Money Flow Trading Method along with Risk Management

Since Short EUR/USD is now my Fifth Trade Plan , I am starting to review all material on the subject.

Here is an excellent daily chart on EUR/USD to have the picture in focus before markets open later today.

http://www.forexfactory.com/attachme...0&d=1486308429

http://www.zerohedge.com/news/2017-0...ops+to+zero%29

Snippet:
In surprising comments that may rekindle a verbal currency war between president Trump and Europe, German finance minister Wolfgang Schäuble told German newspaper Tagesspiegel that in his opinion the Euro is "too low" for Germany, echoing criticism from Trump's trade advisor Peter Navarro, who last week told the FT that Germany was exploiting its US and EU partners by using a “grossly undervalued” euro to create a vast trade surplus. The comment placed Germany, alongside China and Japan, in a category of countries that the Trump administration has accused of currency manipulation for competitive advantage.


As the FT reports on Sunday morning, Schauble acknowledged that the ECB had to set monetary policy for the eurozone as a whole, but said: “It is too loose for Germany.” A recent chart from Morgan Stanley confirms that on a PPP basis, the EUR is over 40% undervalued for exporting and current surplus powerhouse Germany on a standalone basis, however for many of Europe's peripheral countries it still remains expensive.
http://www.zerohedge.com/sites/defau...%20value_0.jpg
What was more curious about Schauble statement is that the German finance minister blamed the European Central Bank for the low exchange rate.


“The euro exchange rate is, strictly speaking, too low for the German economy’s competitive position,” he told Tagesspiegel. “When ECB chief Mario Draghi embarked on the expansive monetary policy, I told him he would drive up Germany’s export surplus . . . I promised then not to publicly criticise this [policy] course. But then I don’t want to be criticised for the consequences of this policy.”


However, as events last week showed, an otherwise hawkish Germany being criticized for ECB's monetary policy is preicsely what happened.


Schäuble pointed out that Germany was not able to set exchange rate policy and pinned responsibility for the euro’s weakness against the dollar on the ECB.

The German finance ministry was “not an ardent fan” of the ECB’s policy of quantitative easing that had helped to weaken the single currency.


In other words, if Trump wants to blame anyone for the weak Euro - according to the German - he should direct his anger at Mario Draghi.


As the FT notes, Germany's Ifo Institute recorded a trade surplus of nearly $300bn last year, outpacing China by more than $50bn to hold the world’s largest trade surplus. Critics not only in Washington, but also Brussels have called for Germany to reframe its fiscal policy and stimulate domestic demand to increase imports. So far, however, any European criticism of Germany has been mostly lip service, which is why the arrival of Trump as a vocal critic of German trade policy has sparked renewed concern in Germany.


Additionally, in the interview Schäuble questioned why a US president would want to divide Europe given that the continent “is closer to them than anybody else in the world”. He added he did not believe that Mr Trump was seriously trying to split up Europe, but he was “testing” a lot.


Despite implicitly agreeing with Trump that the ECB is at fault for keeping the Euro too low, Schauble scorned U.S. accusations that Europe’s biggest economy is using an undervalued currency as a tool to gain unfair trade advantages, saying aides to President Donald Trump apparently don’t understand that the euro’s exchange rate isn’t set by the government.


“In America, the savvy advisers to the new president are now concerned with the question of why the German economy is to a certain extent competitive and performing well,” Schaeuble said on Friday in Saarbruecken, cited by Bloomberg. “They have not entirely understood, or at least not everyone, that the German federal government isn’t responsible for monetary policy in Europe, but someone else.”


As per his latest clarification on Sunday, that "responsible someone" is Mario Draghi.


Schauble added that “the problem is that we have a structure in the monetary union, a common currency without a common finance and economic policy, and that member states - the ECB isn’t tiring of saying that - aren’t doing what they committed to,” Schaeuble said. “One of the big problems of monetary policy” is how to begin an exit from the “unusual” stance without “risking bigger economic upheavals in other European countries,” Schaeuble said.


Schäuble’s Sunday comments on monetary policy comprise his latest attack on the ECB’s easy money policies. Last year, the hawkish finance minister blamed Draghi for “50 per cent” of the success of the populist rightwing Alternative for Germany party. Schäuble and others on the conservative wing of Chancellor Angela Merkel’s ruling CDU/CSU bloc are concerned that as well as profiting from the refugee crisis, the Eurosceptic AfD, which wants an end to the common currency bloc in its present form, is winning support from voters worried about the euro’s stability and the low interest on their savings.


Draghi, meanwhile, was on Friday hailing efforts at European unification, defending the common currency and applauding some of Germany’s labour reform policies in a speech given in Ljubljana, Slovenia.


“There are some today who believe that Europe would be better off if we did not have the single currency and could devalue our exchange rates instead,” Mr Draghi said. “But, as we have seen, countries that have implemented reforms do not depend on a flexible exchange rate to achieve sustainable growth. And for those that have not reformed, one has to ask how beneficial a flexible exchange rate would really be. After all, if a country has low productivity growth because of deep-rooted structural problems, the exchange rate cannot be the answer.”


While it remains to be seen if Trump will pivot his attacks away from Germany and to the rightful source of Europe's weak currency, the European Central Bank which continues to monetize a record amount of debt instruments, now owns over 10% of Europe's entire stock of corporate debt, and whose balance sheet has ballooned to over 36% of the Eurozone's GDP...

http://www.zerohedge.com/sites/defau...0130_ECb_0.jpg
... it would certainly make for a welcome change for Trump to launch an occasional twitter attack at the ECB, instead of focusing all his social media energy on the US Judicial System, although with his cabinet being comprised of numerous former coworkers of Mario Draghi, who would rather keep the ECB's role in facilitating Germany's surplus under wraps, it does not appear too likely.

Another chart on EUR/USD

http://www.forexfactory.com/attachme...3&d=1486318663

Hello KeepCalmfx

If you have a moment can you just do our standard EUR/USD chart please.

