Edition 727 - May 18, 2018
by Master Trader Joe Ross
Author, Trader, Trading Mentor, and Founder of Trading Educators, Inc.
Developer of Instant Income Guaranteed
Chart Scan with Commentary - Hedging with Currency ETFs
At a time of crisis, it really helps to know what to do with your money. The strange thing is that you can protect your money by buying the money of others. There are two ways to go with this concept: 1. Use your shrinking dollars to buy foreign currencies when the dollar is falling and any one of a number of foreign currencies are rising. 2. When the dollar is rising, short any one of a number of foreign currencies that are falling. Either way, you protect your money while your next-door neighbor is probably losing his.
Recently, a friend of mine got into the Australian dollar based on his belief that the US dollar was going to fall. He entered a long position in an Australian Dollar ETF (FXA), which proved to be an adequate hedge.
Typically, moves in currencies last more than just a few days, and often last for many months, especially if the currency of a nation becomes out of favor with the currency of one or more other nations.
Below you can see that being long shares of FXA during December would have been a good way to protect against a falling US dollar.
Keep in mind that many ETFs pay interest on the money you have with 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.
by Master Trader Joe Ross
Author, Trader, Trading Mentor, and Founder of Trading Educators, Inc.
Developer of Instant Income Guaranteed
Trading Article - Trading Opportunities
Good trading times may be just ahead. Are you ready? It’s times like these when the right mental edge can make all the difference. If you want to take advantage of trading opportunities for the New Year, it’s vital that you approach trading with the proper mindset. Be ready to work hard and do whatever it takes to come out a winner.
Unfortunately, many traders aren’t up to the challenge. They don’t have the proper mindset. They don’t have rock solid confidence, and when they see a high probability setup, they flinch, make a trading error and end up with a losing trade. When market conditions are ideal, though, you must be ready to take advantage of them. Self-reproach is the biggest culprit. Many traders are ready to criticize their actions.
Some traders take setbacks in stride. Nothing seems to faze them. Why? They know how to put any setback into the proper perspective; they readily think, ‘It’s just business. It says nothing about me.’ After years of experience, they’ve seen it all, lived through it all, and have learned that the markets are ultimately in control, and so there’s no reason to get unnecessarily upset about the uncertainty of it all.
Other traders, however, secretly fear that the markets will expose their inadequacies. Deep down, they believe they will eventually fail. A little voice in the back of their mind tells them so. This little voice isn’t correct, helpful, or accurate, but it has a subtle impact on the trader’s every move. These thoughts usually happen just below our awareness. These thinking patterns can be seen as ‘automatic thoughts.’ An event happens, such as the market goes against you, and you automatically think, ‘The truth is out; I can’t keep trading profitably.’ The old saying, ‘I think, therefore I am,’ is appropriate here. If you think you can’t keep up your trading performance, you won’t be able to. You’ll start believing your little voice that tells you that you can’t trade. And you will find that even a minor trading error will upset you.
How do you defeat the little voice? Write down your automatic thoughts after they happen and analyze them. Break them down, refute them, and convince yourself that they just aren’t true. For example, if you face a trading setback and think, ‘This setback shows that I’m not a natural born trader; I might as well give up,’ you will actually feel like giving up. This automatic thought is inaccurate, however. When you look at it more closely, you can see that it is not true. First, setbacks happen to all traders. Setbacks should be expected. By thinking they are rare and significant you are exaggerating their importance. You are ‘magnifying’ the event into something bigger than it really is. A setback may reflect poor market conditions, and it may even reflect a lack of experience on your part to deal with a particular set of market conditions, but it is not so meaningful that it is a ‘sign’ that you are not a ‘natural born trader.’ Keep things in proper perspective.
No one really knows what the future will hold, but the start of the New Year looks promising. Don’t sabotage your efforts through self-doubt and unreasonable self-criticism. You can trade profitably if you put in the time and effort. Think optimistically, work hard, and take home the profits.
© 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.
by Philippe Guartier: Administration and New Developments
Developer: Joe Ross
Trading Example: Instant Income Guaranteed
KEY Trade
On 25th April 2018 we gave our Instant Income Guaranteed subscribers the following trade on KeyCorp (KEY). Price insurance could be sold as follows:
- On 3rd May 2018, on a GTC order, we sold to open KEY Jun 15 2018 18P @ 0.215 (average price), with 42 days until expiration and our short strike about 10% below price action
- On 10th May 2018, we bought to close KEY Jun 15 2018 18P @ 0.10, after only 7 days in the trade for quick premium compounding
Profit: 11.50$ per option
Margin: 360$
Return on Margin annualized: 166.57%
Philippe
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© by Joe Ross and Philippe Gautier. Re-transmission or reproduction of any part of this material is strictly prohibited without the prior written consent of Trading Educators, Inc.
by Professional Trader Andy Jordan
Educator for Spreads, Options, Swing, Day Trading, and
Editor of Traders Notebook Complete
Trading Article - How to separate your ego from trading?
One way to separate our egos from our trading is to build fences between ourselves and our trading.
Realize that it’s “okay” if you are not right about every trade. It is not important to be right. It is important to execute and carry out your trading plan with consistency and discipline. Give yourself permission to be wrong about a trade.
Realize that taking a loss has nothing to do with your self-esteem. Tell yourself that taking losses is a part of trading. Give yourself permission to lose from time to time. Your ego must remain intact regardless of what is happening in your trading.
Erecting appropriate fences between yourself and your trading maintains your ability to separate yourself from your trading business.
There is more to you than your business. You are more than your trading. A proper fence informs you that the results of one trade are not to be confused with the results of all of your trading. Fences guide you as to the difference between the past, the present, and the future.
Andy Jordan is the editor for Traders Notebook which shows you Futures Trading Strategies in Spreads, Options, and Swing Trades. Learn step-by-step how to trade successfully.
Click Here for Valuable Information about 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.
by Professional Trader Marco Mayer
Educator for Forex, Futures and Systematic Trader
Creator of Ambush Trading Method, Ambush Signals, and Head of AlgoStrats.com
Trading Article - Who's next in line?
"Buy low, sell high" is one of the most popular memes in the investment and trading world. And obviously, it does make sense, who wouldn't like to buy low and sell high all the time? I found this to be quite a helpful advice to invest in stocks for example. Wait for a crash, buy it and sell again when prices are back to old highs.
Of course, the problem often is to figure out what's actually a low price and what's a high price. You can also buy high and sell higher to make a profit, which is how trend following works.
So what's the real deal here? I think the actual question to ask is "who's going to buy after me?" or "who's next in line?". Will there be enough traders willing to buy after you did at a higher price? Or if you're short the other way around, will there be sellers standing in line to sell after you did or not?
Think about it. To make a profit that's exactly what needs to happen. If you buy at $100, the only way to make a profit is if there are buyers willing to buy at higher prices. If they don't bid it up after you and you find someone to sell to at a higher price, you won't make a profit. Simple fact most traders are not really aware of.
Obviously, there's always someone who's gonna be the last in line. Someone is going to buy the high of the day/week/month/year/all-time. In poker, there's the popular saying that if you don't know who the patsy is in the round after 30 minutes, it's probably you. That same idea applies to trading. If you don't know why other traders are probably willing to buy at a higher price after you during the day, you might be the last one in the order book to bid at such a high price for today.
Because of that, it's always helpful to ask yourself "Who's gonna buy/sell after me and why?". If you can't answer that question it might be best to skip the trade!
Happy Trading!
Marco
© 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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