I was organizing some photos on my computer yesterday, and was slowly flipping through a bunch that I took in Hawaii.

It was when my family and I spent a month out there.

Here’s a couple reasons why staying less than a month is tough

Any how, it reminded me of a trader I met, and the conversation I had with him.

He was telling me how he was part of a group of traders based in Hawaii. He goes on to tell me that the reason they stationed in Hawaii was so they could work from 3am till 9am, then spend the rest of the day enjoying the sand and the surf… (tough life

Any way, he explained how he was bought into their circle because designed software to profit from market imbalances, and if things went well, his software would bank profits for a few days to a few weeks before he had to redesign it or throw it out all together.

Now the idea of using computers to make money in the markets sounds awesome, but that wasn’t the cool part…

He segwayed onto a guy on his team that they referred to as the “Zen Trader”, and when he started talking about him he had a sound of awe in his voice…

He said they called the guy “The Zen Trader” because he was just so in tune with the market…

And he got even more animated when he explained that when things went wrong (with their trading), like if they had a bunch of positions open and the market started reacting strangely, or if a program messed up and initiated positions that they shouldn’t have, the Zen Trader would step in and work the positions.

He recounted how this guys ability to read the market and manage the trades were a sight to see.

What does this have to do with your trading?

While you may not be a computer programmer who designs trading software, and you may not be a zen trader who just becomes one with the market, there is an interesting lesson here…

You can spend your time and energy buying systems or strategies that are designed to take advantage of temporary opportunities in the market (that you’ll have to throw out in a few weeks) or you can spend that same time learning how to read the market itself, giving you a skill to profit from the market regardless of what its doing… the choice is yours…

Categories: Trading

*Disclaimer:It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options.

That’s today’s question I received from my question and answer request.

Hi Ray,

I am looking to trade forex and was wondering what you’ve found to be the best time frame to trade? I’d like to trade before or after work, so making trades around that schedule would be good, but I was wondering what you’d recommend.

Thanks

This is actually a very popular question I’ve received over the years. And my usual answer was, “Well it depends on a number of factors, including,

* when are you available to trade,
* how well you perform under pressure,
* are you willing and able to monitor positions constantly or not
* does the timeframe seem to short or long for you
etc…

I’ve recently realized that I may have it all wrong.

Each of those criteria leave out 1 important factor… the market.

You see, each of those critera only address what YOU want, and not what the market wants.

I’m coming closer to grasping the fact that picking a timeframe is not about you, it’s about the market.

So how do you know what timeframe the market wants?

That’s a good question, and I don’t yet have a full answer, yet…

All I do know is that by learning to see the trends and ranges in the timeframes they belong to, you can get closer to trading the right trend in the right timeframe.

If that sounds all mysterious, it may be, because as I said, I’m still trying to figure it all out.

Over the past few days I’ve been getting better at tuning into the “right” timeframe and this gets me in trades earlier, and out of trades later, meaning I’m taking more of the trending portion than I ever have before.

In fact as I write this, I’m actually trading a timeframe I’ve avoided for the longest time.

Of course it is still too early to know if this is just luck, but I wanted to share this with you because maybe it will act as a catalyst and give you an idea to try, and who knows, maybe you’ll share it with me.

So does this mean you can’t pick your timeframe?

No, you can still choose the timeframe you trade… but I believe that when you experience getting into trades late, and out of trades early, it could be because of you’re dictating the timeframe instead of allowing the market to.

Continued Success!

Categories: Trading

*Disclaimer:It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options.

Hi Ray,

you mentioned that you had integrated swing trading back into your life. Do you have a system that you have developed that traders can buy or do you use a system for that? I am interested in multi day trades using end of day data. Thanks for your help.

Brian

Hi Brian,

Thanks for the question…

This is a bit of a tough question to answer… no, I don’t have a product that addresses swing trading specifically, yet each of my products kind of addresses swing trading.

So to clarify…

I’ve always tended to be a discretionary trader. In other words, I don’t use a hard and fast set of rules to trade. That doesn’t mean I don’t have a set of rules and guidelines, they just aren’t black and white.

Instead I focus on analyzing the market, accessing where things are, and where they may go, and trade accordingly.

This doesn’t make a great “system” to be distributed (at least from my own experiences).

You see, of my courses, each one got progressively more and more conceptual.

What do I mean?

Well Market-Millions was released and was a very rules based, black and white trading system. I think this is perfect for the beginner trader, as it outlines exactly what needs to be done every step of the way. Through this regimented approach, proper habits are developed like trading with the trend, risk management and knowing your entries and exits all in advance.

This is a good approach, overall… but after following the markets for some time, and applying a strict approach, you begin to wonder if there are ways to tweak the system.

