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June 28, 2009

T Sized Pip: Losing Trader, Exhibit "F"

Losing Traders and Losing Attitudes,

Hello Traders!

I hope everyone had a great weekend getting rested, refreshed, and relaxed. Or as Ben Lichtenstein over at Trader's Audio would say, "Get Rrrrrrrrrrrrrrrrrrrrrrr'd"....But, I digress...

I do not have too many FX updates as of right now, but I am sure I will as the night progresses. I want to take the time to focus on a small anecdote and trading lesson during this post, so please bear with me as this is not usually the topic of discussion. But, before I do, I briefly want to give my impressions of the FX market in general. Clearly, we are most definitely caught in a heavy storm of consolidation, attempted breakouts, attempted breakdowns, and general whipsaw trading. Central banks and governments are seemingly just as confused, trying to figure out what to do going forward as it is becoming more and more evident that U.S. stimulus and U.S/Worlwide 'recovery' is fleeting. Overall, I will focus on a completely different topic in today's post, simply because these are not the type of conditions we want to put risk capital to work in. Yet many traders do, and they complain when things go wrong. To explore today's lesson on Losing Traders and Losing attitudes, we will focus on the exhibit of one lonely trader/hater who feels the need to try and spoil good things for the majority in the hopes of spoils for the limited. If you are a trader like that, then you most likely are already in the market and do not understand why.

More specifically, if you are known as 'T Sized Pip', AKA, a lonely trader ostracized to the financial/trading wastelands by their lack of wit, lack of intelligence, and most definitely lack of any trading skill, you may want to just go ahead and throw all your chips on the table right now. This type of trader is located somewhere between the 6th and 8th stage of the graph above, just FYI. That's what 'traders' of that caliber do, they shoot in the dark similarly to how they live their lives. We all know that trading results are simply an off shoot of our general life experience. Who knows....After all, you CAN actually hit the dart board if you are BLIND, just as T Sized Pip does 1/10 trades, but you simply can't do this with any mathematically predictive and or probabilistic expectation going forward. These types of traders are what we call "Boom and Busters", swinging big, missing big. Yet, when they DO hit it big the result is even more damaging, making them feel/act emboldened, falsely confident, and dangerously (to their own account) compulsive in any and all trading activity that follows this rare, but majorly successful trade. Now, all of you must be wondering, WTF??? LOL. Where did this come from, and what does it have to do with trading? There is this wonderful little thing called "zero-sum", reflecting the true nature of many trading markets in which for every winner their is a loser. For every credit to an account, there exits a debit to another account. We are in a constant mental battle to out think, out perceive, and out trade our opponents, yet the reality is that 90-80% of all participants loose in the end, leaving only a small proportion of participants with a great deal of the money. This is where our lonely, sad, and confused little soul-of-a-trader "T Sized Pips" comes into the discussion. He/She felt the needed to express comments regarding proper editing, which is never a bad idea, but I guess he/she cannot figure out how to communicate with other living human beings. SO, my apologies to any of the readers who have taken offense to a lack of proper editing at times, this is my fault due to my occupation as a 24/7 Forex/Futures trader causing a massive lack of sleep, and I will definitely do my best to remedy this problem going forward! : ) As for "T Sized Pips", R.I.P in cemetery of losing traders....You will all realized after being involved with trading long enough that those who go needless (usually jealously/ego driven) attacks are also those same traders with no money in their account, no idea of what it takes to win, and definitely a great deal of frustration. All "T Sized Pips" needs to do is look through the archives of this blog to understand that success takes time and is a daily occupation, it is not an event or a status. He/she greatly misses the overall point of trading, which is not to win, but to make money. Winning and loosing has nothing to do with trading, but until he/she figures that out, they will continue to waste away. Lastly, this is also another reason that my blog is not heavily advertised, and I do not offer subscription services or trading alerts. That type of activity simply brings more stress, and why would you need to do that if you are in fact making money doing what you do? That is my question, and as you can see my answer is clear in that I do not offer any of those things. I pay myself, and so should all of you! : )

In conclusion, while this post has not been focused on actual trading, I think it still serves to create a great lesson about the "Boom and Bust" trading cycle, and how important it is a professional trader to keep your eye on YOUR PRIZE, not on other's.....Winning Traders have Winning Attitudes, sounds 'pie in the sky-ish', but its true. We have wasted enough time on people like this, but the lessons we can learn from this type of 'hater' are numerous. When you trade zero-sum, you are potentially trading against somebody like "T Sized Pips" because sadly over 80% of the participants out there are just like this person, losers. Find the loser, and you become the winner.

