Wednesday, September 15, 2010

Wealth & Trading

Wealth & Trading

Been involved with this and it has been a pretty amazing experience.

Been in the free trial week and it has been moving experience. Don’t worry if you missed these, this was not sort of one time experience that’s not replicatable and I’m not talking about the winning trades. Jason has been doing some thinking about trading, wealth, etc. There’s probably a lot of people that won’t get it, this is not some new kabuke indicator. He has fused stuff from Tony Robbins with the world of trading so, for me, it’s all doubly powerful.


The question is: what kind of thinking is involved if you are really going to dare be a professional trader? Nobody has really addressed this .. until now.

Tuesday, September 14, 2010

Taking a Bit of a Breather

Well not really.  Spending two weeks with Jason Stapleton at http://www.4xtraderslive.com/ in his free two week class.  I've resolved to really professionalize my trading I'm going to hammer out my system and test it before taking any more live trades.

Also, I'm in the midst of switching brokers so more on that later.

Thursday, September 9, 2010

Wednesday, September 8, 2010

Should I use a Trading Goal

From The Trading Zone

The question of whether or not to set a daily financial goal in your trading has come up more times than I can count.

Whether it be in the chat room or member training, it is a trading topic that comes up all the time.


Simply put, trading without a goal is akin to competing in a sporting event without keeping score. At the close of the market the bell is rung, the competition ends and everyone tallies their points or counts their profits (or loss).


While traders are often told and taught to trade without emotion, it is specifically the emotion of fear of loss that can keep a trader out of trouble.


In my opinion and in my experience every trader should set a reasonable and achievable daily goal and stop (or adjust) trading once their goal is achieved.


Newer traders should set a goal low enough so that it can easily be achieved 4 of 5 trading days. That goal can be as low as 1 or 2 points.


While stopping to trade once a goal is reached may not be the way to maximize profits in the short term, it will serve to dramatically increase profitability in the long run.


Too often I have seen a trader earn substantial profits from the morning trade, profits great enough that when annualized would place the trader securely in the 15 % of consistently profitable traders, only to see them return those profits to the market in the afternoon session.


So where is the downside of setting a goal and moving to a sim account.


Ego and poor guidance in my opinion are the culprits. A trader who says ‘I am playing with the houses money’ as a justification to risking an entire day of profits in my opinion has adopted a gamblers mentality that will destroy a trading career.


A trader who asserts that the market has not yet reached it’s low or high for the day and must therefore keep trading, has put his ego before his profits.


What matters at the end of the day, is that you have more money in your trading account than you started with.


What matters is what You are doing and not what the market is doing.


If the market rallies 50 points but you are not in the trade, then the move is irrelevant to your p/l.


If the market moves just 3 points and you grab those and make a 3 point profit, that is relevant.


If the daily goal you have set is 3 points and the market moves another 50 after you exit the trade, well guess what .. Exactly irrelevant.


When the market decides to deliver your setup that locks in your daily goal can happen at any time, ideally one would think this would be best at the open. However an undisciplined trader who is trading without a set goal, may continue to take unnecessary risks and end up in a loss position.


So why work twice as hard to earn half as much?


Set your daily goal and earn twice as much for half the effort.


Stop trading when you reach your daily goal is most important for newer traders as they build their confidence and build their trading accounts.
From Forex Crunch


I feel that something equally important as the strategy that one uses to trade with is the psychology. Trading (especially forex) is not an easy thing to do and it can be disheartening when losses occur. I wanted to give you something to look forward to so you know what’s required to become successful.


The following video is inspired by an anonymous statement from a trader who outlined the 5 stages traders go through before becoming successful. I’ve made several mistakes during each stage, which you may be able to relate to, before making it through and my hope is that you honestly assess which stage you’re in and decide what you need to do to get to the next one. I hope that this provides you some certainty and a pathway to make it as a successful, profitable, forex trader. With that, keep at it and remember to keep focusing on your goal and make the right decisions- then you’ll hit your target.

