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Sunday, December 30, 2012

Annual Trading Reviews on Major Pairs (2012)


EURUSD

Primary trend: Bullish

From January to February 2012, the EURUSD went up. Then it fell by over 1400 pips, i.e. between February and July. Since then the EURUSD has been caught in slow but steady bullish pressure. From July to September, the pair rose by more than 1000, before it consolidated slightly to the downside. The consolidation to the downside took place between September and November – something that saw a loss of over 400 pips. Right now, the pair is upwards, and as a result of this, we have what can be called a Bullish Confirmation Pattern. Clearly, this is a bull market.

 

USDCHF

Primary trend: Bearish

There has been some perpetual bearish pressure on the USDCHF, showing the bears’ hegemony. From January to February 2012, the price fell by more than 600 pips. And from that period till April, it was in an equilibrium mode. Then it rose by over 800 pips (that was from April to July). Since then, the price has fallen by close to 800 pips. Yes, this is a Bearish Confirmation Pattern. Nevertheless, one should note that the price is going towards a major psychological level – something of a recalcitrant accumulation zone. The zone is the price level at 0.9000.

 

 

GBPUSD

Primary trend: Bullish

The Cable has been volatile in the year 2012; extremely volatile. The price actions included sharp declines and well as northward upsurges. From January to April 2012, the price rallied by over 1000 pips. After that, the price plunged by more than 1000 pips, especially in the month of May. From May to September, the price rose by another 1000 pips. Then it fell by another 400 pips (from September to November). Currently, the price is engaged in some northward attempts, though in a volatile mode. What is happening right now shows that buying pressure is extant.  

 

USDJPY

Primary trend: Bullish

This is a bull market, a significant bull market. One should not assume that the market is overbought, because it has much room to go. From January to March, the USDJPY rose by more than 600 pips. It then fell by 600 pips (Between March and May), and range-traded from then till July.  Since July till now, the price has shot upwards by over 800 pips. While some indicators are showing overbought conditions on this pair, the price continues going upwards. One reason for this is because of perpetual weakness in the Yen. It is likely that the price would reach the resistance zone at 87.00.  

 

 

EURJPY

Primary trend: Bullish

From July 2012 till now, the EURJPY has moved upwards by more than 1800 pips, whereas from April to July, it fell by over 1600 pips! The bullish outlook is still valid. We should also note that, this same cross rose by close to 1400 pips from January to March. All JPY pairs are bullish, just as it has been said earlier. One wonderful thing about this unique class of pairs is that, in most cases, the weakness in the Yen would signify bull markets on all JPY pairs, while the strength in the Yen would make the pairs plummet. That is why those who trade JPY pairs can make hefty gains if they are caught the right direction.

 

 

 

Conclusion: It would be assumed that the current market biases would continue going as such, until there would be some confirmed reversals in the markets. When this happens, the bearish runs would be noteworthy. Moreover, the markets tend to skydive (go southwards) more rapidly than they shoot up (go northwards). To make the markets go upwards, there is a need for more buying pressure, generated by bulls, so that they can offer higher prices than the existing speculators. This scenario also has its boundaries. As soon as shorts trades are called, the boundaries would not matter as such. Please do not forget that you cannot outwit the markets. However, you can become victorious if you know how to truncate losing trades and allow winning trades to run.

 

This article is concluded with the quote below:

 

Only if I learn from my mistakes and look for the reasons why I have missed certain sharp price movements can I improve my trading!” – Faik Giese

 

 

 

Azeez Mustapha

 

Forex Signals Strategist, Funds Manager &Coach

 


 

Open an account here: eng.fxclearing.ca/ib/915

 

If you want to receive permanently free winning Forex trading signals, please send me an email titled: “A Request for Free Trading Signals.”

 

Send the request to: saazalmu@yahoo.com

 

Yahoo! Messenger ID: saazalmu

 

NB: Trading has become a calling!

