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February, 2018

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Extreme volatility

Whilst volatility is necessary in trading there are issues with extreme volatility that traders need to consider. The clickable chart below shows one example of extreme volatility with Copper (CUUUSD). The size of a reasonable stop-loss which is related strongly to account size, is a limiting factor. If your account is say £2000 how much of a hit can you take in one trade like this? Not much. You’d be depending on luck to jumpRead More

Disentangling currency pairs

Many a new trader will find listen to the news about which currency is doing well or badly. For example the news might say that the US Dollar strengthened, or something like that. Most of these news reports do not say how they know what they are reporting. Traders would normally be setting their brains against currency pairs e.g. USDJPY, or GBPUSD and so on. This is a ratio of one currency to the other.Read More

The nature of expectation in financial trading

On several occasions I’ve referred to ‘expectation‘ as against ‘prediction‘. I can expect a delivery of a package at my home this morning (for example) but that does not mean I know it is going to arrive for certain ‘this morning’ or that I predict that it will. ‘Expectation’ means a reasoned position/opinion based in information I might have or inferences I may make based on a range of things. How is expectation important inRead More

Stalking the microstructure of chaos

On occasions a trader may need to turn up the microscope and look deeply into the chaos. For what? A micro-fracture, a microtrend or a small bubble movement that is like the flap of a butterfly’s wings – from which evolves a hurricane. This is the nature of chaos. The chart below shows a small rising wedge down to the 5 min time frame. ‘We’ don’t know what will happen next. Rising wedges on anyRead More

Microtrends and risk aversion

Many a trader will have looked at the same chart (say AUDUSD) at different times (let’s say 4 hours apart), and had doubts or an urge to change their minds on what to do. This situation occurred recently with BTCUSD. On one day it appeared that there was as strong microtrend on a 2H time frame pushing against the big bearish daily trend. Then on the next day it appeared that the 2H trend mightRead More

So did you get it right?

Did you get it right? This is an important question for new and seasoned traders to think about – but there is a problem with it. So you made your best risk assessment, decided your entry point and stop-loss and you entered the trade. What happens next? Many a new trader would spend some time looking at price movement shortly after. There’s a ‘Yes!!‘ sort of feeling if early on price moves into positive equityRead More

Better than a million minds

Are you better than a million minds? The chart below shows the recent extreme volatility on Wall Street. Millions of minds are into this ‘game’ of stocks/shares. They all want one important thing: profit on their positions. We don’t know these people (obviously); how can we. Yes – their interests may be represented by brokers in the stock markets. Some of these folk are institutional investors – these are the ‘big boys’ with big financialRead More

New traders conned

This morning I receive yet another email from somebody selling a system for beating the markets. It’s some software that runs on their server, that gives off signals when to enter long or short. Cost? USD $997 down from $1491 – and one is offered some ‘ultra’ indicator as free. Links to the advert are tracked, so that ‘they’ can monitor who clicks what in their emails. The adverts usually have a set of testimonialsRead More