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Found 113 results

  1. Hi all! I am looking for an alert system that can notify me when ANY stock (pink, otc) hits a 7 day high or something of the sort. The only alerting systems I can find are designed to watch an individual stock. Anyone know of something like this???
  2. Emotional Intelligence and the Trader’s Mind An Emotional Braking System Failure “I left money on the table yesterday, and I’m not going to leave money on the table this time!” Harry silently declared, “I’ve missed out to many times – I’m going to ride this one and clean up.” Harry could feel the excitement pulsing in his veins – he could hardly contain himself. He pushed beyond his exit point, knowing that this one was going up. What a rush! Harry could feel the surge of energy. He almost became giddy as he saw the numbers climb even higher. That triggered even more excitement as he thought, “I’ve hooked a big one – I’ll show them who’s a trader!” In the blink of an eye, without explanation, the numbers began to drop. Harry kept waiting for the downward spiral to right itself. It didn’t. Harry moved the stop because he knew in his gut that it would go back up again. It didn’t. Finally Harry pulled the trigger and accepted that he had another draw down on his trading account. He felt frustrated because, in his irrational exuberance (some would call it greed), and he let a perfectly good trade go bad. He had sabotaged himself yet again. Now Harry felt shame and wondered, “What made me think that I could trade for a living?” You Trade Your Psychology What happened to Harry? How did he get suckered into bad trading practices? From the sidelines, it is easy to say that Harry neglected to trade his plan. This assertion misses one big point about humans (and particularly the ones who trade) – emotions rule mind. Out of your emotional states comes the kind and quality of the thinking of which you are capable. In Harry’s case the state of mind that he needed to trade effectively was swept away by a fear of missing out. Once this fear triggered and accelerated, his thinking became clouded and his rational evaluation process was blown out of the water. Like many traders, Harry did not have the skill sets to keep his emotions regulated as he entered the trade. Consequently, a guy who had diligently done his charting and was ready for the trading day got ambushed by unseen forces. His trading plan did not also include a psychological plan for managing emotions. This was a big mistake for Harry and for many traders. And until he learns how to make visible the unseen forces that hijacked his rational mind, his trading will suffer. The problem is age old. Since the rise of Descartes’ rationalism, people (traders included) have attempted to separate body (emotions) and mind. Today, even Western medical science is concluding that this separation is impossible. The mind and the body (emotions) are woven together life a garment. They are inseparable. Maintaining awareness of your emotional nature as a trader is, in fact, the first step to developing a peak performance state of mind specifically for trading. Before this is explored, let’s take a look at what just happened to Harry. The Anatomy of a State of Mind Hijacking Harry experienced the trap of an undisciplined trader’s mind. As he moved into the trade, he was not attuned to what his hardwired and primitive emotional brain was biased to sense – nor how to manage the impulse. He did not notice the excitement of emotional arousal of the hunt that evolution had programmed into him. The thrill of the hunt (and its companion – the fear of missing out) was mobilizing Harry to pursue the prey before it could get away. From a resting place where a calm, observant state of mind prevailed, Harry began to pursue the “hunt”, not noticing that his thinking was being compromised. (Remember, thinking is emotional state dependent.) The arousal of conquest or greed came to dominate his mind. He could no longer think rationally. Then he pursued his “prey”, consumed by the passion of taking no prisoners. In this emotional stupor, Harry overtraded and lost. This trait of Harry’s (a single minded pursuit of winning big and being the best) had served Harry well in many areas of his life. It had helped him achieve many goals in his life, particularly in his career before trading. What he was beginning to recognize was that it did not serve him well as a trader though. What is different about trading? Peak Performance and States of Arousal In this discussion we are focusing on the component of an emotion called arousal. Arousal is preparation for action that happens in your body as an emotion prepares us for action. Powerful levels of adrenaline and cortisol are pumped into Harry’s body as he becomes excited by the trade. That excitement, as the arousal increases, becomes fixated on the object of pursuit – bringing down the home run trade. This is called a high arousal and is a great component to some peak performance states of mind – particularly ones that more physical exertion and less cognitive functioning. Foot ball would be a good example of where peak performance demands high levels of arousal and reliance on instinct that has been trained into the athlete. A peak performance trading state of mind requires low arousal. Impartiality, discernment, dispassion, and calm states of mind are the emotional components sought after for trading success. This is because cognitive functioning is what is necessary for trading peak performance, rather than physical exertion. The moment that high arousal states become apparent in trading, the trading has lost his capacity to take a step back emotionally and think impartially. You can be passionate about trading, but you cannot be passionate while trading. Managing Arousal Until a trader learns how to manage their emotional arousal levels, trying to use the mind to manage emotions often creates more (not less) stress and fixation. As an example imagine a chocoholic attempting to talk themselves out of wanting the warm fudge just coming out of the aromatic