السبت، 10 أكتوبر 2009
Futures COT
Adam Hamilton of Zeal LLC is one commentator I have been following for many years. His latest one on the Commitments of Traders Report is essential reading:
"The bottom line is gold futures activity as chronicled in the CFTC’s Commitments of Traders Report is often misunderstood. A minority of analysts choose to interpret facts about week-to-week developments out of the illuminating context of bull-to-date behavior in similar situations. Thus their interpretations of this complex report are often misleading. And sadly many newer traders are swayed by this shoddy analysis.
It is critical to remember gold futures are a zero-sum game. For every short, there is an offsetting long. So if the feared commercial hedgers’ net-short position is surging and hitting records, then so too are speculators’ net-long positions."
"The bottom line is gold futures activity as chronicled in the CFTC’s Commitments of Traders Report is often misunderstood. A minority of analysts choose to interpret facts about week-to-week developments out of the illuminating context of bull-to-date behavior in similar situations. Thus their interpretations of this complex report are often misleading. And sadly many newer traders are swayed by this shoddy analysis.
It is critical to remember gold futures are a zero-sum game. For every short, there is an offsetting long. So if the feared commercial hedgers’ net-short position is surging and hitting records, then so too are speculators’ net-long positions."
الجمعة، 9 أكتوبر 2009
الخميس، 8 أكتوبر 2009
الثلاثاء، 6 أكتوبر 2009
Divergence in Apple????????
Is a divergence building in Apple?
See the latest video post on Apple and what apple is up to:
This is for those of my friend who have other interest than Forex. This is in no way a solicitation to buy any product, it is posted for your information only!
الاثنين، 5 أكتوبر 2009
Discipline
What makes forex trading so hard????????? Is it Fibonacci, MACD, Elliott Wave, EMAs, Stochastic, or a host of other indicators???????
No, if it is not that, what is it? As traders we watch every webinar, read every available trading book, go to every seminar and attend expensive classes. We know all of the rules, so why is it that so many of us fail as traders?
I think the number one reason we fail as traders is lack of discipline.
If you are like me; you want price to hurry up and get there, so you can put in your trade.....Sound familiar?????
The market is always slower or faster than you want. Sometimes you wait for hours for the right set-up, get a phone call or go make a sandwich and by the time you get back to your screen your big move is all over. Then you know you will have to wait for a while before the next good set-up comes along.
I remember one day, I'd waited about two hours for price to hit the morning's resistance and I got distracted somehow. When I got back to the computer, I had missed my much anticipated scalping opportunity. You may as well have put me in a straight jacket. I was so angry I could have chewed nails. I was to upset to trade the rest of the day, so I was out.
As a person who was born Type A, I still struggle with waiting, so I had to make some changes in my overall approach to my trading and I want to share somethings that I hope will help you.
#1. Write it down. Always come to your platform with a written plan. You are a business professional in a very competitive market, so it behooves you to have a game plan. Your completion is ready. This is not flag football; it is full frontal tackle. Suit up and be ready to play!
#2. Follow your game plan!!!!!!! It helps to tame some of those nail biting emotions that you are likely to encounter when the market begin to fluctuate.
#3. Stay out of the market, unless you have identified a clear trend. SOMETIMES THERE IS NO TRADE!!!!!!!!!!!!!!!
This one is connected to the same thought as in #2, but it is important enough for a line of it's own: RETRACEMENTS WILL GIVE YOU THE ILLUSION THAT YOU HAVE MISSED OUT, OR THAT YOU ARE ON THE WRONG SIDE OF THE TRADE. Having a clear game plan will help you not to panic so when you see price hiccups and retraces. Every price hiccup is not a loss. Remember that price never moves straight up or down. It bounces all day long, that is why you have to identify the major trend. You can read more about that at my blog:
http://tradersbud.blogspot.com/2009/09/trend-lines.html.
#4. Don't try to trade distracted! Come to your platform with a clear head, if you do not, you will leave with your butt thoroughly handed to you.
Here a a few tidbits that I hope will help even further.
Identify the longer term trend, and then use a shorter time frame for a good entry in the direction of the trend. This may take some time, but in order to enjoy success as a trader, it is essential that you learn to wait. You don't have to sit in front of your screen all day, but you do have to wait for a good set up. If you trade longer term charts four hours or more, this is easier, because you can come and go checking the chart at intervals.
Find your support and resistance levels. Many times I just used my high and low from the previous day, or week or month depending on my trading and profit objective. You may want to use pivot points, and you should be able to get those from your broker on your trading platform.
You want to buy around your previous support level, with a proper confirmation, and sell around your previous resistance level with a proper confirmation. If you don't get a confirmation, DO NOT BUY/SELL!!!! You want to trade when the odds are mostly in your favor!!!!!!!!!!
You want to buy around your previous support level, with a proper confirmation, and sell around your previous resistance level with a proper confirmation. If you don't get a confirmation, DO NOT BUY/SELL!!!! You want to trade when the odds are mostly in your favor!!!!!!!!!!
Know your reversal signals!!!! Know your reversal signals!!! Know your reversal signals!!!!
If you use an MA it often time will confirm a change of a trend. This tool confirms best in a trending market
After a loss take a break. Revenge trading often kills new traders. If you take a loss, especially a big one, your confidence has been shaken. Step away, CLEAR YOUR HEAD, review your game plan, refine it if you need to. After you have worked through your emotions, come back fresh and ready to trade. The emotional train-wreck of a big loss, compromises you and you can not see things as clearly or objectively.
Stay out of consolidation/deliberation (when price is in a tight trading range) on a short term time frame. There is a time for the market to rest, you need to rest with it. You are not a fortune teller, you are a trader, allow the market to show you which direction it is going to move in.
Oh this is a biggie. LETTING YOUR WINNING TRADES RUN AND CUTTING YOUR LOSSES SHORT. If you have had trades that started out as winners and ended up as losers , it can chips away at your confidence, often causing you to close your winning trades as soon as they come into profit. On the other hand you will allow your losing trades to run wild, hoping, waiting and praying for a reversal, instead of cutting the legs off of that diseased monster.
Staying in losing trades for extended periods of time cost you not only potential capital, but it also keeps you from entering other profitable trades.
After a loss take a break. Revenge trading often kills new traders. If you take a loss, especially a big one, your confidence has been shaken. Step away, CLEAR YOUR HEAD, review your game plan, refine it if you need to. After you have worked through your emotions, come back fresh and ready to trade. The emotional train-wreck of a big loss, compromises you and you can not see things as clearly or objectively.
Stay out of consolidation/deliberation (when price is in a tight trading range) on a short term time frame. There is a time for the market to rest, you need to rest with it. You are not a fortune teller, you are a trader, allow the market to show you which direction it is going to move in.
Oh this is a biggie. LETTING YOUR WINNING TRADES RUN AND CUTTING YOUR LOSSES SHORT. If you have had trades that started out as winners and ended up as losers , it can chips away at your confidence, often causing you to close your winning trades as soon as they come into profit. On the other hand you will allow your losing trades to run wild, hoping, waiting and praying for a reversal, instead of cutting the legs off of that diseased monster.
Staying in losing trades for extended periods of time cost you not only potential capital, but it also keeps you from entering other profitable trades.
A properly placed SL (stop loss) is your Friend and will help you save your capital. There are traders who trade without SLs. I would advise you to use SLs on your practice accounts often so that you get comfortable with them. There will be times that you will miss it, there is no need to punish yourself by going broke. You missed it, suck it up and move on.
If you were a trader who once lost money to the market, you can change to become an informed profitable trader. You are no longer that scared trader who was always losing and it is time to develop and approach the market with a whole new confidence!
If your confidence has been shaken, use your practice account a lot. Look for trade set-ups on the short and long side of the trade and rebuild your confidence. When you start trading your live account again, then start off small with smaller margins.
Lastly, LEARN TO WAIT FOR PROPER SET-UPS AND NEVER STOP LEARNING!!!!!!! Patience and knowledge will be your best friends in the market!!!!
Happy trading My Friends!!