And you can… the thing is, many “tweaks” tend to become more and more subjective. Saying I’ll exit at $x is different from saying I’ll exit at the previous swing low, is different to saying I’ll exit as the momentum decreases.

In each example we get potentially more and more subjective.

Is there anything wrong with subjectivity? I don’t think so. The major issue with subjectivity is that you could start running into the potential of blaming yourself for bad trades (which may be the case) instead of accepting that the markets do what they do, and that’s just how it is.

Starting with a rigid method kind of protects you from this self-criticism until you absorb the experience of losses as just a part of the game.

As you move more into the realm of discretionary trading, (at least how I see it) you move away from rules and more towards concepts.

Giving you rules to follow versus giving you concepts to follow is night and day.

A rule will define as precisely as it can the conditions you’re looking for, while a condition will describe the intent.

Buy when price breaks a trendline drawn over the last 50 bars versus, buy as you see prices moving up strongly from a low.

The first instruction will get you in at some point, while the second can get you in both earlier and later or not at all. Knowing when to apply rules and when to apply concepts is I guess the challenge.

I discovered this challenge as I was working on codifying a set of rules for the trading robot I was working on over the past few years, and that was an interesting experience because it made me realize that a bunch of decisions were unconsciously being made by me in terms of entering and exiting trades…

But here’s why most robots fail…

They are given jobs they do well AND given jobs they do poorly.

The key is leaving them to do the jobs they do well, and not giving them the jobs they do poorly.

Well this was a rather long reply just to tell you no I don’t have a swing trading product… I guess not writing for a while must have caused a backlog of stuff in my brain.

Thanks again for the question and Continued Success!

Ray

Categories: Trading

*Disclaimer:It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options.

“I’ve been told that prices go up because there’s more buyers than sellers…

But the question is when someone is buying, doesn’t there need to be a seller to complete the transaction?

So in essence, isn’t every buyer matched with a seller?”

That’s a good question. It actually address the foundation of trading. Most people don’t bother working through the mechanics of it,

If there are more buyers at $1.00 than sellers at $1.00 then after all the $1 buyers clear out the sellers at $1.00 then the

$1.00 buyers either choose to buy at $1.01 where there may be more sellers, or they wait for sellers to come back in offering $1.00

If sellers are only willing to sell at $1.10 and the buyers at $1.00 are willing to go up to that offer price, then we see the price move from $1.00 to $1.10.

So it really isn’t accurate to say that there are more buyers than sellers… there are always equal number of buyers and sellers.

What’s more accurate to state is that price moves up if there are more buyers than sellers at a given price AND buyers are willing to go up and pay sellers at a higher price.

Because even if there were more buyers at $1 than sellers, if buyers were unwilling to hit the offer at $1.01, then prices will not move up.

So what makes buyers more apt to follow prices up and hit a higher offer?

Well they must believe prices will go even higher.

What makes sellers willing to sell at the prices they sell at? They must believe prices won’t go higher, but will go lower.

Buyers buy because they believe prices will go up, sellers sell because they believe prices will go down.

So the key is being able to read the balance between the two…

Hope that helps.

If you have any trading questions, feel free to add them as a comment below.

Categories: Trading

*Disclaimer:It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options.

Q: My question is related with the way to handle short term sector rotation and relative strenght analysis.

Some sectors and industries are down sharply in the near past, but look strong when looking over 1 or 3 months.

Other sectors look strong in the near past, but show weakness when viewed over longer periods. How do you deal with this situation? Which are showing relative strenght and which are showing relative weakness?

A: The way I see it from your description is essentially this… you have a sector which was strong and is now in a correction.

And you have a sector that was weak and now is showing strength… this is the same scenario, where that sector is correcting the downtrend by showing strength.

From the sounds of these 2 scenarios we are looking at the same thing. As the corrections in both complete, and the trend reasserts itself, the strong market (currently weak) will begin to show strength again, and the weak market (currently strong) will continue with weakness.

The only way this will change is if these two markets are going through actual reversals, at which point (if they stay inversely co-related) the strong market will now get weak and vice-versa for the weak market.

In the end, it comes back to the same trading foundations… identifying a trend, a correction and a reversal; then formulating a plan to trade accordingly.

I would treat each market as separate trading decisions.

Categories: Trading

*Disclaimer:It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options.

Got questions about trading? Let’s see what we can do?

Post your question as a blog comment below. I’ll answer each question in the following weeks…

Some thoughts to get you started…

What aspects are you struggling with in your trading now?

What do you need to know to take your trading to a new level this year?

Why isn’t your trading working right now?

I don’t know… I’ll leave this homework up to you

Categories: Trading

*Disclaimer:It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options.

If you haven’t read first article about the “Smash & Grab” trading setup, you can read it here.

The beauty of this strategy is that it works based on the principle that there are many traders watching support and resistance levels, waiting for them to break.

