Forex Trading The Mindset to Win

90% or more FOREX traders lose and only 10% or less achieve FOREX trading success.

Everything about trading however can be specifically learned.

The reason so many traders fail, is not they can't be successful (anyone can), they simply cannot adopt the right mindset needed for trading. If you can adopt the right mindset and have desire to learn, you can enter the minority of traders who achieve FOREX trading success - Let's look at this in more detail.

1. Your On Your Own

If you want to make it in FOREX Trading you are responsible for your success. Today, more than ever before people don't like taking responsibility for their actions - they want to consult an "expert". Many people think that they can buy success in FX trading, but you can't. If you think buying an e-book for $100.00 or so will make you rich think again. The only way you will be successful is to do it on your own. With this attitude you will now be able to learn the right knowledge for FOREX trading success.

2. Learning the RIGHT knowledge

This means leaving your ego behind and being humble. This may seem a strange trait for trading success, but it's true. Many traders think that learning lots of knowledge, developing complicated trading systems and being clever means success. They think the fact they are smart, means they have "a right" to be successful. This is of course is not true you make money not for being clever or working hard, but for getting market direction right. The really successful traders know this, they learn what they need to know, have essentially simple FOREX trading systems and are humble, in terms of their attitude to the market.

Many traders who make millions have no formal qualifications, yet they make money, that's because they learn the RIGHT knowledge and work smart rather than hard.

3. Confidence and discipline

If you develop your own trading methodology, you will know how and why it works - this means you will be confident in it and apply it with discipline in the market. Discipline is a hard trait to acquire and it's hard to put into words actually how hard it is. Staying for example with a trading system through a string of losses can be frustrating and this is where you need mental discipline to stick with your system. More traders fail due to lack of discipline than any other character trait, but it's essential for FOREX Trading success. It comes from learning your own trading methodology and having confidence in it.

4. Trade In Isolation

If you want to be successful in currency trading, then you need to trade in isolation. The real pro traders understand this. They don't discuss their trades with others, give or seek opinions, they focus on what their doing in the currency markets and ignore everyone else. If you don't trade in isolation, you will find that your emotions get involved and discipline suffers.

5. Patience.

You can't hurry the currency markets, or profits so don't try. Trading requires immense patience to ride out losing periods and wait for good risk to reward opportunities to present themselves.

6. Love what your doing

Trading should be fun and you should love what you do. If you constantly are feeling nervous, don't like risk, constantly checking quotes and willing the market to go your way, then trading is not for you.

If you can approach online FOREX trading with the character traits above, you have the opportunity to achieve FOREX Trading success and make some great long term capital gains.

Read More..

Jump in Nonresidential Construction Spending not Expected to Stick

Total construction spending fell 0.9 percent in February with downward revisions to December and January. Residential construction spending fell 4.1 percent. Nonresidential construction spending increased 0.5 percent, but we do not expect the gain to stick. Public construction spending rose 0.8 percent.

Residential Construction Spending Continued to Fall

Total construction spending was down 0.9 percent and is now down 10 percent year-over-year. Much of the decline continued to be in residential construction spending which fell 4.1 percent and was down 29.2 percent year-over-year. Single family residential spending fell 10.9 percent on the month and multifamily was down 2.1 percent. Home improvements increased 1.9 percent on the month, but are down 14.3 percent from a year ago.

Nonresidential Surprise Gain is not Expected to Stick

Nonresidential construction spending rose 0.5 percent with gains in both private and public construction spending. Private nonresidential construction spending rose 0.3 percent on the month with lodging and manufacturing increasing. Public nonresidential construction spending rose 0.8 percent with gains in power and conservation and development. With continued weak economic growth, nonresidential spending should decline in coming months.

Read More..

Tell 'em the Way it is Aso San!!

Having revealed his own economy to be in "a state of crisis," Japanese Prime Minister Taro Aso today told the Financial Times in London that the German government should get off its Teutonic high-horse and get to grips with the essence of fiscal stimulus. Mr. Aso told the FT, "There are countries that understand the importance of fiscal mobilization and some that do not, which is why, I believe, Germany has come up with their views."

