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lastninja2

Quit Job to Watch DOM.

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I would reckon start out by learning to swing trade. That way, you keep your income and you can learn over time. Longer timeframe trading has parallels with day trading and when you are ready, if that's still what you want to do, move to day trading.

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Well IMO you failed to. You just did what I did, gave an opinion.

 

BTW how long have you been trading?

 

I was stating that I have evidence to the contrary. If you fail to believe me, that's your problem -- not mine.

 

I've been trading for about 9 years. I both position, swing and daytrade. I've been profitable since year one.

 

I don't want to waste my time arguing. It is factually incorrect to state that it "will take years".

If some can't comprehend that it's impossible to make such a claim, then I wish them all the best.

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I was stating that I have evidence ....

Well I can state I have evidence too without providing any.

 

As I said, I just providing my opinion for what its worth. Obvious not much to you.

 

Most all adults in this country can get behind the wheel of a car. Most don't truly know "how to drive" though. Even less are qualified to drive in the Indy or Daytona 500. Those who can didn't learn in days/weeks or months.

 

All skilled occupations are the same.

 

Good trading. I've said enough.

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Most all adults in this country can get behind the wheel of a car. Most don't truly know "how to drive" though. Even less are qualified to drive in the Indy or Daytona 500. Those who can didn't learn in days/weeks or months.

 

All skilled occupations are the same.

 

Agree in principle that skilled occupations take time and training to learn. But funny that you mention driving. I can guarantee you that most people simply cannot be trained to be a race car driver. From the first moment I got into a car, I have just known how to drive; at least, after the initial newness of it kind of sunk in, maybe a month or so. I have always driven manual trannys, and have always taken an aggressive approach to driving. I'm no race car driver and would need to be trained as such. But I am intuitively a good driver. Much more so than other stuff I have tried. So, I think it's possible that some people simply are more naturally attuned to certain activities. Doesn't mean we don't need some kind of training, of course.

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Agree in principle that skilled occupations take time and training to learn. But funny that you mention driving. I can guarantee you that most people simply cannot be trained to be a race car driver. From the first moment I got into a car, I have just known how to drive; at least, after the initial newness of it kind of sunk in, maybe a month or so. I have always driven manual trannys, and have always taken an aggressive approach to driving. I'm no race car driver and would need to be trained as such. But I am intuitively a good driver. Much more so than other stuff I have tried. So, I think it's possible that some people simply are more naturally attuned to certain activities. Doesn't mean we don't need some kind of training, of course.

Agree I am similar. There are also exceptions - a few that could teach others not long after they have learned something themselves.

 

But the vast majority (which I include myself) take time to truly do something well.

 

Anyone can click a buy/sell button. And after not too long a time become proficient. But I didn't get into trading to be proficient. I did to become the best I could be which means continuing to learn, learn, learn and not downplay the journey to others.

 

Many take that as being negative. So be it.

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Blue, I agree with small contracts scalping is absolutely not the way to go, that's not what I was eluding too, but if you have 2 contracts with the ability to take one off at a profit target of say 2:1 or 3:1 and trail the remaining contract the gains can really add up.

 

I thought it was about time that I did what I’m asking others to do, and put forward some actual figures to support my claims about the inadequacies of profitable scale-out strategies. So here are the results of testing a simple stop-and-reverse day-trading system, with various dollar profit exit methods.

 

The system sells when a 3 period moving average crosses above a 30 period moving average, and buys when a 3 period moving average crosses below a 30 period moving average (ie it ‘fades’ the MA crossover). It always trades 2 contracts, and it always uses a 4 point per contract stop-loss. The back-tests all use the @ES e-mini futures contract over a 5 year period. 30 minute bars were used. No commission or slippage has been deducted.

 

IMPORTANT: The profitability of this system is almost entirely due to the fact that the MA length parameters have been heavily optimised. It is used here as an example. Unless you want your broker to fall in love with you, please do not attempt to use it in live trading or you will most likely lose money. In the 4 months following the back-test period this system has consistently lost money.

 

Here is the performance when we scale out of one contract for a 2 point profit, and the other for a 4 point profit:

 

Total Net Profit: $60,925

Profit Factor: 1.17

Percentage Profitable: 58.7%

 

If anyone wants to see equity curves etc then let me know and I will upload them.

 

Next are the results of scaling out of the first contract for a 4 point profit, and the second contract for a 6 point profit:

 

Total Net Profit: $79,812

Profit Factor: 1.16

Percentage Profitable: 57.93%

 

Finally, we have the results of simply exiting both contracts for a 4 point profit – in other words, not scaling out at all:

 

Total Net Profit: $166,800

Profit Factor: 1.23

Percentage Profitable: 65.48%

 

I would like to point out that the ‘un-scaled’ 4 points per contract profit target is not the optimum target (this would have been 7 points per contract, which goes some way to explaining why the 6 point late scale-out fared better than the 2 point early scale out).