oven. The more you try to talk yourself out of the fixation, the more you want the chocolate. The arousal has already kicked started the desire to acquire. Fortunately our breathing is both automatic and volitional – this is key to emotional regulation. If let on automatic, your breathing style will accelerate the arousal of an emotion as it triggers. In Harry’s case, his fear of missing out lead to the arousal of pursuit based on greed. He both held his breath and he then would breathe rapidly and shallowly. This excited breathing style accelerated his heart to beat faster adding to the excitement. The emotion greed and its motivation to grab all the profit he could, then took over Harry’s capacity to think impartially. And out of this emotional state, his thinking became compromised which lead to his over trading. It did not have to be this way. Breathing is both automatic and volitional. With training, Harry has learned how to stay in a calm, impartial state of mind, in part, by managing the kind of breathing he does throughout a trading day. Once he understood that peak performance trading requires low arousal state of mind, he began using diaphragmatic breathing to manage his emotions while trading. He has much better control of his overtrading. He does not wait to feel arousal kick in. Instead, Harry using diaphragmatic breathing to help kept his emotions in check. The moment he senses the triggering of arousal, he volitionally uses his breathing to cut off the gasoline supply to the fire of the aroused emotion. Rather than fear of missing out, greed, or a desire to pursue hijacking his mental faculties, he now is consciously able to calm the excitatory process of the emotional brain. Having learned how to manage the levels of adrenaline and cortisol in his body by managing breathing style, he is much less reactive in the management of his trading days. Harry now maintains a calm, impartial, and disciplined state of mind from which to trade. In the process, Harry has learned how to change himself. His focus is on developing the skills and tools that allow him to trade at peak performance levels. And to let go of habitual historical practices that hinder his progress. His first step was becoming aware of the power that breathing has over emotional nature to influence states of mind. Other steps to lead to peak performance states of mind will be explained in the coming posts. Stay tuned. Rande Howell MEd, LPC
  3. WHAT’S WRONG WITH MY SYSTEM? My last post gave you the bones of a trading system. It was not a particularly brilliant setup – it was not meant to be. After all, what I really wanted you to get from the exercise, was this: You can build your own system, if you know what is needed. That’s all. We had a look at some oscillators, some momentum indicators, some moving averages, and we came up with a chart that should look like the one below. OK … so you take the hint, and get to work, creating a simple-but-meaningful template on your MT4 chart. You tweak it a bit, and even discard an indicator or two, and add an indicator or two. Soon the chart is looking good, and you can see where good trades could have been entered and closed, for a nice bundle of pips. It looks good, so you decide to road test it on demo. Suddenly it doesn’t seem to produce the pips it seemed to promise, in the development stage. Does it need further tweaking? Maybe. Is there something wrong with the time frame? Not usually the problem. Am I missing something here? Could be! Then, please tell me what it is … I thought this was easy once I had my own system! Ok. Let’s look at what can go amiss here. To begin the process, we need to set down some RULES so that we begin to follow a STRUCTURED approach to our trade. RULES of TRADING 1. Identify ONE to FOUR currency pairs for this session, that you will assess. Do not flip through a dozen pairs looking for “something to trade”. This is the very worst approach to take when you are learning to apply any system – particularly a new system. 2. Examine the trend over at least three time-frames during your initial assessment. Remember, we are trading the 4H TF, so we need to be aware of what is going on in the DAILY TF. Remember: THE HIGHER TF SETS THE TREND. You would also do well to check the WEEKLY TF, and if it lines up, then you have even more going for your trade. 3. Once you have identified the trend, trade only in this direction. Trying to trade “counter-trend” is a specialised skill, and a bit beyond most traders in the early stages of learning. 4. Wait for your indicators to actually complete the signal – that is – allow the candle to fully close before deciding whether this is a true setup or not. 5. Here’s some useful help – check the 1H TF after you have your trigger signal on the 4H. This might be the most important piece of information you will ever learn when trading the 4H TF. In a previous post I mentioned that 4H candles frequently have “wicks” on them – also called “tails” or “shadows.” When checking on the lower TF – the 1H – you sometimes see the price activity pull back in the counter direction to the trend for a short while. This is natural activity, and is responsible for creating the wicks on the next higher TF. I use the word “breathing” to describe it. Price is dynamic, – it does not move in a straight line, and it rarely stays still for long. Once you become familiar with the swinging action of price, you begin to feel at ease with a price that seems to be a trend reversal, when it is not. So … on the lower TF wait until this “pull-back” activity peaks, and your indicators ON THIS TF begin to show movement IN THE DIRECTION of your 4H trend. When this occurs (it might be the cross-over of your moving averages, or the crossing of the zero line of the MACD histogram, for example – your system will tell you) then you are ready to place your practice trade into your platform. This kind of exercise needs to be practiced over and over and over again before attempting to place live trades. NEVER trade with real money on a live account based on a system that someone else has given you, before