If your strategy is focused on getting the perfect entry then you might want to continue reading.
What if, from this point forward, your days of choosing market direction were over?
No green & red arrows, no moving average crossovers, no divergence play, no orderflow charts, Fibonacci's or full moons to bark at.
I mean look at all the post on twitter about directional bias. The market could go here...but if it doesn't it's going here..lolz. I believe everyone trades like this because that is what we are fed by the brokers. Educational garbage to keep you and I from pulling any real long term gains.
Well then, why don't people try other methods in the market? My answer is more clear now than ever. When people lose they run. Typical human logic...we do not like to lose so we quit altogether. The tough ones that do stick around are still left nothing to go on except what your broker, trading forums (getting paid for the garbage as well) and social media regurgitate. The same stuff over and over. You get caught on the rat wheel. I did it for 6 years, my blog will attest to this as well as my Topstep Trader contract I earned in 2013-2014. I traded for 13 months in futures using stops and could not sustain. I had to close my account and go back to work. Attempting to pick bottoms and tops over a long period of time is just not sustainable, and this is exactly how the brokers want it.
You should wait for the pullback, fade the top of the range with a tight stop in case it breaks, 8/21 MA crossovers on the 4H...I mean the list is a mile long and none of them work over long periods of time. They work just long enough to give you some hope, its almost like a zero sum game...hmm.
So what does a struggling trader do to get that positive ROI at the end of the year?
Quit focusing on entries and focus on exits. This is easier said than done, I can promise you this.
The funny thing is that the skill is free to learn and everyone can do it.
The skill is called Patience.
If you can learn how to be a patient trader than you can throw away every book, manual and trend trading garbage you ever read and start producing real, long term sustainable returns that are predicated on your account size, not your infantile entry. If you do not have an account yet than I say even better. You trade in a demo account, work your ass off until you do have $1,000 to begin your growth with micro lot trading.
So, how do you trade with no entry signal? The answer is simple, you scale in. Read this article here for more on scaling in. This is a Float the Loss technique that I have been doing for 4 years now and if I may be frank here... it is quite awesome. This is why I am so eager to share with my fellow traders because I have been down the road of entry picking with tight stops and it is no fun.
I implore everyone that has not produced an annual performance report to try floating the loss.
Nobody can sustain the constant failure that using stops brings. Float your loss and manage your risk accordingly. Trust that the aggregate will get you out with a profit every time.
I understand it sounds crazy and nobody is doing it but think about this. How will you ever pay your broker if you are not using stops? There are only two ways. You over leverage your trading size and blow the account yourself, or the market you are trading goes parabolic and never returns back to the mean. These are the only two ways the broker can win if you remove your stops.
Now, go look at the four main Forex markets. EUR/USD, GBP/USD, JPY/USD, USD,CHF.
Everyone of these markets are perfectly functioning markets with millions of top officials that have families, they rely on these functioning markets. My point is...THEY WILL Return to the mean. Look at them, study them, do your homework, test your market with Market Replay from Ninja Trader.
Do not believe the BS out there.
Try something unconventional for a change. Remove those stops and start scaling in. This way you no longer focus on entries...let your focus shift to exiting the market.
If you enjoyed the read then please share or leave a comment as I enjoy healthy discussions on the topic.
Great trading everyone,
If you want to get your first annual trade report then trade in a demo account. This is the ultimate tool for growing your first annual report. How does the old saying go?..."If you want to get the things others do not have, you have to be willing to do the things that others will not do. Trading in a demo account for an entire year, with one trade model, will instantly put you in that elite category of doing what others will not do". The pros are numerous while the cons are few if any. Let's do a quick break down of why it is a great idea to use a demo account for acquiring your first annual trade report.
1) No Monetary Risk.
Why would you risk your hard earned dollar on a trade model that you have not tested extensively in a demo account? This makes absolute zero sense to me. It is okay to copy any trade model that you like but you MUST trade this model in a demo account for an entire year to get a good look at what the model is capable of doing throughout the years flow of institutional monies (Volatility). You will need deep wells of confidence in your trade model when you do put real money on the line. Trading in a demo account for an entire year will give you that confidence (provided your trade model is any good...we will get to that later).
If you have ever trained at anything in your life, even a job can work in this analogy, then you know what it is like to out work your opponent or co-worker. The harder you work at a particular skill, the more confident you become. Trading is no different. Think about six months into the year, you are on pace for a 70% annual return for the year. You have taken maybe a hundred trades or more during this process. Think about the level of confidence you will now have. The simple fact that you know, you are doing something nobody else is doing and you are doing it at a high level.