 

This is why I think Tim Racette's advice in this thread to scale out is poor - I believe that you will find that what you see above repeats itself in pretty similar form for any strategy. And before anybody starts quoting Karl Popper’s falsification principle at me, I am fully aware that I can produce dozens of examples to support my argument, but that it only takes one counter example to discredit it. . .

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No, mine are as irrelevant as yours.

 

There is nothing stopping anyone on this board from approaching a reputable prop firm and receiving decent training.

 

However, the simple fact is that if we are referring to price action trading, which is among the most popular approaches on online message boards, it all comes down to pattern recognition and intuition. It's more of an innate ability than something learned, but one, of course, needs a little time to cultivate one's predisposition.

 

It is factually incorrect to state that it "will take years", and I felt compelled to clarify that.

 

I have had significant experience both trading and training....what I find is that each individual takes their own time to learn based on background, education, temperment, available capital and limitations on the time they can devote to the project. Iironically those who don't "need" the money, and do not wish to become professionals....are doing very well...while those who say they are interested in achieving professional status and believe that the potential to make money is very important are by and large doing less well (breakeven or slightly better)....for those who are doing less well, I attribute this to an inability to manage emotions, and more specifically an inability to manage the idea of periodic loss...in fact at the end of this time period all of them will be asked to stop and trade on their own....in my opinion, whether they "make it" or not, will depend on their own motivation to succeed and to break through their own psychological barriers....and before anyone posts comments, I have nothing to sell....

 

Good luck

Steve

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I would reckon start out by learning to swing trade. That way, you keep your income and you can learn over time. Longer timeframe trading has parallels with day trading and when you are ready, if that's still what you want to do, move to day trading.

 

Couldn't agree more. There's so much that swing trading teaches you when it comes to designing a system and being able to follow it exclusively. Plus, it's a great alternative to sitting in from of the screen all day and can be integrated much easier into your current lifestyle, that is, if you work a job.

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Couldn't agree more. There's so much that swing trading teaches you when it comes to designing a system and being able to follow it exclusively. Plus, it's a great alternative to sitting in from of the screen all day and can be integrated much easier into your current lifestyle, that is, if you work a job.

 

My opinion is totally the opposite. I have long, long, long term holdings and I also day trade. I do not swing trade,

 

I trade discretionary, I use a chart for context and I use the ladder for entry for the ES. For US treasuries, I do not use a chart, there is no need in these markets, it tells you so little as there are so few swings. The volume profile tells you where the action was and that is enough. On more swingy markets, the volume profile is less relevant and the intraday swings more relevant.

 

The skills I use to trade this are not transferrable to swing trading. Day Trading is a very specific set of skills. I cannot day trade all markets, I focus on the ES and US Treasuries.

 

At the moment, I wouldn't even know where to start on the CL. Even between different markets the skills of Day Trading are not easily transferrable.

 

As I said, my opinion is the opposite. Swing trading will not really help you to become a profitable day trader. Systems won't help you to become a profitable day trader either. The OP is on the right track. He's learning how to read the market. This is ultimately what you need to do if you want to make money intra-day. This does not mean you trade at random and it does not mean you are without rules or guidelins. It's just not systematic.

 

It's not easy BUT learning how to read the market is a lot easier embarking on a never ending quest for a mechanical day trading system which is what a lot of traders get hung up on.

 

In terms of sitting in front of the screen. I've never met a trader that made money in 15 minutes a day. It requires time & attention. I think the "sitting in front of a screen all day" argument against day trading isn't valid. Trading is hard work.

 

DT

Edited by DionysusToast

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Swing trading will not really help you to become a profitable day trader.

 

I agree but I do think the converse is true - that once you've got on top of intraday swing/position trading is more obvious. Once you understand the auction, you understand the auction.

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I would reckon start out by learning to swing trade. That way, you keep your income and you can learn over time. Longer timeframe trading has parallels with day trading and when you are ready, if that's still what you want to do, move to day trading.

 

A little off topic but, what is swing trading and how do you do it?

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FWIW the best two pieces of advice I can give to any aspiring Futures Trader would be to

a) Enable trade sounds (bleeps) on MD_Trader if you use it [really get immersed in the action]

 

:anyone:

Thanks for the advice.

Do you hear the beeps even when your computer is off?:)

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Thank you lastninja2.

 

lastninja2, or anyone else who might know the answer to this,

 

What do these sound bleeps identify? Does the sound intensify as volume increases? Is this a direct result of the volume increase or a separate algorithm within the dom that increases simultaneously with volume? What I'm trying to determine is which components I would need to declare as variables? ...to create the sounds? ....or convert the sounds to a visual representation of what they are measuing?

 

Enable trade sounds (bleeps) on MD_Trader if you use it [really get immersed in the action]

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Hi BlueHorseshoe

 

Thanks for the simulation example. It appears to be a good illustration of your point, but I am slightly worried about the third case ie:

 

Total Net Profit: $166,800

Profit Factor: 1.23

Percentage Profitable: 65.48%

 

Why is the "percentage profitable" higher in this case than in the first case. I would have thought there should be a higher percentage of targets met with the first contract at 2 points target than at 4 points, so wouldn't the overall percentage be higher in the first case than the third case? Or perhaps I am just mis-understanding the meaning of "percentage profitable"

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I thought it was about time that I did what

I’m asking others to do, and put forward some actual figures to support

my claims about the inadequacies of profitable scale-out strategies. So

here are the results of testing a simple stop-and-reverse day-trading

system, with various dollar profit exit methods.