Get 10 Trading Lessons FREE Click Here
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This blog is not in anyway an enticement or solicitation to trade in the Forex Market. These tips are for informational purposes only and are not to be substituted for legal advice or council. I have written this blog in hopes that it will help you to avoid some of the terrifying pitfalls I had in the Forex Market before I learned better.
Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you need for living expenses and cannot afford to lose.
الأحد، 4 أكتوبر 2009
SLV and Jeff Nielson
On Sep 17 Jeff Nielson posted an article on SLV. I took issue with his belief that ETFs' management fees were unrealistically cheap and thus another indicator they were a scam. Below is the exchange between Jeff and I on the matter.
Bron: You say "custodians of the vast majority of all the world's bullion-ETFs – a service which they are providing free of charge" but SLV has an expense ratio of 0.50%, some of which if I remember the prospectus correctly, is paid to the custodian. If SLV holders pay 0.50% how can it be considered "free". By what do you mean free?
Jeff: Hi Bron. Just look at all that is SUPPOSEDLY covered by this 1/2% fee:
1) Transaction costs. Purchases must be made CONSTANTLY, all day long - in order to buy the actual silver for unit-holders at the same price they bought their units at. Given the huge volatility with silver, it's not even feasible to restrict buying to once a day - since silver has had MANY daily moves of 5% or more.
2) Insurance/delivery costs
3) Storage/security costs.
Obviously BILLIONS of dollars of silver require significant security to guard such a hoard. The U.S. government has an entire military battalion guarding Fort Knox - so no one can find out how much gold is NOT there.If you think these costs are minimal, then answer this question: why do the small number of companies who hold their own bullion need to charge MANY times that premium for their own security/storage costs?
Bron: Before I comment, just want to state upfront that I work for the Perth Mint, but I am speaking here in a personal capacity. While I’m speaking personally, obviously the ETFs are competitors to my employer’s business, both in respect of physical coins and bars as well as our own storage facility, so I’m not any apologist for the ETFs. Taking each of your points in turn.
1) Transaction costs. I note that SLV’s average Bid Ask Ratio is 0.08%. This is very tight but is not necessarily unprofitable for a market maker. You are right that the market maker must be purchasing (or selling) gold constantly as it sells (or buys) SLV shares. My experience with the Perth Mint’s ASX listed product (code: ZAUWBA) is that the market maker will simply set their stock exchange price for an ETF higher than their cost on the wholesale over-the-counter market and adjust this constantly during the trading day. This way they always make a profit on transactions, it is not a cost to them. If individuals bid prices under this than the market maker misses out on a trade. It is only where there are excessive buyers or sellers that the market maker’s prices will get hit.
2) Insurance/delivery costs. Delivery costs are effectively zero, as the metal is most likely already in the vaults as sellers of physical need to bring their metal to London to trade it. Insurance is a real cost, but are easily covered by 0.50%. Important to note that the metal is not fully insured, just the first couple of billion (I don’t think the prospectus says anything about the first loss limit of the insurance). Once you get to a certain size therefore, the insurance cost is a fixed cost, not variable.
3) Storage/security costs. These are fixed costs, once you have a vault and have secured it, every additional ounce does not result in any change in costs. Once you get to the point that you have covered these fixed costs, every ounce above that is pure profit and this is where custodianship can be highly profitable. At 280 million ounces, SLV is definitely there in my opinion. Storage business is a classic case of economies of scale, which is why smaller companies have to have higher storage charges (eg Perth Mint allocated silver is 2.5% pa).
I have been a bit brief on explaining the above, but my view is that they are making money with a 0.5% expense ratio. That is why I think the “free of charge” line of attack is not supported and you are better off focusing on your other criticisms.
Jeff: Bron, at the time that SLV was created, there was only 200 million oz's of silver in GLOBAL inventories. Now SLV and others hold close to 450 million oz's. Obviously there MUST be both delivery AND insurance charges for AT LEAST 250 million oz's of silver - which could NOT have "already been in vaults".
As for security/storage costs, I'll happily concede (for purposes of argument) that no new storage space was created. This brings me back to my point about the ludicrous idea of a BANKER (holding a massive short position) SUBSIDIZING "longs" by providing free storage/security.
Even if you subscribe to that ludicrous fantasy, there is still the issue of the "opportunity cost" to banks. Precious metals are not the ONLY items in the world for which there is a demand for high-security storage. Will ANYONE suggest that banks will provide a FREE service for precious metals longs - rather than charge someone a fee for storing other valuable assets? Try asking JP Morgan to store YOUR OWN precious metals for free - and listen to how hard they laugh at you.
Bron: "Obviously there MUST be both delivery AND insurance charges for AT LEAST 250 million oz's of silver - which could NOT have already been in vaults"
You've missed my point. Lets assume the additional 250moz is real and was bought by bullion banks to back SLV & others. In that case, the bullion banks would incur no delivery charges as the seller delivers metal to London at their cost to be able to sell it on the spot market in London. Secondly, the additional 250moz has no insurance charges - as I said, they only insure the first $1b of holdings, not the entire holdings.
"the ludicrous idea of a BANKER (holding a massive short position) SUBSIDIZING longs by providing free storage/security" & "Will ANYONE suggest that banks will provide a FREE service for precious metals longs - rather than charge someone a fee for storing other valuable assets?"
Jeff, you keep on saying they are doing it for free when SLV charges 0.5%. Some of that 0.5% goes to the custodian, they are being paid. That is not "for free" - I don't understand why you keep on saying they are providing free storage.
The question is whether the 0.5% charge is realistic, profitable assuming the volumes of metal SLV and others hold is physical. As explained in my previous reply it is. Saying this does not mean that they have physical, but nor does it mean they do not.
Jeff: Bron, your assumptions about delivery cost are only valid if you're implying that silver (and gold) goes straight from refineries into bankster vaults - rather than having to be PURCHASED by the banksters (first) on the open market, and then transferred to their vaults.
When you mention the 0.5% fee charged by SLV, my understanding is that this also (supposedly) covers their OWN administrative costs AS WELL AS all the shipping costs, transaction costs, insurance costs, and storage/security costs.
You would be hard-pressed to find any ONE bankster service (in ANY of their business activities) which they are willing to provide for a 0.5% fee. Suggesting that they are willing to REDUCE their fees (to close to ZERO) to SUBSIDIZE the entry of longs into the market is simply nonsense.
Bron: "your assumptions about delivery cost are only valid if you're implying that silver (and gold) goes straight from refineries into bankster vaults - rather than having to be PURCHASED by the banksters (first) on the open market, and then transferred to their vaults."
No it doesn't. There is no difference between purchasing from refineries or on the open market - refineries are all in different countries just like existing stocks. If market makers cannot acquire metal from investors or sellers already holding it in London, they will actually be able to acquire it at a discount to London spot (which is the usual state of the market), the discount equalling the shipment cost into London. Even if they have to pay a premium (or pay shipment costs into London), then they just factor this into their bid and ask prices quoted for SLV. This is why delivery is not a cost that comes out of the 0.5% fee.
"When you mention the 0.5% fee charged by SLV, my understanding is that this also (supposedly) covers their OWN administrative costs AS WELL AS all the shipping costs, transaction costs, insurance costs, and storage/security costs."
The 0.5% does cover their administrative and compliance costs, but as I have discussed above and in my previous replies, any shipping and transaction costs are recovered via market making activities, so these do not come out of the 0.5%. As I have also replied, insurance and storage/security are FIXED costs, not variable, whereas the revenue of 0.5% is variable. This means that once you cover you fixed costs, the 0.5% on any additional metal is pure profit.
"You would be hard-pressed to find any ONE bankster service (in ANY of their business activities) which they are willing to provide for a 0.5% fee. Suggesting that they are willing to REDUCE their fees (to close to ZERO) to SUBSIDIZE the entry of longs into the market is simply nonsense."
0.5% is not "close to zero". On 280moz, 0.5% = $24 million, that is not anywhere near zero. The fact is that in the wholesale market storage is offered for much less than 0.5%. Do you remember David Einhorn's Greenlight Capital exiting his GLD in favor of physical bullion? He did this because it was CHEAPER, in other words he could get storage for less than GLD’s 0.4%. In fact, quoting http://www.hardassetsinvestor/:
“By contrast, a $400 million player in the bullion market has substantial room to negotiate. You can be sure his [Einhorn] bullion holdings are being custodied for less than 12 basis points.”
