Market Gaps
We are writing this because of the large gaps in the market at the open on Sunday September 7, 2008. The market does gap but usually it will happen on the opening of the market on Sunday. Occasionally a gap can be seen around a new announcement. It is not as large as the gap at the opening of the market.
What causes the market to gap? Most brokers close for the week end but the market is still moving because the banks are still trading. When a currency pair has a gap it is because the market was trading in a direction which moved away from the price the brokers closed at. This causes a gap in the price of the currency because the broker’s closing price has to align with the banks prices at the time the broker opens.
If you have a stop loss on an order that is open over the week end the market will gap past the stop loss and the order will not be closed at the stop loss price it is closed at the next available price. In most cases the stop is filled at the price the market gapes to. If you have a buy or sell stop and the market gaps past the market order you will be filled at the next available price. This is the price the market gaps to. If you have a sell or buy limit order then it will be filled at that exact price when the market hits the exact price of the limit (pending) order.
This is why many traders do not like to leave trades open over the week end. Position traders (long Term Traders) are not concerned about the gaps because they are trading the long term trend.
Great Success, Small Success
Can anyone be trained to trade for a living? I would say a LOUD yes…. and no.
A great deal can be “taught” like a working strategy. But a lot cannot be taught. One trader will have great success and another just a little success trading the same strategy.
There is something that some traders have and others don’t. That doesn’t mean you can’t be trained to make money trading; many can, but the level of success varies greatly. The love of trading has a lot to do with it. How you think and feel about money plays a big part in your trading also. A trader must understand that there are no absolute systems in the trading arena. Trading systems will give you the advantage but time and study have to be put in to become a good trader. Planning, practice, disciple, control over your emotions and greed, and a fresh outlook on life can go a long way to determine the level of success you may have.
There are many good trading systems, and trader must find the one that works for them. If you find a flaw in a system move on to something else. We would caution you not to spend much valuable trading time trying to perfect something that is flawed to start with. Find a trading strategy that fits you then learn how to use it. Do not spend time trying to change it or perfect it. Spend your energies learning how to trade, and then trade.
Letter From Our Strategy User- Part 2
Traders response to my “any losses” question,
Jed,
Yes, I have sustained losses on this particular demo account, and in many other accounts as well. Not sure what you meant by the question. The losses are few, but they still come. As I briefly look over this demo, I am seeing roughly 15 wins for every 18 to 19 trades. So, about 75%, which could be better, but we’ll work on that.
I have played with several demo accounts, and one live account. Currently, my live account is now a 1:100 leveraged account while my demos are 1:100, 1:200, and 1:400. My numbers are fairly consistent on all accounts, and I am following the rules of the technique.
(My Advice)
Dear Trader
Good, I just want to make sure that you are having a real experience. This just helps to solidify the fact that this is a realistic strategy and not pie in the sky.
To further add to your question about the natural laws of economics. I have found an example from nature that I think will shed some light on my philosophy about investing and returns on said investments.
Letter From Our Strategy User- Part 1
This is a letter we’ve received from a strategy user and we thought it brought powerful insight that we would like to share with all of you.
Jed
Also, just to let you know, I find it quite amazing that two moving averages and the so-called “mao” can produce so many positive results. It is truly incredible, to say the least! So simple yet so powerful.
Please do share with me your thoughts regarding the natural laws of economics in relation to a personal account growing with such massive momentum. Let me explain what I mean.
I have taken this current MINI demo account from $10,000 to over $19,000 since yesterday morning by ONLY using your system. It is a 1:400 leveraged account, but I am only trading 1.5 to 2 percent of the capital per position. All trades are placed based off of H1, H4, and Daily trends while most entries are placed in the M5, M15, and M30 in order to take advantage of the immediate shift in trend. Currently, I have five positions open on GBPJPY with only 4.1 percent of my capital in the market (there are three very small positions open with two positions open of 1.2 percent each). This position, only counting the current equity held, has yielded over $2,800, which takes the total profit to nearly $22,000.
To Hedge Or Not To Hedge
When I first started trading and heard about hedging I thought it was a great idea. Since then it has been a nightmare on a few occasions until I stopped using that trading method. The only way I have been able to trade out of a hedge was when it was small, less than 20 pips, and it was in the middle of a trend. The larger the hedge the harder it is to get out of.