 

The system sells when a 3 period moving average crosses above a 30

period moving average, and buys when a 3 period moving average crosses

below a 30 period moving average (ie it ‘fades’ the MA crossover). It

always trades 2 contracts, and it always uses a 4 point per contract

stop-loss. The back-tests all use the @ES e-mini futures contract over a

5 year period. 30 minute bars were used. No commission or slippage has

been deducted.

 

IMPORTANT: The profitability of this system is almost entirely due to

the fact that the MA length parameters have been heavily optimised. It

is used here as an example. Unless you want your broker to fall in love

with you, please do not attempt to use it in live trading or you will

most likely lose money. In the 4 months following the back-test period

this system has consistently lost money.

 

Here is the performance when we scale out of one contract for a 2 point

profit, and the other for a 4 point profit:

 

Total Net Profit: $60,925

Profit Factor: 1.17

Percentage Profitable: 58.7%

 

If anyone wants to see equity curves etc then let me know and I will

upload them.

 

Next are the results of scaling out of the first contract for a 4 point

profit, and the second contract for a 6 point profit:

 

Total Net Profit: $79,812

Profit Factor: 1.16

Percentage Profitable: 57.93%

 

Finally, we have the results of simply exiting both contracts for a 4

point profit – in other words, not scaling out at all:

 

Total Net Profit: $166,800

Profit Factor: 1.23

Percentage Profitable: 65.48%

 

I would like to point out that the ‘un-scaled’ 4 points per contract

profit target is not the optimum target (this would have been 7 points

per contract, which goes some way to explaining why the 6 point late

scale-out fared better than the 2 point early scale out).

 

This is why I think Tim Racette's advice in this thread to scale out is

poor - I believe that you will find that what you see above repeats

itself in pretty similar form for any strategy. And before anybody

starts quoting Karl Popper’s falsification principle at me, I am fully

aware that I can produce dozens of examples to support my argument, but

that it only takes one counter example to discredit it. . .

 

 

First this is not a mathematical proof (as you requested it from

others), just showing some numbers from an example.

 

 

The result of the example is in favor of the "exit all" strategy.

This is simply achieved by the parameters chosen (far from showing a

general rule or giving a proof):

 

I would like to point out that the

‘un-scaled’ 4 points per contract profit target is not the optimum

target (this would have been 7 points per contract.

 

So it is just logical that in an example where the optimum target is 7

points "scaling out" before target 7 points is inferior to "exit all" (as rluc99 understood).

 

In other words: An example was chosen where the parameters were in favor of the strategy proposed (exit all).

 

 

If one is not trading (or producing an example) in hindsight it's more like this:

1. The probality of finding a strategy that is good for just a few points is much higher than to find a strategy that is good for many points.

2. Trader enters (say with 3 contracts) when such a small target strategy that he found gives a signal

3. Trader exits 1 contract when small target reached, leaves 2 contracts, moves stop loss to break even

4. Trader lets the remaining contracts run and exits by some discretionary rules (e.g. exit 1 contract at noon, exit remaining last contract previous to close of the day....). He doesn't know where price will be by this time but once in a while he will hit a homerun.

 

That's trading without assuming one can "predict" something.

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Well I can state I have evidence too without providing any.

 

As I said, I just providing my opinion for what its worth. Obvious not much to you.

 

Most all adults in this country can get behind the wheel of a car. Most don't truly know "how to drive" though. Even less are qualified to drive in the Indy or Daytona 500. Those who can didn't learn in days/weeks or months.

 

All skilled occupations are the same.

 

Good trading. I've said enough.

 

I did not claim one could achieve mastery in such a short period of time, but I made the claim that it is possible to reach a level of proficiency where one could live off it.

 

The discussion is rather futile, at least with regard to most kinds of trading. Some have relevant degrees, others have not. Some are mathematically inclined, others detest math.

 

Just like in sports, the sciences, music, etc it is possible to be naturally suited for trading. It is probably a prerequisite for achieving mastery. For some reason most claim that trading is exempt from needing talent to excel, but it's pretty evident that they are wrong.

 

The lowest common denominator for trading is, of course, price action and/or scalping. It requires no formal education, but I would argue that it requires talent. It should not take more than a year to be able to make a living from it, if one is suited for that particular style of trading.

 

If you haven't gotten any viable ideas after watching price action for about 6 months, you are probably better off spending time pursuing other styles of trading.

 

Agree I am similar. There are also exceptions - a few that could teach others not long after they have learned something themselves.

 

But the vast majority (which I include myself) take time to truly do something well.

 

Anyone can click a buy/sell button. And after not too long a time become proficient. But I didn't get into trading to be proficient. I did to become the best I could be which means continuing to learn, learn, learn and not downplay the journey to others.