Read your PM and I am still limited to one a day so my reply here is that it is ok and it is not that important to contact the person that you tried to send a PM to. Thanks for trying. I sent you an email with the 1804 Forex trades made while I traded at PFG Best in Chicago.


Benjaminis

Hi Benjamin

Ok, thanks.
I did receive your mail thanks.

Here is the chart.

Dow Jones

Fiscal Hole Will Test Donald Trump's Agenda

Sun Feb 05 07:38:00 2017
By Nick Timiraos


For an economy that isn't in recession, the U.S. is facing one of the bleakest fiscal outlooks since World War II. One question that President Donald Trump will soon have to decide: How much is he willing to embrace even wider deficits?

The answer will determine whether Mr. Trump's domestic agenda lives up to markets' bold expectations, and his own.

Before Mr. Trump does anything, growing budget deficits are already on a course to push federal debt to record levels as a share of gross domestic product. That will make it extremely difficult to make good on promises to cut taxes and boost spending without spilling more red ink.

Unlike past periods, deficits are swelling not because of an economic downturn or a short-term boost in discretionary spending, but because of the costs of caring for an aging population. Medicare and Social Security are the biggest projected drivers of spending. Ten years ago, some 6,700 Americans turned 65 every day. The number is now 9,800 Americans, and it will rise to 11,700 by 2026.

An aging population not only pushes up federal spending on health care and retirement, it also shrinks the tax base and may lead to slower rates of growth in personal income and household spending.

Faster economic growth would solve many of Mr. Trump's problems. But doubling the growth rate to 4%, Mr. Trump's stated goal, would be difficult when productivity and the labor force are growing slowly. Another hurdle: Unemployment is already low. The Federal Reserve might stand in the way of a very fast growth rate if it threatens to push unemployment much lower and risks spurring inflation.

The Fed sees a long-run growth rate of just 1.8%.

"You're not going to be able to grow your way out of this one. It's too big," says Rep. Tom Cole (R., Okla.). He expresses worry about relying on rosy growth projections, through the use of so-called dynamic scoring, to assume tax cuts would stimulate the economy to materially offset upfront revenue losses. "I worry we're so in love with dynamic scoring, and it never works out the way the tax gurus tell us it's going to," says Mr. Cole.

The Congressional Budget Office expects, under current law and assuming the economy keeps expanding modestly, deficits to rise from 2.4% in the fiscal year that starts this October to 4.2% gradually over the following four years.

The last two times Republicans reclaimed the White House from Democrats, in 1981 and 2001, they secured large tax cuts. President Ronald Reagan inherited shrinking deficits, and George W. Bush inherited budget surpluses that were projected to grow. The publicly held debt was much lower, too, at 25% and 31% of GDP, respectively, compared with 77% today.

Faced with a worsening deficit outlook when he took office in 1993, President Bill Clinton tossed overboard his campaign promise of a middle-class tax cut. Mr. Trump and his team have yet to detail the scope of his agenda and the deficits it may require.

One overriding question: Would he design tax changes that don't raise deficits, a goal of House Republicans, or would he stick with plans sketched out during his campaign that relied heavily on growth to offset steep revenue losses?

Mr. Trump has tipped his hand in favor of tolerating deficits. "A balanced budget is fine, but sometimes you have to fuel the well in order to really get the economy going," Mr. Trump said on Fox News last month. "Our military is more important to me than a balanced budget."

He could face resistance from budget hawks in his own party. GOP lawmakers have split sharply over the past two years on whether to boost military spending without adding to the deficit.

Lawmakers are even warier about adding to deficits with infrastructure spending, an initiative where Mr. Trump's appetite seems most out of step with GOP elected officials. White House officials are looking at creative ways to finance such spending.

"There's a big budget battle coming if they don't come forward with a big pay-for plan," says William Beach, an economist with the right-leaning Mercatus Center at George Mason University.

Even if Republicans opt to offset new spending with cuts, it remains unclear whether the White House could identify programs that allies in Congress are willing to axe. Mr. Trump has ruled out changes to the biggest drivers of rising outlays, Social Security and Medicare.

Republicans are planning cuts on nondiscretionary spending and welfare programs, but some of those have already seen large reductions due to automatic curbs Congress imposed five years ago.

Big cuts can be popular in symbolic budget resolutions offered in the spring. But analysts at Beacon Policy Advisors said in a report that when it comes to actually passing spending bills in late summer, Republican lawmakers will object to specific reductions that affect their own constituents.

"The long-term budget problems are no longer long-term. They are here now," says Andrew Laperriere, policy analyst at research firm Cornerstone Macro LP. In overlooking the budget math, he believes, investors are too optimistic about both the timing and size of any fiscal stimulus.

Write to Nick Timiraos at [email protected]
(END) Dow Jones Newswires
February 05, 2017 07:38 ET (12:38 GMT)

Some interesting points.

45 WAYS TO AVOID LOSING MONEY TRADING FOREX
by Jimmy Young, CTA
Who is Jimmy Young?
Retired proven professional Bank FOREX trader with over 20 years of hands-on FOREX trading experience.

1) Knowledge Deficiency Most new FOREX traders dont take the time to learn what drives currency rates (primarily fundamentals).

2) Overtrading - Trading often with tight stops and tiny profit targets will only make the broker rich. The desire to just make a few hundred dollars a day by locking in tiny profits whenever possible is a losing strategy.

3) Over leveraged - Leverage is a two way street. The brokers want you to use high leverage because that means more spread income because your position size determines the amount of spread income; the bigger the position the more spread income the broker earns.

4) Relying on Others Real traders play a lone hand; they make their own decisions and dont rely on others to make their trading decisions for them; there is no halfway; either trade for yourself or have someone else trade for you.

5) Stop Losses Putting tight stop losses with retail brokers is a recipe for disaster. When you put on a trade commit to a reasonable stop loss limit that allows your trade a fair chance to develop.

6) Demo Accounts Broker demo accounts are a shill game of sorts; theyre not as time sensitive as real accounts and therefore give the impression that time sensitive trading systems, such as short-term moving average crossovers can be consistently profitably traded; once you start dealing with real money, reality is quick to set in.