Monday, September 6, 2010

Happy Labor Day

The world fx markets are humming right along without the USA as we take a little rest.  I am up early and trying my new broker and testing a 5 minute trading strategy on a demo account.  I'll blog more on that later.

Saturday, September 4, 2010

Learn Forex – RSI as a Forex Trend Indicator

courtesy of http://www.fxpath.com/
James Chen is a "stay with the trend guy." He has a great site with tons of free stuff all about trading forex.

Here's a neat little post about RSI. I have to admit I've spent tons of time staring at indicators about which I have no education. Here's a little education.


Used in context, watch the videos I post from the guy at Perfect Stock Alert. He uses RSI, the slow Stochastics and a little MACD to figure everything (and with great precision.)

Also, here a little video link on the subject from Deutsche Bank.

Free Email Trading Course from MarketclubLesson Two : Trading the Trend

Lesson 2 - "Finding A Friend In The Trend" The trend is where the big money is made in trading. This lesson also covers false breakouts and how you can avoid them.
Understanding trend is the single biggest element to successful trading. I've done quite well in years where I have kept on track of the major trend. In other years, where I was not so attuned to the market .. it was a disaster.

One thing that has shocked me in the world of forex trading is the obsession with counter-trend trading, playing reversals, tring to pick tops and bottoms, ostensibly acting as if you are smarter than the market.  In some of the analysis webpages, we're talking major players, brokers, people with thousand of clients, this seems to be all that they do.  It's become one filter I use to judge whether I want to allow people into my Twitter on onto my reading list.

Oh they'll do great during the period when the trend is changing or indeterminate.  And you'll feel like crap when the whole market changes on you (Like I did in that last Euro trade.)  But the rest of the time, they're fighting against the tide, always seeking a trade.  Whereas, the trend trader will take a lump and then lie in wait for the next big thing.





Wednesday, September 1, 2010

Free Email Trading Course from Marketclub - Lesson 1 Psychology

Taking a free course is a good way to learn about trading.  I took this some time ago but finding myself in a position to retrain myself on the fundamentals.  Here's a preview of Lesson 1 from Market Club founder Adam Hewison

Most traders don't realize just how important the role of psychology plays in trading. Successful traders know thattrading is more than just buying and selling a market. It requires a complete understanding of what is going on in the market and in other traders' minds.
Trading is full of guys.  And I think the retail side is full of guys, sitting along staring at their screens.  It is tempting to get sucked into this private little world, away from job, away from the wife, away from the kids.  A solitary little oasis.  The problem is that this sets up a flawed view of trading. 

When trading you are in a vast crowd.  See it all as personal just don't take it as personal.  I've spent some time listening to a professional psychologist with a speciality in coaching traders.  She has urged us in the seminars to see the price action in a personal light.  Get a feel for what the crowd is thinking.  Think about the person(s) on the opposite side of your trade.

In particular, this first lesson is a real area of weakness for me.  Telling that a floor tarder with deacdes of experience places this first in his free course.  You see, I just did it.  I didn't just blindly accept the first emailed lesson as is.  I saw it in personal light (what does Adam this is of primary importance) , but I didn't take it personally (Adam is insinuating I suck at trading).




Exuberance Returns to Equities and EURUSD but this Run is Likely to Collapse - DailyFX September 1, 2010 - ForexTV.com

Exuberance Returns to Equities and EURUSD but this Run is Likely to Collapse - DailyFX September 1, 2010 - ForexTV.com

Tuesday, August 31, 2010

Trading Masterclass - Crude oil not likely to go up soon

A fun little video from some people calling themselves Cantos.

Actually, I've been having great fun in option land playing this sideways action in oil trading calender spreads the high and low ends of the sideways channel.

Selling the Euro

Actually this is a double take. I shorted this AM but biled just before the 2pm FOMC meeting announcement. Took a 13 pip hit, maybe that was more due to nervousness on my part. The TWITTER feed reveals my re-entry.

Probably a mistake to be doing this as it smacks of pure day trading. My entry this am was not so good. But, I'd be up 20 pips right now if I had just stuck with it, even with this crap entry. Gotta work on that.


