A HK Cab Driver’s Tale

 

Yesterday, I grabbed a cab from the office to home – but before I tell you the story, an important announcement. I’ll be travelling to LA tomorrow and won’t be back in HK until Feb 21. I’ll start my blog again on Feb 22.

Back to the story…as I was saying, I grabbed a cab yesterday…..

“Hey! Would you like to know why the world, especially the US stock market crashed? In the process, you’ll make a ton of money” said the cabbie as soon as I had made myself comfortable. 

“Sure!” I replied.

“Let me tell you a story.

In early November 2017, the Chinese government approached N. Korea and said:

“We all know the world’s stock markets are overvalued. It won’t take much to send them down, here’s what we do. We short the indices. You then set off some missiles, threaten Guam and so on. Stocks will crash! We’ll make a fortune!!”

Kim said: “That’s a wonderful idea! Let’s do it!”

But as with all plans of mice and men, the plan went astray: not only did stocks not crash, they moved higher, and higher and higher! Both countries lost a ton. So, on Jan 12, China stopped and reversed. It kept buying as the stocks, especially the S&P, climbed inexorably higher! 

Then the US, having lured in the longs and knowing the market was susceptible to a fall, begun selling and shorting big-time. The US indices were all fair game: S&Ps, Dow, NASDAQ, and the Russell.  Prices collapsed and went below the earlier November short entry.  So, the Chinese have had their fingers severely burnt over 600 S&P points in five months!

And the pain won’t stop until the Chinese give in to Trump’s trade demands”.

Just a story from a HK cabbie. I have no idea where he got it from. Still, it makes for interesting speculation, no?

 

What is the Trading Paradox?

Let me ask you a question: do you believe I could predict with certainty the price the S&P will close at today?

No?

Well then, let me ask you this: do you believe that I can tell you with certainty whether the S&P will close up or down today?

No?

Then how is it that I can be consistently profitable in my trading?

If you can answer this question, you’ll have avoided one of the major hurdles to consistent profitability.  Ready for the answer? Here it is:

on a trade by trade basis, the market movement is uncertain and random. But, over a large sample size, market movement is relatively certain and predictable. 

It’s as simple as that.  Anyone that tells you he’ll teach you how to have a 100% trading record is scamming you or delusional. Losses are part of the game. The ‘secret’ is to ensure that

your average dollar loss x loss rate is less than 

your average dollar x win rate.

The major hurdle to success? The refusal to take losses. We do this even though we know better. Why? Because of the fear that after our exit, the trade will turn out to be a humongously profitable – and we won’t be aboard!

By the way, if you want to know how to overcome this hurdle – read the current the Wednesday series.

New Readers – Publication Schedule

The site is receiving a whole bunch of new readers! Great to have you aboard!

To welcome you, here’s my publication schedule:

  • Monday and Tuesday, market commentary
  • Wednesday, improvement advice.
  • Thursday, mystery day where I scour the net for ideas applicable to trading but not directly connected.
  • Friday, I may or may not post. Usually, I take a break.

There you have it.  See you Monday.

Good News! Schedules

 

Great news! Quite a few have asked me to consider using a weekly format schedule.

OK, guys and gals – I agree.  So, here it is:

  • Monday and Tuesday, market commentary
  • Wednesday, improvement advice. And I have a beaut series to start. You won’t want to miss it.
  • Thursday, mystery day where I scour the net for ideas applicable to trading but not directly connected. Wait till you see the left-field topic for this week!
  • Friday, I may or may not post.

There you have it. See you Monday!

 

S&P Trade

Thanks, Baz, Lee and Ryan for the comments! Appreciate…

The 60-minute chart above shows what I did. I exited the entire long position taken at 2667.3  because:

  1. Traditionally, the end of year sees an up close in the S&P because fund managers want to close their books with a strong showing. Instead, we saw a down day: a warning of a larger correction ahead?
  2. The Upthrust Change In Trend is a very reliable pattern. The minimum target for the move was 2678 to 2676. For me, if 2676 gave way, the next support zone was 2669.5 to 2656.3. Given the narrow ranges in the week, I thought it highly probable I’d see 2676 breached.
  3. Exiting the position meant I’d have a clear mind to see if the new year brought a rally. My mindset was I could always re-enter if I thought a rally was on the way.