7) Trading During Off Hours Bank FX traders, option traders, and hedge funds have a huge advantage during off hours; they can push the currencies around when no volume is going through and the end game is new traders get fleeced trying to trade signals. There is only one signal during off hours stay out.

8) Trading a Currency, Not a Pair Being right about a currency is half a trade; success or failure depends upon being right about the second currency that makes up the pair.

9) No Trading Plan - 'Make money' is not a trading plan. A trading plan is a blueprint for trading success; it spells out what you see your edge as being; if you dont have an edge, you dont have a plan, and likely youll wind up a statistic (part of the 95% of new traders that lose and quit).

10) Trading Against Prevailing Trend There is a huge difference between buying cheaply on the way down and buying cheaply. What was a low price quickly becomes a high price when youre trading against the trend.

11) Exiting Trades Poorly If you put on a trade and its not working make sure you exit properly; dont compound the damage. If youre in a winning trade, dont talk yourself out of the position because youre bored or want to relieve stress; stress is a natural part of trading; get used to it.

12) Trading Too Short-term If your profit target is less than 20 points dont do the trade; the spread you pay to enter the trade makes the odds way against you when you go for these tiny profits.

13) Picking Tops and Bottoms - Looking for bargains works well at the supermarket but not trading foreign exchange; try to trade in the direction the price is going and your results will improve.

14) Being Too Smart The most successful traders I know are high school graduates. They keep it simple and dont look beyond the obvious; their results are excellent.

15) Not Trading Around News Time Most of the big moves occur around news time. The volume is high and the moves are real; there is no better time to trade fundamentally or technically than when news is released; this is when the real money adjusts their positions and as a result the price changes reflect serious currency flow (compared to quiet times when Bank traders rule the market with their customer order flow).

16) Ignore Technical Condition Determining whether the market is over-extended long or over-extended short is a key determinant of near time price action. Spike moves often occur when the market is all one way.

17) Emotional Trading When you dont pre-plan your trades essentially its a thought and not an idea; thoughts are emotions and a very poor basis for doing trades. Do people generally say intelligent things when they are upset and emotional? I dont think so.

18) Lack of Confidence Confidence only comes from successful trading. If you lose money early in your trading career its very difficult to gain true confidence. The trick is dont go off half-cocked. Learn the business before you trade.

19) Lack of Courage to Take a Loss There is nothing macho or gutsy about riding a loss, just stupidity and cowardice. It takes guts to accept your loss and wait for tomorrow to try again. Getting married to a bad position ruins lots of traders. The thing to remember is the market does crazy things often, so dont get married to any one trade. Its just a trade. One good trade will not make you a trading success; rather its monthly and annual performance that defines a good trader.

20) Not Focusing on the Trade at Hand There is no room for fantasizing in successful trading. Counting up and mentally spending profits you havent made yet is mental masturbation and does you no good. Same with worrying about a loss that hasnt happened yet. Focus on your position and have a reasonable stop loss in place at the time you do the trade. Then be like an astronaut sit back and enjoy the ride. No sense worrying because you have no real control. The market will do what it wants to do.

21) Interpreting FOREX News Incorrectly Fact is the press only has a very superficial understanding of the news they are reporting and tend to focus on one element and miss the point. Learn to read the source documents and understand it for real.

22) Lucky or Good Your account balance changes dont tell you the whole story about your trading. Fact is if you are taking a lot of risk and making money you will eventually crash and burn. Look at the individual trade details. Focus on your big loses and losing streaks. Ask yourself this, "If I had a couple of consecutive losing streaks or a couple of consecutive big losses, how would my account balance look?" Generally, traders making money without big daily losses have the best chance of sustaining positive performance. The others are accidents waiting to happen.

23) Too Many Charity Trades When you make money on a well thought out trade dont give back half on a whim. Invest your profits from good trades on the next good trade.

24) Courage Under Fire When a policeman breaks down the door to a drug dealer's apartment he is scared but he does it anyway. When a fireman climbs onto the roof of a burning building he is scared but does it anyway, and gets the job done. Same with trading. Its ok to be scared but you have to pull the trigger. No trigger no trades no profits no trader.

25) Quality Trading Time I suggest 3 hours a day of quality, focused trading time. Thats about all your brain allows. When you are trading, be 100% focused. Half way is bullshit - it doesnt work. Dont even think that time spent in front of the computer watching the rates has any correlation to profitability - it doesnt. Spend less time but when you're trading, be 100% focused on trading.

26) Rationalizing Killer. Absolute Killer. Put your trade on and let it run. If it hits your reasonable pre-determined stop, you're out. Think of yourself as a prize fighter. You just got knocked out. Moving your stop is like getting up after being crushed with a knockout blow. Its pointless. Things will only get worse. Dont ignore the obvious. You're wrong get out. Come back the next day and try again. A small loss will not hurt you - a catastrophic loss will.

27) Mixing Apples and Oranges Have you ever done this? You see the EURUSD trading higher so you buy GBPUSD because it hasnt moved yet. Thats a mistake. Most of the time the reason the GBPUSD hasnt moved yet is because it's already overbought or some 4:30am UK news was bearish. Dont mix apples and oranges. If EURUSD looks bid, buy EURUSD.

28) Avoiding the Hard Trades Bank FX traders have an axiom "the harder the trade is to do the better the trade". This I learned from experience. When I needed to buy EURUSD and it was hard to get them, thats when its necessary to pay up and get the business done. When its easy to get them, then sit back and wait for better levels. So if you are trying to get into a trade, or more importantly get out of a trade, dont putz around for a few points - get your business done.

29) Too Much Detail If your trading more than 2 indicators then you need to clean house. Having many indicators stifles trading and finds reasons not to trade. A setup and a trigger is all you need.

30) Giving Up Too Easy Your first trade of the day may not be your best but certainly its no reason to quit. I have a preset daily trading limit and I use it. You cant make money by making excuses. Getting trades wrong is natural and should be expected.

31) Jumping the Gun Dont be penny wise and dollar foolish. Wait for your trade signal to be clear. Put on your trade and give it a decent size stop loss so that you dont get knocked out by random noise.