Look At The Overall Trend

Thursday, August 26, 2010

Smells Like 2008 To Me

Forex Trading Technical Analysis (2010/08/26) USD/JPY Retracement within Downtrend

James Chen is one of my favorites, very solid analysis Check out his site by clicking the title which is linked.

Forex Trading Technical Analysis (2010/08/26) USD/JPY Retracement within Downtrend

Short that USD/JPY

Been eyeballing shorting the USD/JPY as my next maneuver.  I'm actually trading both currencies ... the dollar may come back down to earth irrespective of the goings on in Japan.  The damn may well have been broken as far as Yen support via threats from their government to depreciate their own currency (weird huh?)


Same game, very mechanical. (click photo to enlarge) MARKETCLUB is saying short this thing and the Guppy 4 hr is identifying a clear cut down trend with its longer averafe and the short term moving averages popped and bunched up.  I guess I could have shorted this last night but my trading brain was exhausted.

I kinda felt a twinge of regret over not taking an obvious short in USD/CHF back down to that support but, oh well, my first month of FOREX trading is wrapping up as a profitable one.

Profit target on this trade is the lows (of course.) Same ole, same ole.  I hope to always be taking the excitement and drama out of this trading business.  This would be something like 75 pips or something.

Tuesday, August 24, 2010

More Selling Ahead



Ignore Mr. Christian from PerfectStockAlert.com at your own peril. He even confirmed by own analysis blasted out on TWITTER that GOLD is indeciferable at this point: people flocking to it, people fleeing it, governments messing around with it.

Lower lows and lower highs, that mean BEARISH. Get over it.

It blows my mind in the FOREX world when you have people looking at charts that look just like the Dow Jones or like the Hang Seng .. and they say to themselves (and the world) "Hey, buying opportunity, here." Insane just insane.
I'll stay patient and stay with the trend thank you very much. I don't care if the Pound, Euro or Aussie bounces off support .... the market is bearish .. people are selling that stuff.

Back at It

If you observe the Twitter Feed you can see now MARKET CLUB blasted out a freebie over Twitter.  It caught my eye about an hour later and I decided to go along with the shorting of GBP/USD.

Looking at the Guppy system entry , this was not exactly an optimal entry as the price had popped but you don't see that bunching up of blue lines.  I drove home thinking ... "oh boy, here comes a loser".  But this pair just kept chugging down to 1.54 which is a key level of support and has been for days.

As I write this, its 6:28 pm,  I've already sold off 1/2 when she got down to support for 47.3 pips of profit.  The stop has been set to break even plus a few dollars to cover commissions.  There's a case to be made for this pound to go much lower and that sceario will be covered in the next post.

This trade is at that point where you really do not know what is going to happen.  The stop is inside the size range of the last bar .... in other words it's tight but I'm not losing a dollar on this trade.  This pair has made an awesome run and if I had caught that TWEET from MARKETCLUB then I woulda got more like 100 pips on the first have.

It's important to be all about managing risk, taking risk off the table.  This helps keep your mind clear.

Ended that USD/CAD

I tried to twitter my exit from USD/CAD by exporting the trade to twitter via MYTRADE, the trading community embedded in the thinkorswim platform but I can see that that did not work.

I exited @ 6:33 am EST as it blew past the profit target #1.  The report came out at 8:30 am and it was pretty bearish on Canadian retail.  The pair blew past profit target #2 but then pulled way back.

It wasn't really an easy decision but I knew that those reports can do some crazy things.  In the end I got 43 pips on the first half and then 118.2 pips on the second half. Not bad considering that that I'm not doing this full time, staring at a screen.

If USD/CAD retraces a bit and MARKETCLUB trade triangles are telling to keep shorting then I'll re-enter with an eye on my trust 4hr GUPPY study.  That may happen tomorrow sometime.