 

Annual Trading Reviews on Major Pairs (2012)


EURUSD

Primary trend: Bullish

From January to February 2012, the EURUSD went up. Then it fell by over 1400 pips, i.e. between February and July. Since then the EURUSD has been caught in slow but steady bullish pressure. From July to September, the pair rose by more than 1000, before it consolidated slightly to the downside. The consolidation to the downside took place between September and November – something that saw a loss of over 400 pips. Right now, the pair is upwards, and as a result of this, we have what can be called a Bullish Confirmation Pattern. Clearly, this is a bull market.

 

USDCHF

Primary trend: Bearish

There has been some perpetual bearish pressure on the USDCHF, showing the bears’ hegemony. From January to February 2012, the price fell by more than 600 pips. And from that period till April, it was in an equilibrium mode. Then it rose by over 800 pips (that was from April to July). Since then, the price has fallen by close to 800 pips. Yes, this is a Bearish Confirmation Pattern. Nevertheless, one should note that the price is going towards a major psychological level – something of a recalcitrant accumulation zone. The zone is the price level at 0.9000.

 

 

GBPUSD

Primary trend: Bullish

The Cable has been volatile in the year 2012; extremely volatile. The price actions included sharp declines and well as northward upsurges. From January to April 2012, the price rallied by over 1000 pips. After that, the price plunged by more than 1000 pips, especially in the month of May. From May to September, the price rose by another 1000 pips. Then it fell by another 400 pips (from September to November). Currently, the price is engaged in some northward attempts, though in a volatile mode. What is happening right now shows that buying pressure is extant.  

 

USDJPY

Primary trend: Bullish

This is a bull market, a significant bull market. One should not assume that the market is overbought, because it has much room to go. From January to March, the USDJPY rose by more than 600 pips. It then fell by 600 pips (Between March and May), and range-traded from then till July.  Since July till now, the price has shot upwards by over 800 pips. While some indicators are showing overbought conditions on this pair, the price continues going upwards. One reason for this is because of perpetual weakness in the Yen. It is likely that the price would reach the resistance zone at 87.00.  

 

 

EURJPY

Primary trend: Bullish

From July 2012 till now, the EURJPY has moved upwards by more than 1800 pips, whereas from April to July, it fell by over 1600 pips! The bullish outlook is still valid. We should also note that, this same cross rose by close to 1400 pips from January to March. All JPY pairs are bullish, just as it has been said earlier. One wonderful thing about this unique class of pairs is that, in most cases, the weakness in the Yen would signify bull markets on all JPY pairs, while the strength in the Yen would make the pairs plummet. That is why those who trade JPY pairs can make hefty gains if they are caught the right direction.

 

 

 

Conclusion: It would be assumed that the current market biases would continue going as such, until there would be some confirmed reversals in the markets. When this happens, the bearish runs would be noteworthy. Moreover, the markets tend to skydive (go southwards) more rapidly than they shoot up (go northwards). To make the markets go upwards, there is a need for more buying pressure, generated by bulls, so that they can offer higher prices than the existing speculators. This scenario also has its boundaries. As soon as shorts trades are called, the boundaries would not matter as such. Please do not forget that you cannot outwit the markets. However, you can become victorious if you know how to truncate losing trades and allow winning trades to run.

 

This article is concluded with the quote below:

 

Only if I learn from my mistakes and look for the reasons why I have missed certain sharp price movements can I improve my trading!” – Faik Giese

 

 

 

Azeez Mustapha

 

Forex Signals Strategist, Funds Manager &Coach

 


 

Open an account here: eng.fxclearing.ca/ib/915

 

If you want to receive permanently free winning Forex trading signals, please send me an email titled: “A Request for Free Trading Signals.”

 

Send the request to: saazalmu@yahoo.com

 

Yahoo! Messenger ID: saazalmu

 

NB: Trading has become a calling!

 

Annual Trading Reviews on Major Pairs (2012)


EURUSD

Primary trend: Bullish

From January to February 2012, the EURUSD went up. Then it fell by over 1400 pips, i.e. between February and July. Since then the EURUSD has been caught in slow but steady bullish pressure. From July to September, the pair rose by more than 1000, before it consolidated slightly to the downside. The consolidation to the downside took place between September and November – something that saw a loss of over 400 pips. Right now, the pair is upwards, and as a result of this, we have what can be called a Bullish Confirmation Pattern. Clearly, this is a bull market.

