New Page 6

Forex Articles - Trader's Corner

Trader's Corner - May 2007
The month of May is traditional the most active month of the year in market volatility and direction. As mentioned in our newsletter last month, with several breaks of all time highs in April, May took the back seat in market action. The key to Forex profits is not just volatility, but the magnitude of that volatility – the bigger the wave the longer the ride. We saw very small magnitude moves with little follow through during the entire month which made for low profit trading.

The Forex market is known for its trending modes, yet 30 percent of the time the market does not trend. This sideways action is where most traders lose their shirt and throw in the towel. The On Target Trading System did exceptionally well this last month with its Target 1 catching small profits and eliminating risk by moving the stop loss up to break even for the rest of the trade while the remaining position searched out Target 2. Unfortunately, we did see very few Target 2’s reached as the market seemed to channel most of the month. With Target 1 being reached 71 percent of the time this last month, we were able to retain capital and move our accounts forward with some profits.

OUTLOOK FOR JUNE: Since May did create a bit of a buffer from our maximum highs in April, June looks to have great potential in any direction. If the market seeks to try to take out the all-time highs again, there is plenty of room to catch the wave up. Of course if the market becomes exhausted then we will see plenty of room to also run down. Watch for the channel break out as the run should be clean with plenty of pips to go around.

Trader's Corner - June 2007

The month of May is traditional the most active month of the year in market volatility and direction. As mentioned in our newsletter last month, with several breaks of all time highs in April, May took the back seat in market action. The key to Forex profits is not just volatility, but the magnitude of that volatility – the bigger the wave the longer the ride. We saw very small magnitude moves with little follow through during the entire month which made for low profit trading.

Trader's Corner - July 2007

The month of July is always an unpredictable month. Sometimes you find July as flat as a desert and other times as bumpy as the Rocky Mountains. I seem to find time to go on vacation during the month of July. I only traded the first 10 days of the month and enjoyed the rest of the month off. If you had traded the On Target Trading System (OTTS) during the month of July you could have made upwards of 800+ pips*. There was a great deal of movement and we saw a new all-time high on the EUR/USD and a 26-Year high on the GBP/USD. The market ran very quickly when it moved, but still left a lot of margin of error for trend traders.

OUTLOOK: August traditionally has always been one of my best months in trading. It is almost as if traders finally get focused and work together to push markets in a declared direction. With many of the majors busting their tops last month, and then retracing quite a bit toward the end of July, we should see some great range trading. Support and Resistance Levels are the name of the game and as mentioned in previous newsletters – pushing against an all-time high is never fun to trade. August should be a great month.

Trader's Corner - August 2007

We were glad when the month of August finally came to an end – boy was it a wild ride. August traditionally is usually a bit rocky at the beginning of the month as so many traders in Europe are getting back to work from their holiday. After the first two weeks, August was looking like a grand slam month with 334 pips in week one and 143 pips in week two we were rolling on the On Target. The Premier stepped it up as well with multiple daily trades that turned into instant profits. Then the “Credit Crisis” hit and we saw markets bust open. Every currency on the books was down as the long-term position holders dropped their positions by the truck loads. Currencies over two days dropped over 800+ pips, some as many as 2400 pips. The fall didn’t appear to have an end in sight until all the world banks intervened and took up the slack. The Federal Reserve dumped over $500 billion in the market, the French bank, European Central Bank, and Bank of Japan also dumped billions and were the big players in holding markets in place. Some currencies, like the NZD/USD (New Zealand Dollar [Kiwi] against the US Dollar) retraced 61% of its gains in four days that took over a year to accumulate. In simple terms the markets were Crazy! Already in the first five days of the month of September I have talked to a dozen traders that lost their shirt in the month of August. All of which where not trading with 4xIsland – So even though the month was tough we were able to toot our horn a bit at the end of the month making 541 pips for the month.

OUTLOOK FOR SEPTEMBER: So what does this mean for future trading – a lot of good. For the last three months we have been hitting our head against the all-time highs on many currencies. This makes for difficult trading as the all-time high is a very strong level of resistance. With currencies across the board pulling back we now have plenty of room to run up, and also if the markets wish to continue to sell off, we have plenty of room to run down. The huge move in August is like a forest fire - It is tough during the burning phase, but the great potential that a wild fire leaves behind, for future growth and life, is enormous. We see huge potential and good trading on the horizon in the forex markets.