testing it and mastering it yourself on a practice account. I’ll be frank here – many people want to trade currencies for a variety of reasons – the motivator behind all of them is the money that can be made. Yet the best statistics we have point to only about 5% to 10% of traders actually making any money from this instrument. The reasons for this are complex, but the chief reason is that the skills and energies that go into making other life choices and activities successful, simply do NOT work in trading. It is not a matter of intelligence, or natural aptitude either. Those who possess these actually fare no better as a group than anyone else overall. Here are the qualities you need to possess or develop, if you are to truly master this form of investment: * Commitment to the plan * Focus on the plan * Discipline to remain committed and focused * Patience to wait for the right setups * Courage not to trade, if no setup appears * Contentment with reaching your target * Discipline to follow sound money management and trade management principles * Willingness to close a trade where indicated, that might yield more pips – this is absence of greed * Willingness to close a trade very quickly that is not going according to expectations … the earlier the better! This is absence of fear. Never be afraid to take a loss. This last point is called the “ability to take a loss” and is one of the strongest qualities a trader can foster within their own psyche. There is always another setup. Finally, you need to know how YOU behave under pressure – do you stay relaxed … do you panic … do you regret leaving pips “on the table” … do you disregard your indicators, and remain with a losing trade in the hope that it will turn around and become a winner … do you take trades that have not been confirmed on all TF because you “like the action” … and so on. There are many emotions to be controlled in trading of which you may be unaware. You just don’t get exposed to these in everyday life and trading brings them to the surface. Exposing the person in the mirror to many emotions … and worse … exposing your TRADING to the effects your emotions have on your decision-making, reveals the inner person. I call it your “Trading IQ” and will have more to say about it in another post. Finally, consider this advice: Stay with your system until you MASTER it – don’t jump from one indicator to the next or from one charting platform to the next or from one system to the next. Write down each trade you take, and the reasons WHY your decision was made to take the trade. Write down WHY you closed the trade too – no profits are ever taken until a trade is closed. Writing your reasons for closing can teach you important things about your method, your indicators and yourself. If you can do that, then it becomes clear when and why a change needs to be made to your strategy – and any changes become evidence-based, and can take a legitimate place in your forex trading strategy. Posted in my Blog: http://forexapplepie.com/
  4. CONSTRUCTING A FOREX TRADING SYSTEM - PART 2 View Part 1 here ... To make money trading forex, we need to sell at a higher price than we bought, in a rising market. And the opposite applies in a downtrend. We could use pure price action to do this, and we could introduce more advanced concepts such as support and resistance (or as some put it – supply and demand) – levels. And we could introduce such things as Pivot Points, and Fibonacci levels. But right now I am going to take the route of indicator-based trading for the purposes of this example, (and leave the extra tools for another day) because this is an easy and uncomplicated approach. We are not discussing the best or the worst way. This article discusses the basic construction of a system. Don’t expect any new or startling revelations here – this information is common knowledge. But I lay these foundations now, in order to build later. What we need to be understanding, is the principle of mechanical system construction and operation. No work is ever going to be complete, and it is quite possible – even likely that - I will either update this post, or expand on it in another article. OUR STARTING LINE-UP OF INDICATORS We can not trade without trend or momentum in play. There are several indicators available to measure these – MACD, ADX, RSI, CCI, PSAR, and even the simplest of all – the EMA cross. You can research these yourself, and make some choices based on personal feel and results of testing. There are good oscillators available too – Stochastic and CCI are usually classed as Oscillators, but when used on the lower TF with higher period settings, such as 21-period, or even30-period, they begin to act as momentum or trend indicators. My preference is for MACD and RSI. Some prefer ADX, CCI, or other indicator. There are countless indicators available for the Forex Trading industry, on hundreds of proprietary trading platforms. Simple is best. If you don’t accept that now, the market will surely reveal the truth of that to you in the future. MOVING AVERAGES Indicators are placed automatically in their own “window” below the main price. Some indicators are right at home alongside the price bars or candles. Moving Averages are one kind. This is not the place to be describing a moving average, or their types. But here we will use the Exponential Moving Average – available on all charting packages. We intend to use three EMA’s of different lengths. The idea is to allow them to indicate when to enter and exit trades, without giving too much profit back. Without going into detail, we will be using the 5EMA (Green); 13EMA (Yellow); 34EMA (RED). These are Fibonacci numbers, and actually mean nothing – it’s a quant choice. But hold on – there is more to this. What Fibonacci actually gives us here, is a slow, medium and fast EMA, and this is ideal for our system. There are inherent problems with using this simplest of approaches – in a word: whipsaws! On their own, we would have a method that would give us profit, but over time ranging or consolidating price, would take back that profit. And it is for this