When they break, many orders are often times waiting on the other side (the way we did it).

Many traders refer to this type of strategy “breakout trading”.

This is NOT your average breakout trade!

The key difference is that while other traders are looking for the move to carry through, all we’re doing is looking to grab a quick 20 pips as these orders get filled and cash out quick – happy with our payday.

Continuing with the example – you can see below, we hit our target with ease (at the arrow)… pocketing $200 per contract – or $20 on a mini contract.

Now here’s where you can start to leverage this strategy…

As you start to bank some profits, you can then to get aggressive with the “market’s money” and look into ways to start trading the retracement, and subsequent follow-through of that breakout.

In the next chart you can see the market rallied an additional 100 pips AFTER our little trade.

Are you starting to see the potential with this?

Of course on its own this strategy is pretty awesome… but its just the tip of the iceburg.

We’ll further develop this idea in future articles and look at how we can suck even more pips out of the market!

Categories: Trading

*Disclaimer:It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options.

Learning to read price is one of the most profitable skills you can develop.

Until recently it was a very labor intensive process to gather price data and test out ideas.

I remember when I got started, charts were delivered weekly – with enough space on each chart to update it by hand.

Indicators were virtually non-existent, as computers were not a household item.

Today the internet has has allowed anyone, anywhere, with a computer to have access to powerful tools. The key is learning how to use them.

One of the fastest ways to improve your trading ability is by using free resources right in front of you.

Here’s what to do:

Firstly, get yourself setup on a demo account. Any broker will do. Check out IBFX.com if you don’t have one already. They’re free and you can get setup in minutes.

Open it up, and take a look at a chart. I’d suggest looking at either the GBP/USD or EUR/USD. Any pair will do, so if you already have a favorite, then go with that.

If you’re brand spankin new to this head over to babypips.com to pick up a bit of basics about what the chart is showing you. Then come back to continue.

Now go to the timeframe you trade (or plan to trade). Don’t have one? Well try the hourly.

At the top of the chart, there is a little button with “H1″ on it, click that.

Now press the “Home” key on your keyboard. This will take you to the beginning of the chart.

Here’s what you’re going to do, move forward, bar by bar, you do this by clicking on “F12″ – found at the top of your keyboard.

What are you looking for?

Well the first few times you do this… don’t look for anything, just get your eyes used to how price moves.

Click to the next bar at your own pace.

Don’t go too fast or too slow.

Now what have you done?

You’ve compressed, typically a year’s worth of trading into only an hour or so of actual screen time.

Do you see the value in this?

Yesterday, while waiting at the dentist’s office, I read an interesting article.  It detailed how researchers found that amassing 10,000 hours of practice lead to mastery in just about any subject.

In his early high-school years, when he should have been in bed, a young Bill Gates would head off to the University of Washington where he and his friends racked up 1,575 hours of computer time on the mainframe computer.  That averaged out to 8 hours a day – 7 days a week.  By the time he dropped out of Harvard he’d already been programming practically non-stop for seven consecutive years. He was way past 10,00 hours.

Not into computers… well there was another excerpt about a band.  While most bands don’t perform 1,200 times in their entire careers, this group performed 1,200 times in a 4 year span.  By the time The Beatles broke out in 1964 they’d banked 10,000+ hours of gigs.

The article went on to highlight more and more cases, in a variety of different areas and how practice was a key ingredient to success.

This made me realize WHY this trading exercise is so powerful, and why it’s really a secret to why professional traders outperform the average.

Successful traders spend countless hours pouring over charts,  studying the market AND following the market in real-time.  Is it any wonder they get good?

But what’s really encouraging is that success is possible for anyone willing to put in the practice.

And that’s what this exercise is all about.  You don’t have to wait and watch 10,000 hours of price action in real-time – you can compress years of data into a few hours.

I highly recommend you do (and repeat) this exercise whenever you can.  

Hone your skills… trust me, this is a priceless skill!

Categories: Trading

*Disclaimer:It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options.

Sound good?

I thought so…

Ok, let’s get started…

I’m about to show you a great little trading tactic you can use to grab some quick profits.

I’m assuming that you already have some knowledge of how to trade forex. If you don’t, run over to www.babypips.com and start building a foundation – because what I’m about to share doesn’t get into how the forex markets work, or how to place orders, etc… it’s the nuts and bolts of a quick and dirty strategy you can use to start banking some pips in the next day or so.

In fact its so easy you might just want to make this your entire strategy.

What is it?

It’s a price based trading strategy that:

Doesn’t require any special indicators.
Works based on trader psychology and strategy.
Can be applied in any market.

The “Quick 20 – Smash & Grab” Strategy

First we’re going to pull up an hourly chart. I use Metatrader, so you can follow along with my charts, however this works with any charts.

