Edition 610 - February 19, 2016
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Euro FX
by Master Trader Joe Ross
Author, Trader, Trading Mentor, and Founder of Trading Educators, Inc.
In 2005, with the beginning of a dollar rally in effect there were certain things we should have noticed.
First, when everyone is short a currency the preponderance of traders left to buy are the shorts, who need to cover in order to take a profit. At that time, dollar bulls were virtually nowhere to be found and virtually no one wanted to hold dollars. We saw this situation reflected in the daily charts of both the Dollar Index and also in the forex daily charts of euro/dollar. Euro had moved to over 1.34 euros to the dollar. The Law of Charts™ accurately reflected this situation. However, it was a foregone conclusion that at some point in order to take profits, someone would have to begin buying dollars and selling euros in order to profit from both sides of the trade. When those dollar bears began to buy, they were joined by dollar bulls to the extent that buying had overcome selling.
We see that reflected here on the 10 minute chart in classic Law of Charts formations. The Law of Charts can only, and does always reflect the truth about human action and reaction to events that underlie the markets.
There we three opportunities to join the euro selling: All three were Traders Tricks*: First was getting in ahead of a violation of the #2 point of a 1-2-3 high*; Second and third were getting in ahead of a violation of a Ross hook. Please note that the definition of a Ross hook includes the statement that:
Any failure by prices to continue in the direction of the move subsequent to a breakout of the #2 point of a 1-2-3 formation is a Ross hook.
*Descriptions for 123s and Traders Trick and are located in our free member area under TLOC and TTE tab.
© by Joe Ross. Re-transmission or reproduction of any part of this material is strictly prohibited without the prior written consent of Trading Educators, Inc.
Are Markets Random?
by Master Trader Joe Ross
Author, Trader, Trading Mentor, and Founder of Trading Educators, Inc.
Hey Joe! As you trade, do you ever think, "It's all just random, why even bother trying at all?"
Markets are not random. If you passively think you have no control, you may end up making less money.
About 25% of wannabe traders tell us they have no strategy; they just see outcomes as random. Can it be that they actually believe that their actions would in no way influence the outcome of their trades?
Other traders tell us they have developed some sort of strategy or game plan. However, some of these strategies are based on the gambler's fallacy, the belief that after a string of losses, the odds should work in their favor or "even-out," since each trade is independent of every other trade. Of course, such a belief is irrational in that actual chances of success are not taken into account. A trader might believe that the chances of success are greater than they actually are. Nevertheless, it is better to use some sort of strategy, even if it is "irrational," than none at all.
Traders who come up with some sort of strategy, rational or not, believe that their actions have an impact on trading outcomes. Those traders made more trades than those who have no strategy, and make more money in the end. But, does this prove that markets are random?
During trading, it's easy to think that no matter what you do, you won't make a profit. The markets can be brutal at times, and it's tempting to fall prey to a victim mentality. Such beliefs may paralyze you. It's more productive to believe that if you take control, you'll make a profit. Even if you have no real control, it helps: You take action, you plan, and think of a some sort of strategy. When you take action, and make enough trades, the odds may work in your favor, and you'll end up with profits. So as you trade, take an action-oriented approach. As Mark Douglas suggests in "Trading in the Zone," the more you find excuses to avoid making trades, the less likely you'll be at actually taking home profits. But if you look for an edge, and use this edge to make numerous trades, you'll increase your chances of success. In trading, there are proven strategies that work under specific market conditions. If you look hard enough, you'll find them, and use them to your advantage. Always remember, markets are manipulated by those who have the power to move them.
© by Joe Ross. Re-transmission or reproduction of any part of this material is strictly prohibited without the prior written consent of Trading Educators, Inc.
Trading Idea with Commentary
by Master Trader Andy Jordan
Educator for Spreads, Options, Swing/Day Trading, and Editor of Traders Notebook
Click on the video below to learn about the selling Euro FX put options.
Profitable trades are attainable! To find out how to manage this and other trades, and also to receive our daily detailed trading newsletter, subscribe to Traders Notebook.
© 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.
Is Trading a Sin?
by Master Trader Andy Jordan
Educator for Spreads, Options, Swing/Day Trading, and Editor of Traders Notebook
No, trading is not a sin, but trading without knowing what you are doing can lead to a lot of problems. Trading, in and of itself, is not considered as gambling. The futures markets exist as a venue in which hedgers are able to “purchase” price insurance. The ability to hedge is the economic and social justification for the futures markets. However, gambling is considered to be foolish. Trading without adequate knowledge of the markets and self is foolish because, by doing so, you are gambling.
There is a certain amount of self-knowledge needed to choose the proper trading method. It has even been suggested that many small traders in the futures market, without knowing it, secretly want to lose. They jump in with high hopes - but feeling vaguely guilty. Guilty over 'gambling' with the family's money, guilty over trying to get 'something for nothing', or guilty over plunging in without really having done much research or analysis. Then they punish themselves, for these or other sins, by selling out, demoralized, at a loss.
© 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.
Using Outside Bars as an Entry Signal
by Master Trader Marco Mayer
Educator for Forex and Futures, System Trader, and Creator of Ambush Trading Method
© 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.
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