Edition 625 - June 3, 2016
The Law of Charts with Commentary
by Master Trader Joe Ross
Author, Trader, Trading Mentor, and Founder of Trading Educators, Inc.
Tradable Markets
Regardless of what you trade, or where you live, the price of crude oil is going to affect your life. We are receiving many emails asking us about crude oil prices. Will they go higher? Will they go lower? Will the release of export restrictions bring down the price of crude oil and thus the price of gasoline?
My friends, I do not have the answers. When they passed out crystal balls, they somehow overlooked me. However, I think this might be a good opportunity to see what the daily chart was telling us some years ago. While we discuss the daily chart, please realize that as I wrote this the weekly and monthly charts show crude still in an uptrend, with the monthly chart indicating that the rise may have been be a bit too steep. On my charts oil prices had become increasingly parabolic.
Now to the daily October crude oil futures chart, on which I will show only prices since June in order to conserve space.
Clearly, the dotted uptrend line had been broken. I drew a solid horizontal line at the base of what was officially a trading range in accordance with The Law of Charts. The arrow points to a price bar which typifies the vertical midpoint of the trading range. Inclusive of that bar, prices had been consolidating for 21 days. The Law of Charts states a probability of a breakout of the trading range is most likely to occur on days 21-29.
We can also see the left shoulder and head of what might have become a classical "Head and Shoulders" formation.
What does all this mean? I can tell you only what it meant to me - you are, of course, entitled to your own opinion. Keeping in mind that I have trained myself to trade only what I see and not what I think, I extracted myself from anything to do with short-term crude oil futures, and was standing aside at the time. Short-term conclusion was: get out of any short-term long crude oil positions. Prepare for the eventuality that a right shoulder may form. Prepare for further consolidation. Wait to see what develops.
What did I think? I thought crude oil had a very good chance of going much higher - perhaps even hitting the $100/bbl mark, which it eventually did. But obviously, not just yet. So for long-term stock holdings, I was willing to run my trend line along the weekly chart, but quite frankly, the monthly chart seemed to be a bit overdone. Long-term conclusion? Crude oil price will consolidate here for awhile, perhaps go a bit lower. This was a good opportunity for getting long and holding on for higher prices.
© 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.
Passion for Trading
by Master Trader Joe Ross
Author, Trader, Trading Mentor, and Founder of Trading Educators, Inc.
After months of trading in a slump, Jake tells his best friend, "I think I want to quit the trading business. Why am I doing it? There must be a better way to make a living."
Have you ever felt like Jake? Trading is stressful and demanding. It's understandable to feel like “throwing in the towel” at times. If you are ready to find a new job, or if you just don't seem to have the same passion for trading that you used to, there is a lot you can do to reignite your desire to trade the markets.
Trading is a tough business. If you lose your passion for trading, all it means is that you are human. Here's an obvious cure. Why not take the rest of the month off? Maybe you're just stressed out. A little rest will help put things back in perspective. Once you are rested, relaxed, and re-energized, you'll be ready to tackle the markets with zeal.
Here's another strategy. Remind yourself of how great trading really is. You work for yourself (unless you are an institutional trader). You can work at your own pace, and feel that you have freedom. Remember what it was like to work a 9-to-5 job?
"Absence makes the heart grow fonder." Maybe you could arrange to visit a friend for a day at a regular 9-to-5 job. Or, when it is the holiday season, you could take time off from trading and find a part-time holiday job. It's not forever. It's just a way to rebuild your passion. Sometimes we forget why we trade. It’s like having a thrilling sports car, we start to see the “thrilling” job of trading as mundane. Drive a compact car for a week and you'll see how great your sports car drives. Work at a regular 9-to-5 job for a few weeks, and you will quickly rediscover your passion for trading. It may sound extreme, but it works. Maybe even after the first day, you'll think, "Oh, now I remember why I became a trader."
It's hard to trade successfully day in and day out. Some traders never lose their passion, but many forget just how exciting the markets can be. If you lose your passion, don't sit around sulking about how boring life can be. Go out to see how the other-half lives. You'll remember why trading is a great profession. And you will trade with renewed passion.
© 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 Plan Series - Part 3
by Master Trader Andy Jordan
Educator for Spreads, Options, Swing/Day Trading, and Editor of Traders Notebook
In part 3 of our Trading Plan Series, we talk about how important it is to know yourself and to know your purpose.
© 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.
Trading Plan Series - Part 4
by Master Trader Andy Jordan
Educator for Spreads, Options, Swing/Day Trading, and Editor of Traders Notebook
In part 4 of our Trading Plan Series, Andy explains how to set the right trading goals.
© 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.
Andy's Blog Post - Controlling Emotions
by Master Trader Andy Jordan
Educator for Spreads, Options, Swing/Day Trading, and Editor of Traders Notebook
Winning traders cannot afford to be influenced by their emotions. The nature of trading demands an objective, logical approach. If you experience extreme excitement after a win and extreme disappointment after a loss, you will be living on an emotional roller coaster: up and down, up and down. Read 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.
Trading Error: Trading Your P&L
by Master Trader Marco Mayer
Educator for Forex and Futures, Systematic Trader, and
Creator of Ambush Trading Method and AlgoStrats.com.
In this week's video, Marco talks about another very common trading mistake: trading your P&L instead of the actual market action. If you're struggling to become a winning trader, this might be an eye-opener, especially if you're a breakeven trader right now. If you have any questions, feel free to This email address is being protected from spambots. You need JavaScript enabled to view it., or post it in our Blog or Forum.
(AlgoStrats.com - Coming Soon!)
© 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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