Trading in the Zone

Wealth Wednesdays 

This book has been recommended to me by more than one of my mentors over the past few years. Having read it, I agree it is invaluable. 

Being a successful trader means accepting winning and losing trades, and for those with a fear of failure (like me) this isn't always easy to accept. 

Not to sound all philosophical, but so much of trading is about balance. You accept the balance between winning and losing trades, have to keep your emotions balanced, have to balance your risk management and you must have a balanced portfolio at any given time (i.e. having short and long trades, in similar forex pairs or within the same market if you are trading stocks). A balanced portfolio is critical - if a sudden political announcement was made and all your long trades went short, you would want a few trades that were short and therefore save your account. 

Trading in the zone, writes about trading psychology and maintaining this balance much more succinctly than me. Definitely worth a read. 

Check out the first few pages free at https://amzn.to/2XziJUN

Traders Tuesday!

This is a great video on developing your own trading strategies. Trading strategies can be based on indicators with a strict set of rules, or newer strategies such as mechanical strategies, which take human interpretation out of trading. 

Later this week I’ll be sharing my personal excel sheet that I use for backtesting and to record live trades (which a short webinar on how to use it). Safe trading!

See one, do one, teach one......

Surgery is an apprenticeship, that automatically enrolls you into a 'mentoring scheme'. The age old medical adage... see one, do one, teach one drills down what is truly important in leaning any new skill. Learning a new skill this way, seems logical and efficient, saving hours of painstaking moments trying to find what you are supposed to be learning.

Don't get me wrong apprenticeships still require a lot of hard work, but they are more focussed work with the aim of achieving measurable results at an accelerated pace. 

With this is in mind, I have applied the same ethos to learning trading myself and teaching others. Bob and his team at 1000 pip builder, allow you to effectively 'watch them on the trading floor'. They achieve this by sending you signals of trades they are places, and not simply I'm placing this trade, have a go too. Bob and his team give you exact figures - stop loss, entry price and target. Nothing is left for you to guess, they walk you through the operation. 

I have been through several trading mentoring schemes myself, and not all deliver the results the promise. I am grateful to have found 1000 pip builder, as they have definitely made a refreshing change.

To find out more take a look at 1000 pip builder

How to use Fibonacci in trading....

Fibonacci explained and some examples of how to apply it, in your trading.
Personally I find Fibonacci more useful in planning my target, rather than as a criteria to enter a trade

Turning your weekend into a financial resource

Some people hate working on the weekends but I love it, in fact, I look forward to it, here’s why…

As a trader, I know it’s critically important that I am as prepared as possible for the upcoming trading week, and I have learned over my 15+ years in the market that the best time to do my market analysis and make trading decisions, is when the markets are closed.

Of course, what I just described is the opposite of what most traders do; frantically checking the charts throughout the day during the week, hoping or praying and ultimately making terrible choices about when to enter and exit the market. Whereas, if they would just learn how to do their market analysis on the weekends and take the rest of the week off, they would not have to hope or pray because they would be strategically preempting their decisions and actions in the market with logic and objectivity.

Now, I may be exaggerating slightly with “take the rest of the week off”, but what I mean is, most of your time spent in front of the charts should be on the weekend. During the week, I will monitor the market lightly each day, maybe 10 to 15 minutes at the start and end of the day. If there is something to do that meshes with my weekend-analysis, I will place the orders and walk the hell away from the charts until tomorrow. I DO NOT want to be consumed by the market or constantly staring at charts, instead, I want to be out enjoying the fruits of my craft (because being a trader rocks). By the way, being out and enjoying your life will have the unintended benefit of helping you improve your trading results, because as I’ve discussed in-depth in an article on why you shouldn’t watch your trades, the less involved you are with your trades, the better your trading performance is likely to be.

What is weekend market analysis?

So, what does my weekend analysis look like? What do I ACTUALLY do, you might be wondering. I am going to explain it to you then show you on the charts later on…

First off, 95% of my market analysis is done on the weekend and takes place on the weekly and daily chart time frame (I will explain more on this later). It’s no big secret, what I am doing is basically looking for key chart levels of support and resistance, swing highs and lows, event areas and daily chart price action signals (See linked terms if you are unsure what any of these things are).