reason that we rely on indicators that provide a filter, to screen our setups and confirm higher probability opportunities. MACD … developed by Gerald Appel in the late 1970’s. We’ll be looking at the version that employs a histogram to enhance visual interpretation. The default is 12-26-9. You may change to a personal setting that improves the indication of momentum. RSI We shall use the 9-period settings - long enough to filter out “noise” and short enough to remain responsive. For faster signals, shorten the period, but beware an increase in false signals and whipsaws. On the 4H Tf, the 9-period RSI is adequate. PUTTING IT TOGETHER The default settings of indicators are effective on the 4H TF – but optimum period settings can be added. There is very little that is new, under the “forex sun”, but don’t let that stop you from experimenting. “Tweaks” can be very meaningful if you do them to “own your system.” I have developed my own indicator-based personal system. It is not difficult, and you can’t damage anything through trying. Believe it or not, having a good system does not guarantee successful trading- that is only one part of the process. We want to capture the change of trend, or at least find an appropriate entry. Fast-moving indicators are not necessary – we are not attempting to scalp. In many of the trades signalled, there may be a significant drawdown before the trade actually begins to move in the direction of the signal. This is the dichotomy of trading – trading the pull-back to the main trend - and it is the single most difficult mechanism for traders to negotiate. 4H candles show a wick or shadow – frequently on both ends of many of the candles – that form, as evidence of the ebb-and-flow nature of trading price movement. There is always time to take an entry, so no haste is required. A good way to fine-tune an entry at the 4H level, is to drop down to the next level – the 1H on MT4 charts – and find the best entry there. And similarly, one of the best things a trader can do to boost success, is to find out what the higher TF trend is. We are trading the 4H TF, so we need to know what the Daily trend is. Remember, the higher TF is the dominant one. To construct your trading chart, you will need a trading platform that offers decent charting. I have found that the MT4 platforms are free, functional, and offer a very large range of “in-house” indicators. In fact you will find these basic indicators we are discussing, in every MT4 platform. Look for a platform that has only 5 trading days – based on the NY close. Currently I can not upload charts to the Blog. But when I get this function, I will update. The next Blog entry will be about locating good trends and trades, and analysing the indicators to help us nail the entry. _________________________ _________________ Posted in my Blog: http://forexapplepie.com/
  5. CONSTRUCTING A FOREX TRADING SYSTEM - PART 1 Before beginning our construction of a forex trading system we need to know whether our system is going to be purely rules-based and fully mechanical, or discretionary, or a mix of both (the most popular ones). We shall keep in mind that there are hundreds of systems available on the Internet trading forums, and I shall be posting several of the better ones on my blog, with the permission of the originators. But for now, we are going to build our own “from the ground up.” WHAT KIND OF SYSTEM? It would be wise for us to stick to purely rules-based trading for our first forex trading system. I say this because beginner-traders usually trade with their emotions, and with poor knowledge of how markets, indicators and charts really work. For inexperienced traders to be making discretionary trading decisions based on what the account balance is doing, can cause panic and uncertainty. Mechanical Trading Systems can always have a degree of discretion added later on, as traders grow in trading wisdom and experience. For example, it might be ok to simply take a “buy” trade because the rules say so, but to be buying when price is almost hard up against a strong resistance level, is not something an experienced trader would be looking to do. Therefore, discretion to ignore that signal would be used, and the trader would wait with interest, to see if a “sell” signal developed after testing the resistance level. There is far more to that situation, of course, but enough for now. FIRST PRINCIPLES … things we need to know and consider Right now we will keep our trading system simple. All we need to know is how to “read” the chart, so as to understand what kind of probability we have of price going higher/lower, and how to get into and out of that trade in the best possible places. In order to profit through trading, we need to be along for the ride when price moves … simple. Buy when price is going up … sell when price is going down … right? Well … yes … and no. Quite often much of the move is over by the time we visually recognise a change in the trend. Or the move is short-lived, and reverses or moves sideways before we can take a position, or establish any profit. But sometimes a strong trend commences, and it is these trends that make us the money in trading, providing we recognise an entry in good time. I should state here that many traders start their trading careers by trying to scalp the market. While I have no opinion on what you should or should not do, I would just say it is something that I would not be looking to do myself as a beginner. Why? Because scalping requires specialist knowledge of the instrument traded. The moves can be fast and furious – as can be the reversals. Traders need very well-developed reflexes to know and understand and judge what might be going on in the market when certain moves occur. Experience can tell the trader if the move is a reversal, or volatility. A novice trader would not be expected to understand or know how to handle that. Volatile price moves could be fake-outs, designed to shake weak hands from their positions. Or they could be just knee-jerk responses to news, causing great price swings before settling down again, and the