Hey, but its all in a day's work trying to do what I do. Go ahead and hate, its just part of being successful and it's nothing new to deal with. (and sorry to bore any of you who couldn't care less!) : )

I will be back tonight with updates/setups as they materialize!

Happy Trading....

June 25, 2009

6/26 Waiting, waiting, and more waiting

Hello Traders!

Just waiting for the consolidation/whipsaw that has overtaken the FX market to subside a bit. I will be back tonight with updates as they develop!

June 21, 2009

Sunday Night FX... 6/21

Hello Traders, hope the weekend was enjoyable. Sunday night FX trading is always fun, and usually has some good action. Hopefully we have some nice opportunities. The chart above shows the classically formed Citigroup Head and Shoulders pattern that we saw as C began to top out and reverse. This is exactly what we want to see with the Euro. The $EURUSD formation is also very clear and visible, but the bulls will not give up easily...

I have waited a few days to post any $EUR/USD Head and Shoulders updates, as we are only seeing consolidation and a bit of whipsaw trading across clearly drawn support/resistance areas. It is my opinion that there are a great many bulls trapped long, and nervous. I still see this pattern breaking downward and continuing as described in earlier posts, not to mention that we have continued to see more bearish signals continuing into tonight's action. It will be very interesting to see where the London Session takes the market, as well as the U.S.

I will post charts as necessary, and updates for setups that I see taking place.
Good Luck!

June 18, 2009

6/18 Free Live Forex Trading Webinar!! Going Live NOW, Come Join US!

Is this $EUR/USD H+S going to break or what! Come and find out what we think.

Live Free Forex Trading Webinar! Come join me and my trading buddy DaytraderAnna. She is really a great trader. We will trade, cover charts, talk strategy, and just shoot the breeze...


2. Use your microphone and speakers (VoIP) - a headset is recommended. Or, call in using your telephone.

Dial 217-287-4112
Access Code: 760-998-434
Audio PIN: Shown after joining the meeting

Meeting ID: 760-998-434

June 16, 2009

EUR/USD Head and Shoulders Update 5...

Hello Traders-

Very nice development for our $EUR/USD Head and Shoulders last night. This puppy is steadily increasing strength and pattern recognition from the large time frame traders. This is exactly what we want to see. The attached chart shows what we have been looking for, and have seen on smaller time frames, but we now have a clear illustration on the Daily Chart....

Yesterday's daily candle closed just below the neckline, and while we may whipsaw back and forth within this area for a while, the potential for the next leg down has been fully confirmed, and all we need to do now is enter, set the stop, and walk away. I am personally putting several positions on for the $EUR/USD, some with stops just above the neckline, and others with stops above the top of the right shoulder. These patterns have a very high percentage of reliability, but they also come with a very high level of volatility centered around the neckline area. This can be attributed to the dense confluence of emotion/psychology driven reactions to price, previous enty, previous exit, holding, waiting, anticipating, front-running, chasing, you name it, its all there. However, the key is the daily bar closing under the key level, no matter whether there is retrace or not before it officially breaks. So....Long story short, you are now free to enter on the Daily Chart signal, stops at the very least should go above the illustrated neckline. Like I said above, I will have some stops very near the top of neckline, and some actually above the right shoulder. Either way, set them, and forget them.....

Happy Trading....

June 15, 2009

6/15 EUR/USD Head and Shoulders Update

Hello Traders!

Just wanted to throw a quick update your way with regard to our ongoing EUR/USD Head and Shoulders situation. I hope some of you made some coin on the way down, it was a nice ride so far if you have been scalping. I should clarify because I know that I have mentioned very stearn reminders about not front-running and there being no need to get in front of such a large pattern. If you are a scalper, and you are comfortable hopping in and out of things, honoring stops, and generally being 'quick on your toes', then BY ALL MEANS go ahead and trade with the trend. In this case that would be down, and in particular I would probably wait for a nice right shoulder to be formed before really getting any major scalping going. That said....

For those of you doing a longer term style of trading, or maybe just some swing trading, well formed Head and Shoulders patterns offer a great reward with low risk, hence the warning to not front run. There is no need, especially if you are longer term (when I say LONGER, I mean holding your trades a bit longer than a day-trader, not 'investing'.) trader, because these types of patterns produce very nice returns after confirmation, assuming they continue as expected.