This will change you as a trader. I know because it is exactly what happened to me. Checkout my last three years of trading here. I have a detailed report for 2019 that you can download here. This is a 25 page Detailed Transaction Report from Thinkorswim. The report shows hundreds of trades taken along with images to corroborate. I have been trading the exact same trade model for four years now. This has instilled a ridiculous amount of confidence in my model. I continue to test different markets in demo accounts as evident by my twitter post about the Bus Ticket Theory Genius here. I am a huge fan and avid supporter of demo trading.
2) No Psychological pressure when drawing down.
Now, I know what you are thinking, psychological pressure and drawdown is what trading is all about. Yes, you are absolutely correct. That is the reason you must not have any when you are developing your confidence in a new trade model. Your mental psyche will be what carries you through the year. If you are drawing down with real money and you have never seen your trade model in a years performance, you will most likely panic and run for the hills when drawing down i.e. stop yourself out and take a big loss or even worse, quit the trade model all together. Either way you are in deep waters when drawing down so your psyche abilities must be working on all cylinders. If you are not confident you will begin to flip flop, trying every trade model you can find, desperate to show a profit. This is the rat wheel where many traders go to die. Don't be the next victim of this vicious cycle. Handle those draw downs with ease when trading in a simulation account.
1) This takes time.
This is probably the number one cause for traders not having an annual trade report. It simply takes too much time to develop. We live in a world of "I want it now" type of mentality. I understand you want results and you want them now but I implore you to re-think that strategy when working with financial markets. I say it all the time, "trading is a marathon not a sprint". If you want to become a consistent trader for a long period of time you will need proper risk on training. Trading in a demo account for an entire year will provide you with the proper risk on training needed to succeed in this very tough business.
Earn your live trading account through hard work and dedication to proper "Risk On" training.
I can not think of another negative to trading in a demo account. Please feel free to comment below if you can think of something to add, as I encourage a healthy debate.
That is all I have for today. I hope this article was helpful. Please contact me here if you would like to discuss more on how to become a profitable trader or simply to figure out how you can get your first annual trade report.
Great trading everyone,
If you are not making money in the Forex markets then you should try the steps listed below.
I make my pledge to you right here and now that if you do what I say in this blog you will make $$$ in the Forex markets. You can find me on my Discord channel to discuss any and all material related to this topic. We would certainly like to have you join our trader community.
You MUST follow these steps to the "T" in order to maximize profit.
1) Remove your stop.
I understand this ruffle's a few feathers with some of you but hear me out.
Just try it.
The only thing you have to lose is time. I do not condone trading a live account when building a trade model so trade demo for six months minimum.
Now that we are over that we are ready to tackle the only issue you will concern yourself with...Risk Management. Learn to manage your risk (account size) and you are on your way to real alpha returns.
2) When the market goes against your position you will add.
See my blog here for how to scale into a position. You do not panic, you do not run for the exit...instead you embrace volatility like a warm blanket on a cold night, because in reality this is what it truly is.
Without this wonderful sporadic movement in the markets we would not have the ability make the cheddar like we do.
So, embrace volatility, don't run.
3) You simply wait it out.
This seems to be the hardest part of the process by far. Most people can not wait it out. They will eventually think they are smarter than the market and will concoct some reason to mess it up, be it stopping themselves out or leveraging down too much and blowing the entire account...either way you are doomed.
Find something else to keep you occupied. If you must be engaged in the market at all times (like me) then trade profusely in multiple demo accounts. Trade everything under the sun. Just make sure you follow the steps outline here.
4) Once your position is closed for $$$ then reverse it.
Your targets can be anything in the green meaning, as soon as the market rolls over and shows positive data on that position feel free to close it for a small profit. This choice is entirely up to you. I like to close rather quickly and reverse simply because I believe the market will reverse many times a day. I want to capitalize on this as much as possible.
Let's recap in a nutshell.
1) Build your position (Adding to drawdown)
2) Cover your position (when account shows green on said position)
3) Reverse your position (Position is now opened in the opposite direction)
Follow these steps and you will be forever changed as a trader.
Great trading everyone,
I am pleased to announce that we are now grid trading with micro futures. I have been testing the M6A (Aussie Dollar), M6B (British Pound) and the M6E (Euro Dollar) with much success.
I am able to grid trade these markets because of the low margins. In fact, I am incorporating a bit of Martingale technique into my trade model. This is important because it get's you out of the market much quicker. You will need this because futures contracts have an expiration every 30 days.
After one week of trading in all three markets, my longest hold was less than 48 hours, as you can see by the screenshots below. My average turnover time is somewhere around 2 hours.