I was prepared to buy on the close on Jan 29 (US time) if the S&P reversed and formed a rejection day, by closing near the highs.

By the way, if you click on the chart above, it will expand to a new window.

Thanks again for the participation!

 

Arise

In July last year, I waved goodbye. I had been trying since 2010 to create a school, the “Harvard of the Trading World’ in S-E Asia with insufficient success.

On January 1, 2018, I say, ‘Hello. I back’ – for two reasons:

A friend persuaded me I had much to offer; and, the position of the S&P suggests I may also be able to contribute with timely advice.

So “Hello”.

Tomorrow, I’ll pen some thoughts on the stock indices. If you’d like me to post comments on a specific subject, please leave a comment.

Hope you had a great New Year’s Day! All the best for 2018!

 

A Goodbye

BarroMetrics Views: A Goodbye

Has it been ten years?  Almost, I first started publishing this blog on November 1, 2007. I’ll stop publishing on Tuesday, July 19, 2017.

That said, the blog articles will be available until December 10, 2017. This will give you time to download any articles you may want to keep.

Thank you all for stopping by. I have made some good friends here, Baz, Chris, Jason, Thomas and too many others to mention. All the best with your trading, every success.

Turning to today’s entry: I’ll finish the commentary on the GBPCAD trade. At the July 12 presentation, I started the analysis, but we couldn’t see the beginning of the trade because the BoC’s figures came out at 22:00 Singapore just as the presentation concluded.

Those of you who attended will know I was looking for the BoC not to raise rates. I mapped out a strategy for the expected ensuing rallying. I also mapped a strategy if it did. In the latter case, I concluded that:

  • given where the pair was trading ahead of the number; and
  • given that I expected the daily range to be between 190 – 300 pips, I was not prepared to sell the pair on the news.
  • Instead, I said I’d wait for the rally.

The BoC did raise rates. The GBPCAD then fell; we saw 315 pip range for the day. So, yesterday I was looking for a rally.

Figure 1 shows provide two important bits of information:

  1. Acceptance above the blue 120% (1.6789, I’ll round that to 1.6790) tells me that the current structure, the 5-day swing downtrend, is probably over; breach of the 5-d swing high at 1.6975 will confirm).
  2. The red lines show the 5-day resistance levels.

Figure 2 shows the 60-minute chart with resistance levels. Yesterday, the GBPCAD moved into the bottom of my preferred zone, and I took the trade at 1.6473. My initial stop (hard) is above 1.6616; my soft stop is above 1.6577.

Yesterday, the GBPCAD moved into the bottom of my preferred zone, and I took shorts at 1.6473. My initial hard stop is above 1.6616; my soft stop is above 1.6577.

(By ‘hard’ I mean ‘the stop order is resting in the market’; by ‘soft’, I mean I’ll be looking to exit should I see acceptance above 1.6577)

I believe there is a 50-50 chance will see a test of 1.6530 to 1.6565 today to establish a congestion high on the 60-min. The congestion low is at 1.6354.

I’ll publish an update at 20:00 tonight Singapore time.

FIGURE 1 GBPCAD Daily

FIGURE GBPCAD 60-min

Last Call – July 12

BarroMetrics Views: Last Call – July 12

One last call for our July 12 event in Singapore. The in-person registration link is:

http://www.barrometrics.com/avoid-3-biggest-mistakes-traders-make-july-2017

The registration fee of SGD 20 (about USD 14-15) is refundable on attendance on July 12.

Not living in Singapore or can’t make July 12? No problems, we are live-streaming and providing a video to the event.

