Edition 1044
September 6, 2024
Learn the Art of Trading Joe Ross' Way!
"For some, happiness in trading is nothing more than good health and a bad memory." -- Master Trader Joe Ross
Master Trader Joe Ross
Author, Trader, Trading Mentor, and Founder of Trading Educators, Inc.
Developer of Instant Income Guaranteed
Chart Scan with Commentary: How Not to Manage
Howe Knott didn’t have much money, and it bothered him a lot. Howe had lost his job, and was at home in his small apartment when a broker telephoned to persuade him to open an account.
Howe listened as the broker convinced him he didn’t need a lot of money to trade from a one-minute Mini Dow chart.
The broker, Les Skinem, knowingly pontificated about trading the "YM." He said he would show Howe a simple setup that offered a high expectancy of being on the right side of most trades.
By the time the conversation was over, Howe was building castles in the air. He could envision a new car, a nicer apartment, maybe even a speedboat.
True to his word, Skinem, a failed trader-turned-broker, showed Howe how to setup a standard, 14,3,3 Stochastic indicator on a one-minute chart.
Skinem told Howe that whenever %K first reached Stochastic value of 25 or less, and then crossed %D to the upside, Howe should buy, and whenever %K reached Stochastic value of 75 or greater, and then crossed %D to the downside, Howe should sell.
Skinem brought up a YM price chart to show Howe how easy it was to use this method of trading.
Howe could hardly believe his eyes. Seven out of eight times prices moved the way that Skinem said they would. Howe thought they should rename this indicator from Stochastic to "Fantastic."
There was one major problem with this incredible method, and the problem was one of management. Skinem told Howe about risk/reward ratios. He said you should risk $100 to make at least $200. He failed to reveal that not a single one of these trades would have made $200. Why? It’s because there is frequently not enough movement on a one-minute YM chart to be able to make $100, let alone $200. Here are the sad statistics:
Trade #1: Sell. Had Howe sold at the very high of the move and bought back at the lowest low, he would have made $50. More than likely, Howe would not have bought back at the absolute low, and would have taken a loss. Prices moved against him, as you will see with Trade #2.
Trade #2: Buy: Assuming Howe had gotten out at the low of Trade #1, and immediately went long on trade #2, he could have made $105, provided he entered at the absolute low of Trade #1 and exited at the highest high possible.
Trade #3: If Howe had entered at the absolute high of Trade #2, and exited at the lowest possible low, he could have made $55.
Trade #4: If Howe went long at the absolute low of Trade #3, and exited at the highest possible high, he could have made $115.
Trade #5: If Howe went short at the absolute high of Trade #4 and exited at the absolute low, he could have made $35. However, before Trade #6 he would have been stopped out with a loss, or at best at breakeven.
Trade #6: From absolute high to absolute low prices moved $55. Of course, the signal to sell came on the bar after the absolute high, so the trade made even less.
Trade #7: From the absolute low of Trade #6 to the absolute high, prices moved $110
Trade #8: From the absolute high of Trade #7 to the absolute low, prices moved $55.
Never once could Howe have made any more than $115, much less $200. The truth is that unless Howe was a genius and had traded perfectly, entering short at the highest highs and entering long at the lowest lows, he would have lost on every trade in which he expected to risk $100 to make $200. He couldn’t have made as much as $150 risking $100.
I allowed those trades to make more than they would in reality, because not even once did the buy or sell signal come at the highest high, or lowest low.
I constantly have contact with traders who want to trade the Mini Dow on a 1, 2, or 3 minute chart, and who have never figured out that there is not enough movement in that market in those time frames to be able to trade successfully.
During the same time frame, using a 3-minute chart, there were 4 trades, all of which gave terrible signals. However, the moves on a 3-minute chart will normally be greater than those on a 1-minute chart. The 4 trades yielded $130, $115, $45, and $115.
Don’t think that because you have a small account that it means you have to trade a small time frame. If you are going to risk $100 to make $200, then you need to trade in a time frame that will enable you to see price moves of greater than $200. To make $200 on winning trades you need to see at least $250 of volatility, simply because you are not going to be able to enter at the absolute highs and lows of any move.
© by Joe Ross, first release 2014. Re-transmission or production of any part of this material is strictly prohibited without the prior written consent of Trading Educators, Inc.