If you believe that 0.5% is an unrealistic fee, a subsidised fee and therefore proof that SLV is a scam, then logically you must also believe that Bullion Vault, with a 0.12% storage fee, is also a scam. This puts you in a bit of a spot, because Bullion Vault is one of the most transparent operations in the market, and favoured by many goldbugs and commentators. Your stepping out on a limb here.
The post above was on Sep 21, Jeff replied to another post on Sep 22 but ignored mine. I posted the comment below on Sep 27. No response by Jeff as at Oct 4.
Bron: You have replied to someone else's comment which appear after mine, but ignored mine. Does this mean you conceed on the issue of the reasonableness of the storage fee?
Bron: You say "custodians of the vast majority of all the world's bullion-ETFs – a service which they are providing free of charge" but SLV has an expense ratio of 0.50%, some of which if I remember the prospectus correctly, is paid to the custodian. If SLV holders pay 0.50% how can it be considered "free". By what do you mean free?
Jeff: Hi Bron. Just look at all that is SUPPOSEDLY covered by this 1/2% fee:
1) Transaction costs. Purchases must be made CONSTANTLY, all day long - in order to buy the actual silver for unit-holders at the same price they bought their units at. Given the huge volatility with silver, it's not even feasible to restrict buying to once a day - since silver has had MANY daily moves of 5% or more.
2) Insurance/delivery costs
3) Storage/security costs.
Obviously BILLIONS of dollars of silver require significant security to guard such a hoard. The U.S. government has an entire military battalion guarding Fort Knox - so no one can find out how much gold is NOT there.If you think these costs are minimal, then answer this question: why do the small number of companies who hold their own bullion need to charge MANY times that premium for their own security/storage costs?
Bron: Before I comment, just want to state upfront that I work for the Perth Mint, but I am speaking here in a personal capacity. While I’m speaking personally, obviously the ETFs are competitors to my employer’s business, both in respect of physical coins and bars as well as our own storage facility, so I’m not any apologist for the ETFs. Taking each of your points in turn.
1) Transaction costs. I note that SLV’s average Bid Ask Ratio is 0.08%. This is very tight but is not necessarily unprofitable for a market maker. You are right that the market maker must be purchasing (or selling) gold constantly as it sells (or buys) SLV shares. My experience with the Perth Mint’s ASX listed product (code: ZAUWBA) is that the market maker will simply set their stock exchange price for an ETF higher than their cost on the wholesale over-the-counter market and adjust this constantly during the trading day. This way they always make a profit on transactions, it is not a cost to them. If individuals bid prices under this than the market maker misses out on a trade. It is only where there are excessive buyers or sellers that the market maker’s prices will get hit.
2) Insurance/delivery costs. Delivery costs are effectively zero, as the metal is most likely already in the vaults as sellers of physical need to bring their metal to London to trade it. Insurance is a real cost, but are easily covered by 0.50%. Important to note that the metal is not fully insured, just the first couple of billion (I don’t think the prospectus says anything about the first loss limit of the insurance). Once you get to a certain size therefore, the insurance cost is a fixed cost, not variable.
3) Storage/security costs. These are fixed costs, once you have a vault and have secured it, every additional ounce does not result in any change in costs. Once you get to the point that you have covered these fixed costs, every ounce above that is pure profit and this is where custodianship can be highly profitable. At 280 million ounces, SLV is definitely there in my opinion. Storage business is a classic case of economies of scale, which is why smaller companies have to have higher storage charges (eg Perth Mint allocated silver is 2.5% pa).
I have been a bit brief on explaining the above, but my view is that they are making money with a 0.5% expense ratio. That is why I think the “free of charge” line of attack is not supported and you are better off focusing on your other criticisms.
Jeff: Bron, at the time that SLV was created, there was only 200 million oz's of silver in GLOBAL inventories. Now SLV and others hold close to 450 million oz's. Obviously there MUST be both delivery AND insurance charges for AT LEAST 250 million oz's of silver - which could NOT have "already been in vaults".
As for security/storage costs, I'll happily concede (for purposes of argument) that no new storage space was created. This brings me back to my point about the ludicrous idea of a BANKER (holding a massive short position) SUBSIDIZING "longs" by providing free storage/security.
Even if you subscribe to that ludicrous fantasy, there is still the issue of the "opportunity cost" to banks. Precious metals are not the ONLY items in the world for which there is a demand for high-security storage. Will ANYONE suggest that banks will provide a FREE service for precious metals longs - rather than charge someone a fee for storing other valuable assets? Try asking JP Morgan to store YOUR OWN precious metals for free - and listen to how hard they laugh at you.
Bron: "Obviously there MUST be both delivery AND insurance charges for AT LEAST 250 million oz's of silver - which could NOT have already been in vaults"
You've missed my point. Lets assume the additional 250moz is real and was bought by bullion banks to back SLV & others. In that case, the bullion banks would incur no delivery charges as the seller delivers metal to London at their cost to be able to sell it on the spot market in London. Secondly, the additional 250moz has no insurance charges - as I said, they only insure the first $1b of holdings, not the entire holdings.
"the ludicrous idea of a BANKER (holding a massive short position) SUBSIDIZING longs by providing free storage/security" & "Will ANYONE suggest that banks will provide a FREE service for precious metals longs - rather than charge someone a fee for storing other valuable assets?"
Jeff, you keep on saying they are doing it for free when SLV charges 0.5%. Some of that 0.5% goes to the custodian, they are being paid. That is not "for free" - I don't understand why you keep on saying they are providing free storage.
The question is whether the 0.5% charge is realistic, profitable assuming the volumes of metal SLV and others hold is physical. As explained in my previous reply it is. Saying this does not mean that they have physical, but nor does it mean they do not.
Jeff: Bron, your assumptions about delivery cost are only valid if you're implying that silver (and gold) goes straight from refineries into bankster vaults - rather than having to be PURCHASED by the banksters (first) on the open market, and then transferred to their vaults.
When you mention the 0.5% fee charged by SLV, my understanding is that this also (supposedly) covers their OWN administrative costs AS WELL AS all the shipping costs, transaction costs, insurance costs, and storage/security costs.
You would be hard-pressed to find any ONE bankster service (in ANY of their business activities) which they are willing to provide for a 0.5% fee. Suggesting that they are willing to REDUCE their fees (to close to ZERO) to SUBSIDIZE the entry of longs into the market is simply nonsense.
Bron: "your assumptions about delivery cost are only valid if you're implying that silver (and gold) goes straight from refineries into bankster vaults - rather than having to be PURCHASED by the banksters (first) on the open market, and then transferred to their vaults."
No it doesn't. There is no difference between purchasing from refineries or on the open market - refineries are all in different countries just like existing stocks. If market makers cannot acquire metal from investors or sellers already holding it in London, they will actually be able to acquire it at a discount to London spot (which is the usual state of the market), the discount equalling the shipment cost into London. Even if they have to pay a premium (or pay shipment costs into London), then they just factor this into their bid and ask prices quoted for SLV. This is why delivery is not a cost that comes out of the 0.5% fee.
"When you mention the 0.5% fee charged by SLV, my understanding is that this also (supposedly) covers their OWN administrative costs AS WELL AS all the shipping costs, transaction costs, insurance costs, and storage/security costs."
The 0.5% does cover their administrative and compliance costs, but as I have discussed above and in my previous replies, any shipping and transaction costs are recovered via market making activities, so these do not come out of the 0.5%. As I have also replied, insurance and storage/security are FIXED costs, not variable, whereas the revenue of 0.5% is variable. This means that once you cover you fixed costs, the 0.5% on any additional metal is pure profit.
"You would be hard-pressed to find any ONE bankster service (in ANY of their business activities) which they are willing to provide for a 0.5% fee. Suggesting that they are willing to REDUCE their fees (to close to ZERO) to SUBSIDIZE the entry of longs into the market is simply nonsense."