All trades you see below are winners. I do not use stops. This is grid trading. Scale in, cover then reverse and start the process all over again.
Accumulate, Cover, Reverse
The most contracts bought at one time in this trial run was 20. With margins at $50 that equals just $1000 risk. The really cool thing is that this was during a big fed news week. This gives you a good indication that you can handle wide ranges (news day).
Knowing this bit of information now allows you to trade, pardon my french...balls to the wall, 24/7/365.
M6A (Aussie Micro)
M6B (British Pound Micro)
M6E (Euro Dollar Micro)
NinjaTrader has a great feature built into the software called Market Replay and you can use it to learn and test different volatility levels.
These are my Grid Levels:
$1,000.00 - $2,000 account = $0.01 (Lot Size) = ($10) add 1 lot, keep adding until market rolls over and your position turns positive.
$5,000.00 - $10,000 account = $0.10 (Lot Size) = ($100) add 1 lot, keep adding until market rolls over and your position turns positive.
$10,000.00 - $20,000 account = $1.00 (Lot Size) = ($1,000) add 1 lot, keep adding until market rolls over and your position turns positive.
So, for example:
You open a trade long the AUD/USD and the market quickly moves against your position. You are now negative ($100.00) on this position. You add to your position one .1 lot. The market continues downward and you are now negative ($200). You add another making your position 3 long @ ($200). You continue this until the market rolls over and your position turns positive.
($100) = 2 lots
($200) = 3 lots
($300) = 4 lots
($400) = 5 lots
($500) = 6 lots
Continue this pattern until your position turns positive.
As you can see from the image above there are four charts open in market replay each containing an FX pair.
I use an ATM bracket with stop @ 20000 (A ridiculous number because I do not use stops in my trading) and a target of 200 pips (targets will vary with testing) Warning: testing different target levels with market replay can be very addicting.
I also have reverse at target checked so as soon as a position closes, one is opened in the opposite direction and the "Accumulation" process starts all over again.
Think of it as a martingale strategy but without doubling down. I simply add to my position with the macro understanding that the market will come back to equilibrium.
Test this in Ninja Traders Market Replay.
You can also use myfxbook.com to get an idea of a markets volatility range. Some markets swing really dramatic so you want to stay away from those unless you have a big account and like plenty of action.
Disclaimer: My trade model can use a large drawdown % because I do not use stops. This is why it is critical for me to understand a markets range, and to not overleverage. This is what I do...I watch volatility levels. I do not give a rats ass about an elongated candle showing momentum, a moving average crossover or any other scenario you can dream up. I stay in the markets 24/7. I am always building a position through accumulation.
I never have to break a sweat trying to figure out market direction. That crap will ware you down over a ten year span and not even necessary. I do know a guy that likes to pick direction daily but it is not for me. I just let the market wiggle around and pay me in the process. The key for me is understanding a markets range and to not overleverage in that market.
Ninja Traders Market Replay is the perfect tool for checking and testing a markets range.
Hope you got something out of this. Leave a comment below or sign up with our Live Trading Room to see the action five days a week.
Great trading everyone,
Here is an Iron Condor trade 38 days out from expiration with an 85% chance of expiring worthless.
Credit $1.10 X 5 Lots
Total $550 - commissions
Call Side = 83.12% chance of expiring worthless.
Put Side = 92.80% chance of expiring worthless.
Expires in 38 Days
Credit: $1.10 x 5 = $550.00
Below is the Option Chain screen shot. This is showing you the Delta of the underlying.
You are looking for something close to .10 on the Call side and -.10 on the Put side.
Check back in 38 days to see how this trade turned out.
Remember...trading is a marathon, not a sprint. You only need 50% or better annual returns to be an elite trader.
Try not to get caught up in daily or even weekly profits when starting out. Look for high probability setups way out of the money like the one illustrated above. These are super easy to manage with a high winning ratio. This "winning" ratio will keep you in the game and consistent with your trade model. A lower probability set up tends to fall to the wayside because the trader will simply get tired of seeing the loss in his or her account.
Share and comment if you like the post :)
If you are looking to diversify your portfolio I suggest you try the Iron Condor set up in the Russell 2000 (RUT). This setup will produce 40% or better annual gains and can be managed with little time and effort.
Below is a screenshot of the Russell 2000 Index options page, on the Thinkorswim platform.
Notice the two orange squares. The green and red boxes inside are my debit spread position on each side creating an Iron Condor. What you want to look at here is the DELTA. Outlined green in the image below.
This trade is about to expire so the delta is worthless @ .01 on both sides.
