Forgot the Fundies and The "account"

   The battle between technical and fundamental analysis has been going on for years with no clear winner. For my trading I use both simply because the more information the better, failing to prepare is preparing to fail.
   How I use fundamentals is a little more complex. I have developed an index system similar to the USD index for all the major currencies and use news releases to estimate the move in the market and compare it to the actual move and trade around the miss pricing.
   For example let's say American CPI (inflation) came out lower by 1% this may imply a 100pip move in the market for the dollar. Also Japanese Trade balance improved by 1% this implies a 100pip move in the market for the yen. Therefore we should see the USD/JPY decline by 200pips. However, let's say the market only declined 100pips, we can assume that the market has miss priced the USD/JPY by 100pips.
   Trading around this is simple though. In the case above we would expect a 100pip decline over the course of the next week and look for signs of a reversal to buy or look to get ahead of the decline and go short.  I'll post the Index data every week so you can better understand my trades.

   As for the actual demo account, I will be using excel to track account information using the actual position statements from fxcm. Those will be posted here as well. The reason for the this is because fxcm doesn't offer a $1000 demo account and I don't actually have $1000 to throw at one of these ventures.
Rules:
1. All Trades will be posted here with explanations.
2. $50 will be added to the "account" at the start of every month.
3. All results will be posted here as well as my performance results every month, quarter and year.

Thank you for reading and don't forget to follow this blog, my other blog and comment below.

My Methodology

Alright, time to get down to business...
Before we go any further I think it's important that I layout the basics of my method. I'm not however, trying to preach a "holy grail" system, I'm only laying out my system to help you better understand my thoughts going forward and learn, if possible, from example.
First and foremost my system is based around price action swing trading, from now on I'll refer to price action as PA. PA also known as tape reading, is based analyzing how, where and price moves. This includes studying candle sticks, support and resistance and rarely any other indicators. Ok so let me give an example:

Above is a 15 minute chart of the Australian dollar against the US dollar.

The two grey lines represent support and resistance lines, there is also pivot points and the ADX indicator. 

As a PA trader ill first notice the support line (bottom grey line). It can be seen that this acts as support because price has visited and reversed from this area twice. Same with the resistance line price has visited and reversed twice. Also we can see that the ADX<25 so we can therefore conclude that the AUD/USD is stuck in a range. Now candle stick analysis also sheds light on the strength of these levels as the long wicks at the resistance line and long tails at the support line shows that the market is rejecting these levels. 

Ok, so analysis done how would I trade this? Buy at the support on a reversal signal and confirmation candle with a stop 20-50pips away with a limit at the resistance line. It's as simple as that. 

Now that you know how I analyze, I'll layout my basic fundamental rules and speak to them in future posts.

First: The trend is your friend. Find where is price going in the long term and never trade against it.

Second: Trade within your means: Never over trade or risk more than your account can handle.

Third: Never get into a trade you don't understand.

Finally: Market Sentiment>Technical and Fundamental Analysis.