Essentially, what I am doing is reading the story on the chart and mapping the market from left to right. I am reading what has happened, what is happening and making a final decision of what I think might happen next (the upcoming week). I want to have all my key levels drawn in, my bias (bullish or bearish) written out along with the chart condition (uptrend, downtrend, large sideways range or tight / choppy consolidation) as well as taking note of any imminent trade setups that I am looking at.

WHY you should do your trading analysis on the weekends:

Before I get into the step-by-step breakdown of how I analyze the markets on the weekend, I want to make sure you know why this concept is so powerful so you that you start putting it into practice and reaping the benefits of it as soon as possible:

First off, end of week and end of day analysis obviously saves a lot of time compared to day trading, allowing us to truly enjoy the fruits of our craft, but this is not the main reason I do my analysis this way, not by a long-shot…

You see, the end of the week means something in the market. In fact, it’s very importantbecause it shows an entire 5 days or 1 week of trading in the market, showing who won the battle between bulls and bears that week. The market will have shown part of its hand at week’s close and there is far more weight behind where the market closes on a Friday compared to any other day of the week.

Note: This doesn’t mean “weekly chart trading”, it means END OF THE WEEK analysis; identifying the key levels and trend and if any trade signals formed over the previous week. In other words, using the weekly and daily chart to get the complete picture and then develop your approach from that.

Another big reason why this end-of-week analysis approach works so well is that it contributes to a low frequency trading approach, something I have written about quite extensively in various lessons over the years.

When you trade less, it improves your trading performance over the long-run, and there are many studies that show this. This is partially why the data shows that women make better traders than men; because they trade less frequently than men do as I explained in my recent article What is the weakest link in your trading?

The market is slower than we think, meaning good trades take time to play out, and over time you will agree. You look back at trades you were in and think, “I should have held that longer”. This hindsight regret should teach you to hold trades longer and have some faith in your analysis. The end of week analysis will help you, and the end of day entries will further boost your performance and clarity, here is how I do my analysis….

Here is a summary version of my trading routine 

My weekly and daily trading routine is a lot less complicated than you probably think. First off, as I’ve written about in a recent article on the power of trading routines, the most important thing to remember here is that all of this has become a HABIT for me. The routine of writing my weekly market commentary, which I started back in 2008, still helps me after all these years.

You must develop the proper trading habits if you want to become a successful trader, as in any other profession.

The discussion that follows is basically a step-by-step explanation of how I create my weekly members market outlook, which, coincidentally, was something I was doing BEFORE I ever had any students. It should go without saying that this is something you should be doing too; creating your own weekly market outlook will provide you with a ‘road map’ to the market each week that will help guide you in making trade decisions in the ‘heat of the moment’. Just as a general in war preempts his strategy, so you must preempt your trading strategy so that you are not making impulsive decisions in the middle of a heated market move. Therefore, you often see me write in my market commentaries something like, “We will do this if this happens this week, or bullish above this level, wait for this to do that and to monitor XYZ level, etc”…I am laying out a road map so that you can preempt your trading week rather than making decisions in the ‘heat of battle’…

Step 1.

The very first thing you should know is that I don’t look at every Forex pair, not even close. I have a select number of my favorite Forex currency pairs that I follow and these are the ones I have open on my MetaTrader 4 trading platform (sign up with AVAtrader today http://tiny.cc/awardwinningbroker) and I really don’t look at any other ones. I do, of course, trade other markets, like Gold, Oil and several Stock Indices, but I am not trying to analyze and follow 30 different markets each week as many traders do, so keep that in mind.

The first thing I do is open my charts and look at the weekly time frame to plot the key levels and to get a good bird’s eye view of the long-term market trend. In the chart example below, I have drawn in the key support and resistance levels and I’ve marked on the chart the obvious overall trend of the market, so you can see what I am thinking when I look at it. It’s important to know what the current long-term market condition is (trending up or down, sideways etc.), in this case the long-term trend is up, as we can see below. This fact, along with the key levels you plotted, will work to guide your trading decisions throughout the upcoming week, as we will see later…

Here’s another example…

Step 2.

