On September 9th the U.S. Government auctioned Treasury Bills via the normal procedure whereby banks enter multibillion-dollar orders via the New York Federal Reserve’s computer systems to participate. Unfortunately, Goldman Sachs was again at the center of a ‘glitch’, which had the NY Fed blocking their order. Now, I don t feel sorry for Goldman Sachs, but what does concern me is the larger implication of how one investment bank can impact the entire global treasury market. The Treasury department did not release many details about how or what happened stating only that it suffered “a technical issue that prevented one bidder from participating in the 3-month auction. The ‘glitch’ is the latest in a growing string of technical problems in the U.S. financial markets which creates additional mistrust amongst traders and investors that are frankly getting tired of wondering what’s next. It would seem that after the “greedy” humans and malfunctioning computers t
http://www.indicatorwarehouse.com/96676/computer-glitch-strikes-again-monday-updates/Monday, September 23, 2013
Optimizing Profit and Stop Loss Targets
How to Optimize Your Profit (and Stop Loss) Targets by Erich Senft, CTA Don’t you hate it when you take profit on a trade and the market continues on a lot further without you? That’s almost as good as getting tagged on your stop loss only to watch the market reverse and head to your intended profit target (and maybe continue past it!) What’s going on? Why is it so difficult to make set efficient profit and stop loss targets? The problem originates with the assumption that the markets never change, and of course that is a bad assumption. The markets are constantly changing, expanding and contracting to reflect what is currently going on in the marketplace. Just understanding that the markets are in constant flux will better equip you to take advantage of what the market is giving (or not giving) and allow you to set effect profit and stop loss targets. How do you do that? The first thing you need to consider is the market’s Average Daily Range, or ADR. Notice that the Average
http://www.indicatorwarehouse.com/96671/optimizing-profit-and-stop-loss-targets/Thursday, September 19, 2013
Inside Day as the Focus Turns to Triple Witching Expiration Friday
The focus on Thursday turned quickly from follow through “FED” buying to position squaring ahead of tomorrow’s triple witching expiration. New highs were rejected early producing more of an inside day with volatility traders also adjusting positions as many September positions expire throughout the trading day on Friday. Volatility Indexes The volatility quickly evaporated on Wednesday after Bernanke’s statements as many were caught “off guard” by the FED Chair announcing no tapering yet. Thursday’s trade initially was again in the direction of crushing volatility with volatility indexes sinking. The VIX is again teetering just above the 13 level. As a directional indicator, the VIX is based on the prices (real-time) of options on the SPX listed on the CBOE. The future is designed to reflect traders’ consensus view of expected market volatility 30-days out. As a gage of market complacency or market fear the VIX moves higher during periods of uncertainty a
http://www.indicatorwarehouse.com/96634/inside-day-as-the-focus-turns-to-triple-witching-expiration-friday/How Much Can I Make?? Goals and Planning When Trading
Hi Folks!! A question I have gotten quite often in my life when I work with various types of traders is what to expect with returns from trading. The email usually sounds something like: Hi Omar!! I was wondering if you could share with me how much you are making per month (either in $$ s or %) so I can know what to expect for myself After getting over the initial shock that someone would ask something so personal, I started to try to figure out how to best answer this question. I have no problem being open and honest about anything, but I have certain sensibilities which usually prevent me from sharing every detail of my life indiscriminately. But I realized that even if I simply told each of these people asking the numbers, it would not help their trading one bit. Why?? Because everyone s experience is different!! Day trading is not like a regular career choice or job. There are no guarantees for success overall and it s got such a wide range of results people find fro
http://www.indicatorwarehouse.com/96259/how-much-can-i-make-goals-and-planning-when-trading/Wednesday, September 18, 2013
Survey Says… New Highs for DJIA, S&P 500, and Russell 2000
The markets put in a stellar “Billy Graham” rally after the FED announcement on Wednesday. Equities, treasuries, precious metals, and many commodities all surged higher as the U.S. Dollar plummeted. Billy Graham rally or sell-off is a term I use to describe a situation when equities, treasuries, precious metals, and commodities all go in the same direction while the U.S. Dollar moves in the opposite direction. Frequently the same underlying reason will be in opposite corners as to the “why”?