Step 1: Grab your chart.

Pull up an hourly chart. I like to follow GBP/USD and EUR/USD, and I advise you to follow those – of course it works in other pairs, but why get greedy

Step 2: Find Support and Resistance Zones.

Zoom out and look for highly identifiable support and resistance zones.

Support and resistance are levels price points where the market stopped and turned around.

So if you look at the chart below, you’ll see I’ve marked off potential areas of support and resistance. (Ignore the red and green dashed lines – that was simply an order I had placed in the market.)

The blue highlighted areas are not exhaustive by any means… the whole point is to show you where ever the market turns, support/resistance points are found.

What do I mean by highly identifiable?

Well as I said, anywhere the market turned is a support or resistance level. But not all support and resistance levels are created equally…

Areas where the market has repeatedly hit and turned at are “better” levels of support and resistance. The more hits the better.

Also the bigger the time between hits – the better.

It’s probably easier to understand with a picture…

The areas with the arrows pointing to them have multiple instances of price reaching and turning at those levels. Now they are not exact price touches and turns, but regions. The more the better.

When I find these points I draw some lines on to highlight the support/resistance areas…

I put thick lines for support/resistance I feel is stronger – and thinner lines for weaker levels.

That’s it.

Now I’ll probably get asked, “Why aren’t your lines on exact levels?” or “Why are some lines touching price, and other not?”

The whole objective here is to simply mark areas where price has shown to turn – that way we can use those levels in the next step.

Step 3: Pinpoint Price Setup – And Place The Order

Find the most recent price action that is near (or touching) a support or resistance level and place trades on the other side of the support / resistance with a stop of 20 pips and a target of 20 pips.

So in this example, seeing the resistance level at 1.6554, I’d find the place an order to buy at the high of the bar in the blue ellipse – 1.6555 (+4 pips for the spread) taking it to 1.6559.

I’d then set a target at 1.6579 (1.6559 + 20 pips) and a stop loss at 1.6539 (1.6539 – 20 pips).

Step 4: You’re Done!

Sit back and let the trade work itself out… go for a walk… read a book… go to work…

Of course I can’t force you to walk away, but it’s always nice coming back to your computer after an afternoon out and seeing more money in your account than you spent that day

Of course all trades don’t turn into winners – and that’s fine… as long as we win more than we lose we’re happy.

And with this strategy – we’re happy…

But don’t take my word for it – test it out for yourself!

There is a way to enhance this strategy even more… and we’ll get more onto that in the next article.

Categories: Trading

*Disclaimer:It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options.

I grabbed it off a video I was watching.

It’s a great summary of how you can manage your risk while working on maximizing your profits…

It works regardless of what you trade or the timeframe you trade in.

To quickly run through…

1. Risk up to 2%

Limit the amount of money risked per trade. In other words, don’t bet the bank on each trade.

2% is a good number, you can even go down to 1% if you’ve got a decent sized account, you could go down to 1% – if you’re really aggressive you could possibly go up to 3%

But keeping your overall risk below 3% gurantees that even when you take losses, you won’t be put out of business.

2. Place stops where the market shouldn’t go.

And this is a big one…

Don’t place your stops at a fixed dollar amount away… or a fixed amount of ticks away. This doesn’t take into account the natural ebb and flow of the market.

Taking it even one step further, I’d say don’t put your stops where they’re likely to be hit.

Unfortunately most people ARE TAUGHT to put their stops in the wrong places. They put them EXACTLY where the market is likely to go. Then they turn around and cry about how their stops were run.

Try this – look at chart – and ask yourself – “If I had the power to move the market and run stops, where would I go?”

And I’ll bet that where YOU’D run stops, is exactly where you were taught to place your stops.

So stop doing that

3. Sell 1/2 your position at a target.

This advice can always been seen two ways… at least for me.

On the negative side, selling half your position at a set target means that if the market moves past that point, you’ll only be holding 50% of the position… but if on the flip side you were to take a loss, you’d be doing it on 100% of the amount.

The counter argument is that by taking off 1/2 your position and locking in profits, psychologically and emotionally, you have at least banked some gains.

I know that it’s psychologically difficult to watch a profitable trade dwindle, so I tend to follow this same technique.

4,5,6 “Erase the risk”

At some price point raise your stop to breakeven and trail out of your remaining position.

This allows you to stay in those trades that keep running.

I wanted to share this slide with you, because it is a key component of successful trading.

You can actually watch this whole video yourself, which may be a bit clearer than what I wrote – as I’m nearing the end of my 18 hour day.

I think it should still be posted up – It covers this idea, and it walks you through 2 examples of how it works on a winning and losing trade.

Check it out:

http://www.click-here-for-details.com/screenshot2.php

Continued Success!
Ray

Categories: Trading

*Disclaimer:It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options.