32) Afraid to Take a Loss - trading is not personal, its business. Dont think that a poor trade is a reflection on you. It could be you're just ahead of your time or a commercial order hits the market and temporarily creates a small unexpected move. Again, place your stop beforehand and NEVER increase your pre-determined risk. If its going bad, it will probably get worse. I think thats Newton's body in motion tends to stay in motion

33) Over-Relying on Risk Reward There is zero advantage in risk reward. If you put a 20 point stop and a 60 point profit your chances are probably 3-1 that you will lose. Actually with the spread its more like 4 to 1 (from entry point if it goes down 17 points you lose, or up 63 - you win; 17/63 is close to 4-1).

34) Trading for Wrong Reasons Because the EURUSD is going up is not in itself a reason to buy. Buying EURUSD because it's not moving much is even worse. Youre paying the toll (spread) without even a hint that you will get a directional move. If you are bored, dont trade; the reason you're bored is there is no trade to do in the first place.

35) Rumors Rumors are rumors almost 100% of the time. Think about where in the motion you heard the rumor. If EURUSD is up 50 points in last 15 minutes and the rumor is dollar negative, well - then you missed it. Whenever you in motion with the trade, determine where you are entering.

36) Trading Short-term Moving Average Crossovers This is the money sucker of the century. When the shorter term moving average cross the longer term moving average, it only means that the average price in the short run is equal to the average price in the longer run. For the life of me, I cannot understand why this is bullish or bearish. Easy to set up on software, complete with lights, bells and whistles, and good for the seller getting thousands for the software but in terms of creating profit - its a zero.

37) Stochastic Another money sucker. Personally I think this indicator is used backwards. When it first signals an overdone condition, thats when I think the big spike in the overdone currency pair occurs. To be overbought means strong and oversold means weak. Try buying on the first sign of overbought and selling on the first sign of oversold. Youll be with the trend and likely have identified a move with plenty of juice left.

38) Wrong Broker A lot of FOREX brokers are horrible. Get a good one. Read forums and chats in several different places to get an unbiased opinion.

39) Simulated Results Watch out for black box systems. These are trading systems that dont divulge how the trade signals are generated. Great majority of them are absolute garbage. They show you a track record of extraordinary results but think about it. If you could build a trading system with half a dozen filters using the benefit of hindsight, couldnt you too come up with a great system. Of course going forward is an entirely different story. High-speed number crunching capabilities allows for building great hindsight trading systems, so BEWARE.

40) Inconsistency Every business (FOREX trading included) requires a business plan (trading plan). Unless you have taken the time to write down a set of rules that you can and will follow, its likely your trading will remain unfocused and directionless. Make a plan, have rules, follow them. Set goals that are realistic and you will achieve them.

41) Master of None Focus on one currency for technical trading. Each currency has a unique way of trading and unless you get intimate with it, you will never truly understand its underlying idiosyncrasies. Dont spread yourself too thin focus, master one currency at a time.

42) Thinking Long Term Dont do it. Stay in the moment. Especially if youre a day trader. It doesnt matter what happens next week or next month. If you are trading with 30 to 50 point stops, restrict your thought process to whats happening right now. That is not to stay the long-term trend is not important. It is to say the long-term trend will not always help you when your trading a significantly shorter time frame.

43) Overconfidence Trading is simple but not easy. Statistics show 95% failure rate of those attempting to become traders. If you're doing well, dont take your success for granted. Always be on the lookout for ways to improve what you are already doing.

44) Getting Pumped Up The trick is to maintain an even keel. When you are in a trade, you want to think exactly as you would if you didnt have a trade on. To do this requires a relaxed disposition. This is not a football game. Dont get psyched up. Relax and try to enjoy it.

45) Staying in the Game I dont recommend demo trading because traders learn bad habits when trading with play money. I also dont think letting it all hang out right away is wise either. Start off doing trades and taking risk that is relatively small but still makes a difference to you if you win or lose. About a quarter to a third of what you expect to reach as your trading matures is reasonable.

Different Stages of a Forex trading career

Stage 1 Intrigued by Forex

1.1 We accumulate information, we learn - buying books, buy the Best Forex Course we can find, maybe going to seminars and researching what really works in trading.
1.2 We begin to trade with our new found knowledge.
1.3 We make profits only to give it back very quickly and then realize we may need more knowledge or information.

Stage 2 Back to school

2.1 We accumulate more information.
2.2 We switch the currency pair or strategy we are currently following and trading.
2.3 We go back into the market and trade with our better Forex trading system. This time it will work.
2.4 We lose even more money and begin to lose of confidence that we can even be traders. The reality of losing money sets in.

Stage 3 - Discouragement

3.1 We start to listen to other traders and what works for them.
3.2 We go back into the market and continue to lose more money.
3.3 We completely switch our style and method.

Stage 4 - Optimism

4.1 We search for more information and resources online.
4.2 We go back into the market and start to see a little progress.
4.3 We get over-confident in a single trade and put on a big position believing it is a sure thing and the market quickly takes our money.
4.4 We start to understand that trading successfully is going to take more time and more knowledge than we ever anticipated.

MOST PEOPLE WILL GIVE UP AT THIS POINT, AS THEY REALIZE WORK IS INVOLVED.

Stage 5 Limbo its easy to get stuck here for some time

5.1 We get serious and start concentrating on learning a real methodology & Forex strategies that work.
5.2 We trade our methodology with some success, but realize that something is missing.
5.3 We begin to understand the need for having rules to apply our methodology.
5.4 We take a sabbatical from trading to develop and research our trading rules.
5.5 We start trading again, this time with rules and find some success, but over all we still hesitate when we execute.
5.6 We add, subtract and modify rules as we see a need to be more proficient with our rules.
5.7 We feel we are very close to crossing that threshold of successful trading.

Stage 6 - Belief

6.1 We start to take responsibility for our trading results as we understand that our success is in us, not the methodology.
6.2 We continue to trade and become more proficient with our methodology and our rules.
6.3 As we trade we still have a tendency to violate our rules and our results are still erratic.
6.4 We know we are close.