The words of warning underscore the likely lack of action that many expect from the conclusion of the London G20 meeting. Japan's own problems took roots throughout the 1980's due to excessive bank balance sheet lending and asset appreciation, which drove the Nikkei close to 40,000 at the end of the decade. Failure to deal with problem loans in the aftermath ensured the Japanese system lay pinned to the seabed for more than a decade after the bubble burst, and today the benchmark Nikkei carries a similar index value to the S&P some 20 years later. The Japanese nation has been through a period of sincere chest-beating throughout its decade of torpor and hardly needed the world's largest economy to go belly up, just when they were enjoying the recovery.

So the veiled assault on Germany's fiscal fear is one spoken from the gut and one that deserves a page one headline of, "Aso lays bare G20 split." Yesterday's Eurozone inflation data halved in February to 0.6% from 1.2% and reveals a real chance that at as early as the summer, the ECB will be faced with the prospect of deflation. Arguably, in a declining economy, falling prices are harder to eradicate than rising prices. Just ask Mr. Aso if you have any doubts about that.

The euro accordingly has felt a little pressure overnight as dealers prepare for a potential interest rate cut on Thursday. But speculation is growing that the ECB might yet launch some element of quantitative easing, not just to stay in line with other central banks, but because monetary policy has proven to be just one minor part of the solution in spurring lending. We'd argue that failure to join the club will ultimately be a bad move for the Eurozone and there will be additional pressure on its currency going forward for failing to prevent a deepening recession turning worse. We're not sure what the Japanese for, "See! We told you so!" is, but we're pretty sure that as and when Europe's prices turn negative, the rear-view crowd will be telling the ECB that rates should have been cut faster and the governments that fiscal spending should have been sooner.

At $1.3267 the euro is unchanged overnight, while it has lost a little ground to the Japanese yen at ¥130.80. The Japanese Tankan index of manufacturers revealed the most pessimistic conditions since 1974. Investors' angst continues to center on the yen in response to the ongoing release of dire data. Arguably, a far better target would be the euro where deflation is a threat and a raft of fresh data released today highlights the worsening situation.

Unemployment in the region rose to 8.5% - a three-year high. Germany's retail sales numbers showed shoppers stayed clear creating a drop of 0.2% instead of the consensus rise of 0.3%. A survey of manufacturers confirmed an ongoing sign of Eurozone decay as further industrial contraction was indicated. When you stop to think that the dollar took it in the neck because of the Fed's announced quantitative easing and compare the prospects for each economic area, the U.S. wins hands down. The failure to implement quantitative easing in the Eurozone for fear of a collapse of the common budget boundaries that created the single euro currency might just turn out to be the reason why the euro collapses.

A rebound in British manufacturing helped rally the troops around the pound today, which rose against both the dollar to $1.4350 and the euro, where one euro buys 92.30 pennies.

Weakness in commodity markets is weighing on the commodity dollars today. Crude oil for May delivery is off almost $2.00 at $47.60 in early trade, which is substantially below the rally peak at $54.50 last week. That move was inspired by expectations that growth was set to return inspired by U.S. quantitative easing. As we know, that impacted the dollar negatively yet at the same time provided a double-whammy of enthusiasm for commodities, which typically trade inversely to the performance of the dollar.

Today's ADP payroll data bodes badly for Friday's key non-farm payroll report for the U.S. in which the current expectation will see a fifteenth consecutive month of job losses in which five million jobs will have been lost. That would send the unemployment rate careening towards double-digits at 8.5% from 8.2% as more companies see sales slump in the face of weakening consumer spending and tightening credit conditions.

The Aussie and the Canadian dollars look increasingly vulnerable here without firm evidence of a turnaround in economic data. Overnight, Aussie retail sales took a turn for the worse and it appears a matter of time before bears assault its currency.

Andrew Wilkinson
Senior Market Analyst

Interactive Brokers

Note: The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. However, neither Interactive Brokers LLC nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither IB nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance is not necessarily indicative of future results.

This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities or other financial instruments mentioned in this material are not suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue. The information contained herein does not constitute advice on the tax consequences of making any particular investment decision. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation to you of any particular securities, financial instruments or strategies. Before investing, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

Read More..

Private Employers Shed A Staggering 742,000 Job in March According to the ADP!