 

USDCHF

Primary trend: Bearish

There has been some perpetual bearish pressure on the USDCHF, showing the bears’ hegemony. From January to February 2012, the price fell by more than 600 pips. And from that period till April, it was in an equilibrium mode. Then it rose by over 800 pips (that was from April to July). Since then, the price has fallen by close to 800 pips. Yes, this is a Bearish Confirmation Pattern. Nevertheless, one should note that the price is going towards a major psychological level – something of a recalcitrant accumulation zone. The zone is the price level at 0.9000.

 

 

GBPUSD

Primary trend: Bullish

The Cable has been volatile in the year 2012; extremely volatile. The price actions included sharp declines and well as northward upsurges. From January to April 2012, the price rallied by over 1000 pips. After that, the price plunged by more than 1000 pips, especially in the month of May. From May to September, the price rose by another 1000 pips. Then it fell by another 400 pips (from September to November). Currently, the price is engaged in some northward attempts, though in a volatile mode. What is happening right now shows that buying pressure is extant.  

 

USDJPY

Primary trend: Bullish

This is a bull market, a significant bull market. One should not assume that the market is overbought, because it has much room to go. From January to March, the USDJPY rose by more than 600 pips. It then fell by 600 pips (Between March and May), and range-traded from then till July.  Since July till now, the price has shot upwards by over 800 pips. While some indicators are showing overbought conditions on this pair, the price continues going upwards. One reason for this is because of perpetual weakness in the Yen. It is likely that the price would reach the resistance zone at 87.00.  

 

 

EURJPY

Primary trend: Bullish

From July 2012 till now, the EURJPY has moved upwards by more than 1800 pips, whereas from April to July, it fell by over 1600 pips! The bullish outlook is still valid. We should also note that, this same cross rose by close to 1400 pips from January to March. All JPY pairs are bullish, just as it has been said earlier. One wonderful thing about this unique class of pairs is that, in most cases, the weakness in the Yen would signify bull markets on all JPY pairs, while the strength in the Yen would make the pairs plummet. That is why those who trade JPY pairs can make hefty gains if they are caught the right direction.

 

 

 

Conclusion: It would be assumed that the current market biases would continue going as such, until there would be some confirmed reversals in the markets. When this happens, the bearish runs would be noteworthy. Moreover, the markets tend to skydive (go southwards) more rapidly than they shoot up (go northwards). To make the markets go upwards, there is a need for more buying pressure, generated by bulls, so that they can offer higher prices than the existing speculators. This scenario also has its boundaries. As soon as shorts trades are called, the boundaries would not matter as such. Please do not forget that you cannot outwit the markets. However, you can become victorious if you know how to truncate losing trades and allow winning trades to run.

 

This article is concluded with the quote below:

 

Only if I learn from my mistakes and look for the reasons why I have missed certain sharp price movements can I improve my trading!” – Faik Giese

 

 

 

Azeez Mustapha

 

Forex Signals Strategist, Funds Manager &Coach

 


 

Open an account here: eng.fxclearing.ca/ib/915

 

If you want to receive permanently free winning Forex trading signals, please send me an email titled: “A Request for Free Trading Signals.”

 

Send the request to: saazalmu@yahoo.com

 

Yahoo! Messenger ID: saazalmu

 

NB: Trading has become a calling!

 

Saturday, December 29, 2012

David Harding: A Triumphant Trend Follower


 
LEARN FROM GENERALS OF THE MARKETS - PART 19

 

“…In the last all but 15 years I have probably tested  more than 500 systems or strategies, but only few of them have made it onto my list.”  – Faik Giese

 

David Winton Harding is a brilliant British funds manager, presiding over research at Winton Capital Management.  Earning his first class degree from St. Catharine’s College, University of Cambridge, he was a trainee at Wood Mackenzie; a brokerage firm. 2 years later, he went to Johnson Matthey & Wallace. He also had an experience with Sabre Fund Management (a UK CTA). Later, he co-founded AHL in 1987 which was later named the Man Group. In 1997 he started his own business – Winton Capital Management. Starting out with about two million dollars in that year (1997), he now has about up to twenty-nine billion dollars.  That’s why Winton Capital is one of the largest hedge fund in the world. He’s kindly donated to, and sponsored many education and research programs and organizations.

