DAX Revisted 2015-03-30

BarroMetrics Views: DAX Revisted 2015-03-30

In ‘The Start of a Heavy 25 Days“, I suggested that the DAX would provide a low risk, high reward trade.

Today the DAX provided an entry scenario.

Figure 1 shows the Ray Wave Count. Wave (2) was a simple wave; this suggests Wave (4) will be complex – the most usual complex is a sideways market. If a sideways structure is to form, we should see the DAX move to the Primary Sell Zone (12,189 to 12220), and then head down to the Primary Buy Zone (11649 to 11619). The minimum retracement would be the 21.4% line, 11747/11748.

A breach of 11177 would invalidate the wave (4) count.

This allows us to prepare for an entry at the Primary Buy Zone, with stops below 11177. With the 13-week swing in a strong uptrend (what I call a R2 Trend), it is difficult to project a reward. I’d deal with that once an entry is executed.


FIGURE 1 Ray Wave


FIGURE 2 Sideways Zone


BarrOMetrics Views: FOMC II

I was going to conclude “The Thin Line” today but the FED decision takes precedence. Besides, I received a flood of emails commenting on the ‘The Thin Line’ that needs to be read. I’ll conclude that piece tomorrow.

Yesterday, the FED tried to have it both ways: it did not drop ‘for a considerable time’ (commit to keep rates low) but did indicate that it would raise rates at a faster rate. It now is looking for a rate rise to 1.25% to 1.5% by end 2015 (instead of a max 1.25% by end 2015). This suggests that the latest rate rise would have to begin by June 2015 and this would be followed by a rate rise at every meeting thereafter to reach these levels. This is because there are only 8 FED meetings a year.

Also note that the FED expects the rate to be 2.75% to 3% by end of 2016. This suggests another 6 rises in 2016.

My question is whether Yellen will have the stomach to keep to this roadmap if the stock market starts to tumble.

The reaction to the FED was pretty much as anticipated:

  • The USD went up (except against the GBP, we’ll need to await the result of Scottish vote  for that decision)
  • The S&P gyrated around and ended with a neutral. To shake the belief that the FED will jump in to save any decline, it appears we’ll need to see clearer evidence that the punchbowl will be withdrawn. Let’s see what happens.

GxE for Success? (VII)

BarroMetrics Views: GxE for Success? (VII)

We are reviewing the Accountability Cycle for aspiring traders. The final three guidelines form the ‘action phase’. So far, our trader has identified the problem, with reality as a context, he has taken responsibility for the problem, and has devised a possible solution.

Now, he has to test the solution: ultimately, he has to act, review the outcome obtained, adjust his process to deliver the desired outcome, and act again. This process of ‘act-outcome-adjust process-act’ continues until the desired outcome is attained.

If we examine the route many (most?) novices take in an endeavour to attain success, we’ll find that the they fail to follow the accountability  cycle.

Most start with the idea that trading is an easy way to riches. As one aspiring trader said to me: “I want to get rich with no effort, no starting money and little effort” (???). Hardly a realistic attitude. Many fail to obtain the most basic education, they flit from ‘freebie to freebie’, somehow believing that this will be all they need to learn to attain their dreams. These fail to ‘seek reality’

Some do go from seminar to seminar, book to book, looking for the one system, the one magic indicator that will produce the results they seek. I take the view such a system probably does not exits; and if it exists, will not be shared.

Moreover, if such a system does exist, it will exist, at best, for a short time.

At its base, trading is a function of the consistent execution of trading and risk management rules, rather than the result of some ‘holy grail’. By seeking the Holy Grail, these traders fail to ‘acknowledge reality’.

A few do obtain an education; but, they then fail to translate that education into a robust trading method, and a set of risk management rules. In this, they ‘fail to own the problem and find a solution’.

In my experience those that successfully navigate past the ‘find solution’ phase, usually go on to succeed. They apply the three guidelines ‘act-review-adjust-act’ to attain their vision of success. But, a minority in this group, find that they know what to do, but fail to do what they know. What causes this?

We’ll look at this tomorrow.

GxE for Success? (V)

BarroMetrics Views: GxE for Success? (V)

So far we have covered the areas of responsibility for a budding, successful trader in the Coyle Model. Today, I’ll examine application examples. Clearly a detailed examination would be beyond the scope of a blog; but we can examine an example.

Let’s take the accountability model. In my view, most budding traders come to the game with an unrealistic expectation of what is possible and how much time, effort and money it will take.

The accountability model first ‘seeks  reality’.  In what way is this guideline broken? Well, in this part of the world, the best example is the local belief an education is necessary for success. We see countless numbers attend all the freebies but many will proudly tell you that they have never taken any kind of course. 

Imagine going to a lawyer or doctor who proudly advertises that he has never been to law school or medical school. What chance would you give him to succeed in his chosen profession. As Aussies’ say: ‘Buckleys!’ (i.e. no chance).

The second guideline asks the budding trader to acknowledge reality. In this case, he needs to take the action to acquire an education, apply it in a way that will provide a positive expectancy return. The positive return will take time and effort – it won’t come with some magical indicator or system.

(more tomorrow)

On Premium Follow-up Workshop

  1. Thumbnail0:55 Edit in progress


    November 27, 2012 9:00 AM


  2. Thumbnail2:16


    November 27, 2012 8:58 AM


  3. Thumbnail2:25


    November 27, 2012 8:50 AM


  4. Thumbnail1:09

    20121126074942.Student feedbk

    November 27, 2012 12:44 AM

    These are some of the video clips to share especially for those attendees of CMC talks on Nov 10 2012, who are not premium attendees.

    Ag Moderator