 

Many take that as being negative. So be it.

 

That is not true; most never even become proficient.

 

The few make a lot of money, while the rest are just losing money at various paces.

 

You are right about constantly adapting/learning, of course. I was not the one downplaying the journey of others...

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I totally agree with the sentiment of your post. However, finding people who are consistently profitable in their trading, who are willing to provide evidence of this, and who are willing to give any kind of mentoring or guidance to new traders, is extremely difficult.

 

I think we are at a far greater disadvantage in this respect than traders in previous decades: twenty years ago if you were really serious about becoming successful then you moved to Chicago, leased a seat at one of the exchanges for a few months, and gained instant access to some of the most profitable traders in the world.

 

What is the equivalent of that in 2012 for the screen trader?

 

LOL.

 

Not quite.

 

If you'd have walked on to the CBOT floor and asked anyone how to trade - even after a few months, the only thing you'd have learnt is that you're considered a mug. You'd have been raped. Trust me. I used to be a local.

 

Just like if you walk into any prop firm today and ask the top traders how to trade you'll probably be told to go where the sun dont shine.

 

Remember its a zero sum game less costs. Thats why no one is going to tell you sh!t unless they have a share in you're p&l. If they did tell you anything for free, you'd be taking a piece of their business/edge.

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I thought it was about time that I did what I’m asking others to do, and put forward some actual figures to support my claims about the inadequacies of profitable scale-out strategies. So here are the results of testing a simple stop-and-reverse day-trading system, with various dollar profit exit methods.

 

The system sells when a 3 period moving average crosses above a 30 period moving average, and buys when a 3 period moving average crosses below a 30 period moving average (ie it ‘fades’ the MA crossover). It always trades 2 contracts, and it always uses a 4 point per contract stop-loss. The back-tests all use the @ES e-mini futures contract over a 5 year period. 30 minute bars were used. No commission or slippage has been deducted.

 

IMPORTANT: The profitability of this system is almost entirely due to the fact that the MA length parameters have been heavily optimised. It is used here as an example. Unless you want your broker to fall in love with you, please do not attempt to use it in live trading or you will most likely lose money. In the 4 months following the back-test period this system has consistently lost money.

 

Here is the performance when we scale out of one contract for a 2 point profit, and the other for a 4 point profit:

 

Total Net Profit: $60,925

Profit Factor: 1.17

Percentage Profitable: 58.7%

 

If anyone wants to see equity curves etc then let me know and I will upload them.

 

Next are the results of scaling out of the first contract for a 4 point profit, and the second contract for a 6 point profit:

 

Total Net Profit: $79,812

Profit Factor: 1.16

Percentage Profitable: 57.93%

 

Finally, we have the results of simply exiting both contracts for a 4 point profit – in other words, not scaling out at all:

 

Total Net Profit: $166,800

Profit Factor: 1.23

Percentage Profitable: 65.48%

 

I would like to point out that the ‘un-scaled’ 4 points per contract profit target is not the optimum target (this would have been 7 points per contract, which goes some way to explaining why the 6 point late scale-out fared better than the 2 point early scale out).

 

This is why I think Tim Racette's advice in this thread to scale out is poor - I believe that you will find that what you see above repeats itself in pretty similar form for any strategy. And before anybody starts quoting Karl Popper’s falsification principle at me, I am fully aware that I can produce dozens of examples to support my argument, but that it only takes one counter example to discredit it. . .

 

Hello again,

 

sorry, i think you've missed the point.

 

Tim R was talking about eliminating price risk quickly, leaving the trader with execution risk only. I didnt read his post as the merits scaling out or not (or am I mistaken??).

 

The quicker a new trader eliminates as much risk as possible, the easier (IMO) he/she will be able to view the market objectively.

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LOL.

 

Not quite.

 

If you'd have walked on to the CBOT floor and asked anyone how to trade - even after a few months, the only thing you'd have learnt is that you're considered a mug. You'd have been raped. Trust me. I used to be a local.

 

Just like if you walk into any prop firm today and ask the top traders how to trade you'll probably be told to go where the sun dont shine.

 

Remember its a zero sum game less costs. Thats why no one is going to tell you sh!t unless they have a share in you're p&l. If they did tell you anything for free, you'd be taking a piece of their business/edge.

 

I wasn't suggesting that you could sidle up to any local and they'd reveal exactly how they trade. I simply said that you had access to them. Are you trying to tell me that watching one of the best traders on the floor of the CBOT and trying to model them wouldn't be beneficial to most newbies?

 

If I came and stood next to you in the pits, then you wouldn't even speak to me, sure, but maybe I'd stand and watch you lose, watch how you responded to that loss, and think to myself "hmm, look at this guy, he just dealt with it calmly and now five minutes later he's got a profitable position on; last time I had a losing trade like that I just let it go indefinitely against me and hoped it would come back, maybe that wasn't the right thing to do . . ." Sounds like a learning experience to me.