Here’s the rego page:

http://www.barrometrics.com/avoid-3-biggest-mistakes-traders-make-july-2017-livestream

The registration fee of SGD 20 (about USD 14-15) is non-refundable.

What do you get for attending?

Firstly, we’re looking to change the abysmal success-trading stats. By attending, you’ll acquire a model for trading success. But, note this is a partnership: we provide the information, you provide the action.

If you are looking for a no-work, get-rich approach, don’t come. July 12 is grounded in reality – what I have found works in over 30 years trading.

Secondly, this is a value-rich offer. Here’s one of many emails:

hello Ray,
no issue with me. you can place me for the live stream. the cost is trivial for the knowledge shared.
thanks.
best regards.
eddie

We needed to postpone the event from July 5 to July 12 because July 5 was a public holiday in the US. (We will be trading the FX markets, so we wanted a day whose volatility was not circumscribed by holidays).

Eddie had registered for the July 5, in-person, presentation and could not attend July 12. We had to move him to the live-stream.

Why did he consider the cost trivial? Well, he has attended one of my courses. So, he knows how much effort we put into our side of the partnership – and the results he secured when he lived up to his.

Secondly, there’s the super value package you receive by attending:

  • Video of July 12
  • The Rule of 3Ms for Preparation, Execution and Review of Trading Mindmap (includes Free Viewer or HTML)
  • Equity Spreadsheet + Video
  • Mechanical system + Video
  • Video for Psych template in Evernote:
  • Deliberative Practice Material
    1. The Beginners Guide to Deliberative Practice
    2. The Making of An Expert
    3. Beyond the 10,000 Hour Myth – How We Really Acquire Skills

The in-person event is limited to 100 registrations. Our joint-venture Oanda began its staggered mail out yesterday. If you are planning to register for Singapore, best do it as soon as possible to avoid disappointment.

http://www.barrometrics.com/avoid-3-biggest-mistakes-traders-make-july-2017

There is no limit to the live-stream.

http://www.barrometrics.com/avoid-3-biggest-mistakes-traders-make-july-2017-livestream

We’ll close registrations for both on Monday, July 10th, 23:00 Singapore.

Using MindMaps

BarrosMetrics Views: Using MindMaps

Nothing to do with trading or finance today. Occasionally, I come across an offer that I’ll pass on, simply because I consider it great value. Today is such a day.

But first: Happy July 4 to all my US readers!

Those who know me, know that I am passionate about improving my skills. Many moons ago, I adopted Mindmapping. I apply this skill to all areas of my life – reading, memory, planning, etc.

Last year I took a course called Mindmap to Kanban by Faizel Mohidin.

You’ve never heard of Kanban? At the time, neither had I. But, with Mindmap to Kanban, I learned and am now applying it daily. It’s has improved my personal effectiveness by 50% or more. If you want to learn more about personal Kanban go to:

http://www.personalkanban.com/pk/.

Figure 1 has an overview of the course contents.

Faizel has gone on to develop quite a few other programs. Another I took was his Learning Management Program. Again I found it useful and beneficial. Figure 2 for course contents.

So why am I telling you all this?

Faizel has a special offer open to Thursday – all his courses (USD 1282.00) for USD 279 (4.61:1 Reward: Risk!)

  • 6 Week MMK High Performance Coaching ($497 Value)
  • MMK High Performance System ($197 Value)
  • Learning Management Program ($197 Value)
  • Personal Business Model ($97 Value)
  • Worker’s Guide to Using Mind Maps ($97 Value)
  • Premium Webinars ($197 Value)

To view the offer, go to

http://usingmindmapsacademy.com/p/using-mind-maps-academy-lifetime-membership-special/

If you have questions, please write to Faizel at

fmohidin@usingmindmaps.com

Usual disclaimer: I am not an affiliate and don’t receive a commission if you sign up. I’m recommending the offer because I have taken two of the courses; I consider the $297 great value.

FIGURE 1  MindMap to Kanban

FIGURE 2 Learning Management