Trader's Corner - September 2007
The Aftershock Hits the On Target

The aftershock of the “Credit Crisis” in August hit us in the month of September on our On Target Trading System. We saw a losing week the last week of August and that trend continued all the way through the end of September. With some very tight channels and quick trend switches we strived to keep things together by applying our Money Management strategies and minimizing our leverage on each trade. The Yen currencies caused us the greatest headache as position traders went back-and-forth buying and selling the Yen. The Pound/Yen (GBPJPY) was the most effective enemy to the account as it never did break out of its channel until the last day of the month. The EURUSD and GBPUSD, however, did break out of their channels with the EURUSD hitting Target 2 every time with 100 percent accuracy. We did hit a streak of bad luck the third week of the month with three trades hitting Target 1, closing half our position for mild gains and moving our stop loss up to break even, the set-ups looked great and the market was on our side, but the magnitude of the market was just too large and before we had a chance to run at Target 2 we were stopped out at breakeven. We say “bad luck,” because once the market stopped us out at break even, the trades ran according to our predictions and hit Target 2. This equated to a miss opportunity of almost 300+ pips. Among the trials, the market did figure several things out this month with the Fed adjusting interest rates and a better feel on the risks associated with the Credit Crisis. All-in-all we saw within the last week that the currencies began to come back within their normal magnitude levels whereupon the system was created. These normal levels will smooth out our risk versus reward ratios that went a little crazy in September.

Things look good for October and as of this writing, the 2^nd of October, we have already seen two winning trades (EURJPY hitting Target 2 and GBPJPY hitting Target 1). All currencies have broken out of their channels which will clear things up for better trade set-ups and more accurate Targets.

Premier Holds on Positive
Amongst the doom and gloom of the On Target Trading System the Premier Trading System stepped up to the task and made consistent profits all but the last week of the month. We did sit as high as 13 percent positive on both closed trades and carry trades before the market pushed a run against our commodity currencies namely the Australian Dollar and New Zealand Dollar. As we teach in our online webinar and share with new students, diversification is key to the consistent growth in any market. We developed the Premier to take up the slack when the On Target is lagging behind. Although the Premier did give back a big chunk of its carry-trade profits the last trading week of September, it did its job in maintaining the value of our students’ accounts whom where diversified between the two strategies.

Trader's Corner - October 2007

October was the month of the Premier Trading System. The long-term trend following system caught the wave of the market the last 2 ½ weeks of the month to put up some impressive numbers of +18 to +36 percent* depending on your leverage. Believe it or not, the initial drawdown of 6 to 12 percent during the very first week of the month was where we added most of our additional position through dollar-cost-averaging. During times of correction prices are cheaper and the old school trading strategy of buy low and sell high was in play. Once the market corrected back to the long-term trend we saw profits stack up. The runs on the Euro against the US Dollar reaching an all-time high almost every week and the fresh highs on the Canadian Dollar against the British Pound and US Dollar were key participants in the high returns. The over all price activity of the market in October was actually very rough and choppy. When price is looked at on smaller time frames, the game wasn’t as bright. The On Target strategy found itself in a tug-a-war battle all month long with a good run the last week having the last four trades of the month hit all targets. The swings were very sharp and fast which caused trading to be less predicable on the On Target while giving the Premier Strategy the optimum timing to place new trades at lower prices. Is the On Target off base? Not at all. Price magnitudes of the market have returned to normal since the credit crisis back in August. The targets are right on in accuracy with some of our target 2’s predicting the tops of markets within a few pips. The culprit, however, was just 2 or 3 trades on the Yen crosses that took back a good portion of what was earned. In addition, due to the wild price moves of the overall trends we used lower lot sizing (Money Management) on the majority of the trades which minimized profit potential. While we strive to earn about 1000 pips a month which gets us to our profit goals for the month, we still made +349 pips which equated to 3 to 6 percent* on invested capital.

The key and goal to long-term success is diversification. The On Target and Premier work together in accomplishing profits in a strong diversified portfolio, when one lags behind the other takes the lead.

*Past performance is not indicative of future results

November Outlook

The month of thanksgiving looks very bright as large banks and corporations begin to stack their positions into the end of the year. The year of 2007 has formulated some very strong trends which in a nut shell are US Dollar weak. These last few pushes of searching for new highs will give the Premier strategy much opportunity to profit. The On Target as well appears to be back in its grove. The Yen currencies made a strong push out of their channeling habits the last week of October. This has opened up the roof to test highs reached back pre-Credit Crisis. Oil prices have been the key driver of the Yen currencies. The commodities market as a whole is very focused on Oil which will provide many swing opportunities on the Yen crosses in the weeks to come. We are very excited at the opportunities at hand leading into November.