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The quicker a new trader eliminates as much risk as possible, the easier (IMO) he/she will be able to view the market objectively.

 

I think you (and plenty of others on here) are confusing 'eliminating risk' with 'eliminating the opportunity for profit'. No risk means no reward guys, there's no two ways about it. If you start jamming your stop in at break even all the time then you're not doing yourself any favours, however good it feels.

 

If you're trading systematically, then there's no need to worry about 'viewing the market objectively'. Your views of the market will become irrelevant.

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First this is not a mathematical proof (as you requested it from

others), just showing some numbers from an example.

The result of the example is in favor of the "exit all" strategy.

This is simply achieved by the parameters chosen (far from showing a

general rule or giving a proof):

 

Of course it's not a 'proof'. No matter how many examples I provide in favour of a generalising statement of this kind, then it will still take only one single counter example to disprove it. It's called the 'falsification principle'. I made it abundantly clear in my post that I was aware of this fact. I studied the philosophy of science for three years at one of the best universities in the world, so you'll excuse my being a little short tempered with your patronising and unnecessary need to point this out.

 

So I can't provide a proof for my claim, but what I am requesting from others, a proof of the incorrectness of my claim, could be very easily provided.

 

While I can assure you that I didn't sit down and deliberately search for a set of parameters that supported my claim, it may be that I have inadvertently done so. But where are the posts from any of you giving a concrete example of where scaling out does work? You can optimise away all you want, it doesn't matter - one concrete example and I have to shut up and go away.

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Hi BlueHorseshoe

 

Thanks for the simulation example. It appears to be a good illustration of your point, but I am slightly worried about the third case ie:

 

Total Net Profit: $166,800

Profit Factor: 1.23

Percentage Profitable: 65.48%

 

Why is the "percentage profitable" higher in this case than in the first case. I would have thought there should be a higher percentage of targets met with the first contract at 2 points target than at 4 points, so wouldn't the overall percentage be higher in the first case than the third case? Or perhaps I am just mis-understanding the meaning of "percentage profitable"

 

Hello,

 

You're not misunderstanding 'percentage profitable' at all, so it's a very good question. It highlights something un-stated in how I backtested to get these results . . .

 

In addition to exiting positions according to the relevant scaleout rules, the strategy also exited positions when an opposing entry signal was given. In other words, to enter long, the strategy did not require that you were flat (and similarly for shorts).

 

So while there might have been a higher percentage of 2 point targets met than there were 4 point targets met, a proportion of the positions entered with a 4 point target would have closed out for a profit without that 4 point target ever having been met.

 

Please bear in mind that although I tried to choose something really simple with which to demonstrate my point, the way in which the different elements of even a very simple system interact with different parameters can be complex. You could quite reasonably complain that my example is far from ideal in that respect.

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I've asked the moderator to delete your post in which you claim you are NOT a vendor. You ARE a vendor claiming you are not a vendor.

 

If it is permissible for you to notify thread participants you are NOT a vendor then it is permissable to notify thread participants you ARE a vendor.

 

 

 

I have had significant experience both trading and training....what I find is that each individual takes their own time to learn based on background, education, temperment, available capital and limitations on the time they can devote to the project. In my own classes ironically those who don't "need" the money, and do not wish to become professionals....are doing very well...while those who say they are interested in achieving professional status and believe that the potential to make money is very important are by and large doing less well (breakeven or slightly better)....for those who are doing less well, I attribute this to an inability to manage emotions, and more specifically an inability to manage the idea of periodic loss...my class is scheduled to run for 12 more months, however several of my students are making good money now and in my opinion, could go off on their own if they chose to do so....in fact at the end of this time period all of them will be asked to stop and trade on their own....in my opinion, whether they "make it" or not, will depend on their own motivation to succeed and to break through their own psychological barriers....and before anyone posts snippy ignorant comments , my class is closed, I have nothing to sell....no website only a blog (google blogspot) and on that blog I state clearly that I am not accepting new students....