0.5% is not "close to zero". On 280moz, 0.5% = $24 million, that is not anywhere near zero. The fact is that in the wholesale market storage is offered for much less than 0.5%. Do you remember David Einhorn's Greenlight Capital exiting his GLD in favor of physical bullion? He did this because it was CHEAPER, in other words he could get storage for less than GLD’s 0.4%. In fact, quoting http://www.hardassetsinvestor/:
“By contrast, a $400 million player in the bullion market has substantial room to negotiate. You can be sure his [Einhorn] bullion holdings are being custodied for less than 12 basis points.”
If you believe that 0.5% is an unrealistic fee, a subsidised fee and therefore proof that SLV is a scam, then logically you must also believe that Bullion Vault, with a 0.12% storage fee, is also a scam. This puts you in a bit of a spot, because Bullion Vault is one of the most transparent operations in the market, and favoured by many goldbugs and commentators. Your stepping out on a limb here.
The post above was on Sep 21, Jeff replied to another post on Sep 22 but ignored mine. I posted the comment below on Sep 27. No response by Jeff as at Oct 4.
Bron: You have replied to someone else's comment which appear after mine, but ignored mine. Does this mean you conceed on the issue of the reasonableness of the storage fee?
الخميس، 1 أكتوبر 2009
Canberra Trip
I have been busy preparing for two presentations I'll be doing at the Gold Standard Institute's seminar in Canberra. As a result my blogging will be infrequent.
On Sunday 1 Nov there is a free gold investor day and I will be explaining how London metal accounts are used to facilitate the flow of gold from mine to you. There is a great range of other speakers from Daily Reckoning, BullionMark, Global Speculator. If you are within driving distance of Canberra you would be crazy to miss it as it is a great opportunity to catch up with fellow precious metal investors.
2 Nov to 5 Nov is the formal seminar with Professor Fekete the key speaker. I'll have an hour session on COMEX stocks. Daily Reckoning will also be speaking and has a good explanation of what you can expect. Cost is $790 and a 4 day committment but if you have the time will be well worth it.
I have also forgottent to mention a new precious metals forum for Australians called Silver Stackers (they let gold investors in :). If you are tired of US centric discussions on forums like Kitco, it is worth a look.
On Sunday 1 Nov there is a free gold investor day and I will be explaining how London metal accounts are used to facilitate the flow of gold from mine to you. There is a great range of other speakers from Daily Reckoning, BullionMark, Global Speculator. If you are within driving distance of Canberra you would be crazy to miss it as it is a great opportunity to catch up with fellow precious metal investors.
2 Nov to 5 Nov is the formal seminar with Professor Fekete the key speaker. I'll have an hour session on COMEX stocks. Daily Reckoning will also be speaking and has a good explanation of what you can expect. Cost is $790 and a 4 day committment but if you have the time will be well worth it.
I have also forgottent to mention a new precious metals forum for Australians called Silver Stackers (they let gold investors in :). If you are tired of US centric discussions on forums like Kitco, it is worth a look.
الاثنين، 28 سبتمبر 2009
Trading tips for new traders/ classic
This is just an addition to my blog Forex tips for Newbies. (originally posted 5/9/08)
I want to tell you some addition things I am learning as I trade Forex.
First I want to say Forex is very hard work and please respect that, and start off small and slow, if you don't, unless you are a super genius, you will be humbled very fast; and like the rest of us that got our butts handed to us, you will either learn how to trade or quit. With that said here are some additional tips. Thanks for stopping in.
Forex is not Vegas, it is not a place to gamble, it is a place that you must have skills if you are going to enjoy any measure of success.
Unlike the stock market (unless you are a seasoned pro) this is not buy and hold game in the short term. Short term price bounces and retraces often. You can lose everything if you invest in Forex like you do in the stock market unless you are a longer term trader with the capital and patience to sustain you.
This is a tough game, Trader to Trader, winner takes all, it is not personal, it's forex.
If you feel like the trade is always going against you STOP, and take a LOOK at your strategy, and learn from other taders. Don't sweat it, we all felt that way in the beginning, except for the few gifted ones.
Keep in mind that whenever you open a position it will always put you in the negative, because you have purchased the right to hold a position. So don't panic
I just want to share what I feel are some pretty safe tips. REMEMBER!!!! ALL TRADES have the potential of being losing trades: and no strategy is fool proof, sometimes you will miss it. Now with that disclaimer in mind, here we go.
Come to your platform with a plan and a clear head. If you are pissed, stressed, panicked or in any other series of negative emotions, you will lose your money to the clear thinking, well seasoned, rested, calm trading pro who is ready to eat your lunch.
Look at your price chart on a longer term chart than you trade in. Tell yourself aloud which way the major trend is running, so that you can align yourself with that trend in your thinking and trade accordingly.
Draw your trend lines, if they are not already up, so that you won't forget your trend direction when you are bombarded by the noise of the market.
If potential corrections are fundamental to your trading, draw Fibonacci lines to determine possible pivot levels.
You may also check pivot levels. The forex strategist employed by your company can usually provide these for you. Use all tools and indicators along with your common sense, because tools DON'T ALWAYS WORK!!!!!!!! I no longer use these indicators as they are lagging data, but I am really simple in my trading approach. There are super pros who ace this stuff. Just learn common sense rules to these things if you are going to use them. If you do not, you will be squashed count on it!
I never listen to the news, it usually affects my trading decisions, so I just trade what the charts tell me. If you are a short term trader, Stay out of the market during major economic news on your currencies if you can.
Wait a while after major economic news, let price settle and determine a direction before jumping aboard. Please for the sake of your capital learn all of your major economic news on the currencies you trade, and know when it is released. You don't have to listen to it, but it is wise to know when it occurs so that you can stay out of the market during that time. This is critical. Being in the market at the wrong time can break you within a matter of minutes.
IT COULD COST YOU EVERYTHING!!!!!!!!!!!!
Just know that for every trade you make, there is another trader trying to out trade, and wait you out. Try not to panic, but it gets easier with time. Also know that price never, ever goes straight up or down, because you have traders fighting at every level. This is why it is a good idea to trade small initially, and PRACTICE, DRILL AND REHEARSE on a practice account, so that you can become comfortable with the price dance.
Take note of the highs/lows on a larger time frame than you are trading, so that you have an idea what trading strategy to employ. If the market is trending down, selling the highs is usually a good safe way to make profits. It doesn't always work, some news, speech or price spike/dip in oil or other important news things could effect your trade. If the market is trending up, then you want to buy dips. Your spikes or dips usually occur around your trend lines or MA(moving averages) when you see a reversal in your candlesticks formations. Don't try to pick top/bottoms yourself, this will also get you squashed. You need valid confirmations for tops/bottoms and the more confirmations the better.
Patience is paramount. It is hard to watch the market for a while to establish the ranges, without wanting to jump right in, but if you are going to be a safe trader, it is wise; also keep a practice account so that when you can't wait, you can get that itch out of your system by trading on your on your practice account.
I also don't buy near the highs or sell near the lows. I have been there and been burned there. It is dangerous.
Then there are times when price is going like a mad freight train and all you can do is jump on-board and enjoy the ride for a minute. Jump on during corrections if you can, otherwise, unless you have a good risk appetite, wait for a less risky time to trade.
This is also critical, have another source of income while you are learning to trade Forex, because the pressure to have to earn X number of dollars to pay your rent, utilities and other major bills will cause you to make critical trading errors, and lose a substantial amount of money. If you want to learn. ****** PLEASE, start slow and find a broker who will allow you to learn with pennies instead of dollars. I still trade pennies and use my practice account.
AS ALWAYS:---- IF YOU WANT TO BE GOOD, PRACTICE, DRILL AND REHEARSE!!!!!!!
PLEASE REMEMBER THAT THE MARKET IS NEW, AND FRESH EVERYDAY, BUT HAS HISTORY IN YESTERDAY!!!!!!!!!!!!
If you have lost in Forex, especially if it is a substantial amount. Take a break to conquer those fear ghost that might be housed in your head. Start reprogramming your mind to make this work for you. If any other human being can successfully trade, you can too!