Most people put on a hedge when they cannot emotionally or financially take the loss any longer. Most of the hedges are placed at the top or bottom of a movement in the market, so it becomes almost imposable to get out of. A hedge is usually at a point where you cannot take the loss any more so you lock it in the loss and then live with it. When you have a hedge in place it is a constant emotional drain of energy and seems to cloud your trading vision and your trading decision making ability.
BUSINESS INSURANCE… When Trading?
When you have a typical business you buy all kinds of insurance. Examples might be:
1. Workers compensation
2. Property Insurance
3. General Liability Coverage
4. Business owners policies
5. Vehicle insurance
6. Employment Practice Liability Insurance
7. Business Interruption Insurance
8. Key man Insurance
9. Errors and Omissions Insurance
10. Directors and Officers Liability
Making a claim:
Here are some tips for making sure you come out ahead in any squabbles over how much your insurer will cover.
1. Keep Detailed Records
2. Be Prompt
3. Follow Up
4. Know Your rights
5. Hire a Lawyer
Here are some examples of Currency Trading Insurances:
1. Stop Loss
2. Only trading a small set % or your account 1%, 2%, 3%, 5% on any one trade
3. Only trading a total amount of your account at any one time. 5%, 10% … your choice
4. Keeping the Margin level % above 1000% ( you chose the level of coverage you want)
5. If your Margin Level % drops down to 500% close all of your open trades.
6. Take the total amount you have for trading and put ½ in a savings account then put the other ½ in you trading account. This way you will have some money to trade with if you lose you trading account.
7. Never add money to your account to cover a margin call.
8. If your account has a drawdown of 10% you stop trading until you figure out what you are doing wrong, or what you have changed from when you were making money.
An Alternate To Hedging By Wayne Jackson
This is a strategy to replace hedging that Wayne Jackson created. We agree with his feelings about hedging in this post and feel that it provides valuable information. We wanted to share this theory because it presents insights into hedging and the options you have. However this is not a post to endorse his products because we have never had the opportunity to test and review his products and services. We hope you find this post as insightful as we did.
DO NOT LOSE SIGHT THAT the prime strategy is to trade medium/ long term and trade with the trend, with a trailing stop.
We have posted this in his words.
“Hedging ” to me is simply hiding a loss under another opposite trade…and sooner or later, when the hedge comes off, there is an ugly loss exposed…I don’t like that concept !!! (However, to those who use them, I say, different strokes for different folks…that is, its a personal choice).
Currently, this is what seems to happen to some Traders…
Where Are You Trading: In The Past, In The Present, In The Future?
Take a look at your trading if you are not doing well, you will most likely find that you are not trading in the present. You may be over thinking the market. Your thoughts may be on past successes or past failures which take you away from trading in the present. You could be thinking about all the money you will be making or all the money you have been losing. All of this noise is just taking you away from the present and what the market is really doing.
We all need to find out how we can get back to the present in our trading. We may need to take a close look at ourselves and our motives for trading. Do we have to be right all of the time? Are we finding we have deviated from our trading system or could we be reacting to rather than acting on signals? If you are doing any of these things you are making trading more difficult than it has to be. Keep your trading in the area of probabilities where there is no right or wrong just a result with the advantage in your favor.
Is Your Money Safe?
In today’s world the question ‘Is your money safe?’ is a very valid question. We wanted to share with you the latest video from Terry Savage at the MoneyShow.com. We found that it offers some great advice for how to keep your money safe and some great resources to understand what you need to know. Click on the link below and watch it, then come back and tell us what you think and other ideas you know of to keep your money safe.
We strongly recommend taking the time to research the ideas presented in the video, if you have any questions let us know.
To Chat Or Trade
I was reading a statement by a trader the other day and I found it quite amusing. This is what he says “Lately it just seemed that some folks where hanging out to catch a trade call and make some money.” I am not sure what a trade call is but I was thinking that most people trade the currency market to make some money.
This person goes on :
“Which we know that later on down the line it will all backfire and then someone will get upset because the account just had a margin call”.
Now that you have started this thread I feel that I can go somewhere to get market views and discussion on what is going on in the world without someone coming in and asking that classic question….”Which way do you think the pound is going today””
keep looking »