Stage 7 - Reward

7.1 We go back and research our rules.
7.2 We build the confidence in our rules and go back into the market and trade.
7.3 Our trading results are getting better, but we are still hesitating in executing our rules.
7.4 We now see the importance of following our rules as we see the results of our trades when we dont follow the rules.

Stage 8 - Realization

8.1 We begin to see that our lack of success is within us (a lack of discipline in following the rules because of some kind of fear) and we begin to work on knowing ourselves better.
8.2 We continue to trade and the market teaches us more and more about ourselves.
8.3 We master our methodology and our trading rules.
8.4 We begin to consistently make money.
8.5 We get a little over-confident and the market humbles us.
8.6 We continue to learn our lessons.

Stage 9 - Victory

9.1 We learn smaller positions lower the volume of our emotions so we trade smaller and this surprisingly makes us better with our discipline.
9.2 We learn that risk management is one of the biggest keys to winning as a trader.
9.3 We stop thinking and allow our rules to trade for us (trading becomes boring, but successful) and our trading account continues to grow as we increase our position size only as our account grows.
9.4 We are making more money than we ever dreamed possible.

Criteria for successful investing

 

1. Patience
2. Perseverance
3. Knowledge
4. Honesty
5. Pre-planning
6. Discipline

Patience

Learning that you can make a lot of money on the markets is one of the most exciting moments you can experience in your professional life. A whole new world of possibilities opens up before you as you begin to imagine your dream house, car, boat, and vacations with your family. I've seen people get so excited after just one little seminar that they actually started trading right there and then. Not smart! Give yourself some time to get used to the idea. And never start trading on an emotional wave of any kind whatsoever. You need to be switched on, alert and calm. Many workshops give you the emotional high but with out the substance of real experience (and sometimes many other things, Like knowledge!).

Think about it this way. Would you consider yourself able to do brain surgery after just one conference? Well, in a different context same applies to trading, and even more so for options trading (although the same principles apply). Give yourself time to learn. By reading this book, you are doing just that, giving yourself a learning opportunity. By now, you're probably used to trading stocks or futures in the markets. So now is the next step. And just as you had to get comfortable with trading stocks or futures at first, you also now have to get comfortable with trading options.

Furthermore, when you are comfortable enough to trade, you need to have an abundance of patience to do the trading itself. We've all had the experience of jumping into an investment too early even when we weren't quite convinced it was the right thing to do. Be patient, take a deep breath if you have to, and stick to your plan of action.

Finally, patience also involves selecting a trading strategy where time works in your favor and where your downside is covered. Be patient in your attitude to acquiring wealth. The more patient you are in this way, the better off you will be. This doesn't mean sitting back and doing nothing-that's apathy, not patience! Give yourself time to learn, gain experience and then start to apply consistently time and time again so that you begin a process of making money and building wealth.

Consistent with the art of patience is your embracing the concept of compounding. If you can make just 1% per week, this would mean more than 67% in just one year, a record of which any fund manager would be envious. The following table illustrates the power of compounding if you start with just $10,000 in your account.

This table is simply here to convince you about the need to be patient. Allow your returns to accumulate, and let the magic of compounding do its work for you. We're not suggesting these as consistent, realistic growth targets for you, but it helps to see where you'd be in three years even if you were succeeding with modest returns.

Perseverance

Keep going for it! If there's one thing I've learned in life, it's that if you believe in something you have to keep at it until you reach your goal. And once you've reached your goal, and then set another target.

Having embarked on the mission of becoming a successful trader (whether full-time or part-time), you must stick to it. Anyone can do it. Even those who don't think they can. Babies don't give up trying to walk or talk after a few unsuccessful attempts, do they? Well, follow their example and now you're here, stick to it and prepare yourself to be rewarded richly from this process of learning.

To be practical, give yourself attainable targets to reach in a realistic time frame. So by next week you'll be familiar with the four main options risk profiles. You may be able to do it tonight. Keep on setting the attainable targets (do make them a slight challenge, though!) and in this way you'll be able to keep up the momentum of learning and gaining experience. You'll also start to build up your confidence as you go along, reassuring yourself of your ability to understand anything you put your mind to. This book will help you in building your confidence because it's a practical book and it's easy to follow and understand. So keep going and enjoy the process of accumulating.

Knowledge

Having established the need for patience for both acquiring the knowledge and for trading itself, let's remember that knowledge is attainable now with such ease and speed that it is eminently achievable in a reasonably quick time. Tools exist now to simulate the trading experience, and there are myriad publications and web sites designed to help you build up your knowledge database.

The best knowledge you will ever get is experience. It's all very well to say, "Trade mechanically," but very few people do. Why? Because we're human beings and have emotions and feelings. It's true to say that they are best left away from the trading environment, but we have to learn how to do that first. It's no good just saying, "Do it!" Moreover, why can't we use our feelings and emotions to our advantage? Well, we can, and that's what we discuss in Chapter 10 on trading psychology.

Remember that learning is experience based. We can all remember the most extreme of our teachers at school, right? You can recall the funniest, the scariest, the prettiest and the ugliest, but I'll bet you have a problem remembering anything about the teachers who were somewhere in the middle-those who barely made an experimental impact on you in years of being in the same classroom!

The same applies to trading. A lot of the learning involved in trading is experience-based. In fact, the most pertinent form of learning about trading is experience-based. It's through the extreme experiences that you find more out about yourself in good times and bad. Most brilliant traders have had terrible experiences but, crucially, have stepped back up to the plate and applied what they had learned. Just like me. I made a lot of money very fast, thought I was "the don" (tut-tut) and then gave some of it back again! Believe me, then I didn't feel too good at all, but did I learn! And more importantly, did I apply those lessons? . . .you bet I did!

So, remember, learning is based on experience, so allow yourself to get experience, which is what this book and our workshops are all about-building experience. As you continually acquire experience, apply it consistently, continually, and carefully.