Master Trader Joe Ross
Author, Trader, Trading Mentor, and Founder of Trading Educators, Inc.
Developer of Instant Income Guaranteed
Trading Article: What Did the Market Do Today?
In a number of places and at various times, I've mentioned that trading in the past was a lot easier than it is today.
When it comes to making money over the long-term, the "instant results" generation is at a huge disadvantage. Most of the focus today (thanks to the business media) is on checking your financial scoreboard frequently. As a result, many modern market watchers are more like gamblers than patient traders and real investors. It's reached the point where most people will simply ask...read more.
© by Joe Ross first release 2014. Re-transmission or reproduction of any part of this material is strictly prohibited without the prior written consent of Trading Educators, Inc.
This newsletter and future publications are created to keep Master Trader Joe Ross' lessons readily available to traders that want to learn and improve their skills and to show his written word is still very relevant in today's trading world. He passed away on September 7, 2021 and will be greatly missed, but his writings will stand the test of time for generations to come. Take it to heart and learn from the best through Joe Ross' trading examples and articles which have impacted thousands of traders on every continent for over 60 years. Enjoy and let's start learning the art of trading Joe Ross' way.
Professional Trader Andy Jordan
Educator for Spreads, Options, Swing, and Day Trading, and Editor for 20+ years with Traders Notebook, daily advisory newsletter.
In Part 5 of our Trading Plan series, Andy talks about the markets, time frames, trading vehicle, brokers, software and much more.
© by Andy Jordan. Re-transmission or reproduction of any part of this material is strictly prohibited without the prior written consent of Trading Educators, Inc.
Professional Trader Marco Mayer
Educator for Forex, Futures and Systematic Trader
Creator of Ambush Trading Method, Ambush Signals, and Head of AlgoStrats.com
Where and How (Not) to Place a Stop-Loss
In this video, Marco Mayer talks about stop-losses in general, ways to decide on your stops that don't make much sense and other pitfalls like using breakeven-stops. Finally he gives you some insights on his own systematic approach regarding exits and how he likes to decide where to put a stop-loss.
Marco Mayer announced in 2016 a new AlgoStrats service was launched: Ambush Signals for Futures. This is how it all got started....read more.
The Ambush Trading System was created in 2009 by Marco Mayer. Since then it proved itself in the markets for over a decade and did so with exceptional results. It's the only trading system we're aware of that is still going strong after so many years. While Ambush is a day trading system, meaning you will always enter and exit on the same trading day - you don't have to sit in front of your trading screen. You simply place your entry orders when the trading session starts and come back at the close!
© by Marco Mayer. Re-transmission or reproduction of any part of this material is strictly prohibited without the prior written consent of Trading Educators, Inc.
Even though Master Trader Joe Ross passed away September 7, 2021, his trading knowledge of over 60 years will carry a trading legacy and will live on. As you learn about Joe Ross and understand what he was trying to teach his students, you will find that within his writings, he had a very special gift. Most importantly, it was his students that kept him striving to provide comprehendable trading material to actually teach traders and become independent, to rely on anyone, but themselves.
Joe Ross has been trading and investing since his first trade at the age of 14, and is a well known Master Trader and Investor. He was able to survive all the up and downs of the markets because of his adaptable trading style, using a low-risk approach that produces consistent profits.
Joe is the creater of the Ross Hook™ and has set new standards for low-risk trading with his concepts of "The Law of Charts™" and the "Traders Trick Entry™." Joe was a private trader and investor for much of his life, but a serious health situation in the late 80's caused him to shift his focus, and that is when he decided to share his knowledge. After his recovery, he founded Trading Educators in 1988, to teach aspiring traders how to make profits using his trading approach.
Joe Ross has written twelve major books and countless articles and essays about trading. All his books have become classics, and have been translated into many different languages. His students from around the world number in the thousands. His file of letters containing thanks and appreciation from students on every continent is huge: As one student, a successful trader, wrote: "Your mastery of teaching is even greater than my mastery of trading".
Joe Ross holds a Bachelor of Science degree in Business Administration from the University of California at Los Angeles. He did his Masters work in Computer Sciences at the George Washington University extension in Norfolk, Virginia. He is listed in "Who's Who in America." After 5 decades of trading and investing, Joe Ross still tutors, teaches, writes, and trades regularly. Joe is an active and integral part of Trading Educators. He is the founder and contributor of the company's newsletter Chart Scan™.
