-height: 1.5em;">StockTwits; thepipaccumulator</span>

&nbsp;