Honestly

You must be honest with yourself if you're to develop into a decent trader or investor. A company has not made you make or lose money, so part of being honest is to cut out the emotions of trading. Ultimately, your decisions are down to YOU! No matter what you were taught, even if it was by someone who had no right to teach, you're being true to yourself. I've always found that blaming other people never really helps, and in trading you'll save yourself a lot of time if you can apply this lesson fast. Blaming the stock or the teacher or tipster only wastes energy and stops you asking what more you can do to improve your technique, your knowledge, and your performance.
Pre-Planning

You must pre-plan each and every trade. By this you must know you're:

1. Maximum risk
2. Maximum reward
3. Breakeven points.

You must also plan

1. Your entry point
2. Your exit points whether it's to...
   1. Take profits or
   2. Stop losses

   
   

With options trading, I tend to base any loss cut on the basis of the underlying asset. In most cases the underlying asset will be more liquid than options chain, so it makes it easier to make your loss-cutting decision based on the price of the stock, future, or whatever the underlying asset is.
This pre-planning stage also embraces the choice of the underlying asset itself, the strategy you're using, and using fundamental and technical analysis to assist you in the decision-making process. The most important thing, though, is to make a good plan and then stick to it by using massive...

Discipline - The Key to Success

When you have had the patience to acquire the knowledge and apply the principles above, it's imperative not to waste it all. You must be disciplined and apply that discipline rigorously each and every time.

This means that:

1. You do your pre-planning every time.
2. You use your (and others' experience).
3. You do not deviate from your stated sensible plan.

In this way you are taking the first steps to becoming more mechanical. Discipline is the single most important part of trading. In other words, it is money management; even the most sophisticated of trading systems will not work.

By sticking rigorously to sensible money-management principles, you will ensure that your losses are minimized and your profits are allowed to run.

I like Mark Douglas, I have watched his clips a few time and have read his book, "Trading in the Zone"
This is a very powerful post, something to print out and read regularly.

Thank you for the post on the yield, will print it and study it.

KeepCalmfx

I read all of the posts that you shared here. As you know I was familiar with this information, however it is very positive to read it again. I read very carefully the 45 points of Jimmy Young and I still retain a printout of his article which I refer to from time to time. I think he is one of the most balanced and knowledgeable of any Forex trader that I have read, as is clear to see in what he states.

I suggest that yourself and others read it again and what struck myself is that is how my own trading style has developed.

Just as Jimmy Young did by learning through trading then sharing and teaching he arrives at a good place.

I actually did it from the same side however I learned and discovered much of what he shares through 14 years of Forex trading that was actually self taught without any real support from teachers or mentors. It is most enjoyable to see someone who clearly writes better than myself explain to me why I have achieved my success. If there is TWO EDGES that I have, of course it is my discovery of the Money Flow Formula and although in his last point he talks about demo accounts the way that I used it and still use it for teaching purposes is probably unique to the way that my mind has been programmed and works.

That was clearly my FIRST EDGE as it allowed me to learn and practice my Forex profession for nearly three years before I started trading with real funds.

Thank you very much for sharing the articles here again.


Benjaminis

Good Day

Hope everyone had a nice weekend.

Here is the charts

Good day KeepCalm,

Looks like USD/JPY hits strong resistance level that also corresponds with Support level 38.
In my opinion it's a high probability it will hold onto these zones for a while, but if it breaks through it does it becomes RISK OFF and means money starts flowing out? I'll probably short if it breaks S38 on both our charts.

Regards and have a good week!

http://www.marketwatch.com/story/tru...teid=rss&rss=1

Trump on the EU: ‘Others will leave’ the union

President-elect Donald Trump, already embroiled in a war of words with China and Mexico, has come out swinging against the European Union and NATO in interviews over the weekend.
Trump predicted more departures from the EU following the U.K.’s June vote to leave the trade bloc, according to a Times of London article that featured this quote:
‘I do believe this, if they [EU countries] hadn’t been forced to take in all of the refugees, so many, with all the problems that it . . . entails, I think that you wouldn’t have a Brexit. It probably could have worked out but this was the final straw, this was the final straw that broke the camel’s back. I think people want . . . their own identity, so if you ask me . . . I believe others will leave.’

Trump, slated to be sworn in Friday as the 45th U.S. president, also reiterated his past criticism of North Atlantic Treaty Organization. The Western military alliance is “obsolete” because it’s not “taking care of terror” and only five countries “are paying what they’re supposed to,” he said, according to the Times article.
“With that being said, NATO is very important to me,” Trump added.
The president-elect expressed admiration for German leader Angela Merkel, but said “she made one very catastrophic mistake and that was taking all of these illegals, you know taking all of the people from wherever they come from.”

He described the EU as “basically a vehicle for Germany. That’s why I thought the U.K. was so smart in getting out.”
In other parts of his extensive remarks, the incoming commander-in-chief said he will offer a quick and fair trade deal to the U.K. and Brexit will “end up being a great thing.” He also singled out German car makers BMW AG BMW, -1.00% and Daimler AG’s DAI, -0.52% Mercedes-Benz , complaining that automotive trade between the U.S. and Germany was a “one-way street.”

Hi Dttsomh, nice to see you are posting, how did it go with the exams, are you done?

I agree with you, that is a strong support since the 31st of January and if that 112.08 level breaks, I think we could see a nice drop. Looks like it will break today, lets see.

I think we have risk off currently? Benjamin what is your opinion. All USD news event I see for today is FOMC Member Harker that speaks 1:30pm or 8:30pm South Africa time? And then there is EUR news - ECB President Draghi Speaks at 9am or 4pm SA time.

