Reflexivity in the USD

The major move has already been made out of 1/3 of dollar longs as we are at the 50% fib wave hi low from the major wave.
AND yes those bastards stopped me out at 9530 in that false wick before the release. Thank god I got a second shot at the 886 level

Euro and dollar should find a breather here and be mundane for the day.

EDIT FINDING resistance at the 50% added pic

Alright, done for the week as I made my nut. Pissed that NFLX has not rolled over yet for my next week put weeklies considering how much ES is rolling over. But I will give it time as my unrealized loss on the options are more than made up for on my currency trading this week.

Have a nice weekend all, I will be on Skype (Leveredbuyout) if you want to chat.

Thanks man... it help a lot for trading news...This method is for nfp only? Or can be uses on others major news?

Other econ releases that are not spur the moment and are planned ahead. Major ones, Or any that show a nice spike in reaction you can do it.

Was about ready to head to the gym and get a head start on my weekend but now at the 786% and crossed above just go long again on dollar. set a stop just below the 786

The life of a trader, it never ends when the setups are there

Looking for a retest of this mornings high..if not i am out at -3 points so not a bad rr

Out at -3 now I am really done for the day.

Hello all,

Not really trading today as its dead out there. Sitting on the sidelines on dollar and EURO at the moment as I was expecting dollar to continue on from Friday's report. Will wait for London to find an entry on either two on long/short side. Levels to watch on dollar.

Off to the gym see everyone in London

I come home from the gym to check positions and besides being flat on currencies I see my NFLX puts are a monster today. Might close them out as I am up over 4k alone today and we are near the bottom of yesterday's range. A word of advice to forex traders with smaller accounts. Learn to trade options as y0ou can build accounts fast if you know what you're doing and take small contracts
Just today alone had you bought one contract at 2.95-3.00 ($295-300) you would of seen a spike to 5.00/per contract (500)
just my two cents but when currencies are either stagnate or you're flat waiting for a setup, its always nice to have non-correlated plays on your book to make you money.

EDIT Friday's range* we are at not yesterday's liol

S&P way oversold at these levels short term. Looking for a bounce tomorrow so bought some SPYJUNW 209.50 calls
bought 10 at $1 so looking for a combination of profit taking EOD, ETF money to bid these levels as support and a follow through higher.

Dollar is very strange right now given the strong numbers and lack of follow through. I am not touching it or EURO until more PA comes out overnight.

Hey everyone,

I din't trade today like most on currencies as it was beyond boring in US session and flat. I did scalp Oil nothing to write about really. While I was waiting for a jolt in the market, I was reading old PM's from a few traders wanting to transition to the futures markets and had questions. A I also had a conversation with a friend of mine on Skype today who was doing well the first few months trading and ALREADY STATED HE WANTS TO MANAGE MONEY lol. He came from the stock world and he and I had a debate. Anyways, that prompted two things that I thought about.

1. Maybe starting a thread on how to get into futures and understanding the differences between forex and futures. Most traders don't know you can get intra day margin in globex hours whereas most think this just applies to the US market/CME hours. Fun fact

2. I wrote a brief article for anyone who is new to trading, comes from the stock world, or wants to transition to futures.

I might start a thread that does not talk about trades, but just address questions concerning the futures markets and how to get started. Similar to babypips university on learning forex which I found helpful many many years ago.

So here is what I wrote. And again if you know my writing forgive the ADD if you see tangents or misspellings

this was cultivated on the backs of a recent conversation I had with a frien and he brought up a concern that all new and sometimes experienced traders faced when it comes to building a trading plan. What are the proper money management principals to have, and where should I place stops based on my account strategy?

This question really resonated in the back of my mind as it had me thinking when I had to approach this road block two different times. First, when I was investing on behalf of my clients as an investment advisor, then in my current role as a private trader overseeing my own money. The knowledge I gained and the mistakes I personally made when trying to transition risk management into the traders arena really helped me along my path in becoming a full time trader.

Once I overcame this roadblock I found out not only what my current risk management policy should be, but more importantly, I was able to strip away the misconceptions I personally had as an investor coming into the world of fast paced futures trading. As someone who has seen both sides of the spectrum from institutional to retail I wanted to express what I believe are some of the major mistakes investors make when they try their hand at trading.