http://www.indicatorwarehouse.com/96615/survey-says-new-highs-for-djia-sp-500-and-russell-2000/[Video] Back-Testing for the New York Open Trade for the Eagle Trend Trader
Do you ever notice how the market tends to move a certain way at a certain time of the day? I do! For years I stayed away from the open for at least the first half hour of every day and for years I missed out on some pretty great moves, with DTS, this has now changed for me. In this video, I will demonstrate how I back tested the NQ (NASDAQ) at the 9:30 New York Open with precision, accuracy, and very little time to discover a great DTS trade that I’m sure after YOU test it, you will believe. The rules are simple, the only addition to DTS is the time and to learn a simple pattern. I only take this trade between 9:30 a.m. E.S.T., and I will give it up to 30 minutes to “make its move”. Enjoy the video and look for more to come for the Hawk and Falcon as well. Don’t take my word for it, check it out, test it out, and decide for yourself.
http://www.indicatorwarehouse.com/96590/rays-back-testing-for-the-new-york-open-trade-for-the-eagle-trend-trader/Tuesday, September 17, 2013
Facebook The New Market Leader?
There are times when I just sit back and watch what motivates traders. Today was one of those days. A few months back I read where there was a pattern (self fulfilling) where traders bought on Tuesday because the markets move higher. I remember thinking how ignorant can that be – but the reality is that it has continued to happen. Aren t the markets more sophisticated than that? Don t analysts spend hours and days pouring over numbers and charts to determine value and what the next move will be? I guess not – so again, I reiterate when a market moves in either direction based on emotion rather than fundamentals it is very likely a “sucker” move or in Elliott terms a “B” wave. Remember computers don t have emotions the function within the parameters of the program running and until those parameters change don t expect the market gyrations to make economic or financial sense. Despite the total breakdown in Facebook on Monday, traders returned on Tuesday to
http://www.indicatorwarehouse.com/96584/96584/Trading Options Using DTS – Part Four – Managing Winners – High Volatility Strategies
Strategies Employed In Using Volatility to Your Advantage The Iron Condor An Iron Condor is a defined risk options trade, which as a strategy can be highly effective in taking advantage of period of high premium. Volatility is a major factor in deciding to use this strategy. As a general rule Iron Condors are employed when volatility is high. As volatility increases you can widen the strikes, which will improve your probability of profit. Selecting which strike prices to use is an important factor in successfully trading an Iron Condor. Since, Iron Condors are used when volatility is high, and the objective of the trade is to collect premium you would always be a “seller” of the Iron Condor. Selling an Iron Condor is the simultaneous selling of a call spread and a put spread. When volatility is “rich” look to the strike prices that allow you to collect premium that adds up to at least one third of the width of the strike prices. For example on a five dollar w
http://www.indicatorwarehouse.com/96555/trading-options-using-dts-part-four-managing-winners-high-volatility-strategies/Monday, September 16, 2013
Perception Is Not Always Reality – The Markets are Higher Because…
Larry Summers took his name off the list of potential candidates to lead the FED. As an outspoken critic of quantitative easing, the markets were “thrilled he would not be in charge of taking away their ‘fix’ too quickly” – seriously? Some would rather hang their rally hat on the weekend agreement between the U.S. and Russia in ridding Syria of its chemical weapons. Reality on the other hand would say both of these reasons are emotional and not fundamental. Why, because both were not reasons the market was heading lower prior to the news hitting the wires. So if the threat of war has been somewhat removed and the threat of rising interest rates have not been removed wouldn’t reality eventually run over perception? Hasn’t the FED already made that decision on rates via stating their intent to cut back on purchases? The bottom line is the markets did surge higher on Monday and shorts were squeezed hard. Trading opportunities were available today, the NA
http://www.indicatorwarehouse.com/96565/perception-is-not-always-reality-the-markets-are-higher-because/Are You a Weatherman Trader?