LASTLY, NEVER, EVER, EVER, EVER TRY TO PREDICT A TOP OR BOTTOM ON A TREND; THIS IS THE BEST WAY TO BECOME ROAD KILL FAST! LET OTHERS STEP IN FRONT OF THAT VEHICLE. YOU STAY SAFELY ON THE SIDELINES, UNTIL YOU HAVE A PROVEN TOP OR BOTTOM!!!!!!!!!!!!*******************
Happy trading my FRIEND!!
This is not in any way intended to be a solicitation to trade in the forex market. I am only posting this for those who decide to trade and are looking for opinions of other traders!!!!!!
Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you need for living expenses and cannot afford to lose.
Classic tips
Originally posted 3/2/08
WOW!!!!!.....
.......so you decided to trade Forex. Good for you! Forex can be profitable, but you can also lose everything before you have time to blink. I know, I have been there, and there is no adrenaline rush in the world like watching a half a years salary go up in smoke in a matter of minutes. It will arrest you and leave you picking up your jaw from the floor two minutes later.
I just want to offer some TIPS, that I hope will be helpful in your trading experience.
1. Never trade against the trend if you are new. Learn the market like your own name first before trying such stunts. Use 4 hour, daily charts or longer to identify a true trend. Anything less may give you a false reading of the overall trend. KNOW THE PREVAILING TREND BEFORE YOU START TO TRADE.
2. Never trade on impulse. Impulse trading will KILL YOU. Never trade tired; tired trading create costly mistakes. Never do angry/revenge trading. That is when you trade in anger to try to get your money back when a position goes against you. It rarely ever works. Pay attention to what you are trading and how much. An accidental wrong click can be as costly an any other trading mistake.
3. Find a Forex company without a dealing desk, because they are always trading against you, waiting for you to make mistakes that they can pounce on. Forex companies like that stack the odds so far against you, that it makes it almost impossible to win. They will give you just enough knowledge to hang your self.
4. Don't trade with a Forex company that doesn't display your free margin, because most of these companies hide your free margin in your Margin Balance, so that you are fooled into thinking you have all of your balance as a free trading balance, but they will liquidate you. Remember, they are dealing against you, they are not your FRIEND, and they are not there to help you prosper. If they do accidentally liquidate your position, they will still keep ALL OF THE MONEY THAT THEY HAVE LIQUIDATED, then they put you back in at the position that they liquidated you from, even though it was their error, and try to tell you that the position they put you back into is the same because your marginal balance is the same as what it was when they liquidated you, but all of your real money that they stole, is gone, and you are left with a vulnerable open position praying that you can recover your money, which they well know that you probably won't do, that is why they will not give you a refund. THEY ARE CROOKS, SO BUYER BEWARE.
5. If you trade with a company that offers their opinions with the news, ignore the postings, it will scare you to death and often times cause you to lose out on good profit potential or take an unnecessary loss. Just be careful!
*Remember price action is everything and the longer term trend is your friend. Only the charts tell the whole truth. Learn to read them like a master musician reads sheet music.
6. Don't hold on to losers to long, it will eat you alive. If you are in a losing position wait until you recover some before you sell, or sell small lots of the position at a time. Ex: if you have an open position of $100,000USD, and the market has gone against you in a big way, you may want to sell $20,000USD when the market goes back in your favor some instead of the whole $100,000 lot.
7. Be very careful of advice you find on the internet! There is some good stuff out there. Do your own homework, and DO YOUR OWN HOMEWORK, and DO YOUR OWN HOMEWORK. The market will not reward your lazy attempts.
8. Realize and respect that it takes hard work to be successful in Forex.
9. Do not gamble with the market, make good calculated pre-planned entries.
10. When you are borrowing money from family, friends and credit cards for Forex, it is time to step back; look for new/better strategies and make sure that this is what you want to do.
11. THIS IS BUSINESS, ALWAYS RESPECT THAT FACT. YOU ARE HERE TO MAKE MONEY!
12. Never lower your margin with an open position, it could liquidate that position, be sure all of your positions are closed before you lower your margin.
(Allow me to explain margins a bit. I am going to try to make this as simple as possible, it is when your broker lends you $50.00, $100.00, $200.00 and even $250.00 on every $1.00 that you have, (50:1, 100:1, 200:1, 250:1) This is a great deal that can help you be more profitable(because it allows you to hold a bigger position in the market), but it can cause you to over leverage yourself, and if the market goes against you in a big enough way, it will drown you quickly, taking all of your hard earned money in the process.
13. Learn all of the major reports for your currency pair, and try to avoid being in the market before or during those releases, because the market can become so violently volatile that you can be liquidated in less than two minutes.
14. Maintaining your trading capital is more important than making a profit. Sometimes you just gotta save your butt. Minimize losses and your profit will take care of you!
15. Practice on a realistic size Forex demo account. if your initial investment is $250USD, then don't practice on a $50,000 demo account, it will give you a false confidence, and cause you to get your butt handed to you. Use a practice account that will allow you to trade as close to the actual amount you plan to trade as possible.
16. Please don't over leverage yourself, over leveraging will kill you quickly. Invest only 2-5% of your capital Maximum, Even when a trade looks really promising; something can happen to turn a trade against you quickly, and you want the room to ride the wave if you decide to ride, or of course you can get out, (which in a lot of cases is just wiser).
17. When you are looking for a good Forex trading platform, the NFA (Nation Futures Association), FCM (Futures Commission Merchant), (CFTC) Commodity Futures Trading Commission and all of other organizations designated to oversee these markets are good places to begin, but if you really want to find a good Forex Broker, Google "Reputable Forex Broker" and see how other real people feel about different brokers. You will be surprised at how forthcoming they are. You will be glad that you did. Also one of the reason people don't file complaints against these companies is because some of the companies designed to protect you, charge you a hefty fee just to file the complaint, so most people avoid the headache all together. Be wary, and look out for those unscrupulous Forex Brokers. With that said there are a few really good brokers out there! What you are looking for is a broker who is TRANSPARENT, and DOESN'T HAVE A DEALING DESK!
18. Don't panic trade, when you feel that antsy, desperate feeling that makes your mouth dry, turn off the computer and do something else until you are your best self. Trading requires confidence and a good clear head.
19. PRACTICE, PRACTICE, PRACTICE , PRACTICE, PRACTICE, PRACTICE ON YOUR DEMO ACCOUNT,.......... EVEN THAT WON'T BE QUITE ENOUGH,....... BUT GET AS MANY SCREW UPS AND BAD HABITS OUT OF YOUR SYSTEM AS POSSIBLE!!!!!!!
The biggest challenge in Forex is having the confidence that you are doing the right thing, and the discipline to see it through. As you watch those numbers dance in front of your eyes along with your profits, it gets though. It can make you down right panicky, learn the market, and if you pray, ( learn to trust that feeling of peace no matter what the market is doing). The news and the market will make you crazy, but what does your gut tell you in the mist of all of that noise?
20. Lastly if you are stressed, irrational and ready to throw the computer, turn off the screen, breathe and go do something that you really enjoy. (Just breathe, it will be ok, this too shall pass. Live in peace!
Remember to be thankful, be humble, be kind. I hope that this help. Thank you for visiting my blog. Wishing you every blessing of health, wealth, happiness, prosperity and peace for your life. (SMILE)
This blog is not in anyway an enticement or solicitation to trade in the Forex Market. These tips are for informational purposes only and are not to be substituted for legal advice or council. I have written this blog in hopes that it will help you to avoid some of the terrifying pitfalls I had in the Forex Market before I learned better.
WOW!!!!!.....
.......so you decided to trade Forex. Good for you! Forex can be profitable, but you can also lose everything before you have time to blink. I know, I have been there, and there is no adrenaline rush in the world like watching a half a years salary go up in smoke in a matter of minutes. It will arrest you and leave you picking up your jaw from the floor two minutes later.
I just want to offer some TIPS, that I hope will be helpful in your trading experience.