1. Thinking youre a fund manager or Warren Buffet when trading:

If you were like me when you found the markets you most likely discovered the stock market first. Then, as you progressed you grew up reading and idolizing market wizards and other books where you read about great traders and their enormous fortunes that were made. For me after having a few months of success I had a massive ego and thought I would be managing money soon myself while building my small account. This was not only delusional, but made me miss so many opportunities to really learn trading through screen time vs. spending unproductive time reading about hedge fund strategies and obscure products to eventually trade.

In my opinion, one of the biggest mistake traders make (I was part of this camp) is they have a few good months with very little sample size, then they shift away from what works to try and incorporate other complex strategies they believe the pros use so when they get called up theyll be ready.

Here is the truth that no one wants to hear when you think youre the greatest trader on earth. Youre not special when it comes to trading and its very unlikely that you will be managing billions let alone millions of OPM. I say this not to diminish the hopes of pursing fund management, but I say this because as a small retail trader with a short track record youre going up against some of the brightest talent pool the street and Ivy League schools has to offer when it comes to competing for capital.

Also, if you want to be like Buffet, Soros, or any rockstar fund manager youd better get ready to work 80+ hours a week dealing with business matters, overhead, regulators, and appeasing clients by taking constant meetings. If you think the allure of running a fund is just about showing up in a Tom Ford suit and cornering markets, then you dont know the time and cost that goes into setting up shop.

In summary, when youre managing your own money, be in the moment and focus on what works. Stop spending time learning obscure products or HF strategies and build your account through focus. If youre a rockstar and have a solid record, the money will come to you quicker than you can take it in.


2. The 1% risk per trade misconception.

This is a very hot topic that can be debated forever. But I am here to tell you why this is not a feasible strategy when it comes to futures trading. How many traders spin their wheels back testing strategies to find out how to risk 1% per trade while also finding that unicorn strategy that will forever favor their win ratio? I know I did.

First lets do some basic math and show why 1% per trade in the futures market will see your account slowly die by a thousand cuts.

We start out with a 10k account and decide to only trade E-mini futures. (lets pretend youre on intraday margin of $500/contract). If we are only looking to risk 1% of 10k per trade this is a $100 stop loss. Now because youre getting $50 per point in ES we have to assume youre looking at minimum for a 1:1RR trade. If you spend just one hour a day observing eminis or any futures markets for that matter, then you know how volatile it can be to see a position go into your favor a few moments only to reverse and stop you out prematurely/

So what happens next is you get frustrated being stopped out several times, then you spin your wheels once more by going back to the testing lab to find a new strategy in order to make this 1% notion stick. Its never going to happen and while youre spending countless hours trying to curve fit a strategy to meet your 1% rule while still having a high profit factor, youre missing valuable screen time when the market is moving 10 points or more a session.The individual who believes they can curve fit a high profit strategy with a 1% risk rule are the same investors who want 20% returns but categorizes themselves as conservative investors


3 Having the same risk management philosophy when applying it to two different types of markets.

Now if youre like me you found trading after you dabbled in stock investing either on a long term basis or finding growth companies that were prone to move quickly. Again, we usually read books that praised the axioms of buy and hold, dollar cost averaging, and building a diversified portfolio so that losses would be offset by non-correlated markets. This works for the investor methodology but they try to take this same approach and apply it to the futures markets with little success. To explain how this takes place time and time again lets go through a perfect example.

Investor A has a 25k equities account and risk only 1% per trade based on the account size. This is a $250 stop. Lets now pretend that this investor buys 100 shares of APPL at $125. His stop would be placed at 122.50. Now on lower or moderate beta stocks setting stops a few points away from the market provided your system gives you a signal would give you a healthy buffer to be wrong if it doesnt pan out at first. Lets now try to take this same concept to the trading world.
Investor A turned new trader has a 25k futures account and risk only 1% per trade based on the account size. This is a $250 stop. Now lets pretend this investor only trades crude oil futures which are $10 per tick. Now lets say new trader based on his/her system goes long oil at $59. His $250 stop would be at 58.75. Now if you know how violent futures can move in a small time span, then you know your stop based on this rule will more often than not get triggered.


The mistake investors make when coming to the futures field is not understanding beta or average volatility when setting stops or developing a trade plan. They just assume it works when I was an investor dabbling in stocks, it should apply to the futures markets as well with no issue. This is one of the reasons I say investors lose slowly in the futures markets.