The U.S. labor market continues to suffer deeply from the worst financial crisis since the Great Depression, as the ongoing recession which indeed dampened economic activity severely forced companies to increase the pace of layoffs according to the ADP employment report today.

The ADP employment report signaled that the private sectors shed 742,000 jobs in March well above median estimates of 663.000 jobs and above the prior revised estimate of 706,000 jobs shed back in February.

The report comes ahead of Friday's Non-farm payrolls, which is expected to signal an ongoing deterioration in the labor market, as companies continue to reduce their costs through firing more workers to withstand the most difficult economic conditions since early 1930s.

The unemployment rate is also expected to rise from a 25-year high of 8.1 percent to 8.5 percent, which indeed signals that there's still along way to go before the economy starts to recover, meanwhile conditions are still rather challenging and accordingly economic contraction is extending further.

Meanwhile the saga concerning the U.S. automakers continue to spread pessimism around the market, as President Obama is signaling that should General Motors or Chrysler fail to restructure and prove their financial viability, both will be forced to go bankrupt, as that would be the logical solution.

The auto industry continues to suffer the worst conditions since the 1980s, as tightened credit conditions, rising unemployment, and falling households wealth continue to suppress consumer spending.

The last thing the U.S. government needs right now is one of automakers going bankrupt, especially if we consider the aftermath on global financial markets, especially as the level of uncertainty remains rather high, and that will only cause more volatility and more risk aversion among investors.

Meanwhile President Obama joined U.K. Prime Minister Brown in calling for more actions from the G20 in order to be able to help global growth recover the aftermath of the worst financial crisis since the Great Depression, yet on the other hand Germany, France and Japan all were skeptical over the worthiness of the G20 meeting.

The Institute for Supply management released today its manufacturing index for the month of March, the index rose to 36.3 from the prior estimate of 35.8 and slightly above median estimates of 36.0.

The prices paid index rose to 31.0 from 29.0, while the production index was almost unchanged at 36.4, new orders rose to 41.2 from 33.1, while inventories declined to 32.2 from 37.0, meanwhile the employment index rose to 28.1 from 26.1, new exports orders rose to 39.0 from 37.5, and imports rose to 33.0 from 32.0.

Despite the slight rise but the index continues to signal a severe contraction in the manufacturing sector inline with the ongoing contraction in other major sectors around the economy including the services and construction sectors. Construction spending declined in declined in February by 0.9 percent better than the estimate drop of 1.9 percent and up from the prior revised drop of 3.5 percent.

Meanwhile pending home sales rose 2.1 percent in February up from the prior reported drop of 7.7 percent in January and well above the expected flat estimate. The housing market continued to show signs of stabilization in February, which indeed encouraged investors that the long lived slump might be coming to an end.

Stocks barely moved in today's early trading session, as the data provided mixed signals for investors, especially the ADP hefty drop which left investors uncertain over what to expect on Friday.

The DJIA was up by 21.50 points or 0.28% only as it was last trading at 7630.42, while the S&P 500 index was up 2.12 points only or 0.27% and was last trading at 799.99, and the NASDAQ Composite index was almost unchanged at 1528.80, data as of 10:24 New York time.

Equity markets are still expected to drop over the upcoming period, as the incoming data continues to signal that the economy is still contracting, and accordingly the Dow might drop back towards the 7000 levels, meanwhile our projections are signaling the S&P 500 will also drop back to the 750 levels at least, yet I should also note that volatility should persist over the next two days.

Read More..

U.S. Market Update

Dow +48 S&P +4 NASDAQ +6.5

US indices opened not far above Monday's lows on this the first day of the second quarter, while the G20 gather in London and protesters riot in the streets. But equities are rallying with enthusiasm in early trading this morning after February pending home sales rebounded strongly from January's record low and the March ISM reading showed manufacturing activity contracted by a bit less than anticipated. Note that the ISM new orders component was much better than prior, with inventories seen falling. Various commentators have offered doom and gloom this morning, including Fed Governor Fisher, who warned the Q1 contraction in GDP may be worse than Q4's decline, and Harvard Economist Feldstein, who said the economy is getting worse. The FDIC's Bair is not among them, boosting financial names after saying she was cautiously optimistic about the US banking sector.