 

Lessons

There are many lessons that can be learned from David.

 

1.      Never despise the days of your little beginnings. David might be envied for his wealth and consistent success in the markets, but he started as a trainee, then a trader, then a co-founder, then a sole founder and head of research. He started with a few millions and now has many billions. No matter how small your portfolio may be right now, simply focus on successful trading. If you can manage a small account successfully, then you can be entrusted with bigger accounts. If you can’t manage a small portfolio successfully, thinking that, with a big portfolio, you’d become a permanent winner in the markets. Seek ways to become successful first, and then great riches would gradually follow.

 

2.      Get rich slowly (not quickly). Since 1997, Winton Capital has made several hundreds per cent in profits. This is approximately sixteen per cent returns per annum. He’d never made up to sixty per cent per annum. David’s become successful because he was able to make small and consistent profits.  Unfortunately, six hundred per cent is what most traders want to make per year. This can cause huge profits and huge losses (portfolios crashing).

 

3.      David Harding is a consistently triumphant trend follower. You may say he uses different types of systematic trading approaches, with the aid of programming and data research. No matter what strategy he uses, he’s basically a trend follower. He allows profitable positions to ride for as long as possible. Position trading makes a lot of sense for trend following. He uses big pictures and trades long-term. With trend following approaches, he made money in fourteen years and ended only one year negatively (even with that, the loss was highly negligible).  You see, a small monthly or yearly drawdown would allow quick recovery in a favorable market. This is another evidence that trend following is a time-tested and irrefutable trading approach. 

 

4.      Before it can be really said one is conversant with a strategy, one must have traded with it in bull and bear markets, in noisy and quiet markets. Before a strategy can become really dependable, it must be able to makes gains in all market conditions, otherwise, the speculator would need to know when to use it and when not to use it. The optimal market situation for each strategy must be known.

 

5.      You don’t need to be an accurate market forecaster before you can be permanently triumphant. David isn’t a market predictor, yet he’s a market victor. The permanent uncertainty in the markets would forever be our ally. You’d need to know how to handle right and numerous wrong trades and yet be successful.

 

Conclusion: Following the line of the least resistance doesn’t agree with the common trading mindset, since one may even lose over 7 out of 10 trades, and yet show some positivity at the end of the trading year – minimal negativity compensated for by minimal positivity. It’s about 3 out of 10 trades that would make the trader triumphant (as a trend follower). What most people fail to agree with is that, one doesn’t know the trades that could bring positivity. This is a matter of self control, taking trades unemotionally and letting profits take care of themselves. 

 

The article is ended with a quote from David:

 

We know that we know almost nothing. But the “almost nothing” we know isn’t completely nothing, and we only bet on that.”
 
 
Azeez Mustapha
 
Market Analyst, Trading Signals Provider and Coach
 
 
 
NB: If you want to receive permanently free winning Forex trading signals, please send me an email titled: “A Request for Free Trading Signals.”
 
Send the request to: saazalmu@yahoo.com
 
Open an account here: eng.fxclearing.ca/ib/915

Friday, December 28, 2012

The Best Trader in the World



 
“Life itself is a risky enterprise. Sometimes we fly high, enjoying great success. But then suddenly we fall into deep disappointments and the haunting reality of a failure, leaving our hearts wondering if there is anything worth looking forward to.” – Joe Stowell

 

There are super traders all around the world. If you don’t know them, I know some of them. They earn their livelihood by trading and they’re financially free. Now the question is: Who’s the best trader in the world? Indeed, the best trader exists. Now, I won’t mention names, but I’ll tell you how the best trader trades.