Good luck

Steve

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    • Date : 23rd January 2020. How To Improve Your Trading Mindset 23rd January 2020.Our Head Market Analyst, Stuart, explains how to improve your Trading Mindset. Understand the importance of emotional control and discipline through an unmissable Q&A session.Always trade with strict risk management. Your capital is the single most important aspect of your trading business.Please note that times displayed based on local time zone and are from time of writing this report.Click HERE to access the full HotForex Economic calendar.Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE!Click HERE to READ more Market news. Stuart Cowell Head Market Analyst HotForex Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • Bitcoin: Upcoming Halving And What To Expect Bitcoin’s upcoming halving will be one of the most followed crypto-related occasions in the year 2020. Thousands of cryptocurrency enthusiasts will be observing the markets eagerly to witness what effect this year’s halving will have on the cryptocurrency. Many believe that the occasion would have a positive effect on BTC’s price as has been observed in the past. On the other hand, some are expecting the price to drop dramatically after the occasion. Whatever the result may be, it is apparent that this occasion will be a defining juncture for Bitcoin. In this review, we breakdown what the Bitcoin halving is all about, some effects of this occasion, historic occurrences, and what to anticipate from this year’s halving occurrence. Bitcoin was built on a system that mandates regular halving (also known as Halvenings) to sustain its value. The halvings are programmed to happen every 4 years. Already, Bitcoin has witnessed two halving processes, the first in 2012, and the other in 2016. The next halving process is scheduled for the 20th of May 2020. Bitcoin’s Value Preserving Strategy Bitcoin runs on a deflationary economic model which ensures that over time, lesser and lesser Bitcoin tokens will be created until finally, the creation of new Bitcoin tokens will end. BTC’s total supply is capped at 21 million, meaning that it is impossible to have more than that exact number of Bitcoin token in circulation at any point in time. It has been estimated that the very last Bitcoin token will be mined in the year 2140. Bitcoin’s deflationary model predisposes it to scarcity which increases in demand, thereby causing its value to increase as well. This model is different from traditional fiat which is based on an inflationary model, this means that banks can instruct for the printing of more banknotes at will. This is not an ideal practice per se as a boost in the volume of banknotes in circulation could result in the devaluation of that currency. Bitcoin’s “Block Reward” System New Bitcoin tokens are pumped into the market through a popular process known as cryptocurrency “mining”. Bitcoin miners get rewarded with a Bitcoin “block” allotment every time they successfully solve transactions. The blocks are allotted by the Bitcoin algorithm. The block rewarding process happens every ten minutes. So in fact, ten minutes from this moment, new Bitcoin tokens will be created. Mining is not an easy process. It requires a certain level of expertise, specific hardware, and a serious quantity of electricity. After the inception of Bitcoin, the first mining reward was fifty Bitcoin. This meant that every ten minutes, a Bitcoin miner received fifty Bitcoin tokens for solving transactions. That number has since been halved, twice, and is now at 12.5 Bitcoin token per block reward. By May this year, the halving will bring that figure down to 6.25 Bitcoin token per block reward. This feature has been pre-programmed into Bitcoin’s system. What This Could Mean for Mining Lesser block rewards are not the only reason Bitcoin is scarce. It has gotten significantly harder to mine Bitcoin and receive rewards. This is because mining is now more difficult as more miners are entering the system thereby increasing competition. Consequently, an increase in competition means miners require more sophisticated tools to solve cryptographic Algos. Over the years, miners have created what is known as “mining pools” to better handle the rising competition of mining. Mining pools are a network of miners, collectively working towards achieving block rewards. Block rewards in mining pools are distributed according to the percentage of effort put into earning a block. Improved Stock-To-Flow Ratio Halvings have several profitable impacts on Bitcoin. One such effect is that it boosts the Stock-To-Flow ratio of Bitcoin. A commodity’s STF ratio is calculated by dividing the quantity of the asset held in reserves, by the quantity manufactured in a year. The greater the STF ratio, the lesser the annual inflation on that asset. Commodities like gold possess a very impressive STF ratio as its available quantity is limited. Presently, Bitcoin has a significantly lesser STF ratio, unlike gold. Regardless, more halving occasions will boost the Bitcoin’s STF ratio. It is even believed that someday, Bitcoin will surpass gold in the STF ratio rating and will be an even better store of value. This is probably why Bitcoin is dubbed “digital gold”. After-Effects of Previous Halvenings 2012’s Halving The first Bitcoin halving happened on the 28th of November. On that day, the cryptocurrency recorded a 6.5% trade range. Regardless, to the surprise of many, the price remained at a consolidated state months after the occasion. This was partly because Bitcoin was still in its infancy and so, not many people were engaged with it. Also, media coverage at the time was not what it is today, which means many people were not informed of what was going on. Based on the information on Bitcoin’s BNC Liquid Index, the price of BTC attained a high of about $32 on the 8th of June 2011. The price of BTC never broke above the $32 mark until the 28th of February 2013 (4 months later), where price witnessed a climb to $260 after which a drop was experienced and the price stayed below that level for several months. Fast forward to the 30th of November 2013 (close to a year after the 2012 halving), Bitcoin rallied dramatically and peaked at $1,167, which was a whopping 9,686% increase from the initial price of $11 on halving. 2016’s Halving On the 9th of July 2016, the second halving, the price peaked at $664 but did not maintain that uptrend instead fell to $626 on the same day. Subsequently, the price continued on that downward trajectory for about three months. However, things started looking up for Bitcoin from the 27th of October 2016 when price closed above the previous halving’s high of $664. Bitcoin later proceeded to smash its last all-time high of $1,167 on the 23rd of February 2017. This spike started the famous bull rally of 2017 through 2018, which witnessed a peak at $20,000 sometime in December 2017. 