Breakthrough Strategies of Wall Street Traders


BarroMetrics Views: Breakthrough Strategies of Wall Street Traders

A few months ago, Bill Brodi interviewed me. He has now included that interview in his new book, “Breakthrough Strategies of Wall Street Traders: 17 Remarkable Traders Reveal Their Top Performing Investment Strategies.”

In the book, Bill interviews both market professionals and ordinary people who have made it big by trading the markets. Some started with just $10,000 and went on to make millions.

Now, if you thought this is just another “Market Wizards” type book, you’d be mistaken because……

… Breakthrough, trader-investors reveal the exact buying and selling rules they employ for trading the markets via stocks, options or futures, and they are clear enough that you can try them out to duplicate their techniques.

The book covers the spectrum of:

  • Investing-Trading instruments from Stocks to Futures to Options to ETFs to FX.
  • Investing-Trading timeframes from day trading to swing trading to buy and hold
  • Investing-trading methods from BarroMetrics to Price Pattern and Time to Market Profile to Sector Investing to Buffet style investing to Quant Investing.

And I have mentioned only some of the areas covered by the interviews!

In short, there is something for everyone.

By the way, you may wonder why I would recommend a book that covers instruments, timeframes and methods that I don’t trade or use.

Well, I am particularly interested in reading about how others invest-trade. I’m always open to learning something new. My best ideas have come from areas unrelated to my field of expertise and student questions.

If you read my interview, you’ll see what I mean. There is an entire chapter devoted to my trading techniques and system rules (with all the do’s and dont’s).

The interview ran about an hour and a half. The interview contains all the lessons I privately tell people about trading and investing, including the life lessons  I’ve learned along the way to get to where I am today.

Both newcomers to trading-investing and seasoned pros will find a lot of information that will make you a more profitable trader-investor in this book.

So where do you find the book? Here is the link:

Oh, almost forget Some of you may not have heard of Brodi. So, here’s a short description:

Bill used to work on Wall Street as a research analyst and knows his stuff as to what works, what doesn’t and what to ask.

Currency Strength Meters


BarroMetrics Views: Currency Strength Meters

If you are trading FX and are not using a currency strength meter, you are ignoring a valuable resource. I use it to help me by a strong currency and sell the weak one.

However, there are some different variations.

There is the free version, for example, from Mataf. This version is calculated as follows:

  • Where the close is below the open – low minus open.
  • Where the close is above the open – high minus open.

The values are then summed to produce a line chart. Figure 1 shows an example of the chart so produced.

Interpretation of the chart is based upon a trader’s skill, knowledge and experience.

Another type, rates of change charts calculated by using proprietary algorithms. Two of the best are the ones available from:

  1. QM4 and
  2. AccuStrength

Even here, there are differences. The QM4 is available through different timeframes. I have found that is a good indicator for measuring the strength or weakness of the swing; but, it is less useful as an overbought or oversold indicator because it is too sensitive.

AccuStrength does not distinguish between timeframes and is the better oversold or overbought indicator.

It is important to note that for both QM4 and AccuStrength there is no look-back period. I understand that the algorithms depend upon statistical calculations to determine the ratings.

Figure 2 shows a weekly chart for the QM4, and Figure 3 shows an AccuStrength chart.

2016-09-27_12-30-19-metafFIGURE 1 Mataf




FIGURE AccuStrength

Coach or No Coach?

BarroMetrics Views: Coach or No Coach?

The email (attached) I received on Sunday (from ‘Ron'[not his real nam]) reflects a common problem. Essentially Ron is asking: how can I achieve consistency in my trading?

The advice I give is usually rejected because…..?

My advice is to hire a trading coach, and good ones can be considered pricey.

Why is the only solution a coach? Because the trader needs to identify with relative certainty the factors that cause the behaviour.

For example, in Ray’s case, he ascribes his overtrading to situations when he makes ‘consistent money’ or when he hits predetermined targets. The problem is his descriptions are too vague. We need to enter into specifics.

For example:

  1. What does ‘consistent money’ look like?
  2. What was his trading behaviour i.e. what steps did he take before he hit his target?
  3. In what way did those steps change after he hit his target?
  4. Has he tried taking a break after making ‘consistent money’ or ‘hitting target’ etc.?

As they say, the devil is in the details.

In Ron’s case, seeking advice from books, or via email, no matter how skilled the author or educator, will probably not lead to the desired result. It’d be like Andy Murray seeking help with his game by reading a book rather than hiring Ivan Lendl to enable him (Murray) to win Wimbledon.

