I started this thread earlier this week - but someone at FF moved it to another forum. Not sure why that was, hopefully they will leave this one in place.
My intent is to share with you, when possible, some insights and analysis that I am doing during the course of a week. I will start this thread (again) with some of my perspective and pet peeves I have with the FX industry. I am hopeful that my 14 years of experience as a trader/money manager in both FX and equities will bring a common sense perspective to the table that will allow for good discussion. I will mainly focus on technical analysis as well as healthy doses of general insights and opinions.
For today, here are my thoughts not only on the current trading environment but also at attempt to cut through some of the noise that traders are bombarded with everyday.
* * * * * * * * * * * *
Perhaps 'Quick Notes...' is a bit of a misnomer for today's posting. Not only will it likely be longer than normal it will have elements of 'ranting' as well.
There can be no denying that the price action and circumstances recently are unprecedented. Huge intra-day ranges have provided ample opportunities for those who are able to intra-day trade. The fact is however, there are very few people who can do this consistently. With all due respect, newer traders have little to no chance of CONSISTENTLY short-term trading with any degree of success.
So, if we agree that 99% of traders are not in there 'scalping' that leaves only swing and position traders. Either camp has had to be extremely selective and only trade when all the planets came together so to speak. Personally, I have only made 2 (yes 2) trade alerts to my clients so far in September - both turned out to be solid winners and oddly enough September has been the best month since May. Bear in mind I am a swing trader so frequency is not terribly high to begin with. However, with only 2 trades for September, it is well below the historical average of 8-12 per month. Naturally with these trades have come wider stops - if not, price action would have taken you out.
Now the FX managed accounts are a different story. In there, I have included the 2 trades noted above, but also probably about 6 or so intra-day trades that were done on the fly so to speak. I have been at this game since 1994 though and as a result I can and do make 'scalps' when conditions permit. To have conveyed these trades to clients in a timely and effective manner would have been impossible.
So what am I driving at? Rid yourself of these erroneous thoughts that all this price action should result in massive gains. For most traders that is simply rear-view mirror analysis. Most traders have horrible discipline and these markets are the ideal 'drug' to exploit that shortcoming.
Remember, trading is not a game for entertainment; it is a game to create wealth. Too many traders feel they need to be in all the time and fret about not being in.
We have all heard these arguments before - unfortunately rarely are they observed. Too many people are seduced by the scumbags that prowl the internet touting large pip gains that are either fictitious or impossible to have executed in a timely manner. Risk adjusted gains are far more important that gains. Any investor with an ounce of common sense will be very shrewed about looking under the hood so to speak. Max draw-down, annualized standard deviation, Sharpe Ratio, Sortino Ratio etc.
Unless these numbers pencil out, your gains, regardless of how large, are irrelevant because the risk you took to achieve them is simply not worth the gains. Next time you here the idiot, I mean the polished presenter, from the 'Red Light; Green Light' seminar (or similar racket) tell you about how great their system is, ask them for their Sharpe and Sortino Ratio's - and even if you do not stump them, they will go pale as you have likely exposed them for the frauds they are.
So, you can either approach this like a business or a hobby. If you choose the business route, get ready to be bored to tears at times because you are sitting on your hands while putting in long hours of research while you perfect your craft.
Take the time to document your monthly gains/losses and make sure you calculate the ratios noted above. You will be surprised how much more effective and conscious you will become about the quality of the trades you are putting on.
My intent is to share with you, when possible, some insights and analysis that I am doing during the course of a week. I will start this thread (again) with some of my perspective and pet peeves I have with the FX industry. I am hopeful that my 14 years of experience as a trader/money manager in both FX and equities will bring a common sense perspective to the table that will allow for good discussion. I will mainly focus on technical analysis as well as healthy doses of general insights and opinions.
For today, here are my thoughts not only on the current trading environment but also at attempt to cut through some of the noise that traders are bombarded with everyday.
* * * * * * * * * * * *
Perhaps 'Quick Notes...' is a bit of a misnomer for today's posting. Not only will it likely be longer than normal it will have elements of 'ranting' as well.
There can be no denying that the price action and circumstances recently are unprecedented. Huge intra-day ranges have provided ample opportunities for those who are able to intra-day trade. The fact is however, there are very few people who can do this consistently. With all due respect, newer traders have little to no chance of CONSISTENTLY short-term trading with any degree of success.
So, if we agree that 99% of traders are not in there 'scalping' that leaves only swing and position traders. Either camp has had to be extremely selective and only trade when all the planets came together so to speak. Personally, I have only made 2 (yes 2) trade alerts to my clients so far in September - both turned out to be solid winners and oddly enough September has been the best month since May. Bear in mind I am a swing trader so frequency is not terribly high to begin with. However, with only 2 trades for September, it is well below the historical average of 8-12 per month. Naturally with these trades have come wider stops - if not, price action would have taken you out.
Now the FX managed accounts are a different story. In there, I have included the 2 trades noted above, but also probably about 6 or so intra-day trades that were done on the fly so to speak. I have been at this game since 1994 though and as a result I can and do make 'scalps' when conditions permit. To have conveyed these trades to clients in a timely and effective manner would have been impossible.
So what am I driving at? Rid yourself of these erroneous thoughts that all this price action should result in massive gains. For most traders that is simply rear-view mirror analysis. Most traders have horrible discipline and these markets are the ideal 'drug' to exploit that shortcoming.
Remember, trading is not a game for entertainment; it is a game to create wealth. Too many traders feel they need to be in all the time and fret about not being in.
We have all heard these arguments before - unfortunately rarely are they observed. Too many people are seduced by the scumbags that prowl the internet touting large pip gains that are either fictitious or impossible to have executed in a timely manner. Risk adjusted gains are far more important that gains. Any investor with an ounce of common sense will be very shrewed about looking under the hood so to speak. Max draw-down, annualized standard deviation, Sharpe Ratio, Sortino Ratio etc.
Unless these numbers pencil out, your gains, regardless of how large, are irrelevant because the risk you took to achieve them is simply not worth the gains. Next time you here the idiot, I mean the polished presenter, from the 'Red Light; Green Light' seminar (or similar racket) tell you about how great their system is, ask them for their Sharpe and Sortino Ratio's - and even if you do not stump them, they will go pale as you have likely exposed them for the frauds they are.
So, you can either approach this like a business or a hobby. If you choose the business route, get ready to be bored to tears at times because you are sitting on your hands while putting in long hours of research while you perfect your craft.
Take the time to document your monthly gains/losses and make sure you calculate the ratios noted above. You will be surprised how much more effective and conscious you will become about the quality of the trades you are putting on.