previous trend, more frequently than not, resumes. Such trading occurs in the lower time-frames like the 1 minute and 5 minute and even the 15 minute charts. Traders of the higher time-frames, like the 1 hour, 4 hour and Daily time-frames call this “noise” and avoid trading it. It usually has little to do with the main trends. So let’s make our first decision based on time-frame to trade. For the purposes of this exercise, we’ll choose the 4 hour. This is a time-frame that gives us plenty of time to analyse, and is not easily moved by news announcements, or sentiment. And if there is going to be a change of direction, this time-frame usually sends signals to traders that it is going to do that, in time to react to what price is doing. Our decision will be unhurried, and low-stress. I should add that after we construct our forex trading system, we will be able to apply it to other time-frames too. Price action is said to reflect the thinking of the market participants, and the price activity seen in the chart is the manifestation of what the market was collectively thinking at that time. Well … we didn’t get far today. I had hoped to define all the parts of the trading system, but I can see it is a bigger task than I realised. I did discover one thing though, and that is if we are going to create a trading system, we have to define every component. There are sound reasons for that. I have never been one to simply put indicators or trend-lines or moving averages on a chart and expect to be able to make a trading decision based on what I can then see. If I have something on my chart, then I need to know it has earned the right to take its place there. I will have an expectation of it, to tell me its secrets. I need to have as many indicators and filters on my charts as I need to confirm my actions … but not more. If there are too many, then the purpose of having them there is defeated. Each filter chokes back the opportunities more. Each moving average and indicator screams “Look at me!” and soon you have a series of conflicting signals. We don’t want that. We want to keep it simple, and meaningful. We need to be able to look at every object on out charts, and KNOW why they are there, and WHAT it is that they are telling us. We'll take this further next time ... and hopefully get some real progress on designing our own strategy and system. _________________________ __________________ Posted in my Blog: http://forexapplepie.com/
  6. HAVING A SUCCESSFUL TRADING PLAN is STEP ONE to becoming a consistently successful trader, AND… it is actually the simplest part to accomplish. The tough part, for the vast majority of traders, is to control your emotions enough to run your tested trading plan without DOUBTING IT MID-STREAM. NOW THIS IS IMPORTANT… I’ve recently developed a concept called “Flashpoint!”™. The Flashpoint! for a trader is the moment in time where a trader makes the decision to either follow his/her trading plan command (good) or make an excuse not to (bad). In essence, all a trader does is make decisions at Flashpoints! … the plan gives you a signal, you take it (or not). Then after, say, taking the signal, a stop must be placed at a specific place according to plan.. another Flashpoint! A successful trader follows his or her plan without fail, where every Flashpoint! results in a decision to follow the plan… without hesitation. For most traders (every trader?).. this is a learned ability. Miriam Webster defines ‘flashpoint’ as… “a point at which someone or something bursts suddenly into action or being” WOW.. that’s perfect for a trader! OK… now I have a question for you…. “What Stops YOU From Making the RIGHT Decision Every Time (the decision to follow your trading plan)..when you reach a Flashpoint! ? I know that MOST of the time you may make the right Flashpoint decisions. But WHEN YOU DON’T.. what’s the reason? You see, your answer is VERY important. The market is not a forgiving environment.. and all it takes is one bad decision to ruin your trading results, and in extreme cases, even wipe out your account. Please dig deep and share your thought below.
  7. You read about the Gurus of trading. There’s a group of them that started with their last few dollars and ran it up to millions because of a simple strategy they can teach you. There’s another group of Gurus that claim hard work, long study and signing up for their newsletter will lead you to where you want to go. All Gurus want you to “learn from their mistakes.” They ask, “Why should you make all the mistakes I’ve made, when you can benefit from my experiences?” Now being somewhat of a Guru myself, I think there IS a certain truth to this query, but not the way you probably think. Other trader’s experiences can make you aware of what to expect as you embark upon your trading. Knowing what to expect should translate into having less “blindside” occurrences. However, when you come across the forewarned learning experience, emotions will come up. These emotional situations (fear, overconfidence, freezing) are up to YOU to handle. Here, if you’re going to be a successful trader, is where the learning takes place… in dealing with your emotions so that you can follow your trading plan. If you blow the situation, your supposed learn from it and go on. And learn from it, you must... or even the best trading system won’t save you from doom. Your Mental Toughness is going to be the key to whether you make it or break it as a trader. I know of two MAJOR things that you can do to develop your Mental Toughness for trading. The first is to keep a journal. I know that sounds like work, and who wants more paperwork at the end of the trading day? However, soon after you force yourself to start writing down your day’s trading experiences; you will see the power of the technique. It becomes the place where you will be honest with yourself. You’ll find after just a week or so of keeping a journal of your trading experiences, mistakes and all… especially mistakes… that when you are confronted with a trading situation that you blew before… in the back of your head you’ll know that if you do