Yes, I am aware that hiring a coach is not for everyone. In the first place, your trading account size is critical. The benefits of coaching and the fees charged are directly related: if your desired coach is charging $1,000.00 per hour, it does not make much sense to hire him if your trading account is $2,000.00.

That said, it amazes me that so many go into trading without any thought of what success will demand of us – in terms of effort, time and money.

Coaches are one resource – an essential one if your trading size warrants it. So in your case, will a coach help you attain your goals? Have you even considered engaging one? Perhaps it’s worth a thought.

2016-08-29 Ron

Attaining Your Dream?

Here it is: the link to the ebook that will be available on September 30.

If you register now, the ebook is free. Remember the book is about the circle of success: Planning, Executing and Reviewing. But, you must register before September 8, after that date, the book will retail for        USD 97.00

The link again:


At Last The Challenge Details

BarroMetrics Views: At Last The Challenge Details

First thanks to Paul, John, Ken, Deidre and Alice for their support. By the way, if you register for the pre-publication copy, the ebook will be free.

Thanks too to those who wrote in asking for details on how to access the publication. Details are below.

Second, my last day in New York.

I’ll be getting up tomorrow morning 4:00 am EST to catch my flight back to Hong Kong. It will take me about a week to overcome jet lag so the Blog will be back to the normal 5-days a week publication by Monday, August 15.

Finally, Derek’s challenge.

You’ll recall Derek was of the view the ebook would have a wider market with students, especially, Uni and pre-Uni scholars. I believe that traders are my natural audience.

So, he threw out this challenge which I have accepted.

On or about Aug 15, we’ll create two download links:

  • One link for traders, and
  • The other for students.

We’ll then advertise the ebook: for traders at this blog; and for students on my Facebook page. The link will remain up for two weeks. We’ll see which produces the greater response.  For those using the link, the ebook will be free. After two weeks, we’ll be marketing the volume for USD 97.00.

I expect to have the link up on or before August 22 and the ebook completed on or before September 22.

I am confident that anyone who practices the process outlined in the book will experience a parabolic improvement in their productivity. In turn that will provide the time needed for trading profitably.


Confirmation Bias

BarrosMetrics Views: Confirmation Bias

Being on hols, I am giving the markets only an overview, FOMC on Wednesday 14:00 EST is unlikely to produce any rate increase. What I’ll be looking to note is whether the FED will give any indication of a Sept rise.  Failure to provide some clue is likely to send to the USD down; conversely, an indication of a Sept rise will send the USD up.

In the US the news has been and is dominated by the Republican National Congress and the Democratic National Congress. I found more than enough confirmation bias examples in the US media.

The liberal TV and print gloss over the Sanders’ groups dissents; the conservative TV and print gloss over Trump’s difficulties in winning the general election unless he wants over some of the Bernie group, and/or improves his standing among women and Hispanics.

Confirmation bias is a heuristic we traders have to overcome. Until now, there has been an output of material on the effects of heuristics, but little in the way of practical advice.

In my research for my ebook, I came across, ‘How to Have a Good Day‘ by Caroline Webb. This is a very well written book with the latest research and loads of practical suggestions. Be warned though it is s hefty volume.

View from NY – An Important Insight

BarroMetrics Views: View from NY – An Important Insight

I am sitting in the Club Room of the Grand Hyatt, New York, watching Trump on the Republican National Convention. Nothing in the past weeks has changed my mind: the US candidates amount to choosing Tweedle- Dee or Tweedle-Dumb at a time when the world needs a leader.

That’s a depressing thought.

On the positive side, in the 19-hour flight to the US, I had loads of time to reflect on what UIII students are teaching me.

One of the most important insights is that many don’t know how to create an integrated achievement plan. By that I mean, they focus on what I call low-level actions so that they run out of time to take the action to achieve the objectives they desire.

So while I am on hols (till Aug 5), I’ll be laying a plan for the contents of an e-book on Goal Achievement. There has been much research on this  subject in recent times, and much of it counter-intuitive.

My plan is to present the research results and illustrate the ideas with the system I use. No idea how I’ll distribute the e-book – think about the after I have written it.

No One Reason

BarroMetrics Views: No One Reason

Let me start by saying l was dead wrong about the BOE decision. We should see a spate of choppy action till the FOMC decision announcement at 2:00 PM EST on July 27.

Today, I want to turn my attention to what I am learning about passing on a trading education.

