07-27-2011, 10:21 AM
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 Forexpros.com Daily Analysis - 27/07/2011
ForexPros Daily Analysis July 27, 2011
Free webinar on ForexPros - Understanding the simple rules of Money Management
Expert: Sunil Mangwani
Start: Mon, Aug 1, 2011, 10:00 EDT
End: Mon, Aug 1, 2011, 11:00 EDT
Part.1 - The Risk-to-Reward ratio.
A Trading Plan is often the thin line between success and failure in the markets & the ‘Trading Plan’ must incorporate the 3M’s (Money, Mind & method…in that order).
From these 3M's, it is “Money Management” which is the most important part of a trading plan…and ironically the most ignored.
If a trader follow the 2 basic rules of money management, it increases the probability of success –
1.) The Risk-to-Reward ratio.
2.) Position sizing - The ideal exposure of the trading capital.
In the first part of this series, we will have a look at the Risk-to-Reward ratio, understand the importance of this ratio and learn how to implement it in the “Trading plan”. Click here to join free
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Is EUR/GBP Ready to Resume Downtrend?
The Euro stabilized to some degree in days following the agreement to aid Greece for the second time. It seems that fears about possible dissolution of the common currency are gone, at least for now, allowing the EUR to rally against some of its counterparts.
In case of the EUR/GBP pair, this rally has not been very impressive. After a decline from 0.9083 to 0.8704, the price slowly appreciated to 0.8883 a level almost equal to 50% Fibonacci retracement level of the downswing. This creates a strong possibility of reversal and resumption of the downtrend.
On a positive note for the EUR/GBP, this recent run up broke through couple of resistance levels. The price managed to move above the Ichimoku cloud and the 100SMA. However, it failed to stay there, dropping to the current level of 0.8828.
Under these conditions, the EUR/GBP is likely to continue lower, especially if the MACD turns negative, too. The price could possibly test the support of 0.8704 within few days. We must watch the 0.8883 resistance, though – a move above that level might swing momentum into bullish again.
--- Forex Trading analysis written by Mike Kulej for Forexpros.
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