 

The best trader doesn’t argue with the markets - he always admits his mistakes. Most people tend to feel they’re right, even if facts prove them wrong. Extremely terrible speculators don’t accept their errors. It’s really a psychiatric condition that makes a person refuse to think he’s made a mistake, even if reality shows otherwise. Being overconfident in riding a position that’s determinedly negative is definitely not a good thing. Top traders always acknowledge their mistakes.

 

Likewise, the best trader may use any kind of positive expectancy system including fundamental strategies, and anticipate the market to move in a certain direction. If the price movement or fundamental figures happen to be against his expectation, he’ll smooth all his positions immediately.  No arguments, no hope. Financial markets have no mercy upon anybody. If things go against you, then get out of the market without wasting time. Every good speculator I’ve studied is really good at cutting positions that seem to go determinedly against them. Yet, whenever the market proves them right, they run their gains for a considerable amount of time.

 

The greatest trader accepts the uncertainty that can affect any open orders; they even did this before they opened the orders. Uncertainty remains our ally, since speculation is a game in its own right. Negativity is also included in the game. The best trader doesn’t feel sad when a trade goes negative, nor does he feel too happy when a trade goes positive.

 

Using A System Profitably Is Conditional

 

Are you a successful trader? Did you like the results you produced as a trader in the previous year? If not, what errors did you make and how can you improve your results henceforth? You may need a trading system that takes care of some cogent factors contributing to profitable trading. Do you have these factors in mind? Please consider some of them:

 

1). Do I have a rule to follow in my speculative activities? A trading strategy should be approached with the level of seriousness and enthusiasm with which one would approach any high level endeavor or business.  The entry, exit, position sizing and other rules of this strategy must be followed to the letter.

 

2) Do I have a worst-case emergency plan? A good system should have (a) rule(s) that can        deal with any adverse movements that can affect an open trade, as well as a rule that makes you exit quickly if things are no longer going in your favor.

 

    3). Do I have a positive expectancy system that can enable me to survive the current type of market? A good system ought to make money in good market conditions and make as little drawdowns as possible in bad markets conditions. It should have positive expectancy incorporated into it, which means that at least, two dollars should be expected for each dollar that is being risked. In other word, one should be profitable on a long-term basis even with only 30% accuracy.

 

    4). Do I have a technique that will continue working even if the market conditions change without warning? Yes, a good trading system ought to survive all market conditions. A good trading system can work well in bull or bear markets. But you may stay out of extremely consolidating markets! You would just need to stick to its rules.

 

   5). Do I even recognize the current type of market? It helps to be aware of the type of the market one is trading and the current prevailing condition of the market. This can help you make informed trading decisions. 

 

   6) Do I constantly condition my mindset in a way that makes me execute my trades flawlessly? You need to work on yourself. There are traders who use position sizing that is far bigger than the one recommended. Some enter additional trades based on analysis that is completely different from the rules of the system. Some do not even use stops at all – contrary to the system rule!  A trader using a good system should learn how to control herself/himself and do the right things in the markets rather than doing things that would satisfy human emotions.

 

If you answered no to any of those questions, you have clues about why your results in the past have been undesirable. These, by the way, are only a few of the questions you could ask yourself. If you could take the factors above into consideration and work on them successfully, then you may find that trading can indeed be profitable.

 

Conclusion: When the markets go in our favor, we feel like a champion. We’ll assume that we are super trader and that we’re smarter than other traders. In most cases, only traders who’ve experienced the good and the ugly sides of the markets and survived them all are those who’re really qualified to be our mentors. You need to forget about your past and look forward to a brighter future. It’s important that you overlook your past failures and press forward.