Learn the Art of Trading Joe Ross' Way!
"For some, happiness in trading is nothing more than good health and a bad memory." -- Master Trader Joe Ross
Joe's philosophy for helping traders is:
"Teach our students the truth in trading - teach them how to trade."
and
"Give them a way to earn while they learn - realizing that it takes time to develop a successful trader."
Joe sets forth the mission of Trading Educators as follows:
To show aspiring futures traders the truth in trading by teaching them how to read a chart so that they can successfully trade what they see, and by revealing to them all of the insider knowledge they need in order to understand the markets.
To enable them to trade profitably by training them to properly manage their trades as well as their mindset and self-control.
To accomplish our mission for our students we educate them so that they know and understand:
Benefits for Our Clients:
- Where prices are likely to move next.
- Independence from complicated trading methods, magic indicators, and black-box systems.
- Independence from opinion, anyone's opinion, including their own.
- Independence achieved through knowing how to read a chart.
- Independence through having knowledge of insider actions.
- Independence achieved by taking holistic and eclectic approaches.
- Independence coming from knowing how to manage both the trades and themselves.
- Independence because they understand and trade what they see.
- Independence because they have learned how and why prices move as they do, through studying the truth in trading and the truth about markets.
Students learn only proven methods and techniques, which helps them to preserve capital and create more consistent profits; they are offered simple methods that will assist them to earn while they learn.
- They learn to work smarter and more effectively.
- They learn to treat trading as a business; we offer no Holy Grail or magic systems.
- They learn to adapt to changing market conditions.
- They learn a systematic approach to trading rather than a mechanical system for trading.
- Why prices will move there.
- Who and what cause prices to move.
- How far prices are likely to move when they do move.
- Their own role in the movement of prices..
- How to take advantage of the knowledge they receive.
- How to properly manage and exit a trade which they have entered.
- How to manage themselves and acquire the discipline needed to become successful traders.
Read some personal testimonials which Joe has received.
WE APPRECIATE YOUR TRUST IN US AND THANK YOU FOR YOUR BUSINESS!
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A WEALTH OF INFORMATION & EDUCATION:
Joe Ross-Trading Educators' popular free Chart Scan Newsletter has been published since 2004.
Note: Unless otherwise noted, all charts used in Chart Scan commentary were created by using Genesis Financial Technologies' Trade Navigator (with permission).
Legal Notice and Copyright 2024 - Published by Trading Educators, Inc.
Chart Scan is a Complimentary Educational Newsletter.
Dear Traders,
Master Trader Joe Ross passed away September 2021, and prior years he was continously sending me folders filled with Chart Scan and Trading Articles. The emails would be titled "More to follow" and I would reply, "Keep'em coming". I am calling these lessons "hidden vault" material because if Joe were still alive, this is exactly what would be shown in your inbox every Friday morning. This is not regurgitated material; this is new stuff written by Joe or as he would refer to it with such passion, "This is good stuff".
As we continue to receive newsletter sign ups, new students from every continent will start to learn trading Joe's way especially in this challenging market. This is where he would reinforce to his students, yes, that includes you, that learning to trade is possible even in this environment, "A chart, is a chart, is a chart". His writings will stand the test of time to provide teaching lessons and guidance.
The proceeds of Trading Educators will continue to support Joe's wife, Loretta, of 62 years of marriage, which she is our number one priority. We thank everyone with continued support and prayers for her well-being in late stages of dementia.
As expressed in the past editions, the trading world has lost a unique and passionate trader and his material will continue to be relevant. Let's start learning to trade Joe Ross' way with our future Chart Scan publications. I am here to help, so feel free to email me with any comments, questions or concerns.
This newsletter and future publications are created to keep Master Trader Joe Ross' lessons readily available to traders that want to learn and improve their skills. Our father passed away on September 7, 2021 and will be greatly missed, but his writings will stand the test of time for generations to come. Take it to heart and learn from the best through Master Trader Joe Ross' trading examples and articles which have impacted thousands of traders on every continent for over 60 years.
Happy trading,
Martha Ross-Edmunds
© by Trading Educators, Inc. Re-transmission or reproduction of any part of this material is strictly prohibited without prior written consent
