Successful technical traders know that their technical analysis does not make them successful.
It does not take much skill to learn how to read a chart. In fact, there is plenty of programs that can do that for you. Technical analysis provides an historical record; it does not predict what will happen. History is not doomed to repeat itself in the markets. No, the skill comes in managing what happens next. The skill comes in managing the luck handed to us, good or bad.
Technical analysis is a tool that when used properly and for the right reasons will aid the trader in managing what happens at the right hand side of the chart, most of which is pure luck. Once in a trade the trader is 100% dependent on the decisions and news events that follow, none of which is in his or her control.
Archives of “foreign exchange market” tag
rssMystery Trader Revealed…And His Name Is 'Hope'
The UK’s Daily Mirror newspaper has uncovered the FX trader who dropped over $300k in a Scouse club. It is a 23-year old ‘self-taught’ barrow-boy named (somewhat ironically in our view) Alex Hope. Self-described as “talented (three years in and a six-figure salary, hhmm), charismatic (its amazing how much ‘charisma’ a GBP125k bottle of bubbly will buy), and thoroughly likeable (ditto) man. Alex Hope exudes knowledge…” and is willing to share it with you according to his website. How did he become this B.S.D. of the FX markets? “I took two months off my job at Wembley, got really obsessed with reading charts and got the guts to start trading properly.” This self-made rosy-cheeked young man with a penchant for mind-numbingly-arrogant-looking photos on his website may have just become the poster boy for all that is ‘great’ about the free market – or perhaps a skim through his blog and media exposure will reassure us all that anything is possible as we note he does have some good taste (not just in Champagne) in RTing our posts on Twitter.
We can only HOPE that the next time he decides to go down the rub-a-dub-dub for a Leo Sayer, maybe he’ll take some of us Septic Tanks with him on the frog-and-toad…as the days of the ship-it-in-large-on-the-left John, done-a-yard by-breakfast spot FX trader are clearly back with us.
And here is his Bio, enjoy:
London born and bred, Alex Hope, 22, is a self-taught trader who specialises in the Foreign Exchange Market. Despite his tender years, Alex is a name to watch out for in the city; an expert in the UK economy, he works the currency markets, regularly trading millions. (more…)
Consider Factors That Will Affect Market Participants’ Perceptions Even if You Don’t Believe in It
- I have always been a discretionary trader with my analysis based on fundamentals…. Whatever kind of a trader you are, you have to be aware of perceptions in the market place, that can influence the participants’ behavior. If a lot of people are charting and they think that a certain level is a key level for whatever reason – lunar, astrological, who the hell knows – then you have to be aware of it. Because it is going to cause a certain number of market participants to react and you have to be aware of it. You have to understand how that is going to affect your position.
- You have to be aware of all these technical techniques, such as momentum, because a lot of market participants use them and so they can affect the market.
Technical Analysis Fact and Fiction
“Technical analysis, I think, has a great deal that is right and a great deal that is mumbo jumbo…
“There is a great deal of hype attached to technical analysis by some technicians who claim that it predicts the future. Technical analysis tracks the past; it does not predict the future. You have to use your own intelligence to draw conclusions about what the past activity of some traders may say about the future activity of other traders.
“For me, technical analysis is like a thermometer. Fundamentalists who say they are not going to pay any attention to the charts are like a doctor who says he’s not going to take a patient’s temperature. But, of course, that would be sheer folly. If you are a responsible participant in the market, you always want to know where the market is — whether it is hot and excitable, or cold and stagnant. You want to know everything you can about the market to give you an edge.
“Technical analysis reflects the vote of the entire marketplace and, therefore, does pick up unusual behaviors. By definition, anything that creates a new chart pattern is something unusual. It is very important for me to study the details of price action to see if I can observe something about how everybody is voting. Studying the charts is absolutely crucial and alerts me to existing disequilibria and potential changes.”
– Bruce Kovner, Market Wizards
Bruce Kovner pulled billions out of the markets, over multiple decades, before handing the reins of his fund, Caxton Associates, to the next generation of traders.
As an academic in a past life, Kovner was known for his deep dive fundamental analysis — but he also used charts extensively, as the Market Wizards excerpt shows. (more…)
Rouble hits 58 per dollar for first time since July 2015.Last Hope at 55.68
The rouble climbed to its strongest level since July 2015 on Monday morning, as the Russian Central Bank’s pledge to weaken the currency struggles to convince markets.
The rouble had already been appreciating as oil prices have recovered over the last twelve months, and growing optimism since Donald Trump’s victory in the US election has helped it become the best-performing emerging market currency since the vote, up just shy of 10 per cent.