How do we solve the problems mentioned above?
Solution 1. If youre not comfortable risking on a 1 lot ES trade at least 3 points, or just $150 then you can stop reading here. This may sound very harsh but it will save you a lot of time and money because trading futures is a whole different animal than trading stocks or forex. The amount of money that is lost and made in minutes is vastly different then other markets. You have to be comfortable with small losses and accept its part of game or else it will psychologically screw you up and make you endlessly backtest strategies over learning through screen time.

Solution 2 Trade less. We hear this countless times but many fail to do this. Especially in futures markets you can be up massively in the morning and give it all back with interest EOD. Wait for clean setups where the trade favors your bias the most. Those new to the trading world need to confront the idea that youre not working daily to accrue a paycheck. There will be days where no money will be made and this is a great thing as youre smarter than most by not forcing trades that are not clean setups.

Solution 3. Clear the clutter from your screen. I have met traders where they had drawings, fibaonaccis and other indicators that went back several years. Here is the truth when it comes to trading. All that matters when finding setups is knowing the current trend and what happened yesterday and today. THATS IT! People get caught up in drawing all these pretty lines and fibs from years ago and hope when the markets reaches key points it will magically find S/R there. By keeping it simple and understand how price action works on a daily basis your trading decisions will be clearer.


4. Solution 5. Stay away from forces that dont benefit your trading. If you have ever read a mindless market book that does not apply to todays environment, got into a mindless debate with others on various trading forums, or spend time performing analysis on markets you dont even trade, STOP IT! If you trade a certain session and only trade a few instruments then your focus should be entirely on the setups. When your session is over dont waste your time reading mindless tweets, or getting in shouting matches with people on forums who have opposing views than you. If you have a few trader friends who offer intellectual debate then this is different. I have seen to many traders get into the game just to call themselves traders and sound intelligent at cocktail parties.

If you start tracking what you do daily and the hours it consumes regarding market activities, you will find a major surprise of the hours which are entertainment vs. actual screen time and analysis. This will be a wake up call and see you become a serious trader.

In summary, don't trade in your room while wearing a suit and tie to feel like PTJ! And don't think you can run a portfolio when your account is less than several million! Truth of the matter is most investors who are called the 'mass affluent' want a complex system or method when all they need to do is trade 1 or 2 contracts consistently to build a fortune.

Thanks for above two posts JP. I'm not familiar with futures so please let me know if you do start a thread. One quick question from above. Impression I got was that futures are more suited to people who predominantly scalp in forex. Is that an accurate impression?

Great stuff, jplazard. I've been wanting to learn more about futures myself. Eagerly awaiting your new thread (if you decide to make one).

If you're trading an account size that is 20k or below, then I would say yes you're looking for quick moves to get in and out on 1 or 2 contracts during intra day margin. When you hold contracts after US close the B/D converts intra day to overnight where margin increases substantially to continue holding. Or, provided you have a solid framework on the market you're trading on 1 contract at minimum, I would say have the TP at least let you capture $200-$500 as a precaution if you let it run.

When your account grows to a size where not only you have a very safe cushion of taking overnight trades but can add multiple contracts only then should the focus be on larger swings that come in the form of daily candles. I recently joined the CL thread and there is a trader in there who articulates crude trading perfectly when he takes out anywhere from $600-$1000 or more sometimes daily just by using intra day margin and trading from US open to the pit close.

Here is a perfect example of the power of switching to EURO futures vs. Trading EUR/USD on a standard lot.
So EUR/USD is aprox at 1.13. If you buy a standard lot you're putting up $2,260 at 50:1 margin
and from 1.13 to 1.1301 your profit is only=$10!

Now imagine you just trade only US open to close or several hours in Globex where you can take advantage of 'intra-day margin' (obv you need to close out the position before the close and can reopen after Globex to not rollover to overnight margin)
So I pay aprox $600 in margin for a standardized contract in EURO furures

1st pro here is I am only putting up $600 vs. putting up $2,260

Guess what I make when EUR goes from 1.13 to 1.1301? $12.50 per tick

2nd pro: I am getting more bang for my buck on euro movements

And just about every currency that is part of the major's you're putting up less margin and you get more $ per tick value (or pip world if you're talking spot)

Trading futures on small accounts is doable provided you can view the market as an ATM and not think like Soros in developing these macro moves on LONG TIMEFRAMES. It's only when your account reaches the 6 and seven figures is when you can do carry trades, arb, and even ride currency cycles.

