GBPCAD 21:11 07-14 Update

BarroMetrics Views: GBPCAD 21:11 07-14 Update

I now have a possible sell setup. A bearish conviction close below 1.6518 on a 15-min bar will trigger a sell signal. If done, the initial stop is 1.6623.

A move above 1.6618 without first moving below 1.6518 will negate the bearish scenario.

If the trade is triggered, I’ll be aggressively managing the trade. Update tomorrow.

The Trading Mind

BarroMetrics Views: The Trading Mind

As my most recent course, Mastery, comes to an end, today, I looked to review the successes and failures. All of the attendees could be said to be driven to succeed. Yet some did, and some didn’t. By that I mean, over the course, some changed their behaviour, and some did not. For those that did change, I saw the changes in their trading results. For those where there was little or no behavioural change, I saw little change in their results. You can’t keep doing the same thing over and over again and expect to attain a different outcome.

So why do we do it? Why spend countless hours and countless dollars giving lip service to change but failing to follow through.

The answer I believe lies in our brain’s hard-wiring.

The Triune Brain model has been around for a while. Traders would do well to become acquainted with it.  Figure 1 has a summary and attachment 2, has a more in-depth explanation. Let’s see how the hard-wiring affects our trading.

The oldest brain is the Reptilian (unconscious). Our impulses and instincts reside here. Like the subconscious, its primary job is to protect us. Unfortunately. its hasn’t been updated for aeons. As a result, what it treats as ‘life-threatening’ (e.g. losses) isn’t so. It’s solution to our problems is to seek to control the outcome. But that’s not possible when trading – so the fight, flight or freeze response kicks in to deliver the losses we fear may happen.

Its partner in crime is the subconscious but more on this tomorrow.

FIGURE 1

The Reptilian Brain

Attachment 2

BarroMetrics in Action: The French Election

We created the video for some students. Then we decided to share it with you.

Trading the French Election

The usual disclaimer: The video is for educational purposes only.  All care and no liability so far as we are concerned.

The polls close 2:00 am (HK). We should start seeing some exit polls results by 4:00 am (HK). Official results are due at 11:00 a.m. But, we should have unofficial results by 6:00 am (HK).

The French Elections and You 2

BarroMetrics Views: The French Elections and You 2

What’s the worst that can happen when the election results are in – at least so far as the EC is concerned (as well as the EUR crosses)?

Melenchon and Le Pen being the only contenders for the May 7 run-off.

The second worst?

Le Pen securing a vote in the high 40s against either against Macron or Fillon.

The best?

Outright victory for Macron by his securing over 50% of the vote. 

I doubt if we’ll see any of the above results.

The polls are suggesting a Macron-Le Penn face-off on May 7. But, let me throw in a spanner. The momentum of Melenchon has been so strong, I would not be surprised to see him figure in the results.

It seems to me anything but a strong Macron showing will cause a drop in the EU crosses. And, given the doubt about the turnout and the terrorist attack in Paris on Friday, I rate a strong Le Pen win more likely than a Macron.

So, how to take advantage of this view?

I don’t normally trade the CHF. But, I will on this occasion – mainly because of the Swiss decision on immigration will serve the CHF well.  Moreover, the long-term chart of the EURCHF shows the strong downtrend that lately has seen only dead cat bounces (Figure 1).

Figure 2 shows a clearer 18-day swing picture.  Acceptance below 1.063 will probably see a test of the 1.0305 to 1.0238 zone. That would be my target for this move down – if we see it happen.

FIGURE 1 12-m EURCHF

FIGURE 2 18-d EURCHF

Interest Rates Rise – Impact on US Stock Indices?

 

BarroMetrics Views: Interest Rates Rise – Impact on US Stock Indices?

Non-Farm today and I am expecting a figure that is is at least on the better side of consensus (Consensus range: 162K to 240K, Consensus: 200K).

If I prove correct, that will clear the path for the FED to raise rates. That it would, provided the job figure produced no surprises, was made clear by Kaplan and Fisher. It was also confirmed by Yellen.

Let’s assume rates do rise. What effect will that have on the S&P?

I suggest very little in the way of a bearish reaction.