 

This article is concluded with the quotes below:

 

“Stephen Covey says - ‘Live out of your imagination, not your history’. Look forward, not in your rear view mirror - or you're sure to crash. It's not what happens to you, it's how you handle it that counts. Your mistakes are completely separate from who you are as a person. Take pride that you're moving one step closer towards your goals. Don't cripple your future growth by shooting yourself in the foot because you made a screw up.” - Louise Bedford [paraphrased]

 

 

“One of the main issues that new traders have is that they have expectations of huge rewards in a short period of time. “I’ll take my $5,000 trading account and turn it into a million dollars in a year, and tell my boss where he can go!” That rate of return is a bit unrealistic. By increasing your account size just a couple of percentage points a month, the power of compound interest will make you wealthy, but over a long period of time. Trading as a career is a marathon, not sprint. Those who try to make too much too fast often over-leverage their account and take on unnecessary risks by doing so. One or two large losses can wipe out a few weeks or months of good gains! If you do that you have “worked for free” as your account takes these major drawdowns. Does anyone want to work for free? I know I don’t.” – Rick Wright (Online Trading Academy)
 
 
 
 
 
 

 
Azeez Mustapha
 
Forex Signals Strategist, Funds Manager &Coach
 
 
Open an account here: eng.fxclearing.ca/ib/915
 
If you want to receive permanently free winning Forex trading signals, please send me an email titled: “A Request for Free Trading Signals.”
 
Send the request to: saazalmu@yahoo.com
 
Yahoo! Messenger ID: saazalmu
 
NB: Trading has become a calling!
 

 

 

Thursday, December 27, 2012

Benjamin Graham: The Brain behind Market Giants


LEARN FROM GENERALS OF THE MARKETS – PART 9

 

Benjamin Graham lived from May 8, 1894 until September 21, 1976. He was born in the UK but was taken to the US when he was yet a kid. He graduated from Columbia University when he was twenty years old. Then he became an instructor. He’s considered the first person to espouse and teach value investment and investment discipline. He was able to influence great followers (who’re successful traders; giants of the markets), including Warren Buffett, William J. Ruane, Irving Kahn, Walter J. Schloss, Chris Johnston, etc.

 

Benjamin’s investment principles have stood the test of the time, and are therefore peerless. His principles and ideas are mentioned in his books titled: Security Analysis (published in1934) and The Intelligent Investor (published in 1949). The books are very popular in the world of investment. Benjamin himself said: “Investment is most intelligent when it is most businesslike. It is amazing to see how many capable businessmen try to operate on Wall Street with complete disregard of all the sound principles through which they have gained success in their own undertakings. Yet every corporate security may best be viewed, in the first instance, as an ownership interest in, or a claim against, a specific business enterprise. And if a person sets out to make profits from security purchases and sales, he is embarking on a business venture of his own, which must be run in accordance with accepted business principles if it is to have a chance of success.”

 

Lessons

Some good lessons can be learned from Benjamin. Some of them are mentioned below (in very simple terms):

 

1.      You can benefit greatly from trading teachers. Benjamin is presumed to be the first effective investment lecturer. This fact is evident in his followers, like the Oracle of Omaha (Warren), who’s been a long-term success on the battlefield of the markets. There are many great investment teachers like Benjamin today. How can you learn their timeless and non-market specific principles and make yourself one of the best traders in your generation?

2.      The hypothetical theory of the Efficient Market is bunkum. The Efficient Market theory says that that it is generally impossible for any individual to consistently outwit the market.  I don’t know why someone would take this theory serious when reality shows otherwise. That fact that someone fails in the markets doesn’t mean that everybody fails. If you don’t know those who can constantly beat the markets; no matter how small their profits are, I‘ll tell you that they exist. Those who spread that theory are probably those who’ve not found the secrets of everlasting success in the markets. Nearly all the generals of the markets that are featured in this series have found the secrets.  Trading is definitely not easy, but everlasting success is possible. Once you start enjoying this, you’ll be hooked.

3.      Some of Benjamin’s cardinal investment topics are: You should always invest with a margin of safety, expect volatility and movements from the markets and gain from them, and you should know the kind of investor you are.

4.      You’ve to master yourself before you can master the markets. According to Benjamin, individuals who cannot master their emotions are ill-suited to profit from the investment process.