8th of february is the last one, I aced 5 of them so far.

but this is the current situation in my country:

http://www.marketwatch.com/story/tru...teid=rss&rss=1

‘Trump On, Trump Off’ trades are rocking markets and unraveling, Citi says

The Trump administration is helping to steer markets so much that one trader has come up with a new term.
Forget about “Risk On, Risk Off,” which refers to investors jumping into riskier-but-higher-yielding assets, then jumping back out.
It’s now all about the “Trump On or Trump Off” trade, or TOTO, according to Citigroup currencies trader Brent Donnelly.
The Trump headlines are so dominating that economic reports and Federal Reserve policy meetings are taking a back seat, said Donnelly in a note dated Friday.
It looked like 100% “Trump On” in November and December, but now it’s about 50/50, he added.
Below is a Citi chart showing the current state of the affairs, for anyone placing TOTO bets. HIA likely refers to a possible new “Homeland Investment Act.”
http://ei.marketwatch.com//Multimedi...2-001cc448aede Citigroup
“Trump On is the stuff the market likes, and Trump Off is the stuff the market dislikes,” Donnelly said in his note.
One problem is that the recent newsflow hasn’t dealt much with topics that the market cares about, the Citi trader said. He stressed that Republican House Speaker Paul Ryan said tax reform and infrastructure moves probably will have to wait for spring.
That long wait could be “extremely suboptimal“ for the “Trump On” trade, Donnelly said. “The market does not want to sit around until April to hear about tax reform and infrastructure when it already went all-in betting on the fruit of those policies last November and December. Meanwhile, the FOMC is happy to wait and see what, and when Trump delivers.”
The growing risk for investors is that much of the late-2016 euphoria was focused on policies that the market won’t see passed for a long time, Donnelly said.

Well done, and good luck with the last one.

Damn, that is a lot of protester, see on that picture it was +/- 150 000 people.
The light at the back looks like a fire. Are you a few km away from where that picture was taken?

Morning Thoughts - Daily

Good Morning and Good Day Everyone.

In the last few days there has been much valuable information posted on this thread about what a professional Forex trader needs to do. That subject is very clear and to the point. I will reply to comments made here this morning however first I want to focus on the bigger picture in order to make sense of the daily situation. One of the most knowledgeable and informed is Bill Gross and here is what he published today.

https://www.janus.com/insights/bill-...ontent=Markets

Snippet:
Happiness Runs
https://d99a40890d287ea05431-d5c47e0...Happy_Face.JPG
Happiness is wanting what you have
And not wanting what you don't have.
Shakyamuni Buddha, 500 B.C.

The three grand essentials of happiness are: something
To do, someone to love, and something to hope for.
Alexander Chalmers

Happiness runs in a circular motion...
Happiness runs, happiness runs.
Donovan, 1968

I think a lot about happiness - what makes a person happy, whether or not happiness should even be a life's priority - things like that. A good high school friend stunned me at the early age of 17 by suggesting we should not necessarily try to be happy. Sacrifice, service, devotion to a cause were higher orders, he felt, although presumably, since those were choices, their pursuit could secondarily lead to happiness.

Through the years I've accumulated a short list of quotes that express a personal view of what makes people happy. You, I'm sure, have your own candidates, but most of them probably resemble some of the ones listed above: Stay busy doing something you enjoy; be mindful of other people and the world in, around, and above you; don't let your reach exceed your grasp; find someone to share your happiness with. My favorite of all of these is the one above by Donovan - that somewhat kooky "love generation" folk singer of the late 1960s. "Happiness runs in a circular motion...happiness runs, happiness runs." There may be more to this refrain, however, than appears at first glance, the entirety of which I've tried to encapsulate artistically in my open-ended smiley face that wasn't ever-popular when Donovan crooned the tune. For years I thought that the gist of Donovan's phrase was the obvious - the "pay it forward" allusion that suggests what goes around, comes around - and it undoubtedly is. But there are hidden nuances, at least to me. The "running in a circular motion" also connotes a self-contained, inward-looking, self-satisfaction that equates happiness to being content with yourself as a person. And the last phrase - "happiness runs, happiness runs" may speak to the Buddhist philosophy of impermanence and the priority of the moment. Donovan might not rank up there with Kant and Spinoza, but his little song packs a powerful message. Rock on, flower child, wherever you are.

For years I thought that the gist of Donovan's phrase was the obvious - the "pay it forward" allusion that suggests what goes around, comes around - and it undoubtedly is. But there are hidden nuances, at least to me.

And while happiness may run in a circular motion, it seems history may too - or at least it may rhyme, as Mark Twain once said. Pictured below are two of my notes written not recently, but in 2003. They are as relevant today as they were then. "Financial repression" runs...in a circular motion, it seems. In 2003, though, central bankers had rarely contemplated the monetary policy instruments that could lower and then artificially cap interest rates. Although my notes correctly allude to "all means including 'ceilings' " to keep the cost of financing low, the expansion of central bank balance sheets from perhaps $2 trillion in 2003 to a now gargantuan $12 trillion at the end of 2016 is remarkable. Not only did central banks buy $10trillion of bonds, but they lowered policy rates to near 0% and in some cases, negative yields. All of this took place to save our "finance-based economy" and to raise asset prices upon which that model depends. As any investor would admit, these now ongoing policy panaceas have done just that - promoted higher asset prices and engendered a modicum of real growth. In the process however, as I have frequently written, capitalism has been distorted: savings/investment has been discouraged by yields/returns too low to replicate historic productivity gains; zombie corporations have been kept alive in contrast to Schumpeter's "creative destruction"; debt has continued to rise relative to GDP; the financial system has not been cleansed and restored to a balance where risk and reward are on a level plane; disequilibrium has replaced equilibrium, although it is difficult to recognize this economic phantom as long as volatility is contained.
https://d99a40890d287ea05431-d5c47e0...GIO_Sticky.png
But in order to control volatility, and keep a floor under asset prices, central bankers may be trapped in a QE-forever cycle, (in order to keep the global system functioning). Withdrawal of stimulus, as has happened with the Fed in the past few years, seemingly must be replaced by an increased flow of asset purchases (bonds and stocks) from other central banks, as shown in Chart I. A client asked me recently when the Fed or other central banks would ever be able to sell their assets back into the market. My answer was "NEVER". A $12 trillion global central bank balance sheet is PERMANENT - and growing at over $1 trillion a year, thanks to the ECB and the BOJ.