Monday, August 23, 2010

Inverted Hammers

Pay strict attention to Mr. Christian from Perfect Stock Alert

Pros and Cons of the Trading Lifestyle - MoneyShow.com

Pros and Cons of the Trading Lifestyle - MoneyShow.com

This is kinda daunting but some of the negatives he mentions are actually positives. Like, the interaction thing. I have a family, I don't need coworkers in my life 10 hours a day. My life is already full of people.

Oh Canada


First things first ..... the Loonie is really the USD/CAD.  The way it works when you purchase a contract of this pair is that you are buying U.S. dollars against the Canadian dollar.  At first blush one may thing that there would not be much going on between this pair but au contraire mon frere!  As respective top trading partners, there's tons of action although the spreads (difference between the bid and the ask) aren't as tight as I would like.  

And yes, I have checked in with other brokers ..... this could be a whole series of posts on this blog.

There does seem to be a correlation between commodities and especially oil and the Canadian dollar and the oil is traded in dollars .. I'll post more on this later but safe to safe to say ... when oil tanks this pair rises and vice versa.  This is just one fundamental factor.  I'm no fundamentalist although I keep abreast of the news flow on the pair that I am trading.  The news is in the charts but one needs to keep attuned to what is going on if only to stiffen one's resolve in the face of a wavering position. 

I tend to set loose stops but I do make projections and see if a case can be made for a 3:1 risk to reward ratio.  I've marked primary and secondary targets in flourescent green.  This money management, a necessary practice.  You can just sign up for MARKETCLUB and let loose positions while you wait for the next trade triangle.  Its not that simple.



In this loony trade I already took some profits 43 pips in and set the stop at break even plus $2 to cover some commissions.  The USD/CAD has a good chance of making it to thos green area(s) but you gotta pay yourself along the way.  On this trade . this happened just 6 hours in but I'm not a forex day trader.  Those 43 pips could have taken 3 days and that would have been fine. 

Looming on the horizon at 8:30 Eastern Standard Time are some economic reports that may have a major effect on the pair.  A big report can fling your position around by 100 pips, or .0100, so that can bounce you out of a good trade REAL QUICK.  There's a real possibility of that happening and then there's the chance that the report will drive things in my favor, in which case, I will continue to ride this trend.

Short That Loonie !

Well, I've talked about it for months now but it is high time I execute on my promise (or veiled threat) to live blog my trades. I did this a bit on the blog I ran inside INVESTOOLS but my subscription ran out and I really did not have the money to renew so I said goodbye to them and resolved to fire this blog up.

I don't pretend to be a master trader.  This blog will always be a item published (honestly) by an average shmoe trying to make a little extra coin in his IRA and in his puny margin account.  Things have gone well for me this year as I am teetering on 20% gain in my IRA after having been virtually flat as late as May.  Got my head screwed on straight by tapping into some good analysis which I will feature regularly here.

As mentioned in other blogs, my forex goings on are based mainly on daily signals from MARKETCLUB but the actual entires will more likely be done on my own accord using 4 hr charts using the GUPPY method.  Nothing fancy here just buying on the dips on longs, selling on the pops on shorts.

This is what I was looking at ...... (click to enlarge)


Classic pull back and purchase on the cessation of selling.  I think the GUPPY maze of moving averages displays this fairly well.

Note:  I use thinkorswim on a black background with white OHLC bars.  My GUPPY study, is reversed in that the blues are the short time frame and reds are the long time frame and I will fix that later.

I used a sell stop a few pips above the action just to ensure things were going my way.  Follow my TWEETS on the left for the gory details.  I use somewhat or a "catastrophic loss" just in case something drastic happens but it is mostly mental as I watch the action hour to hour using my IPHONE even whilst working away at a day job.

Hmm .. now that I think about it .. there's many elements to this trade.... so much to blog ....

Sunday, August 22, 2010

Shorting via Guppy

I programmed the moving averages into my think or swim and added a twist.  To help visualize the movement a bit I shaded the long and short waves of averages with the lighter tone being the shorter of the group (closer to the price action.)

I screwed it up a bit by having the red group the long term and the blue group as the short term.  I'll fix that later.  For my account size and planning, I like to use a 4 hr chart as this fits in with my Daily Trade Triangle system that I get from MARKETCLUB.  It also seems like most active swing trader types use this 4 hr window to screen out the noise but stay close to the action at the same time.