The Ultimate III program is now into its practical phase. The attendees have written their trading rules (well, all except two – not sure if they won’t drop out), and most have placed their first trades.

When I first started lecturing, I assumed that all traders would follow the path I took:

  • Find the methods that fit our personality.
  • Take action to make the methods our own until we attained our trading objectives.

With more experience, I found that most attendees failed. And, it was not a question of the course cost – whether $500 or $5000 – the resulting failure rate was relatively uniform.

Ultimate has thrown light on the ’causes’.  I say ’causes’ because there is no ‘one size fits all’. In short, there is ‘no one reason’ for the high failure rate.

Take the current registrants – the webinars these past two weeks have shown interesting patterns:

  • Some discretionary traders need practice at effectively combining the elements of their trading tools. Interestingly, the discretionary group is showing a greater willingness to apply the course material.
  • Some mechanical traders had issues of time. To me, the ‘time’ reason was more an excuse; the real barrier to action was a fear of having to move out of their comfort zone. I sought to solve their problem with fear as the foundation, Let’s see if they have been able to start trading.
  • Other traders, because of their lack of experience, had genuine problems in the understanding and application of the material. Their problems were relatively easy to solve.

We’re taking a month off because the mechanical system we use produces consistently poor results in August. I am keen to see the results at the end of September. The great thing about trading is the equity and psych journals lay bare whether or not long-term success is on the cards for each trader.


BarroMetrics Views: Oscillators

I am not a great fan of oscillators.

What many forget, is when Welles Wilder first introduced the RSI to the trading world, he postulated that the US stock indices had a 28-day trading cycle. He created the 14-day RSI to identify the swing highs and lows.

The trading world adopted the RSI with a vengeance: ” at last, here was a tool that would allow the trader to enter and exit with a high degree of accuracy!”

Unfortunately, the promised was never fulfilled.

The problem is there may or may not be a 14-cycle, and if there is, it may or may not, currently, be the dominant cycle.

A few traders, e.g. John Ehlers, sought to overcome the problem by software that would identify the dominant cycle (MESA Cycle Finder). But, I was unable to use MESA to produce the results I desired.

What’s true for the RSI is true for most of the oscillators that traders use. I prefer to use tools that are not dependent on fixed cycle periods – ones that adapt to accommodate new information.

Figure I shows the difference between the LRB and RSI. The LRB is saying, if there is to be a sell signal, the price action has to drop and rally with momentum divergence. So, while the ES is now in a sell zone, the price action still needs to provide a set-up.

The RSI is already showing trend divergence.

2016-06-30 30-min ES

FIGURE 1 30-min ES

Expectations Set the Path to Failure

BarroMetrics Views: Expectations Set the Path to Failure

While we’re waiting for the Brexit results, let’s ask the question why does trading encourage such unrealistic expectations of what is possible to achieve long-term?

Let me give you an example. Recently, I received an email asking for details of the courses I run. As is my wont, I replied by asking a series of questions. One of them was:

“What is your desired return on capital?

His replies

“1) at present, 5% – 10% p.m.”

2) after the course, 20% to 30% p.m.”

Needless to say, I wrote back to say my courses would not be able to assist.

I run courses because my partner and I want to make a difference. With such unrealistic expectations of what is possible, there is no way we’d be able to assist this trader to become profitable.

Some of the newbies may ask why ‘unrealistic’?

Well, consider these two facts:

  • The Medallion Fund has the best returns spanning a 20-year period and that return is……….35% p.a.
  • My newbie is telling me that, at present, he is seeking to make 60% to 120% p.a. and after the course 240% to 260% p.a.

What fantasy world is my chap living in? If the best trader in the world is producing 35% p.a., what chance does my writer have of attaining his goals?

My view: 0%.

So, the question is why? Why such unrealistic expectations?

Part of the blame must lie with the way the industry is promoted.

Yesterday, I received an ad that promised, among other assurances:

“Find out what are the 3 PROVEN trading strategies that master Forex Traders secretly use to earn 3-5% returns every month!

Examine the headline:

  1. The promoter implies there are three established strategies.
  2. Other MASTER traders are using it.
  3. The methods produce 36% to 60% p.a. (Hey! Why invest in Renaissance’s Medallion for a mere 35% p.a. , when I have super traders returning at least 36%??!!).

So guys and girls, if you are thinking of becoming a trader, you owe it to yourself to separate the wheat from the chaff. In this internet age, that is not hard to do, at least in the trading arena. Establish your vision (as out there as you may like) and then take practical, incremental steps to get there.