Edition 733 - June 29, 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 - Traders Trick
Question: Would entry 1 tick below the low of the bar labeled as TTE be valid?
The answer is "perhaps!" The definition of a valid Traders Trick Entry is that there be enough room between the point of entry and the point of the Ross hook for the trader to be able to cover costs and take a profit. But does the Traders Trick on the chart below meet that condition? Most assuredly yes, if we are looking at a weekly or monthly chart. Possibly, if we are looking at a daily chart. But would it be a valid TTE on a 1-, 3-, or even a 5-minute chart? Hardly likely at all.
My point here is that a chart is a chart, is a chart. The Law of Charts states that all price charts reflecting markets make certain formations as humans emotionally respond to the movement of prices.
So what's the difference? The difference is in the magnitude of move that can be expected. For the TTE to work, there must be sufficient room for you to be able to cover costs and take a profit.
A TTE 1 tick below the low of the #3 bar might have worked on one of the lesser time frames. I happen to know a person who lost $45,000 because he could not see what I just explained to you!
© 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 - Timely Exit
What is your tolerance for pain? Consider the following scenario. You have 10% of your account balance on the line. For the past two days, prices have been going in the direction you had anticipated, but today, an announcement was made that caused a market move that caused all your profits to be wiped out in an hour. What will you do? See if prices will move back to where you are okay again? At times like these, it is useful to have a clearly defined trading plan with a specific exit strategy.
Trading is inherently uncertain. You never know exactly what will happen next. That’s what makes the business exciting to some traders but nerve wracking to others. How you handle adverse events that make prices move against you depends on your personality. The best way to protect your capital is to use protective stops. When formulating your trading plan, you must decide how much pain you can tolerate. How much money can you lose before you have to exit the trade? You can set this exit point as a formal stop loss, you can use the automatic settings on your trading platform to set a stop, or you can use a mental stop (not recommended).
The problem with a formal stop loss procedure, whether it is a formal order or an automatic setting on your trading platform, is that a transitory change in price can ‘stop you out.’ if the placement of your stop loss does not adequately account for volatility. It’s hard to know how far a stock may move and a temporary drop can ruin your trading plan when a protective stop is not set properly. Mental stops may be more useful, but you run the risk of not being able to exercise your mental stop (think heart attack, nervous breakdown, stroke, personal emergency, computer failure, etc.). You can decide how far a stock price must move against you before you will liquidate the position. When prices reach the exit point, you can decide whether the low price is transitory or represents a significant change in trend. You can then exit the trade.
This all sounds good in theory, but depending on your personality, you may not be able to carry out this strategy. If you have trouble controlling your emotions and you use a mental stop, for example, you may have trouble closing the trade when it reaches your exit point. Some people panic and out of fear don’t close their position when their mental stop is reached. These people may need to impose the proper amount of discipline on their trading actions by using an electronic stop or a formal stop-loss order.
Minimizing trading losses is the hallmark of successful trading, but not all traders are equal when it comes to their ability to trade decisively under strain. If you want to trade profitably, you have to work around your personality. If you are cool headed, disciplined, and are willing to take the risk even under the most stressful conditions, you can use mental stops to protect your capital. But if you are easily shaken by choppy market action, you might want to use electronic, automatic stops to protect yourself. Whatever you do, however, minimize losses as much as possible. It’s the only way to trade profitably in the long run.
© 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
FCX Trade
On 23rd May 2018 we gave our Instant Income Guaranteed subscribers the following trade on Freeport-McMoran Copper & Gold (FCX). Price insurance could be sold as follows:
- On 29th May 2018, on a GTC order , we sold to open FCX Jul 20 2018 14P @ 0.14, with 51 days until expiration and our short strike about 16% below price action.
- On 6th June 2018, we bought to close FCX Jul 20 2018 14P @ 0.07, after only 8 days in the trade for quick premium compounding.
Profit: 7$ per option
Margin: 280$
Return on Margin annualized: 114.06%
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 Idea
This week, we're looking at 500*GFU18 – 400* LEG19: long September 2018 Feeder Cattle and short February 2018 Live Cattle (CME on Globex).
Do you want to see how we manage this trade and do you want to get detailed trading instructions every day? Click here for additional information!
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 Blog - Don’t get married to a market!
There are so many different instruments to trade like stocks, bonds, futures, spot forex, options and so on. And even when you decide to get into futures, there are tons of futures out there! So where to even start? I was as confused as anyone else about this when I started trading.
That's why it probably feels good to focus on just one market in the beginning. "I just trade the EUR/USD" or "I only trade the ES" or "I'm a Gold trader" are common statements out there. And that's not a bad thing. It's almost impossible to start otherwise, you have to over simplify things in the beginning. Otherwise, you'd never get started trading at all.
But at some point, you should move on and expand your trading world. There are times when it's almost impossible to make a profit in the EUR/USD or when it's better to stay away from the ES. During these times maybe Gold or Crude Oil or AUD/USD are providing really good trading opportunities.
Especially as a day trader, you got to go where the action is. I've seen many traders going under because they kept on trying to milk a dead cow. That's why recognizing when it's time to look elsewhere is one of the most important skills to survive in the long term.
Don't get married to a single market, don't keep on throwing good money after bad just to prove to your ego that you can get the money back from that market. Be flexible, go where the easy buck is.
There's almost always a low hanging fruit…and usually, you know where it is. You're just too stubborn to take it.
Happy Trading!
Marco
Feel free to email Marco with your trading questions, This email address is being protected from spambots. You need JavaScript enabled to view it..
© 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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