In a way, I must say, this is just visually appealing, it looks cool.  It beats you over the head that a pair is not moving, meaning that you should not trade (necessary info for newbs to forex like me.)

Guppy Traders

From Guppytraders.com

 
GUPPY MULTIPLE MOVING AVERAGE ™

 
This indicator was developed by Daryl Guppy. It is fully explained in TREND TRADING. Captures the inferred behaviour of traders and investors by using two groups of averages. Uses fractal repetition to identify points of agreement and disagreement which precede significant trend changes.

 

 

 
APPLICATION

 
Applied to understand the nature and character of the trend. Used to assess the degree and extent of trading activity. Excessive trading activity can destabilise strong trends. Trend analysis enables more effective selection of appropriate trading strategies such as breakout, trend continuation etc. Can be applied to long side and short side trading. Can be applied to intraday trading. Also used for longer term investment style analysis.

 
TACTICS

 
  • Join established trends at points of price weakness
  • Join established trends breaking to new highs
  • Trade breakouts using rally dips and rebounds
  • Trade downtrend rallies as rallies rather than trend breaks
  • Recognise trend breaks as they develop

 
RULES

 
  • Degree and nature of separation in the long term group define trend strength and weakness
  • Degree and nature of separation in the short term group define the nature of trading activity.
  • Degree and nature of separation between the two groups of moving averages define the character of the trend.
  • Compression shows agreement on price and value.
  • Compression of both groups at the same time indicate major re-evaluation of stock and potential for a trend change
  • Trade in the direction of the long term group of averages
  • The relationships between the groups provide the necessary information about the nature and character of the trend.
  • Do not use as a moving average crossover tool

 

 
ADVANTAGES

 
  • Enables effective analysis of the trend environment
  • Improves selection of the appropriate trading tactics
  • Better understanding of trend strength
  • Effective evaluation of unusual price movements, such as dips and spikes
  • Effective understanding of trading activity and behaviour

 
DISADVANTAGES

  • Not effectively applied to trend less stocks
  • Cannot be applied to all trending stocks
  • Do not use as a moving average crossover signal  

Learn Forex – Guppy Multiple Moving Averages (GMMA) in Forex Trading

Learn Forex – Guppy Multiple Moving Averages (GMMA) in Forex Trading

FXPath has bunch of articles in FX trading and analysis. This GMMA method sorta caught my eye and I've started to investigate it as an entry tool although my analysis tool is still Market Club trade triagles.

The FXpath web site links to guppytraders.com and I'll be posting excerpts from that site which give a sense of what is going on. My methodology is already set but in between trades I like to look at new ways of looking at things. And admittedly I let my unconscious mind tell me what strikes my fancy and what does not.

I listen to my instincts. More on that later.

Learn Forex (FXpath.com) – The GMMA, or Guppy Multiple Moving Averages, was developed by Daryl Guppy, an Australian trader. See the accompanying EUR/USD chart with the GMMA set of moving averages overlaid on top. Used by many forex traders, this multi-faceted indicator combines two different sets of moving averages. One set (the longer-term moving averages: 30, 35, 40, 45, 50, and 60 periods) represents a currency pair’s long-term traders, and the other set (the shorter-term moving averages: 3, 5, 8, 10, 12, and 15 periods) represents a currency pair’s short-term traders. There are several ways to interpret the GMMA, the most recommended of which has to do with looking at the separation between each individual moving average as well as the separation between the two sets of moving averages. These separations reveal vital information regarding trend strength, both short-term and long-term, as well as pullbacks within a trend and potential impending changes in trend. They can also provide specific trade entries and exits in the direction of the prevailing trend. For more detailed information on this dynamic indicator and how it can be applied to forex trading, please click on the following link: http://www.guppytraders.com/gup329.shtml .