What’s the difference between a Weatherman and a Trader? I asked this question at our forum a little while ago and stumped quite a few people. Do you know the difference? On the surface they seem the same, but there is a very importance difference between the two. The main difference between a Weatherman and a Trader is that the Weatherman tries to predict what will happen next, whereas the Trader reacts to what IS happening. A subtle difference, but understanding that difference can make, or cost you, a lot of money. Too many traders get caught up in trying to predict what the market will do next. I have friends pushing stock charts in front of me all the time asking “where’s it going from here?” The truth is I don’t know, no one does (and if they tell you differently they’re lying) but what I do know is IF the market does THIS, then THAT should happen – that’s reactionary. That’s reacting to what the market is doing, not trying to predict what it WILL do. Case in p
http://www.indicatorwarehouse.com/96561/are-you-a-weatherman-trader/Thursday, September 12, 2013
Overbought – Part II
The markets paused on Thursday as futures traders concentrated on rolling futures contracts and setting their sites on Friday’s options expiration. As I discussed on Wednesday the rallies in the S&P 500 and NASDAQ 100 have been strong. The SPX gained over 3% in less than a week. The rallies were not fundamentally based but considered more of a “relief” rally in response to the diminished threat of the U.S. military strike in Syria. The reality is that the markets got ahead of themselves very quickly in pushing prices nearly back to record highs. In the process the broader indexes reached extreme overbought levels. This has brought out many signs that the “bounces” are nearing an end. The McClellan oscillator is again pushing into overbought and the move resembles what took place back at the June bottom, which ultimately lead to the declines we saw in August. If nothing else the McClellan oscillator is suggesting stocks are currently extended to the upside.
http://www.indicatorwarehouse.com/96548/overbought-part-ii/Pyramiding………..Not Just For Ancient Civilizations!! Using Multiple Orders To Your Advantage In Trading
So there you are you ve done your homework and taken the trade. You found a great spot for entry, all signals were go, and you entered the market. Within a few minutes of getting in the market though, you find yourself in drawdown. You have a 50 pip stop and before you know it, you are half-way there. You think Well, if I thought my initial entry was a good price to get in, I should really love where the market is now and take another order. That will make it so much easier to get to profit once the market moves in my favor, IN FACT, I won t even have to get to my original entry before I hit b/e. Yeah . the ol dollar-cost averaging philosophy. Although this works great much of the time when you are investing based on fundamentals over the longer-term, it can be a seriously risky maneuver when trading based on technicals in the short-term. When I started trading forex, I had the unfortunate experience of having VERY good results right at the beginning. Why was this unfortunat
http://www.indicatorwarehouse.com/96482/pyramiding-not-just-for-ancient-civilizations-using-multiple-orders-to-your-advantage-in-trading/Wednesday, September 11, 2013
Overbought!
Are the markets climbing the wall of worry or building a skyscraper out of a house of cards? The action on Tuesday and Wednesday leaves little to the imagination as we witness the indexes rocket into the stratosphere. I have been discussing the attributes of “B” waves in that often the moves are emotional and lack any fundamental “ground” underneath to provide the support needed to sustain the weight being put on. This continues to be the case. It is times such as this that a “turn” often occurs as if without warning – “out of the blue”. The S&P 500 future has been on one-way ride since reversing course intraday on September 6th. The index has climbed $50 in four days, which is an impressive move. In the process the market has become extremely overbought as registered by the stochastic oscillator pushing to it’s maximum level of +100. There are times when the “weight” of the markets brings them back to the “mean”. Such a time seems to be a
http://www.indicatorwarehouse.com/96521/overbought/10 Things for Getting Set-up for Pre-market Trading (space, office, tech)
Setting up for pre-market trading is really not that much different than getting yourself situated for trading during regular trading hours; typically I try to have myself set up as follows for regular trading hours: 1. Set-up Your Trading Environment For starters, I like to have a nice, quiet, as secluded space as possible for my desk to be set up at. I want as little disturbance and distraction as possible. 2. Check for Viruses & Software Updates Before I do anything, I check my equipment. I make sure all my virus scans have run so it won’t interrupt my training and I also make sure my updates have completed as well. There is nothing worse than being in a trade and the old Microsoft update wants to restart your PC. 3. Check Your Internet Speed Next, and this is important, I run a speed test through www.speedtest.net . You results will vary according to your ISP and location, but from the Denver area, I like to see a ping speed no greater than 42 milliseconds from here to C
http://www.indicatorwarehouse.com/96500/getting-set-up-for-pre-market-trading-space-office-tech/Tuesday, September 10, 2013
Open Forum FAQ Friday Recording – September 2013