 

Conclusion: We may be expecting too much from the markets; the exact opposite of having realistic expectations.  Would wouldn’t agree that in most cases we’re our own worst enemy? Without minimizing the great harm losses can do to our portfolios, and to our emotional well-being, who can deny the damage we cause as we apply poor position sizing and risk management rules. However, if we can control ourselves logically, we can garner great riches inherent in the markets.

 

This article is ended with a quote from Benjamin:

 

“Have the courage of your knowledge and experience. If you have formed a conclusion from the facts and if you know your judgment is sound, act on it - even though others may hesitate or differ. You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.”
 
Azeez Mustapha
 
Market Analyst, Trading Signals Provider and Coach
 
 
 
NB: If you want to receive permanently free winning Forex trading signals, please send me an email titled: “A Request for Free Trading Signals.”
 
Send the request to: saazalmu@yahoo.com
 
Open an account here: eng.fxclearing.ca/ib/915
 
 

 

 

Friday, December 21, 2012

Tim Knight: Make Fortune Also in Bear Markets


LEARN FROM GENERALS OF THE MARKETS - PART 18

 

“Many times I’ve tried to run away from unpleasant circumstances only to discover that the problem was not the situation I was in but me.” – Julie A. Link

 

Tim Knight is a highly proficient and experienced trader. He founded Prophet.net, which was taken over by Investools in 2005. Between 2005 and 2010, he was senior vice president for that company. He wrote a book titled: Chart Your Way to Profit (published by John Wiley). He’s a very wide audience on his blog; Slopeofhope.com. What makes him popular is the fact that he’s very skilled in making money from bear markets. For example, he made a great fortune in the weak markets in 2008. As an expert funds manager, he uses mainly technical analysis for making his trading calls. He’s technical analysis addict. Tim has been interviewed by many media, including Traderinterviews.com.

 

Lesson

Here are some lessons that can be learned from Tim Knight:

 

  1. Tim is a great bear - a bear that makes money on bearish instruments. While some languish in falling markets, Tim thrives. You simply have to be a bull in rising markets, and be a bear in falling markets, otherwise, your portfolio pines away. Many people, when caught in falling markets, would be reluctant to smooth their positions. Instead, they’d hope that the markets would come back to their entry levels. And you likely know the probable result of that.

 

  1. Based on skills and experience, one can manage multiple positions at a time. For example, it’s not uncommon for a proficient trader to have up to 10, 15, 20, 25 even 40 open positions at time. With risk control and money management, one would manage an individual position successfully. Tim can manage up to 200 positions at a time – diversifying his portfolios. One who manages trades poorly can even lose if they open only one trade at a time; whereas a good trader can manage tens (even hundreds of trades) at a time. Interestingly, Tim has a stop loss for each position. In addition, his exit rules are mainly discretionary.

 

  1. Tim is another living proof (apart from Dr. Alexander Elder) that one can be a permanently successful trader based on chart analysis alone.

 

  1. Tim’s charts are extremely simple; not complicated, and he makes money from that. If you make your charts complicated and intricate, you’re simply making life difficult for yourself (and that won’t even guarantee higher hit rate or success in the long-term). Please be successful with very simple but effectual trading methodologies, and thus make life easy and comfortable for yourself.

 

Conclusion: Did you lose a lot of money in recent bear markets? Well, some made fortunes. What you, perhaps failed to acknowledge is that bulls suffer in downtrends, but lots of gains can be derived in downtrends. Just have it in mind that you too, like Tim Knight, can make money when the markets fall. Focus on that possibility. Focus on the present and let go of the past. Yes, we can’t change the past, but we can certainly learn from it.

 

A quote from Tim ends this article:

 

“…I'm very dedicated to having a stop on every single position at all times. And the whole idea of a mental stop is just anathema to me. They must have stops the moment the trade is on…”
 
Azeez Mustapha
 
Market Analyst, Trading Signals Provider and Coach
 
 
 
NB: If you want to receive permanently free winning Forex trading signals, please send me an email titled: “A Request for Free Trading Signals.”
 