1. Never trade against the trend if you are new. Learn the market like your own name first before trying such stunts. Use 4 hour, daily charts or longer to identify a true trend. Anything less may give you a false reading of the overall trend. KNOW THE PREVAILING TREND BEFORE YOU START TO TRADE.
2. Never trade on impulse. Impulse trading will KILL YOU. Never trade tired; tired trading create costly mistakes. Never do angry/revenge trading. That is when you trade in anger to try to get your money back when a position goes against you. It rarely ever works. Pay attention to what you are trading and how much. An accidental wrong click can be as costly an any other trading mistake.
3. Find a Forex company without a dealing desk, because they are always trading against you, waiting for you to make mistakes that they can pounce on. Forex companies like that stack the odds so far against you, that it makes it almost impossible to win. They will give you just enough knowledge to hang your self.
4. Don't trade with a Forex company that doesn't display your free margin, because most of these companies hide your free margin in your Margin Balance, so that you are fooled into thinking you have all of your balance as a free trading balance, but they will liquidate you. Remember, they are dealing against you, they are not your FRIEND, and they are not there to help you prosper. If they do accidentally liquidate your position, they will still keep ALL OF THE MONEY THAT THEY HAVE LIQUIDATED, then they put you back in at the position that they liquidated you from, even though it was their error, and try to tell you that the position they put you back into is the same because your marginal balance is the same as what it was when they liquidated you, but all of your real money that they stole, is gone, and you are left with a vulnerable open position praying that you can recover your money, which they well know that you probably won't do, that is why they will not give you a refund. THEY ARE CROOKS, SO BUYER BEWARE.
5. If you trade with a company that offers their opinions with the news, ignore the postings, it will scare you to death and often times cause you to lose out on good profit potential or take an unnecessary loss. Just be careful!
*Remember price action is everything and the longer term trend is your friend. Only the charts tell the whole truth. Learn to read them like a master musician reads sheet music.
6. Don't hold on to losers to long, it will eat you alive. If you are in a losing position wait until you recover some before you sell, or sell small lots of the position at a time. Ex: if you have an open position of $100,000USD, and the market has gone against you in a big way, you may want to sell $20,000USD when the market goes back in your favor some instead of the whole $100,000 lot.
7. Be very careful of advice you find on the internet! There is some good stuff out there. Do your own homework, and DO YOUR OWN HOMEWORK, and DO YOUR OWN HOMEWORK. The market will not reward your lazy attempts.
8. Realize and respect that it takes hard work to be successful in Forex.
9. Do not gamble with the market, make good calculated pre-planned entries.
10. When you are borrowing money from family, friends and credit cards for Forex, it is time to step back; look for new/better strategies and make sure that this is what you want to do.
11. THIS IS BUSINESS, ALWAYS RESPECT THAT FACT. YOU ARE HERE TO MAKE MONEY!
12. Never lower your margin with an open position, it could liquidate that position, be sure all of your positions are closed before you lower your margin.
(Allow me to explain margins a bit. I am going to try to make this as simple as possible, it is when your broker lends you $50.00, $100.00, $200.00 and even $250.00 on every $1.00 that you have, (50:1, 100:1, 200:1, 250:1) This is a great deal that can help you be more profitable(because it allows you to hold a bigger position in the market), but it can cause you to over leverage yourself, and if the market goes against you in a big enough way, it will drown you quickly, taking all of your hard earned money in the process.
13. Learn all of the major reports for your currency pair, and try to avoid being in the market before or during those releases, because the market can become so violently volatile that you can be liquidated in less than two minutes.
14. Maintaining your trading capital is more important than making a profit. Sometimes you just gotta save your butt. Minimize losses and your profit will take care of you!
15. Practice on a realistic size Forex demo account. if your initial investment is $250USD, then don't practice on a $50,000 demo account, it will give you a false confidence, and cause you to get your butt handed to you. Use a practice account that will allow you to trade as close to the actual amount you plan to trade as possible.
16. Please don't over leverage yourself, over leveraging will kill you quickly. Invest only 2-5% of your capital Maximum, Even when a trade looks really promising; something can happen to turn a trade against you quickly, and you want the room to ride the wave if you decide to ride, or of course you can get out, (which in a lot of cases is just wiser).
17. When you are looking for a good Forex trading platform, the NFA (Nation Futures Association), FCM (Futures Commission Merchant), (CFTC) Commodity Futures Trading Commission and all of other organizations designated to oversee these markets are good places to begin, but if you really want to find a good Forex Broker, Google "Reputable Forex Broker" and see how other real people feel about different brokers. You will be surprised at how forthcoming they are. You will be glad that you did. Also one of the reason people don't file complaints against these companies is because some of the companies designed to protect you, charge you a hefty fee just to file the complaint, so most people avoid the headache all together. Be wary, and look out for those unscrupulous Forex Brokers. With that said there are a few really good brokers out there! What you are looking for is a broker who is TRANSPARENT, and DOESN'T HAVE A DEALING DESK!
18. Don't panic trade, when you feel that antsy, desperate feeling that makes your mouth dry, turn off the computer and do something else until you are your best self. Trading requires confidence and a good clear head.
19. PRACTICE, PRACTICE, PRACTICE , PRACTICE, PRACTICE, PRACTICE ON YOUR DEMO ACCOUNT,.......... EVEN THAT WON'T BE QUITE ENOUGH,....... BUT GET AS MANY SCREW UPS AND BAD HABITS OUT OF YOUR SYSTEM AS POSSIBLE!!!!!!!
The biggest challenge in Forex is having the confidence that you are doing the right thing, and the discipline to see it through. As you watch those numbers dance in front of your eyes along with your profits, it gets though. It can make you down right panicky, learn the market, and if you pray, ( learn to trust that feeling of peace no matter what the market is doing). The news and the market will make you crazy, but what does your gut tell you in the mist of all of that noise?
20. Lastly if you are stressed, irrational and ready to throw the computer, turn off the screen, breathe and go do something that you really enjoy. (Just breathe, it will be ok, this too shall pass. Live in peace!
HAPPY TRADING
Remember to be thankful, be humble, be kind. I hope that this help. Thank you for visiting my blog. Wishing you every blessing of health, wealth, happiness, prosperity and peace for your life. (SMILE)
This blog is not in anyway an enticement or solicitation to trade in the Forex Market. These tips are for informational purposes only and are not to be substituted for legal advice or council. I have written this blog in hopes that it will help you to avoid some of the terrifying pitfalls I had in the Forex Market before I learned better.
الأحد، 27 سبتمبر 2009
الجمعة، 25 سبتمبر 2009
WHEN TRENDS TURN
As you have probably already read, I love trends; but what happens when a trend turns. No matter what time period you trade your trend will eventually turn. It is essential to the well being of your successful long term trading life that you can recognize the beginning of a trend turn.
The first sign of a trend turn usually come in the form of a candlestick reversal formation. Then you will eventually get a trendline break. That is why it is essential that you learn to read candlesticks like a master musician learns to read sheet music.
Things you want to look for in a valid trend turn are:
1. Price that has really been in a trend for a while, and a valid candlestick reversal signal). (Except on a smaller time frame, those trends can change rapidly)
2. A treadline break is usually a good sign. On the trendline break, be sure to wait for the candle to close. If it closes outside of the line you may want to confirm the validity of the breakout with an indicator such as a MA. I am not a huge fan of indicators because they are lagging data, but in this case, it would be wise to use one, which ever one best suits you. In a valid trend break your MA will usually be broken too.
3. I think the most important piece in a valid reversal is if price surpassed the previous relevant high/low.
Many times a good buy signal comes when a candlestick closes above the trendline, in a downtrend, though not always. A good sell signal could come from the close of a candle below the trendline , in an uptrend. This is where either patience, indicators or a combination of both come in handy.
If the trendline break is not valid (meaning it broke trend only temporarily), then you can redraw your trendline, or add another one to include the new high/low.
Very important if you trade against a long term established trend, expect it to be a short term ride. Get in and get out. The shorter the time frame the faster you'd better get out after you see that you have lost your advantage No matter what time frame you made your counter trend trade, just know that it will eventually turn to continue to follow the major trend. A counter trend trade is like a river temporarily diverted, the trend will eventually resume it's course. There are always trends within trends or hiccups/retracement, price never move straight up or straight down. It is essential that you know your major trend direction.