First up, thank you to everybody that joined us on last Friday s FAQ session. We had a great time and tons of great questions. The first part is with Ray and Michael with Erich jumping on about an hour in. Join us for the next demo of DTS in action. Here s the recording of the session: Here s some of the questions asked: How would you choose which instrument to trade on any given day? What would be the process of elimination to decide which instrument to trade? Do you prefer fundamentals or technical trading? What are your favorite tools as a trader? What is the best trading timing on your opinion, if I would trade only 2 hours? What do you think of the current regulatory environment in regards to trading? how much of a retracement would you consider to have satisfied a test of the extreme ? How do you determine that a trend is taking place and when has ended? Is a Macro Line Pull Back a fair entry or requires a lot of caution? (Too many of my MLPB end up being wrong entries). The dai
http://www.indicatorwarehouse.com/96494/faq-friday-recording-september-2013/Monday, September 9, 2013
Impressive Rallies Continue, But Evidence Still Points Down Near-Term
Don t be Fooled by the Elusive Elliott “B” Wave Even though I have been trading for over 30 years I am still amazed by the markets. In particular I am astounded at how much computers have taken over the trading process. Choosing a trade is no longer about anything fundamental. If it were much of what I’ve witnessed would not happen. Algorithmic programs rule the markets these days. It is something that has been in the works for several decades now. I doubt analysts are the higher paid employees at Goldman Sachs, JP Morgan, Bank of America, Wells Fargo, or Citi Group. Software engineers command the big bucks these days. Monday’s trade was a continuation of the topping process to complete what remains a classic Elliott “B” Wave. Upward (directional) “B” waves are phonies. They are sucker plays, bull traps, speculators’ paradise. They are often emotional and rarely technically strong. For the most part almost all “B” waves are doomed to be c
http://www.indicatorwarehouse.com/96476/impressive-rallies-continue-but-evidence-still-points-down-near-term/Diversification – the Key to Opportunity and Success
Diversification can be a Valuable Tool in the Day Trader s Trading Toolbox In the world of investing “diversification” is synonymous with “safe”, “secure” and “smart”; yet in spite of the advantages diversification brings to trading it is a relatively foreign concept to day traders. Money managers and trading professionals know the advantage of diversification which is why diversification is a key component of any retirement savings plan. No one questions the logic of diversifying investments when it comes to a retirement plan. Everyone knows that diversification lowers risk, and if done right, the good investments will outweigh the bad ones. The good news is that the advantages that diversification brings to your 401k are the same advantages that diversification offers your day-to-day trading. The key to successful diversification is “doing it right”. Diversification on the day trading level is more than just trading a variety of markets; rather, diversification f
http://www.indicatorwarehouse.com/96406/diversification-the-key-to-opportunity-and-success/Thursday, September 5, 2013
Volatility Selling + Low Volumes = B-Wave Top
Volatility Selling + Low Volumes = B-Wave Top The equity markets held their ground on Thursday as treasuries and precious metals sank deeper into the abyss along with the Euro as the U.S. Dollar rally kicked it up a notch. The name of the game on Thursday was “selling volatility.” Statistically, two weeks prior to options expiration is the time when front month volatility gets crushed. This could get upended or pushed out a bit if the markets remain “wishy-washy” towards the yes or no vote on military strikes in Syria. What did strike me were the methodical program traders that moved in today to bring volatility back down. Not that this is totally out of line, but the across the board “vol crush” may bounce back and bite the hand that feeds them. There is good reason for the uncertainty in the market at the moment. Whether or not we all agree or not doesn’t prevent the underlying concerns to evaporate. Volatility selling may turn out to not be the trade i
http://www.indicatorwarehouse.com/96401/volatility-selling-low-volumes-b-wave-top/To Every Season, There Must Be Reason……..To Trade!
As I sit here, my window is open and a draft floats gently by. There is something different about it today. A quality that is both untouchable and at the same time, completely knowable. The current of air today has a soft undertone, rather just a glimpse of the soft end to Summer and the transition to Fall. Just as the leaves will change and a chill will eventually come, the landscape will look different. As in the world, forex also has its seasons. The market can dramatically change from one period to the next. For myself, the trading year always begins in Fall. This period, which ends the summer trading session, generally sees volume return to many markets. I personally mark the end of summer at Labor Day, but much of the time we don t see the full Fall volume return until towards the end of September. Just as people take vacations during the summer months, the markets almost invariably see a sharp drop in volume. Fall sees this activity return to forex, as Europ
http://www.indicatorwarehouse.com/96347/to-every-season-there-must-be-reason-to-trade/