Lessons and Strategy

BEYOND THE TRIGGER - Many aspiring traders struggle mightily because they never have the right idea about time horizons and how long something actually might take to do what it is they are looking for. Someone will take a trade and expect that whatever they want to happen (which many times they don't even know), will happen immediately. There is a quick impatience that overtakes the trader, with this impatience then followed up by silly decision making that ultimately results in a sequence of many bad trades before the trader is no longer a trader and the market then finally does what they actually were maybe thinking about initially. And so, all of this comes down to a very clear understanding that things take time. If you need to be in a hurry, you should be thinking about something else. Hollywood does a great job enticing people into the world of trading, because movies are short encapsulations that have no time to allocate for the bore that is mostly associated with the process. The best thing you can do if you feel you struggle with this, is to make sure you are 100% knowing what you are going to be doing and expecting, before you pull the trigger. Don't just think about the level you are getting into the market at. That's just a part of it. Make sure to think about what you expect from a time horizon perspective as well. This will make it all much easier and increase your chances of success dramatically.

cartoon oct 4

STRATEGY - On the strategy front, I continue to see the Euro and Pound in the process of slowly carving out major bottoms against the US Dollar. But we are going to need to get more confirmation so that I am not looking like the only guy standing in a corner by himself with this one. Ideally, we start seeing both of these currencies pushing back up in the sessions ahead, whereby they are able to gain enough momentum that new participants step in to jump on and take on some meaningful exposure long Euro and Pound against the Buck. For this to happen, there are some important technical developments we will need to see play out. As far as the Euro goes, we need to see EURUSD hold up on a daily close basis above 1.1500 and then break back to challenge the September peak at 1.1815. And with GBPUSD, we need to see the market hold up on dips below 1.3000 for a push that takes the Pound back above a weekly high from a couple of weeks back that comes in around 1.3300. The fundamentals are the same and haven't changed. US protectionism should continue to encourage a weaker Dollar, while risk off trade that ensues, is expected to move less towards the Buck and more into the other major currencies. This leaves the Euro and Pound as primary candidates, especially with the Franc and Yen resistant to absorbing flow that would have them trading higher. An alleviation in structural risk associated with Italy and a breakthrough on the Brexit front, are things that will only help to drive these gains even more.

Aspiring traders fail to appreciate the value in parts of trading that extend beyond the initiation of positions.

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Another Successful Defense

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