The next thing I do after having analyzed the weekly chart as discussed in Step 1, is to drill-down to the daily chart time frame, where we will do a few different things…

1. We are drawing in any obvious support or resistance levels that perhaps were not obvious on the weekly chart.
2. We are identifying the near-term daily chart trend, so we can decide which direction we will look to trade for the upcoming week (this can be different than the weekly trend).
3. Scan for any obvious price action signals for potential trade entries.

Here’s how it looks on the daily chart of the same EURUSD weekly chart in the first image above…

Note: If the daily chart is sideways, always refer up to the weekly chart for which direction you should look to trade in. So, if the daily chart is sideways or range-bound, but the weekly chart is in a long-term uptrend, then look to trade long. In the chart above, the trend was recently sideways but now is showing signs of switching to a downtrend following the recent close under support near 1.1660 – 1.1620.

Here is the GBPUSD daily chart that follows the GBPUSD weekly chart view from Step 1. Notice, we have drawn in a near-term support zone that wasn’t visible on the weekly and we have marked a potential pin bar signal trade which we discussed in our recent weekly trade outlook.

Note: If there are daily / weekly signals there from the Friday’s close, then we plan a trade for the Monday of the next week, and if there isn’t just yet then we WAIT for the daily chart to show us something that following week. Also, the entries are all triggered by end of day on the daily chart, we aren’t taking weekly chart signals. But, if a weekly chart price action signal did form the previous week, that WOULD CERTAINLY influence our approach and decisions on the daily and even 4 hour or 1 hour chart for that next week.

Conclusion

This article has given you a glimpse into how I do my weekly market analysis on the weekends. I hope now you can see that market analysis is actually not all that difficult, you really just need to make it into a routine so that routine develops into a habit.

Written by: Nial Fuller

Source

If you can learn to read.....you can learn to trade

Curtis Carroll is a 35-year-old resident of San Quentin prison. In 1996, when he was 17, he was involved in a robbery that led to a man’s death. He was accused of being the shooter. Three years later, he was convicted of murder and given a 54 years-to-life jail sentence.

He says he entered the prison system an illiterate. Today, other inmates call him “Wall Street” because of his interest in the stock market, an interest born of a very basic desire to make money. (As a teenager, he was a petty thief and graduated to more serious crime.) One day, it dawned on him to learn how to read in order to make money in the stock market. In 2012, he was transferred to San Quentin, which has a robust education program. Marketwatch visited him in prison to talk about his journey to becoming the “Oracle of San Quentin,” a play on Warren Buffet’s nickname. Buffet is, of course, one of Carroll’s idols.

Today he’s a teacher in the program, passing along personal finance tips, “what he calls ‘the timeless rules of personal finance,’ which are: saving to build a nest egg and create an in-case-of-emergency fund; controlling costs by not allowing monthly expenses to exceed monthly after-tax income; not borrowing money you can’t repay; and diversifying your assets.”

But he’s also been successful with his choices. His stock picks are posted on the wall in the prison so everyone can see he’s not a fraud. Writes Marketwatch, “The picks on the wall include Zynga, Bank of America  and Facebook, which Carroll says he bought in December of 2012. What the three stocks had in common at the time: Each was getting substantial bad press—most notably Facebook, thanks to investor malaise after its disappointingly muddled IPO. Those stocks are up 20%, 47% and 134%, respectively, since December 14, 2012; over that same stretch the S&P 500 is up 39%.”

The site notes that most people in prison don’t have access to the brokers and advisors in the outside world to trade in stocks, so Carroll’s situation is unusual. Moreover, 84 percent of people entering the prison system are making less than $2,000 a month, so buying stocks aren’t usually part of their budget.

But this sort of financial literacy is something that everyone, in and out of jail, can stand behind. Though Carroll may spend the rest of his days in prison, some of the inmates that he’s teaching through the prison program say they plan on taking the lessons learned back to the outside world with him.