President Trump’s calls for a normalisation of relations with Russia raised hopes of a relaxation of economic sanctions and encouraged international investors to return to the country.
The central bank has promised to spend more than Rbs113bn ($1.9bn) on foreign currency purchases this month to help slow the rouble’s climb, in an effort to boost the government’s spending power.
However, economists have been sceptical the bank would be able to have a big impact on the currency, and it has continued to rise a further 1.6 per cent since the announcement, including a 0.5 per cent rise this morning to take it to 57.99 per dollar.
Trade base on Facts, Not on Hope -Anirudh Sethi
Knowledge is the key to winning and gain in the Stock, Commodity and Futures, and Forex markets.
Trading on trust is a fools game.
Do not attempt to place a trade. If the market triggers the exit signal you had predefined, without emotion follow it immediately. Many traders enter the market with more ‘hope’ than understanding. You have to take complete charge of your trading. The best way to do this is to get knowledge and all of the information you can about the market you wish to trade and then form a plan.
You plan should include not only the entry parameters but also the exit parameters. The departure is the most important. Your trade should be protected. Failure to admit that you’re wrong when the trade is moving south is one of the reasons.
Learn to trade on knowledge. There isn’t any need for fear and hope that get in your way. When you’re able to trade on knowledge, you’ll have the ability to react to trading opportunities when it’s time to do 31 and to exit out.
Your best friend needs to be the Stop Loss order. (more…)
Trading Errors When Trend Following
Who really wants to define a loss? Only smart trend followers. Most people think they can postpone a loss. They become investors instead of traders. Many refuse to define a loss. I have seen traders not close a losing trade, after they realized that the trade’s potential is greatly diminished and has gone against them. They want to right. All the way to the poor house. This is a typical trading error when trend following. You need an exact plan when you are trend following. You can not make it up as you are going. This is what losers do. Besides having the exact plan you must believe in it and follow it. Do not think of the money. Think in terms of percentages. Follow your rules and stay in the marathon of trend following. Successful trend following is not about tips or magic indicators. It is about you and how you approach the markets. You must be willing to take losses once it is clear the trade is not working.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts, commodity options or forex can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results. You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.
6 Points For Traders
1. Consistently profitable trading is not about discovering some magic way to find profitable trades.
2. Consistently successful trading is founded on solid risk management.
3. Successful trading is a process of doing certain things over and over again with discipline and patience.
4. The human element of trading is enormously important and has been ignored by other authors for years. Recognizing and managing the emotions of fear and greed are central to consistently successful speculation.
5. It is possible to be profitable over time even though the majority of trading events will be losers. “Process” will trump the results of any given trade or series of trades.
6. Charting principles are not magic, but simply provide a structure for a trading process.
5 Trading Lessons-Must Read
- Most of the time, markets are very close to efficient (in the academic sense of the word.) This means that most of the time, price movement is random and we have no reason, from a technical perspective, to be involved in those markets.
- There are, however, repeatable patterns in prices. This is the good news; it means we can make money using technical tools to trade.
- The biases and statistical edges provided by these patterns are very, very small. This is the bad news; it means that it is exceedingly difficult to make money trading. We must be able to identify those points where markets are something a little “less than random” and where there might be a statistical edge present, and then put on trades in very competitive markets.
- Technical trading is nothing more than a statistical game. The parallels to gambling and other games of chance are very, very close. A technical trader simply identifies the patterns where an edge might be present, takes the correct position at the correct time, and manages the risk in the trade. This is, of course, a very simplified summary of the trading process, but it is useful to see things from this perspective. This is the essence of trading: find the pattern, put on the trade, manage the risk, and take profits.
- Because all we are doing is playing the small edges as they occur in the markets, it is important to be utterly consistent in every aspect of our trading. Many markets have gotten harder (i.e. more efficient, more of the time) over the past decade and things that once worked no longer work. Iron discipline is a key component of successful trading. If you are not disciplined every time, every moment of your interaction with the market, do not say you are disciplined.
Technical Analyst & Fundamental Analyst -Chat
“A technical analyst and a fundamental analyst are chatting about the markets in the kitchen. Accidentally one of them knocks a kitchen knife off the table landing right in the fundamental analyst’s foot! The fundamental analyst yells at the technician, asking him why he didn’t catch the knife? “You know technicians don’t catch falling knives!,” the technician responded. He in turn asks the fundamental analyst why he didn’t move his foot out of the way? The fundamental analyst responds, “ I didn’t think it could go that low.”