Thanks so far. I will work on something this weekend. I always loved babypips b/c they have an easy to read layout from beginner to advanced, so I will try to format the same concept in a new thread.

Two possible setups for currencies going into London that I am looking for:

On Dollar, I am still concerned it could not follow through post Friday's report and has traded lower ever since. Having stated that per the chart below it is finding basing here at the 618% fib from the 5/18low-5/27hi. One or two things is going to happen that I am looking to pounce on.

1st scenario, it starts to find major support here to continue a new wave higher from the levels mentioned above.
2nd scenario, it breaks 94.96 and we trade all the way down to 93.15 in a leaky fashion with little spikes.
Until I see an hourly close above above/below the 50%/618% I am letting the chop take over as I don't want to get in early on the wrong side of the next move dollar will have.

On EURO, I actually have the same bias here going into London. Even though looking at RSI on both 1hr & 4hr we are not above 70, If Eur continues to be supported here from today's high from US trade we could easily test 1.1470 again. Or, if we break below said level I am looking to take a quick scalp down to 11280-70.

I don't think swing players have to wait too much longer on dollar as its close to testing the 618% fib point to find direction for the rest of the week. Either we bottom and start a completion wave higher, or we break this level trading to 9315 and having EURO test 5/15 highs at 114-11470

Lastly, if nothing happens on my currency ideas I posted in CL thread of a reversal fib thats in play on crude from 60.90-61.38. I would go short now but I prefer to wait leading into US and more liquidity in gauging if this is a failing point. Once I see several failures withing this sell zone, I will look to short quick before EIA release for a quick move down to 59 (pic of crude was several hours ago, we are now trading at 61.12 so right in the sweet spot for a short tomorrow)

Hi JP, thanks for writing this ... I found it a very useful focus on the differences between different markets. I have never believed that Forex is anything like stocks, and yet I discovered and continue to discover that my huge experience in the stock market has only warped by abilities in Forex due to acquired mentalities.

.....ain't that the truth! In my case 2 years successfully picking stocks, growing my nascent account, the engineering office evolved into a trading club which was supposedly employed to perform product design and production engineering. Some people (who basically were not captured by this alternate activity) were a bit disgruntled by the apparent success of most of us, particularly when a junior colleague one day exclaimed 'I just made a month's salary'!

Then came the dotcom crash. An abject lesson in fallibility, and vital to the rounded development of a trader, IMHO. There have been other crashes since, and my personal bent for fundamental and value investing - including an insistence upon understanding why a company is successful, has helped retain some sanity.

Anyway, enough of me. It is good of you to share your obvious experience and capability with Futures trading. Also good to find somebody not doing it all off demo....

Exodus, Thank you and I agree with the notion coming from the stock market side to alternatives. I used to really value fundis and macro ideas when building portfolios on behalf of clients but then just like a switch everything changed. I mean the lunacy of the markets sometimes of not following fundamentals used to make me go mad! Then with the birth of QE what was bad news caused stocks to go up, and what was good news caused stocks to go down. This never happened way back when. I remember how retarded markets were most of 2013 and part of 2014 when all one had to do was go long at the open on options or ES futures on 'turbo tuesday's b/c for some reason the market decided this day was going to set records for longs in a year. Easiest strategy until it stopped working eventually.

It does feel amazing when you tell others how you made their salary in a few hours in what they make in a month (told this to an ex I ran into with her new BF, yes I was drunk lol) but this translates to the screens and eventually everyone gets caught up on the wrong side.

That is why I idolize Soros so much and his teachings. Not because of his ventures in various markets such as the infamous pound trade, but simply because he is able to explain how the stock market works better than anyone else I have ever come across via his reflexivity theory. If you haven't read The Alchemy of Finance I have the PDF I would be happy to send you and others.

Man, this bund and euro relationship is really not allowing EURO to come down. Hit 1%
Dollar has now breached the 618 I am about ready to go short here if it can't hold.

edit: 94.825 short, lets see what happens.

Could you share it please?

Sure, I would post it below but the file exceeds the 10.MB limitation
If you want the full book PM me your dropbox or email address info and I will send it over.

Youtube has an abridged version which cuts off some of the parts such as the Currency Chapter & Reagan's imperial Circle chapter