A breakout from trend can also be a valid exit signal to close out your profits.
Trend reversals are important because most traders want to buy near the bottom when price begins to move up and sell near the top when price begins to decline, and that means waiting for a proper confirmation before jumping in and getting your butt handed to you.
A reversal signal can be good for 0pips- 1100pips depending on your chart time frame and your patience level. For example the 5 min chart will give you many trading opportunities, but they are less reliable; whereas the monthly chart is much more likely to provide more accurate signals, so far this year it has provided 4 really good bounces for the USD/YEN pair. Longer term traders were able to capitalize on those opportunities, but they are a whole league unto themselves.
Remember, though trends tend to continue, nothing goes on forever and if you are going to be a successful trader, you are going to have to remind yourself that neither price nor trend heads in the same direction perpetually. In order to trade successfully you have got to be flexible. If you, like me, have been bearish all of 2009, you have got to know when to become bullish when there's a bounce in the market. Know when to hold em' know when to fold em, know when to walk away and know when to grab your profits and run.
As it stands; I don't plan to do a blog on candlestick formations, but you are welcome to go to my youtube channel where I have downloaded videos that I think are very helpful to new or a fresher for the more experienced traders. Please copy and paste the link:
http://www.youtube.com/user/TRADERSFRIEND.For a more in-dept look at candles read any of Steve Nison's Japanese Candle Trading books available on-line or at your local library. If you are going to purchase it, ebay is usually an excellent source for on-line trading materials.
Remember a consistently profitable trader spends more time waiting for valid entry signal than actually trading and that is a whole discipline unto itself(BIG SMILE)
HAPPY TRADING!!!!
Get 10 Trading Lessons FREE Click HereThis blog is not in anyway an enticement or solicitation to trade in the Forex Market. These tips are for informational purposes only and are not to be substituted for legal advice or council. I have written this blog in hopes that it will help you to avoid some of the terrifying pitfalls I had in the Forex Market before I learned better.
الخميس، 24 سبتمبر 2009
الثلاثاء، 22 سبتمبر 2009
Trend lines
Now we are about to embark on what is almost sacred territory for me, 'trendlines'. Ahhhh..... What a most glorious word. Trendlines are one of my favor trading tools. If there is a pot of gold at the end of the rainbow in trading for me, I would have say that it is trendlines.
Why?????? Because using trend lines properly will put you on the right side of the trade most of the time. I personally use trendlines in all of my trading. Now for those of you who have used trendlines and it hasn't worked out for you. Please remember that the shorter the time frame you trade, the more your trend is likely to change. My advice is to find the prevailing trend and trade in harmony with it. Example, if the trend is bullish (going up) on the 30min charts and you trade the five minute chart. If the trend is bearish (going down) on the five minute chart, don't take that trade. It is much more likely that the trend will reverse on you than if you wait for a trade that is in harmony with the bullish trend.
Please allow me to elaborate. If you are trading that five minute chart and price has dropped 30pips, you need to wait for a good candlestick reversal confirmation and a trendline break, before going long. Candlesticks are very often the first sign of a trend reversal. The break of the trendline is just further confirmation. If you trade the five minute chart, you want to get in and get out fast!!! Remember on the five minute the direction of the trend is going to change frequently. The shorter your time frame the less reliable your trend, or your candlestick confirmation. On the smaller time frames, snatch your money and go!!!!!!!!!
Ok........What is a trend? A trend is the tendency for price to move (overall) in one direction for a period of time. I say overall, because you get price retracements and corrections. That is when price temporary takes a pause or temporarily reverses from the major trend.
It is essential that if you chose to use trendlines as part of your trading strategy that you determine the direction of price on a larger time frame, so that you know how to best trade your strategy and for how long.
For example if you are in the mist of a bullish price trend on the daily chart and it is bearish on the monthly chart, then you need to be aware that price will reverse in the direction of the major trend at some point, sometimes in as little as 2days. However if you are bullish on the both the daily and the monthly chart, you stand a much greater chance at a longer more successful bullish run.
The reason to determine your trend before you begin trading is because when you sit in front of the monitor all day with price pullbacks and spikes, it is hard to determine the primary trend.
When I first started to trade, I would sit up and watch price move for about 15-30 mins and some times longer, because I wanted to make sure that I was on the right side of the trade before I committed my hard earned money. I would wait just long enough until the end of a rally or dip and I'd find myself on the wrong side of the trade and couldn't figure out why. It was almost as if the broker was just waiting for me to put in my order before price went the other way against me. My early trading life was extremely frustrating and eventually I went broke. I was staying up most of the 24 hours trading and traded all three markets; studying my butt of in between. I stretched my brains with all of the complex theories, and learned all of the indicators, and was still getting killed in the market. After all of that, I had to find what worked for me. Price action.........that is it and I use trendlines and candlestick formations to help me maximize my trading strategies.
Your trendline is diagonal support or resistance, it is that barrier that price is least likely to break. The longer the time frame the more reliable your trendlines. Though trends eventually break.
Traders Whiteboard #1 Traders White Board #1
Drawing trendlines.
To determine if you are in a bearish or bullish trend you will need to draw trendlines...........
For a bearish trend ( a trend in which price is making a series of lower highs) you want to draw your trendline connecting two relevant/major highs, then your trendline should project itself from there.
This is a picture of a downtrend with a bullish break at the end.Video Lesson: Trading a Downward Trending Market Click Here
For a bullish trend ( a trend in which price is making higher lows) you want to draw your trendline below price, connecting relevant lows, then your line will project itself from there.
This is an uptrend with a 20period moving average.How to find the Trend and How to TRADE the Trend Video Lesson Click Here
Lastly I want to touch on a trend channel. A trend channel can be bullish or bearish; but in a trend channel you want to connect both the relevant highs and the relevant lows to form a price channel that forms diagonal support/resistance.
An example of a bearish channel. This is a longer term channel, but I included enough of it so that you can see how price bounced off of support and resistance clearly defining buy/sell zones. I do want to warn you that price will not always fit perfectly in your trend projections, it can be quite naughty sometimes, but we will discuss that in a later blog "When trends turn"
Until we meet again my Friend.
Happy Trading!
For any questions you may contact me at TradersFriend@yahoo.com
MarketClub BONUS, 2 FREE MONTHS! Click Here
This blog is not in anyway an enticement or solicitation to trade in the Forex Market. These tips are for informational purposes only and are not to be substituted for legal advice or council. I have written this blog in hopes that it will help you to avoid some of the terrifying pitfalls I had in the Forex Market before I learned better.
الأحد، 20 سبتمبر 2009
الخميس، 17 سبتمبر 2009
Patience
The biggest challenge to trading once you learn what you are doing is the waiting. The waiting makes you itchy. You have got to trade or bust. Staying out the market is probably the hardest discipline you will have to learn to master as a trader. Itchy is dangerous. It is that horrible nagging feeling(almost a compulsion) that you are going to miss out on something. Every nerve in your body is screaming at you to jump on this opportunity NOW before it is too late and you miss out.If you have been trading any length of time, you know what I am talking about; and there are a few times that you can remember missing out, then you begin to chastise yourself for not getting in at the most opportune time. That missed out recording is still playing in your head. Now I want you to remember more accurately all of the time that you followed that itch because you were so sure of the market's direction and got your butt handed to you. Then you cursed Forex, your broker, and kicked your little dog Mike. You went around all day in a funk because of your lost, and if you continued to trade trying to make your money back, you only dug a dipper hole.I know these things, because I too have been there, except I don't have a little dog(smile). As a recovering 'type A' personality, it was and sometimes is to hard to wait for the market to do what it is I want it to do. The best thing to do so that you don't over-trade is to turn off your monitor, do something else, and wait for a valid reversal signal on a larger time frame chart and then trade.
When you know better psychologically but, you just have to get in or bust, a practice account comes in handy. That way you can play, test your strategies and instinct without getting killed. Trading emotion without logic will get you killed.