the same stupid thing again you’re going to have to report it to yourself…in your journal and… THAT will give you the strength to “do the right thing.” That’s the power of keeping a journal. Whether you just buy a spiral notebook (like I do) and start writing, or you make it a religious experience and buy something leather-bound… You will find that the discipline of keeping a journal, is a practice that will flat-out make you a better trader. The other way to get Mentally Tough is to train your mind with as much intention as exhibit when you test and run your trading system. There are a few psychologists I’ve bumped into over the years that seem to have enough of a handle on what training is … so they may be qualified to help a trader. But I prefer the process of literally programming the mind for discipline and focus, via putting the mind in an alpha brainwave state and then submitting the right suggestions to it. If you were to learn the simple rudiments of self-hypnosis, that, in my opinion, would be a great way to go. This way you could tell yourself exactly what you wanted! This is what Tiger Woods does for his golf game. Why not do something similar with your trading? Mental Toughness is my business. Make it part of yours. Keep a journal. Feed your mind. BIO: Norman Hallett is the co-founder and CEO of Subconscious Training Corporation (STC), headquartered in Parkland, Florida. STC develops state-of-the-art mental training programs, including The Disciplined Trader Intensive Program. Over his career, Mr. Hallett has developed numerous successful startup companies, including the investment firm of Hallett Commodities, Inc., and the Introducing Broker operation, NCH Commodities, Inc. Mr. Hallett holds a BA in Mathematics from the University of Cincinnati. His fascination with the investment industry lead him to grow several firms in his 21 year career in the financial arena. His high-profile style resulted in him being a frequent guest of the Financial News Network and culminated in his popular radio talk show, "Risky Business", which had a strong 5 year run.
  8. Ingot54

    Trading Systems

    TRADING SYSTEMS Before posting any trading systems here, I’ll show you how to construct your own system. Then you will be able to judge the suitability or otherwise, of specific systems for your own purposes. I need to remind you from the outset, that trading success relies less on the system used than on the skills of the user. And success does not depend on the number of indicators used, or on how mechanical or discretionary the system might be. And to pop the bubble of those who believe that getting a great entry is the best way to succeed, it should be noted that no profits are made until the trade is closed. First let’s look at the kinds of trading systems: 1) Mechanical Systems 2) Discretionary Systems 3) Proprietary Systems 4) Black/Grey Box Systems 5) EA’s and Robot Systems These are self-explanatory really, but I’ll quickly run through them to explain my own understanding of them MECHANICAL SYSTEMS: These are the simplest of all – If “A” occurs then the trader does “B”. It can be as simple as price crossing a specific moving average; or the crossing of two specific moving averages; or price crossing a trend-line. The process can become a little busier when other conditions are introduced as filters. These may include using indicators such as MACD, Stochastic, RSI, CCI, PSAR, Bollinger Bands, Price Envelopes and/or any number of specially constructed indicators. And for those who are taking their trading to higher technical levels, support and resistance, or supply and demand levels can be established. Signals are generated around a break-out or breach of these levels. This is where Mechanical Systems begin to overlap with Discretionary Systems. Sometimes the signal needs to be validated by the trigger signal occurring within the context of the “set-up filter” conditions occurring first. DISCRETIONARY SYSTEMS: These are usually based on Mechanical Setups, but the experience of the trader kicks in, and he exercises CHOICE about whether to take the signal, or ignore it or wait for further confirmation: eg what is the price of Gold or Oil doing; or if trading the AUDUSD, he may wish to check the chart of the EURUSD first. Some traders simply look at the chart and make their trading decision based on their experience. Very few systems are “pure” – they usually involve a combination of everything the trader has learned. This can also involve the use of Candle-sticks or OHLC bars, or even more exotic kinds of charting – Point-and-Figure, Heiken Ashi, Range Bars and so on. There are as many discretionary approaches as there are traders, I suspect. PROPRIETARY SYSTEMS: These systems are used by Institutions and Banks and so on, and are well-kept secrets. There are of course claims that “this is the system used by the XXX bank”, but such claims are baseless generally. The truth is that such large institutions normally base their trading on supply and demand, and have certain price targets they are trying to achieve. It is true that they may be using more sophisticated software than the general retail trader, but this neither gives them an advantage over the retail trader, nor any better guarantee of success. They may have their own private indicators, but it is unlikely that this renders any better advantage. In any situation, success or otherwise will be determined by the willingness of the trader to submit to the discipline of following specific and immutable guidelines. BLACK BOX SYSTEMS: These are best described as private indicators which are sold with the promise that they “made $xxx or zz pips/trade” over a period of time, and the exact formula and settings for the indicator are hidden “inside” the software. Unless the trader knows how to “crack the code” the setup remains a mystery. Traders purchasing these are taking on trust that the system will continue to perform in the future as well as it supposedly did in the past. GREY BOX systems usually have some user-adjustable parameters, and may or may not be used in conjunction with