I have backed our chart out to a 4-hour chart, and wow, what a beauty. It is also viewable on the daily, which is great. The current status of this setup is on HIGH ALERT. We received a VERY nice confirmation of the pattern signal this AM/late last night, depending on where you live. The neckline, which I have illustrated with a horizontal trendline in the included chart, shows you exactly where you want to get in and also place your stop. The neckline is traditionally seen as the confirmation point for the Head and Shoulders pattern, and after what is usually a healthy retrace to 'test' the broken area, the pattern development ensues and it is off to the races. This, of course, is assuming everything works out out way! We always have to remember that nothing is promised, that's why we use stops! : ) We are currently sitting a bit above the neckline, and we area actually allowed a FULL 100% retrace of the neckline and right shoulder, from a technical perspective, so keep that in mind. If you are down, keep your stops where you feel comfortable, but do not believe that all is lost. This is a confirmed pattern, and therefore a major retrace is needed to blow it up. Until then, the trend is down, and the target is still the target. I will be looking to ADD TO MY SHORT upon a secondary break of the neckline, and I will then put my stop above the neckline. I will repeat this process as many times as is needed, until all the late longs and pained longs give in. If, however, we get a FULL 100% retrace of the right shoulder, you must respect the technical significance and alter course...... Good Luck and please feel free to contact me with questions!

Happy Trading....

June 14, 2009

6/14 EUR/USD Head and Shoulders Update...

Hello Traders-

Well, well, well....this puppy is coming along nicely. The updated chart says it all, we have come a little more than 100 pips since the last post. Very nice progress. The 'right shoulder' is forming quickly, but had a very nice basis on which to do so mostly because of the choppy action within the 'right shoulder' from last Thursday and Friday. We like to see that, as we do not want thinly formed shoulders, only to end up having a potential fantastic setup evaporate, or worse yet, end up causing an unnecessary loss due to trying to front-running the confirmation of the overall pattern. This by the way is a NO-NO. I will say this again because I find it to be very important; DO NOT FRONT RUN HEAD AND SHOULDERS CONFIRMATION. At somepoint, your head will be handed to you and nobody wants to have that happen. Interestingly enough, the head of this pattern had a very nice mini-H+S pattern, as well as the right shoulder. Both played out nicely, and since H+S patterns are considered reversal patterns, we definitely like to see the psychology and emotion clearly being played out in same micro-structure that applies to and adheres to the OVERALL structure of the larger pattern at hand. I hope that makes sense, its a big convoluted. Please contact me if not, and I can explain further. The important aspects right now are watching the GBP/JPY, EUR/JPY, and of course the EUR/USD for signs that stops are being run, longs are exiting the market, new shorts are adding, and even newer shorts are coming to play as well. This will all end up with hopefully a clear confirmation of a neckline break, and then we need a test of that area to continue the larger move the is predicted by the overall pattern. I am looking at something like +375-400 pips from the neckline as a target. Cant be exact, but somewhere in that range would not surprise me. I also must mention that patience is of the essence because even if this pattern confirms, it can take some time to reach the overall target. Remember, most losing traders deal with their position for approximately 72 hours if they are not pure day traders, and with time contraction and time cycles, it can take a bit for the market to form properly. But as Jesse Livermoore used to say (not an exact quote), "I made my money from patience, not from trading"-

Good Luck and feel free to write me with questions!

Hello Traders! EUR/USD Head and Shoulders

Aloha Traders, been "a few" since we last spoke. I like to trade a whole lot less during tough and choppy consolidation periods as we have had over the past couple of weeks in the FX and equity markets, so I have not seen much worthy of posting about until tonight. We have a very nice and very clear potential Head and Shoulders pattern developing on the EUR/USD pair. As with all setups, potentials, and trades, WAIT FOR CONFIRMATION. There is no need to front run, and in this case, there is a lot of meat on the bone so please do not take the chance of having your head handed to you just because you don't want to 'miss out'. You will not miss out if you are patient. In this case, that means wait for the BREAK of the neckline detailed in the chart above. The idea here is that we want to wait until the spike lows from each individual peak are broken. The peaks are the shoulders and the head, the spike lows extend away from the peaks to create the neckline. The beautiful aspect of the confirmed Head and Shoulders pattern is that it is highly reliable, especially after the neckline has broken, been tested, and then failed. At that point trade entry is recommended with a stop on the other side of the neckline..... Good Luck!