James Chen, CTA, CMT

Saturday, April 10, 2010

More Gems from Elite Trader

* Successful traders adjust their trading style, trading system, holding Period, and exit strategies based on the current market conditions. This is a process I refer to as market adaptive trading. It is better to Learn how to adapt to the market rather than running from one trading idea to the next looking for the next super system. Being frustrated that the market is not doing not what you want often leads to losses. The market does what it wants, we just need to adapt to it. This will take time to learn, be patient. Read this paragraph again.

* As a trader I do not care which way the market moves, I can make money either way. It is important to be able to quickly react to whatever the market does and not be emotionally attached to any particular choice.

* I cannot control what the market does, so I have a plan for whichever path it picks and then trade the plan.

* Successful trading is not about predicting what the market is going to do. It is about knowing how to react to whatever it actually does.

* Always be thinking about taking and protecting profits.

* If you are not sure what to do, exit the position. There will be other good setups.

* You do not need to trade every day. Let the setups come to you and take the best ones. When the market is moving there lots of good setups to trade. If there are few setups, or most are failing, then listen to the message of the market.

* Do not rush in, there is plenty of time to get into a tradable move when the market changes. If a trend is worth trading, then by definition you do not have to be in on the first day (minute).

* Never enter a position without a plan for exiting.

* Do not count your chickens before they hatch. You do not have a profit until you are back in cash.

* Never trade with money you cannot afford to lose.

* Trading is not a team sport. Stay away from chat rooms and financial TV. Seek the truth, not support from others with your point of view.

Will Oil & Natural Gas Prices Reconnect?

Not sure how I gravitated there but I conducted most of my simulated trading on crude oil using the Chicago Mercantile Exchange's Crude and Crude mini contracts.  More on this later, but I really hit it well in my system with crude (more on that larer.)

I had always heard that natural gas prices bore a natural correllation to oil prices as industries could just switch between the two and supply was tied between the two as they are often recovered from the earth in tandem.

But not recently ..... taking a closer look at nat gas on dull oil days ... gas would be rocking and rolling, with no correllation to the dollar either.

Wall Street pit looks at the issue.

(image from wallstreetpit)

Interesting Insight

Since trading is the chief activity I engage in from an economic perspective and speculating about macroeconomic is beyong my ken ... this blog is going to evolve a little into some really nitty gritty stuff about trading the markets.

I had been running a detailed about trading in an investor community that I will be leaving soon (I think) so much of tht content will be coming over here.

This is an interesting tidbit that someone posted over at elitetrader.com . There's a lot of a-holes over there who claim to be hotshot traders while they are really blowhards who've never placed a trade in their life. But every once in a while someone chimes in and I just know they are real deal.

I am sure the mindset of a newbie has not changed since I started 29 years ago, trying to make methods that have the greatest profits. Greatest profits equal huge drawdowns much more risk. I spent years trying to make this tougher than it is, forget about redesigning the wheel. I now concentrate on lowest weekly losing percentages, how to get to a breakeven stop as quickly as possible. I trade for breakeven all day long, then it is a risk free trade and the market will say when I get money. I don't try to beat the market, I let the market give me what it feels like.

Controlling losers as a focal point and letting the market provide the winners from a risk free position .... I could get better at that.

Monday, March 29, 2010

Mr Tax Writer Tax Evader

Oh those silly Tea Party people, why are they so upset? They must be racists! Or maybe this is the reason.

Sunday, February 7, 2010

Sarah's Tea Party Convention Manifesto

I've been somewhat non-committal on Sarah Palin but this 8 part video is a pretty good rundown of the thinking of the "Tea Party" movement. Democrat analyst Bob Shrum called it a "masterful excercise in paranoid politics." He's scared. Listen for yourself. Your may not agree with her point of view but its just a bunch of Constitution-talk and that is what is making the communists and their acolytes nervous.

They removed the Constitution from the schools' social studies programs but people are still going back to it.

Saturday, January 16, 2010

America Rising: An Open Letter To The Democrats

1941 General Yamamoto after the attack on Pearl Harbor, "I fear we have awakened a terrible giant."

Pelosi Politburo Emasculation

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