other setups, involving trader discretion. EA’s AND ROBOTS: (Expert Advisors and Automatic Trading Software) These are becoming more popular and there are even World Robot Trading Competitions these days, so that inventors can test their Robots and EA’s under live competition conditions. So far the success rate of these has been disappointing, but there are a few that have done OK. I suspect that the best ones have been locked up under contract to large institutions … and why not? Still, a very great effort goes into finding that elusive tweak in software that will deliver trading success … while you sleep! So … we have covered the main kinds of trading systems … except for the retail system market! I would just warn readers to be very careful when considering paying for a retail trading system of the kind you find advertised by spam and on the Internet. These have been around for years now, and are always mutating, evolving … and ultimately failing and disappearing! In any event, there are forums that deal with these now. In your “search” box, type in the name of the system you are interested in, and add the word “Scam”. This can tell you something of the experiences of others. But beware – the marketers are even ahead of you on this now, and set up sites to sell the product under the guise of refuting the scam claims! Do some research – ask around – join a forum – or simply devise YOUR OWN system. Chances are that you will trade much more successfully, because you will understand it, and you will “own” it yourself. In the next entry, we will get on with system construction … to be continued. _________________________ _________________ Posted in my Blog: http://forexapplepie.com/
  9. This is a small overview of what Global Market Trader are doing for traders just like yourself. We will update this section of this great forum often and keep you informed with videos, helpful hints and tips and help out where possible. At the moment we can't go past trading renko bars and the profits have been out of this world. Please keep an eye out on this thread as we show you why we are a leader in trading education and training for turning everyday traders into trading professionals. Regards Luke Ferguson Global Market Trader http://www.globalmarkettrader.com
  10. Trading firms put their money on poker experts By Nathaniel Popper, Los Angeles Times - May 16, 2010 A new breed of Wall Street recruit gets ahead not through connections or business experience, but through demonstrating a head for numbers, quick thinking and risk-taking – skills from the card table. Poker, anyone? Assistant traders play a round of poker during training at the Susquehanna Group in Pennsylvania. The game is part of the firm's training. Chris Fargis thought his big job interview was over. But when the partners at Wall Street upstart Toro Trading finished with their questions, they broke out a deck of cards and a green-felt card table. Mind playing a few hands of poker? It was a final test, and Fargis was relieved. The 30-year-old never went to business school or even took a finance class. But he knew poker. He had made a living playing the game online for six years from his Manhattan apartment, betting on up to eight hands at a time. Within a few days, Fargis — with no Wall Street experience — was offered a position trading stock options, a job that entails making multimillion-dollar gambles. His poker skills sealed the deal. "If someone's been successful at poker then there's a good chance they could be successful in this business," said Toro partner Danon Robinson. "If you have no interest, that's almost a red flag.... It's almost the equivalent of not reading the Wall Street Journal." There's a part of Wall Street — investment banking in particular — that looks for recruits with sterling family connections and impeccable educations, and that favors sturdy young men and women who played college team sports such as lacrosse and rugby. Toro Trading is not that Wall Street. Instead, it's one of the new breed of high-speed trading desks that are revolutionizing the financial markets, and making their money on the fractional gains from buying or selling a split-second ahead of their rivals. They look for job candidates who are quick-thinking, have nerves of steel and a head for numbers — the very skills that lead to success in online poker. "There's a certain maturity and ability to deal with risk that is hard to get any other way — unless you put the money on the table at some point in your life," said Aaron Brown, a hedge fund executive and author of the 2006 book "The Poker Face of Wall Street." Susquehanna International Group, a 1,500-employee trading firm based in a Philadelphia suburb, has made the card game a central part of its training program. New hires are given copies of "The Theory of Poker" and "Hold 'Em Poker" and spend one full day a week studying the game by playing it. "We are trying to teach people how to be good decision-makers under uncertainty," said Pat McCauley, who runs the training program. "It's not the stereotypical stuff with bluffing — it's real science." The rising popularity of online poker has created, in effect, a huge farm team for Wall Street trading desks. Last year, 6.8 million people played at least one hand of online poker for money, up 29% from 2008 and nearly triple the number in 2005, according to research firm PokerAnalytics.com. Wall Street's interest in poker players comes with a certain irony in the aftermath of a global financial crisis, which many blame on reckless risk-taking by big banks. The government's recent fraud lawsuit against Goldman Sachs targets just such behavior. And President Obama has proposed limiting speculative trading by banks with their own money. "There are many overwhelming, negative consequences associated with the Wall Street philosophical fixation on casino capitalism," said John Kindt, a University of Illinois business professor, citing the subprime mortgage meltdown and the derivatives deals that felled insurance giant American International Group. Even so, gambling appears to be in Wall Street's