When you search for this trade you are looking for a DELTA of .08 - .11.
When you find this trade you then analyze it in using the Analyzer tab on the Thinkorswim platform as seen in the image below. This image shows the Call side @ 99.81% chance of expiring worthless (it expires tomorrow). When you analyze a set up you are looking for an 85% chance or better of the option expiring worthless. You do this on both sides, evident in the two images.
CALL side above
PUT side below
I will post my next Iron Condor trade next week. I will highlight everything just like the above images so you will be able to see what to look for at the initial stage of the setup.
I highly recommend you learn in simulation for six months minimum.
Great trading everyone.
If you are getting stopped out all the time then remove your stop and cover the swing.
What do I mean by cover the swing? Just what it implies. You should remove your stop and "ADD" to your position instead of stopping out. This is called building a position.
NO STOPS! Quit paying your broker and start paying yourself.
Just try it in a demo account for six months. You owe it to yourself. Before you give up completely you must try this.
My last warning about using stops...I have watched them ruin traders, make them cry and quit...and that is a fact. Hell, they just about made me cry several times back in the day.
Below is a screenshot of a 20 year Monthly chart of the USD/JPY. I am long 1,000 units or 1 micro lot. One micro lot = 1,000 units = $0.01 US dollar. This is in a LIVE ACCOUNT.
The red bubble represents my target and the green bubble represents my second entry long. Remember, this is a monthly chart. Let that sink in a bit then ask yourself one question from here. Which bubble does the market hit first? The red bubble sitting on top of price or the green bubble way down at the "5 YEAR LOW"?
If you guessed the red bubble you would be right about 96.7% of the time...cha ching!
Getting the message yet? Where is my stop?...let's go further.
The only place the market can go, if it does not go up and hit my target, is straight down to the green bubble...what do we do then?...panic and stop ourselves out?
That is one option that most traders seem to take but I say absolutely NOT...
Hmmm...what if...we try a "Different" approach?
Remove our stop and add to our position at each one of the grey squares (in the above chart).
Now we are covering the entire swing of a 20 year market low with only $1,000 plus margin which is10 lots x40 = $400 for a total of $1,400 to cover the entire swing and hold on to this baby until she turns back around and goes up.
Awesome...let's just see what happens.
I can't show you on this trade because I just entered it last week but if you go here you can see my Account Summary Report from Thinkorswim for 2017 and updated 2018.
I used the same trade model explained above to produce the gains you see in my portfolio.
I hope this helps or inspires some traders to think outside of the box a bit...especially if those pesky stops are killing your bottom line, or even worse your spirit.
Don't let those stops get in the way of your financial goals. I promise you you do not need them.
Fire up that demo account and get to work...I will see you at the end of the year...right here with my Annual Account Summary Report in hand. :)
Great Trading everyone,
When you look at trading from a macro stance, you will quickly see that the power of consistent trading, coupled with compounding returns will have an enormous impact on your Annual Performance Report.
I am excluding taxes from this equation as this is meant to inspire some trader minds. We can discuss real tax cost and cuts (Trading in your IRA Account) in another post.
Let's jump right in.
If you can produce a 50% return in a years time and do this for ten years in a row, then you are in an elite category. Let me explain if I may.
Before I begin I should side note that if you can put up these numbers for ten years then you can probably get a job at any financial firm you chose. But that is another post altogether.
Let's say you start your first year with just $1,000. I know that is a very little amount and that is the point. This will show the enormous power of consistent trading along with a compounding trade account. In 5 years that $1K account with a 50% ROI is now $7K and in ten years it is $57K.
That's right...1K into 57K in just 10 years. Let's break it down.
I hope this inspires you to think longer term when analyzing your trading results. This can help you to think outside the box in terms of different positions and strategies. It does not need to be all about an Hourly chart. Back up a bit from those micro views. Slow down your process.
Please comment below or share if you like.
Great Trading Everyone :)
Four Hour Chart
The Four Hour chart is giving us a great macro view at the moment. We can clearly see price rotation and balance with Value area high at 71.47 and value area low at 70.60.
We are currently trading at the low end of value @70.79 with expectancy to rotate back up to the high end of value.
Note: Because markets do not go straight up and down expectancy is to see rotations (Accumulation) before price rises (or falls) again. This can mean one to three days of a rotating market on average.
Note 2: We had a heavy sell off Friday afternoon. Afternoon rallies and selloff's are usually indication of further price action in the same direction so we could see selling all the way down to 69.44, then 68.50.
My Expectancy on the day: Rotational market (Accumulation) with maybe a new low from Friday put in.