When you are not the most patient, times of deliberation and congestion are the worst. That time is designed to work on your nerves, make you antsy, distract and confuse you and cause you to make big mistakes. It is a very successful deterrent and works on most traders, we get caught up, then we have made a commitment with our money that we usually soon regret. Trading isn't hard because it takes a rocket scientist to do it, active trading is hard because in order to trade successfully, you must master and conquer YOU.
By all means stay out of deliberation/consolidation, where price is in a tight trading range. You are much more likely to have successful trade if you wait for a valid breakout from the tight trading range ( a close of a breakout candle below your support/or above your resistance level), to add to the probability of your success.
Price movement is the next most important behind emotional control. No matter what economic reports or the experts say; the charts always tell the truth. They tell you where the real money is headed. The longer term charts are the most accurate, trading the smaller time frames are more of a gamble.
IF YOU ARE NEW TO FOREX, PLEASE DON'T TRADE THE NEWS, UNLESS YOU HAVE BEEN TAUGHT BY A PRO! NOTHING WILL KILL YOU FASTER THAN THOSE WINDFALL GAMBLES!!!!!!!!!!!!!
ALSO TRY NOT TO HAVE AN OPEN POSITION DURING MAJOR ECONOMIC NEWS BECAUSE OF THE EXTREME VOLATILITY OF THE MARKET
You want to give yourself every possible advantage by trading when the odds are most in your favor. Trading in harmony with the longer term trend will give you a tremendous advantage. When your long term trend is down, you want to sell the highs with a valid trend-line rejection or candlestick reversal confirmation or both. When the trend is up, you want to buy the dips with a proper trend-line rejection or candlestick reversal formation or both. Remember this is not Vegas, it is a business. We don't gamble here.
Develop the discipline of patience, stay out of consolidation,(let the market tell you what it is going to do, don't try to out guess the market, the market is always right), and trade with concrete rules.
A very successful trader once said that he made money not through his thinking, but through his sitting(Patience). (The patience to wait for a proper turn in the market and the patience to ride out the turbulence until he hit his profit target)
HAPPY TRADING, LIVE IN LOVE, HARMONY AND PEACE! STRESS IS A GREAT ENEMY TO SUCCESSFUL TRADING. TAKE A BREAK, BREATHE AND RELAX!
Write me if you need me. You can find me at TradersFriend@yahoo.com
This blog is not in anyway an enticement or solicitation to trade in the Forex Market. These tips are for informational purposes only and are not to be substituted for legal advice or council. I have written this blog in hopes that it will help you to avoid some of the terrifying pitfalls I had in the Forex Market before I learned better.
الأربعاء، 16 سبتمبر 2009
Margins/Leverage
Well, I am ready to talk about a biggie, the margin. What is margin? A margin is money we put up as collateral to our broker to cover credit risk on the money the broker has lent to us. A margin gives you leverage (magnification). Leverage is an amount of money a broker lends an investor to buy securities, in our case currency.
The thing that makes margins/leverage so attractive is that it can increase your potential returns). In a 50:1 ratio, for every $1.00 you invest your broker is extending $50.00 to increase your buying power. In a 100:1, it is $100.00 for every $1:00 you put up, and so on. Whoo Hoo! Nice broker, huh??????? The thing about leverage is it can either work for or against you. For most traders, it works against them, that is why your broker is willing to give it so freely. The expectation is it will help you deplete your account more quickly.
Forex is a zero sum game, for every penny you lose, someone else gains it, and it is usually the one who has the deepest pockets and can most afford to ride the volatility waves; so brokers can afford to allow you to over leverage because they have much deeper pockets and usually they win.
I have to mention this, there are some brokers that offer up to 750:1 ratios, stay away from them. I would not trade with a broker who offered more than a 400:1 ratio and believe me 400:1 is gamblers stakes. You work too hard for your money to willing give it over to the market.
How do you protect yourself against the downside of leverage???????
Decrease the size of your leverage. It will take away from that ideal wind fall, but it will also keep your account from being depleted fast.
If you are new to Forex, my advice is a 25:1 or 50:1 ratio, and decrease your lot size. Most of us don't start our accounts with $50,000, and if you are fortunate enough to, then you definitely don't want to give it to the market.
Remember leverage ONLY works for you if the market is moving in your favor. If it moves against you, then it magnifies your losses.
Happy trading!
This blog is not in anyway an enticement or solicitation to trade in the Forex Market. These tips are for informational purposes only and are not to be substituted for legal advice or council. I have written this blog in hopes that it will help you to avoid some of the terrifying pitfalls I had in the Forex Market before I learned better.
الثلاثاء، 15 سبتمبر 2009
PIPS
Pips are percentage in points. In other words it is the smallest amount of a currency, (Kinda like a penny in the US). In this example .8891 the pip is the 1. If you sold a currency at .8891 and it moved to .8861 then you have a gain of 30pips. Or in the dollar/yen pair 108.93 the pip is the 3. The pip is the last number after a series of numbers behind the decimal point making it the smallest amount of the currency.Why pips? Pips are how traders get paid, it is the way profits and losses are calculated.
How to calculate pips:
If I sold a currency at .8750 and it went up to .8800, then I would subtract the smallest number from the largest number to figure out what my profit or loss was. In this case:
.8800-.8750 =50pips lost
Now if I sold at .8750 and the price fell to .8700 then it looks like:
.8750-8700=50pips gained (then I get paid)
Always subtract the smaller number from the larger number whether you buy or sell.
You can obtain more in-dept information on pips from your broker. This is just a quick overview. Basic information like this from your broker is fine, it is just strategic information that you have to be wary of.
Happy trading, Have a great life!!!!!!!
This blog is not in anyway an enticement or solicitation to trade in the Forex Market. These tips are for informational purposes only and are not to be substituted for legal advice or council. I have written this blog in hopes that it will help you to avoid some of the terrifying pitfalls I had in the Forex Market before I learned better.
What is Forex?????
Forex is short for Foreign Exchange, they took the for in Foreign and the ex from Exchange to created the word forex. Forex is a place to exchange one currency for another. The Forex market is larger than all of the other stock and futures and commodity market of the world combined. According to the Bank for International Settlements, average daily turnover in global foreign exchange markets is estimated at $3.98 trillion.
The Forex market, unlike other markets is an OTC (over the counter market) and has no physical location, which means that the entire forex market is run electronically. It is available 24hours a day Sunday evening to Friday afternoon EST. With a computer, a little capital, and a high speed connection, almost anyone can become a forex trader.
What is the lure of Forex? Lots of actions, and quick gains. It is a fast pace, exciting environment that can keep you glued to the computer monitor for hours.
New World Currency Video New World Currency
As a retail trader the odds are stacked against you, due to limited capital, market manipulation, and just lack of information.
You need to be aware that 90% of all first time traders lose all of their capital.
There are reasons for this:
Lack of information; The stuff given to you by your broker will eventually get you killed, if you don't understand how to properly use it. They only give you enough information to make you confident enough to get your tail handed to you. Get on youtube, where real traders are making videos that can help you better understand what is going on. Or other sites like this one that are made by real traders who want to give something back. You must invest in your own education, otherwise you will be just another sheep to the slaughter.
Over extending on too little capital, is one of the biggest mistakes new traders make. You start a $ 50, 000 practice account where you are trading full lots, then you open an account with $2,000-$5,000 and you continue trading full lots. It is a recipe for suicide. On that little capital, you should only trade mini-lots.
Broker trading against clients. Many broker trade against their customers stacking the odds heavily against their customers for big paydays.
Never add to losing positions thinking that the market will turn around in your favor and you are going to get a windfall. 99% of the time that is a false expectation that will break you real fast!
Happy Trading!!!
If you need me you can write me at:
TradersFriend@yahoo.com
This blog is not in anyway an enticement or solicitation to trade in the Forex Market. These tips are for informational purposes only and are not to be substituted for legal advice or council. I have written this blog in hopes that it will help you to avoid some of the terrifying pitfalls I had in the Forex Market before I learned better.
Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you need for living expenses and cannot afford to lose.
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