Central Bank Balance Sheet (US$)
https://d99a40890d287ea05431-d5c47e0..._Feb_Chart.png
Source: Bank of England website "Following Bank of England money market reform on 18 May 2006 theBank of England 'Bank Return' was changed. This series forms part of the new Bank Return, with datastarting on 24 May 2006."

An investor must know that it is this money that now keeps the system functioning. Without it, even 0% policy rates are like methadone - cancelling the craving but not overcoming the addiction. The relevant point of all this for today's financial markets? A 2.45%, 10-year U.S.Treasury rests at 2.45% because the ECB and BOJ are buying $150 billion a month of their own bonds and much of that money then flows from 10 basis points JGB's and 45 basis point Bunds into 2.45% U.S. Treasuries. Without that financial methadone, both bond and stock markets worldwide would sink and produce a tantrum of significant proportions. I would venture a guess that without QE from the ECB and BOJ that 10-year U.S. Treasuries would rather quickly rise to 3.5% and the U.S. economy would sink into recession.

An investor must know that it is this money that now keeps the system functioning. Without it, even 0% policy rates are like methadone - cancelling the craving but not overcoming the addiction.

So what's wrong with financial methadone? What's wrong with a continuing program of QE's or even a rejuvenated U.S. QE if needed? Well conceptually at first blush, not much. The interest earned on the $12 trillion is already being flushed from central banks back to government fiscal authorities. One hand is paying the other. But the transfer in essence means that monetary and fiscal policies have joined hands and that the government, not the private sector, is financing its own spending. At an expanding margin, this allows the private sector to finance its own spending and fails to discriminate between risk and reward. $600 billion in the U.S. for instance goes into the repurchase of company stock, whereas before, investment in the real economy might have been a more lucrative choice. In addition, individual savers, pension funds, and insurance companies are now robbed of the ability to earn rates of return necessary to maintain long-term solvency. Financial Armageddon is postponed as consumption is brought forward and savings suppressed and deferred.

For now, investors must go with, indeed embrace this financial methadone QE fix. Quantitative easing will continue even though the dose may be reduced in future years. But while a methadone habit is far better than a heroin fix, it has created and will continue to create an unhealthy capitalistic equilibrium that one day must be reckoned with. Yields will likely gradually rise (watch 2.60% on the 10-year Treasury), yet they will stay artificially low due to the kindness of foreign central bank quantitative easing policies. But that is not a good thing. Happiness runs...Happiness runs, and so one day, will asset markets, artificially supported by quantitative easing.

COMMENTARY FROM BENJAMINIS: We MUST keep this in mind everyday so that we can see into the FUTURE and know what to do in the present.

The first thing that caught my attention this morning is this chart that I link here now on EUR/USD Daily.
http://www.forexfactory.com/attachme...4&d=1486388079

COMMENTARY FROM BENJAMINIS: There is NO TRADE to make just looking at this chart and surely no sense in going LONG EUR/USD yet many posting in the EUR/USD thread are praying that EUR/USD goes up and it may well do that however now is not the time to do that as our charts show that next support is below 107.00. Before I say another word these comments are not about EGO or persons it is about business. The only business is to make money.

Here is a more recent excellent chart on EUR/USD.

http://www.forexfactory.com/attachme...3&d=1486388648

We know that at the moment as relates to EUR/USD , there is RISK ON as Draghi is scheduled to speak in Europe over the next few hours and his words right or wrong will move the EUR/USD so we need to stand back. Then as we all know the Equity Markets in North America only opens at 9:30 AM so the MONEY FLOW only starts then and the Forex markets will move. What these charts show us is what happens ABOVE 107.00 however if it were to go below 107.00 then the charts have no further value as an X RAY only because the EUR/USD has moved to a new range for the moment. Fundamentals and Money Flow will make that decision not the charts or other technical indicators such as Supply and Demand or Support and Resistance and or Pivot Points or any other method used.

I am not trading USD/JPY because it is at the bottom of our range and it is risky to trade at the moment. I have already explained here about EUR/USD so now on to Gold and Silver which is also at the top of the range so it should not be traded at the moment.

We are in uncharted waters as Bill Gross and others have clearly shown. Look at all the research posted here this weekend from many many independent sources.

I am going to end my comments here so KeepCalmfx can read them and others can as well. We only trade when there is a reason to trade.

I have 5 open positions on Short US 30 and for the moment I will let the markets deal with them. My Risk is 10% however that is not completely accurate as I do have a DRAW DOWN and the reason that I can do this as a very knowledgeable and experienced Forex trader is by the fact that I have build up my capital from $50,000 US Dollars to over $70,000 US Dollars and I have the markets heading in the right direction for the moment which is down.

I would very much appreciate feedback from anyone reading my words so we can have a good discussion and I can see if what I say here this morning is understood. Thank You


Benjaminis

I'm like 2km away, no fire, no violence, people share flowers to armed forces, after protests in 1 hour they clean the streets, there are women with babies there.. Very peaceful protest
They say 250.000 in the picture and 600.000 all over the country.

edit: see the video below from 0:50, camera moves and catches all view, happened yesterday:

Hello dttsomh

Here is another chart on USD/JPY and while it shows the same thing more or less as the chart you refer to the point is how do you know that USD/JPY will not go back towards 113.00 ? You do not so to do a trade here is not wise and even if the TREND is down that does not mean that it goes straight down. Also we have 10 AM Option Expiry and other factors such as Draghi and Money Flow and the fact that Europe equity markets close at 11:30 AM. What that means in practical terms is that there is only the Money Flow from North America. MONEY FLOW is your EDGE so not using it guarantees failure.

http://www.forexfactory.com/attachme...6&d=1486386451

http://www.forexfactory.com/attachme...9&d=1486385469

Have you looked at Risk Off in Europe and where will the US 30 be at 4 PM Eastern Standard Time later today. The whole idea of Forex trading is to make money and not trade for whatever reason that you decide on without having an EDGE.

I hope that you understand this since not following the rules with DISCIPLINE will lead to loss of your money.


Benjaminis

What was the purpose of the peaceful protests ? You can be our reporter in your homeland.

Keep up the good work on your exams.


Benjaminis