Send the request to: saazalmu@yahoo.com
 
Open an account here: eng.fxclearing.ca/ib/915

 

 

Wednesday, December 19, 2012

Dr. Alexander Elder: Safeguard Your Profits


Dr. Alexander Elder: Safeguard Your Profits

 

“You can be free. You can live and work anywhere in the world. You can be independent from routine and not answer to anybody.” - Dr. Alexander Elder

 

LEARN FROM GENERALS OF THE MARKETS - PART 17

 

Dr. Alexander Elder was born in Russia and raised in Estonia. He attended a medical college when he was 16 years old. While working as a doctor on a USSR vessel, he absconded and sought asylum in America. Having worked as a psychiatrist in New York and as a lecturer at Columbia University, he got a good understanding of traders’ mindset. He’s written a number of books, articles and software reviews. He’s also credited with the creation of the Force Index indicator – a unique technical analysis tool.

 

He’s a top expert when it comes to technical analysis, position sizing, and trading psychology. Some of his books are titled: Trading for a Living, Come into My Trading Room, Entries and Exits, etc. which are popular among speculators.  Those books have been translated into many languages. Dr. Elder’s official website is: Elder.com

 

 

 

Lesson

You’ll benefit greatly from the lessons below.

 

1.      As a trader, it’s better for your to be realistic than to be idealistic. Many people approach the markets with terrible methodologies and unrealistic expectations. It’s possible to become a successful trader, but it’s not easy. For you to become successful, you’ll need to work hard at it and learn what it takes to be a successful trader.

 

2.      According to Dr. Alexander Elder, every winner needs to master three essential components of trading; a sound individual psychology, a logical trading system and good money management. These essentials are like three legs of a stool – remove one and the stool will fall, together with the person who sits on it. Losers try to build a stool with only one leg, or two at the most. They usually focus exclusively on trading systems. Your trades must be based on clearly defined rules. You have to analyze your feelings as you trade, to make sure that your decisions are intellectually sound. You have to structure your money management so that no string of losses can kick you out of the game.

 

3.      Dr. Elder is a living proof that one can be a successful trader without being an expert in the area of fundamental analysis. Dr. Elder’s entry and exit criteria are usually chart-based, not something fundamental. Too many people have irrational belief in fundamental analysis as an open sesame to great riches – only to experience negativity continually in their portfolios. While fundamental analysis will always be a very useful and effective decision making tool, long-lasting trading triumph really boils down to risk and money management, self-control and trading only what you see.

 

4.      There should always be a maximum amount of money you’ll to put at stake – as far as each trade is concerned. Dr. Elder believes that the use of stop loss is necessary.  He’s a maximum amount he’d be willing to risk in a month. If he loses more than 6 per cent, he would stop trading for the month. This is very effective, especially in avoiding further drawdown during a losing streak: something every top trader encounters occasionally.

 

5.      Safeguard your profits! After you’ve made a substantial profit on a position, you should try to safeguard it, so that it doesn’t turn into a loss. In one interview in the year 2008, Dr. Elder said he developed this rule after banging his head against the wall for 19 years. There are ways one could safeguard his decent profits, and prevent them from turning into losses. This is however, another topic. You can read my past articles on risk control.

 

Conclusion: Successful trading principles are like a rainbow for comeliness, like an oasis in the wilderness, and like an anchor in a stormy ocean. Taking time to learn the art of trading will enable you to control your future.

 

This piece is concluded with a quote from Dr. Elder:

 

“Markets offer unlimited opportunities for self-sabotage, as well as for self-fulfillment. Acting out your internal conflicts in the marketplace is an expensive proposition. Traders who are not at peace with themselves often try to fulfill their contradictory wishes in their market. If you do not know where you are going, you will wind up somewhere you never wanted to be. You can succeed in trading only if you can handle it as a serious intellectual pursuit. Emotional trading is lethal. To help ensure success, practice defensive money management. A good trader watches his or her capital as successfully as a professional scuba-diver watches his or her air supply.”
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Azeez Mustapha
 
Market Analyst, Trading Signals Provider and Coach
 
 
 
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