2016’s halving shot Bitcoin’s price from $664 to $20,000 which was a growth of 2,912%. Possible Outcomes of this Year’s Halving? In the crypto sector, the Bitcoin halving is undoubtedly among the most talked-about and anticipated occasions of the year. Presently, there are mixed expectations as to what the outcome of the 2020 halving may be. Many in the crypto sector are very optimistic and believe that, just as in the past, the price will soar dramatically either before or after the occasion. Creator of Kraken, Jesse Powell expects the price of Bitcoin to rise close to $100k or 1 million after the halving. The CTO of Morgan Creek Digital Assets also shares the belief of Jesse and expects Bitcoin to reach the $100,000 mark by 2021. He says that scarcity is a driving force for the demand of any commodity. He explains that the 2020 halving will cause Bitcoin to be more scarce. Other crypto players believe that this year’s occasion will not have a similar trajectory with past occasions and would, instead, mar the price of Bitcoin. Another possible scenario that has been observed over time is the “buy and dump” case. This scenario usually plays out when there is a highly anticipated occurrence. It works exceptionally well when the upcoming occasion is sure to have a quantifiable effect on supply and demand dynamics. The price of the asset in question experiences a huge spike just days or a few weeks to the main event. This transpires because investors stock up on the asset towards the event. After the event, however, the price of the said asset drops significantly. This kind of activity has transpired frequently in the cryptocurrency space. One such occasion was the Bitcoin futures trading releases for the CBOE and CME. Just a few days to the CME’s release, the price of Bitcoin rallied from $6,400 and peaked close to its all-time high of $20,000 in a day. Not surprisingly, the price dropped considerably in the period that followed those releases. Furthermore, some cryptocurrency experts believe that the aftermath of the halving has already been priced in. It has been observed that demand is “missing” in the Bitcoin market, this could be a clear indication that the halving has been priced in. Usually, months before a halving, a boost in demand and price of Bitcoin is always noticeable. This time, however, no increase can be observed in neither of the stated areas. In this case, it could lead to a lateral trading period which might be a good thing for traders. At the moment, Bitcoin is still struggling to break above the $7,200 mark and there are no signs of a reversal happening soon. Whatever the result may be one thing is for sure, the price of Bitcoin is set to experience drastic changes this year.   Source: https://learn2.trade 
    • Your All-Round Guide To Security Token Offerings Security token offerings (STOs) are one of the most revered investment options in the crypto space at the moment. It has even been termed the “future of fundraising”. But what exactly are STOs and what is the rave all about? This article aims to break down STOs, what it is all about, and how it can be beneficial to you. What Exactly is a Security Token Offering? STOs, simply put, provide a means of tokenizing fungible financial assets such as stocks, bonds, and REITs, and introduces the tokens to the public through regulated channels. STOs are a lot like ICOs as they generally involve the same processes. However, the differentiating factor between STOs and ICOs is in the tokens being sold. With ICOs, the tokens are usually non-descriptive and could range from anything digital currencies to utility tokens. With STOs however, the token is a “security”, meaning that it is exchangeable and possesses a set monetary value. Breakdown of Security Tokens Security tokens function as digital versions of the assets they represent. Here’s a list of some popular security token representations: 1- Capital markets: Firms can convert their shares into tokens, allowing investors to own parts of the firm. In some cases, owners of tokens receive dividends and can execute votes on the affairs of the firm. 2- Equity funds: Equity funds can also tokenize their shares for sale. 3- Commodities: Commodities like gold, natural gas, coffee can be tokenized. 4- Real estate: The equity of this asset class can be tokenized, much like how REITs function. STOs do not change the underlying securities, instead, it makes these assets more readily accessible on a digital platform. Unlike other digital assets, security tokens can only be traded on certain regulated exchanges. Some exchanges require interested investors to meet some set qualifications. Advantages of STOs STOs are formulated with regulatory-compliance in mind, unlike ordinary token sales. Security tokens provide its owners with several legally binding rights. Some security tokens even bestow its owners with rights to dividends or other defined streams of income. Security tokens are also beneficial to their issuers. From the onset, the entities issuing the tokens are aware that their tokens are being purchased by accredited and verified investors and so, they don’t have to worry about the credibility of their investors. Other advantages of STOs include: 1- It is adequately regulated: Entities issuing security tokens must operate under the guidance of designated regulatory agencies in the region like SECs and FTCs. 2- You can rest assured that STOs won’t falter in the future: Unlike ICOs that cannot be guaranteed, STOs are sure to always deliver because it is properly regulated. 3- STOs offer great convenience: Procuring security tokens is easy, straightforward, and stress-free. All you need to do is to adhere to the STO requirement in your jurisdiction and you’re good to go. 4- It can be programmed: Security tokens are programmable and can be facilitated by smart contracts. 5- Automated dividend disbursement and voting: Some security tokens are structured to send dividends automatically through smart contracts. Also, some security tokens provide the bearer with exclusive voting rights in the affairs of the entity offering the tokens. 6- It is a globally accessible investment vehicle: Investors across the globe can procure security tokens regardless of their location. 7- It is not susceptible to manipulation: Considering the mode of operation STOs are run by, big players cannot manipulate its movements. 