Source: https://madamenoire.com/446718/would-you-let-a-convicted-murderer-choose-your-stock-investments/

What is Wealth?

Interviews have been edited and condensed.

Anuj Peddada, Colorado Springs

Anuj Peddada and his family immigrated to the United States from India when he was 6, and he remembers the sparseness of those early years. “We really had nothing,” he said. “We were in poverty.”

Mr. Peddada, 53, works as a radiation oncologist at the Penrose Cancer Center in Colorado Springs. With more than 22 years of practice under his belt, he is at the top of his field.

"It’s the freedom to have some choices,” he said, explaining what wealth has meant to him. “It means you have the luxury of being able to provide for your family and determine how much work you want to do.”

Mr. Peddada works a lot. On his days off, he pores over medical journals for hours, breaking in the afternoon for a mountain-biking venture with his son – a hobby Mr. Peddada says his wife and daughter are too smart to pursue. 

But, added Mr. Peddada, who treats cancers and brain tumors, the reading doesn’t feel like work. “My job is a calling. I love what I do.”

Wealth, he said, “is experiences and time to do the things you want to do.” — Avalon A. Manly 

Kyle Webb, Los Angeles

For Kyle Webb, 32, wealth is about opportunity and access. His financial and business success came from two places: One was luck and the other was being born to entrepreneurially minded parents.

Mr. Webb is the chief financial officer of his family’s business, Webb Family Enterprises, which operates 16 McDonald’s franchises in Southern California.

He said that his parents set him up with his first McDonald’s franchise and that, along with a good education — a bachelor’s degree in business administration from Morehouse College and an M.B.A. from the University of Southern California — set him on his track. Webb says he is not quite what he would call wealthy yet, but he has a clear view of what that will be.

“Having the financial freedom to contribute to the things that you want to contribute,” Mr. Webb said. “That’s measured by earning twice the income that is required to sustain your cost of living via passive income.”

He said that wealth “provides access to more,” and that it should extend for “future generations to be able to have, again, more access and more opportunities and to be able to extend it to other people whether they are in your familial line or if there are opportunities for other people in your community that you feel warrant opportunity.”

Citing the McDonald’s tagline “America’s best first job,” Mr. Webb takes pride in the way his family’s business extends both access and opportunity to its employees. — Jarrett Hill

Rachel Talton, Akron, Ohio

Wealth is about community, good health and service to others for Rachel Talton. Ms. Talton, 52, is founder of the Flourish Conference for Women in Leadership, and chief executive of Synergy Marketing Strategy & Research in Akron, Ohio.

“I know we are blessed financially because we have the freedom to do the things that we want not only today but tomorrow,” said Ms. Talton, who lives with her husband in the suburb of Richfield.

As a little girl, Ms. Talton knew she wanted to help people, and yearned to be a psychiatrist. In college, she realized she “might not become the scientist I wanted to be” but had a way with words, and switched to marketing. She ultimately earned a doctorate at the Weatherhead School of Management at Case Western Reserve University in Cleveland.

Financial success doesn’t guarantee happiness, she said, but it provides a kind of freedom.

“Wealth means loving what you do and the contributions that you make,” Ms. Talton said. “It means being able to be financially free to do the things you love, to live the way you want to live. But it also means being healthy, and to know that your family and the ones you care about are healthy and spiritually whole, and that they’re contributing.

“If every day I feel I’ve given back, and I have the freedom to do the things that I love and serve other people, then I’m happy to be happy. It makes me so fulfilled.” — Carlo Wolff

Source: https://www.nytimes.com/2017/11/10/your-money/what-is-wealth.html

How many trades do you need to win to make a profit?

Let me get it out of the way: the winrate in trading it completely irrelevant on its own. Many traders put way too much emphasis on the winrate and do not understand that a winrate does not tell you anything about the quality of a system or a trader.

You can lose money with a 80% or even with a 90% winrate if your few losers are so big that they wipe out your winners. On the other hand, you can have a profitable system even with a winrate of 50%, 40% or onl 30% if you are good at letting winners run and cutting losses short.

It all comes down to your reward risk ratio.