DNA. The book "Liar's Poker" by Michael Lewis captures the heady days of the 1980s when cigar-chomping executives and bond traders at Salomon Bros. would challenge each other to million-dollar wagers during down times on the trading floor. Poker was a popular diversion among the Wall Street crowd of the '80s, a go-go era that saw the start of a long bull market and a huge wave of corporate takeovers. The games of that era were clubby — and played in person. A talent for schmoozing was valued at least as much as playing ability, said Brown, who was a regular player. Poker then was more likely to lead to a job as a deal-making investment banker than as a trader. The fast-paced online poker games of today are a better proving ground for Wall Street's trading floors, which have long been places for unrefined upstarts and members of minority groups. Trading floors historically attracted loud characters with outsized desires, who made up for what they lacked in social skills and education with moxie. A penchant for betting big is still more important than connections for a would-be trader. But insiders say the typical personality profile has shifted toward that of a math nerd who understands probability and algorithms — the type of person likely to succeed in the nicety-free world of online poker. Adam Gilman, at AMR Capital Trading in New York, said young traders like him who honed their skills playing poker alone at home "are more analytical, less in-your-face macho meathead types." The similarity in personalities reflects the parallels between poker and trading. Internet poker players and traders both sit in front of multiple computer screens focusing on what they're holding — active hands for a player, open trades for a trader — and consider how to improve their positions. A trader looks for a security selling for slightly more or less than it should be — then pounces, buying and selling quickly to take advantage of the disparity. Similarly, a poker player constantly works through probabilities to determine when another player is betting more or less than makes sense given the cards on the table. Another important crossover skill: the ability to bounce back from big losses. When poker players interview at Group One Trading's office in Chicago, the director of recruiting and risk management, Dave Seidman, asks about their worst day, not their best: "I ask, 'How long did it take you to play again?' I want him to say, 'I played the next day; that's just part of the game.' " For players with these abilities, moving to Wall Street can mean a pay cut, at least in the short term. A talented online poker player can pull down well into six figures, players say. Gilman, at AMR Trading, said he made as much as $550,000 a year playing poker. Traders typically start with a base salary of only about $80,000, albeit supplemented by comparatively large bonuses. But poker winnings pale next to Wall Street's huge profit potential. "Our traders put up millions of dollars in real money on a daily basis," said Noah Minetz, 22, who played poker while attending the University of Illinois before he joined Group One late last year. "It's unlimited higher stakes and unlimited potential. Poker's cool, but it's not that." For Fargis, in addition to the money, there are the normal working hours and the camaraderie that he never got playing poker alone at home into the wee hours. He has co-workers at Toro to talk to — and make bets with. One recent morning, his colleagues smiled when he walked into the office. "It's good you're here because we're about to get a bet on," one said. The wager: whether one of the firm's partners could eat a banana split in less than a minute. Fargis pondered the odds and decided he liked them. A few minutes later, after the banana split was consumed, the former professional gambler was, once again, right on the money. Copyright © 2010, The Los Angeles Times
  11. Trading the OMNI live with O$CAR In another thread, a broker from NY (now trading out of Vegas), known to his many YouTube fans as "Oscar", was referenced. Since my reply was probably off-topic there, I've started a thread here for discussion. Curiously, I had come across one of his videos wherein he was speaking to a group down under about his services. I couldn't believe it when I saw him say how much he charges for a round-trip futures trade in the US markets (and presumably in US dollars, although it's just as egregious in Aussie bucks too). Just go to the 1hr 17min mark and you'll see it for yourself. Fifty (yes, 50) dollars a round trip. No typo or misquote here. In fact, at the 1hr 18min mark on the video he repeated his fee, just in case you didn't catch it the first time around. Unbelievable. So my question to everyone in TL land is...for any broker, full service or discount, is FIFTY dollars a round-trip ever justified? -fs
  12. THE DOUBLE CCI TRADING METHOD I'm using my own CCI trading method using some of Woodie's "observations" to trade stocks and eventually options. I have collected some sophisticated nuances for each set-up and I do keep an eye on the price. I call a Head & Shoulders a Head & Shoulders , not a Ghost. Same goes for Shamu and Famir... there are run of the mill continuation patterns. :missy: Anyone for "meows" or "batman" set-ups? :crap: I never visited Woodie's trading forum. Have read most that has been written by Jeff, DrBob and others. From what I read, I have concluded the the old man has reached senility and has a Napoleonic complex along with a small and closed mind. The use of the double CCI does not produce a leading indicator ... just another tool like the 14-day stochastic. By the way, the same set-ups that you get using the 6- and 14- day CCIs are EXACTLY the same as the ones produced by the 6- and 14- day exponential moving averages. If you doubt me, check it out in your charting system. :helloooo: ***** If anyone is interested in discussing the technicalities of trading with the dual CCI sytem, I'm game! I will frequently check this forum to see if anybody has come alive. SAM6691
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