It has been a negative period for the US dollar in the Forex Markets. When we are trend following we really do not look at the fundamental back drop ,but it seems evident. Look at it this way… with all the debt taken on and more spending by Govt, it doesn’t make sense? If we personally ran our households this way, we would not be living in our households.

Regardless when we are trend following all we look at is price. The thinking that I focus on is risk and defense. I look at Risk per trade, Risk per sector…and total Open trade risk. I will never figure out any market (even though many want me to)! The funny thing is even if the future was known and published on the front page of any newspaper, the market might react in a fashion that is completely opposite of what would have been expected. For this reason, I only rely on price action. This is the bottom line. I have learned over the years Price is always right. I have learned my opinions do not make me money. I am trading to compound my money, not to brag to someone I made a prediction that worked out. To go on further, most trades that I put on do not work. With this said.. I really do not care because I am taking small losses.

My reason of speaking about the decline of the US Dollar in the forex markets to show you what is trend following all about. Trend following is about not trading your opinions. Trend following is about being available. Trend Following is about patience and discipline. Trend Following is all about just putting on the trades and watching to see what happens. Trend following is a specific approach with all aspects of the trade planned out. Trend following is realizing that you engage the risk. Trend Following is far from perfect and there are many times nothing happens for a long period of time (like this year).

On 7.15.09 there was a signal to sell the Dollar Index in the Forex Markets at 79.09. So far the trade is profitable but who knows what will happen. There was a small risk to the stop… so nothing to think about. Then on 7.20.09 a buy signal on the Aussi Dollar at 80.51. Again, Low risk… and took the trade… but later I started having signals in the Canadian…British…Euro…These trades were not taken because they would have exceeded my sector risk. I maxed out my sector risk with the two above mentioned trades. That is it. I am not greedy. I am following my thought out plan. I know that as much as all those trades are working now. I could wake up and see them all going against me and I would have amplified my risk. This is what trading for a commodity trading advisor really is all about. It is not all about the return on investment but how much risk you will have to tolerate to achieve your goals.

Andrew Abraham
www.myinvestorsplace.com

Andrew Abraham has been in the financial arena since 1990. He is a commodity trading ddvisor and co manager of a Commodity Pool. Since 1993 Andrew has been a proponent of quantitative mechanical trading programs. Andrew's major concern is not only total return on investment but rather the amount of risk that one would have to tolerate in order to achieve returns He focuses on developing quant models that encompass strict risk adherence and correlation. He has been a speaker at conferences as well as an author of numerous articles. Andrew has spent years researching ideas that have the potential to outperform indices as well as maintain fewer draw downs.

Visit Angus Jackson Partners (http://www.angusjacksonpartners.com) Contact: A.Abraham@AngusJackson.com (mailto:A.Abraham@AngusJackson.com)

© 2009 Copyright Andrew Abraham - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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