I see this current move as being the last leg of the   13-w bull market that started in 2008. It’s what I call an R2 move (parabolic rise) that is driven by sentiment. My sentiment tools rate the current move to be on par with the 1987 top. Gann Global has a possible date for the top in the time zone, March 17 to April 10.

However, I do think we’ll see a bullish reaction, given that the S&P is in a parabolic move up. Gann Global has a possible date for the top in the time zone, March 17 to April 10.  I’d like to see the S&P put on another 10% before I become overly bearish. In the meantime, I am keeping an eye on the corrections: a 3% drop will signal a top is in place.

 

 

Accountability 3

BarroMetrics Views: Accountability 3

Great! We’ve finally arrived at Reeder’s equation. The basis is a simple one, the degree to which you are motivated is the extent to which the positives outweigh the negatives.

(Treasures – Troubles) + Contributions – Choices = Commitment (or lack of it).

What are treasures?

Well, here’s my contribution: Our values must form the basis of Treasures. Our goal needs to be based on and formulated in line with,  our top values. Once Values are in place, we can think of Treasures as the rewards we are seeking by our goal achievement.

Troubles are the price we pay for our success. Their impact depends on their severity and acceptability. It’s important to bear in mind that Troubles outweigh Treasures by a factor of five to one.

Within the definition of Treasures and Troubles, we fit Gracia’s model. So, for Treasures and Troubles, we not only consider the Rewards of Success and the Pain of failure; we also consider, the Rewards of Failure and the Pain of Success.

Contributions are the irrevocable investments we make in terms if time, talent and tangibles (money and what money can buy). There are times we need to include ‘tenderness’: the giving of self e.g. caring for another.

Finally Choices. The more choices we have, the more commitment will decline.

The strategy to maximising commitment is to increase positives and reduce the negatives. Both books provide a series of strategies to do this as does Acceptance and Commitment Therapy (ACT).

So, over to you. You now have the means to secure any goal you truly desire. You just need enough willpower to run through the equation.

Learn by Doing

BarroMetrics Views: Learn by Doing

Ultimate III jus concluded. The class was evenly split between institutional and retail traders. But, the results could not have been more different.

Today, we’ll look at the retail stats.

Ultimate is a 4-month course whose main focus is to ensure that the attendees can apply the course ideas in their trading. Whether or not they do, depends, of course, entirely on them. But, at least, they can apply the concepts if they wish. It includes a theoretical and practical dimension:

  • Four weeks for theory,
  • Followed by a tw0-day seminar/webinar.
  • Then three months of application.
  • Finally, four weeks of unassisted trading (the exam). Here I am looking to see if the attendees follow the process rather just relying on the results of the trading.

Here are the retail stats:

  • 23% dropped out at the end of theory section. In other words, 67% took the practical.
  • 7% failed to complete practical section.
  • 31% failed the exam. By this I mean, they knew what they had to do but failed to do it.

Here’s a classic example:

John chose to trade mechanically. Given the results of his personality test, I agreed with his election.

September 2016 had unsuitable trading conditions for FX. When that happens, mechanical traders lose money. At this point, John abandoned the system or at least found ‘reasons’ why he would not trade the signals. 

Unfortunately, from the end of October, conditions reverted; and if John had continued to trade the system, he’d have made a tonne of money.  So, what stopped him from returning to the system? The need to prove he was right in stopping its use. 

When you compare John with the 39% who did well in their exam, the main difference is the successful group did the basics well:

  • They followed their position sizing rules.
  • They adhered to the method rules – whether they were mechanical or discretionary rule-based traders.
  • Most important of all, they kept their journals (both equity and psych), AND they reviewed them, so they learned from their mistakes.

More tomorrow

BREAKOUT! 2

In Breakout!, I wrote why I was looking to buy the S&P at the price zone 2278 to 2275 (basis CFDs). Figure 1 shows why I did not enter – the downside momentum was so strong, I never got a setup.

Prices did stop at the next support zone 2258 to 2263. Today. I’ll be a buyer if there is 30-min acceptance above 2281.50 with stops below 2258.

If prices break below 2258, the next support zones are 2248 to 2252 and the spike low zone. 2228 to 2. Acceptance below 2228 would negate my bullish scenario.

 

FIGURE 1: 240-Min S&P (CFD)