8- STOs are very liquid: It is a very promising investment option as it has an impressive liquidity quality and can be traded easily. With benefits like these, STOs are for sure transforming the fundamentals of the financial sphere. Disadvantages of STOs As with every other form of investment, security tokens has its limitations and shortcomings. Some of these limits are: 1- It is considerably more costly than utility tokens: STOs, unlike ICOs, hosts many organizations in their fundraising campaigns. Also, regulatory fees are not cheap which makes it more capital-intensive to host STOs. 2- Investor Qualifications: Countries like the US have certain qualifications an investor has to scale before becoming eligible to engage STOs. According to the SEC to be an “Accredited investor”, you must have an annual income rate of $200k and above or a minimum of $1 million in the bank. 3- Specific trading conditions: STOs can only be traded on certain designated exchanges. Also, these tokens are time-bound meaning that you are allowed to trade these tokens between investors for a set period after the STO. The Howey Test Usually, tokens are said to be securities, by law, when they pass certain thresholds. One such way to identify a security instrument is by applying the “Howey Test”. But first, let’s look at a piece of quick background information on how the Howey test came to be. In 1944, a citrus plantation called the Howey company of Florida leased out a large portion of its land to several investors in a bid to raise funds for much-needed developments. The buyers of the land were not skilled or versed in citrus farming in any way and decided instead to just be “speculators” and let the experts do their jobs. The lease was made on the premise that profits would be generated for the investors by the lessor. Not long after the business transaction the Howey company was sanctioned and accused by the United States SEC of failing to register the sale with the authority. The SEC maintained that the company was dealing with unregistered security. Howey denied the claims however, assuring that what it offered wasn’t a security. After much debate, the case ended up in the Supreme Court, which later ruled in favor of the SEC that Howey’s land leasing were undoubtedly securities. It remarked that investors were purchasing land mainly because they saw an opportunity to make a profit off the deal. Howey was then ordered to register the sale. This was the story of the enactment of the Howey test. Today, per the Howey test, anything is deemed to be a security if it satisfies the following criteria: 1- The investment included money. 2- The investment was made on an enterprise. 3- Profit will be made from the efforts of the providers of the investment. The Howey test has become a stronghold name in the crypto space. In 2017 and 2018 (during the “Heydey boom”), many ICO providers were completely consumed with scaling the Howey test as it was a major determinant used in ascertaining the legality of an ICO by the SEC. Failure to pass the test meant the offering was illegal and was sanctioned by the authorities. Some ICOs even advertised their tokens as investment instruments that had no value, describing their tokens as “utilities” used only for interactions on the platform. The Inception of STOs The very first STO was released by Blockchain Capital on the 10th of April 2017. The release pooled about $10 million in one day. Several STOs have been released following the first event including tZero, Sharespost, Aspen Coin, Quadrant Biosciences, and many more. STOs have since gained widespread acceptance and relevance in today’s market. Understanding the Distinction Between Security Tokens and Tokenized Security Confusing security token for tokenized securities is a common trap that people fall into. The main distinction between the two is that the former is usually a recently issued token that functions on a distributed ledger system while the latter is just a digital manifestation of pre-existing financial instruments. Apart from similarities in appearance and nomenclature, security tokens have absolutely nothing in common with tokenized securities. What Entities are Involved in an STO Issuance? Assuming a business entity plans on issuing security tokens as an embodiment of equity in its establishment, the next necessary step for that business would be to involve certain players and follow certain directives. It has to formally contact an issuance platform to serve as a medium for issuing the tokens. Popular issuance platforms include Polymath and Harbor, which consist of service providers like custodians, broker-dealers, and legal entities to carry out secure processes. Who Can Invest in STOs? STOs are available to the general public for the taking, regardless of location. However, as mentioned previously, the US has certain rules guiding STO investments. In the US, it is mandatory to be an “accredited investor” before you can invest in this instrument. An accredited investor is an individual with an annual cash flow of $200k and above for at least 2 years or a net worth of $1 million and above. More nations are starting to adopt the United States’ classification method and have begun restricting certain classes from investing in STOs. It is advisable to always research on the STO rules and regulations of the jurisdiction you’re planning on investing with. Final Word STOs provide businesses with the prospect of raising funds in an easy and regulated setting. It gives both investors and issuers a good deal of benefits, while also ensuring insurances against fraudulent or malicious practices, unlike ICOs. Issuers are not limited to any industry, they can vary from several sectors including real estate, VC firms, and small and medium enterprises. Moving forward, we will likely witness prominent firms venture into the STOs.   Source: https://learn2.trade 
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    • Good news is my posts no longer seem to need moderator approval! Beginning tomorrow, I will be day-trading two currency pairs: EUR/JPY and GBP/USD. I'll trade during the morning and afternoon hours, New York time.  I'll be using an Oanda "core pricing + commission" account. I plan to trade a "practice account" through the end of January, then a small "live" account beginning February. I've set my charts up to closely resemble the format popular in the RCRT thread (NinjaTrader + MetaTrader). My trading style will primarily consist of what I've learned from that thread. I'll track my performance in terms of R-multiples.  The purpose of this thread is just for a little fun with some bonus accountability. I've got nothing to sell/teach, and I will probably lose money! 😁
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