The reward to risk ratio (RRR, or reward risk ratio) is maybe the most important metric in trading and a trader who understands the RRR can improve his chances of becoming profitable.

Independent trader, James Booth, explains more...

Source: https://www.tradeciety.com/how-to-use-reward-risk-ratio-guide/

Trading Psychology – 5 Tips To Help Control Your Emotions When Trading

At one time or another in your trading career, you will not doubt encounter the pitfalls of emotional trading. Here's one traders story.....

When I just started trading on my own I lost a little over $10,000 the second week. I had made the full-time jump and therefore was desperately emotional to make it work. Looking back now, I probably did things I would never do today. I pushed trades into the market when it wasn't a good time to trade, I let trades run up huge losses without stops, and took any profit I got quickly.


I had never been an "emotional trader" but all of a sudden I was stuck. My emotions had got the best of me. So what changed right? Well, I went back and started to revisit the roots I learned trading for Deutsche Bank that I'm going to share with you below.

The Fear Of Missing Out (FOMO)

Here's the scenario: you've been sitting on the sidelines while watching the market rally nearly 100% off the March lows from 2009. Are you itching to jump in and buy? Are you frustrated because you are missing profits that others are making?

Many traders I've been talking to feel this way right now and it's not uncommon. We have all watched the market rally much further than anyone expected. And, it's not just the swing trader who feels this way. Day traders are feeling the heat as a trending market offers little entry opportunity.

Even though it may be hard, sitting on your hands can be one of the most difficult things a trader NEEDS to learn. If fact, I really do feel like it's a requirement for a successful trade - one lesson I learned quickly during my first few weeks trading at home. We have to treat trading like a business not a hobby - and sometimes waiting for the right entry is part of the business.

Treat Trading Like A Business

After talking with some former traders whom I worked with, I realized I was doing 1 thing completely wrong! I was blindly waking up each day and trading with no real direction - how stupid of me right? Sure I had traded for the banks and knew what to do - but being at home was completely different.


What helped me get over the hump was to treat trading like my own personal business. I wrote a business plan, had specific achievable goals, and daily activities to keep my emotions out of the way. What this helped me do was to remove my emotions from the traditional Fear and Greed cycle.




The trader who can remove themselves from this cycle and treat it like a business is much less likely to force trades out of boredom or because he/she feels an internal pressure to be productive. Case in point - this is where I went wrong when I lost that $10,000.

Let's Control Those Emotions Shall We

Productivity can be extremely helpful when starting to trade. If you are bored then you are more likely to make stupid trades. If you are business searching, analyzing, reading, etc then you are more likely to find amazing trades with great risk/reward.
Here are 5 practical tips to help you learn to be productive and control your emotions:

1. Learn Something New About Trading. Maybe you have wanted to learn more Iron Condors or Credit Spreads, or maybe you have been wanting to learn more about RSI and MACD indicators. Well, stop thinking about it and schedule some time to sit down and do the hard work - pick up a book, get some coaching, watch a video tutorial.

2. Perform Some In-Depth Market Research. You have to be curious about something that's happening in the market right now right? Down times in the market can be great opportunities to do some intense market research.

3. Paper Trade Until You Fall Over. I STILL paper trade each week. I test out new strategies, new indicators, new ideas with paper money first before I ever put real money to work. Focus on a particular setup and paper trade it on a simulator 10 or 20 times. A great new tools is thinkorswim's ThinkBack trading that allows you to "replay" an entire day of trading just as if you were reliving it all over again!

4. Write A Trading/Business Plan. If you don't have one you need one and if you have one you need to revise it monthly. These can always be improved. Take a section of your plan and think carefully about how you can improve it, and then do it already!

       5. Analyze 5 Completely New Charts. Pick out stocks or ETF's you'd like to trade and analyze
       the charts carefully, making a list of the bullish and bearish reasons to trade it. This will help you 
       think carefully about the trade and remove your emotions completely after making the list

Source: https://optionalpha.com/trading-psychology-5-tips-to-help-control-your-emotions-when-trading-options-9866.html

Candlestick patterns

Video that has been described as 'liquid gold'......

What do you think, is this video worth its time in gold?