With the G20 summit about to get underway in London, recent economic data from around the globe confirms that the politicians in attendance are under great pressure to do something about the world economy. China's March manufacturing PMI declined again, casting further doubt on whether the country can power any kind of economic recovery. In Japan the quarterly Tankan was dismal, showing that economic conditions remain severe. German retail sales were worse than expected. European PMI reading remained at or near all-time lows and Euro Zone unemployment climbed to its highest level since May 2006, at 8.5%. The US ADP employment change data registered its largest decline since the inception of the series back in 2001. One European currency dealer commented that the current G20 conference could be among the three most important summits of all time, just behind the Plaza and Louvre Accords in the 1980. However it's worth keeping in mind that the latter left their marks with substantive agreements while this conference is likely to be marred by discord and naked self interest.

Both the Fed and BOE purchased government notes as part of their quantitative easing schemes. GILT prices moved sharply higher after a relatively low bid-to-cover ratio in the reverse auction of £3.5B 2014-2019 paper. Treasury prices have also climbed higher after the NY Fed bought $6B with a bid-to-cover ratio of 2.82, also below the average of the first three reverse auctions. The US benchmark yield is trading around 2.6% while the long bond offers closer to 3.5%. The yield on the Bund has also moved lower, below 3% after sources indicated the ECB is considering unconventional quantitative measures in the coming weeks. Reminder the ECB is expected to cut by another 50 basis points at tomorrow's meeting.

Energy prices remain to the downside following weekly inventory data from the DOE. Distillate stockpiles grew when a decline was expected, and demand dropped off in the latest week indicating the economic weakness continues to weigh on the complex. May crude remains near a 1-week low below $50.

Today's early rebound in the Indices has been led by the financials. Trades seem to be buying these names ahead of tomorrow's FASB meeting and official vote on possible changes to the way mark-to-market accounting is implemented. The XLF is up more than 2% after opening down closer to 3%.

In other equity news, consumer-oriented names Sealy and Borders Group both offered surprising positive quarterly reports yesterday after the close. Sealy reported a modest Q1 profit, while analysts had expected a small loss, earning the company an upgrade at Raymond James. Borders beat Q4 estimates by a healthy margin, although sales remain very depressed on a y/y basis. Shares of ZZ are up 54% early on, while BGP is up 20% and headed higher. Education company Apollo Group managed to beat earnings and revenue estimates, but negative comments on debt from the CEO and a Baird downgrade are weighing on the name, with shares of APOL-12%. Shares of Sonic Automotive are hurting, down more than 45% after reporting a big Q4 loss and refraining from offering any guidance for 2009. Biopharma firm Celgene warned that it would barely achieve its 2009 guidance; shares of CELG-14% are down sharply in early trading.

In currencies, dealers were eyeing key EUR/USD hourly support at the 1.3130 level, where the pair was trading prior to the Fed's quantitative easing announcement on March 18. This level also corresponds to the 100-day moving average. The pair was seen consolidating in a 1.3130 top 1.3330 ahead of the ECB rate decision and G20 summit. Chatter has been circulating that the ECB is planning an additional rate cut of up to 50bps and considering some unconventional quantitative measures in the coming weeks.

Read More..

Sponsor Forex Brokers $ Index, Upside Still Not Complete....

$ index is down from the Oct 28th high at 87.85 but with no signs that a more important top is in place pattern-wise, is seen as a correction and with eventual new highs above 87.85 after. Also, yesterday’s bullish "false break" of the bull trendline since late Sept (see daily chart below), adds weight to the view of further upside ahead. However, there remains some risk for another week or 2 of wide consolidating before the new highs are seen. Reached the buy target from the Oct 22nd email at 84.75 and for now, would stop on a close below the bullish trendline from late Sept (not including yesterday’s spike, currently at 84.75/85). Note that a break below there would not abort the view of new highs, and would be looking to rebuy at lower levels if taken out. Nearby resistance before the 87.85 high is seen at 86.20.

Longer term, the market is nearing overbought after the sharp gains since the March low at 70.70 (see weekly chart/2nd chart below). However, there are no signs of even a near term top and suggests further gains above, but there is some risk that further upside may be limited. Note too that longer term resistance is above there at 90.00 (38% retracement from the July 2001 high at 121.00) and a number on bigger picture cycles in the financial markets reverse in the mid Dec timeframe. So for now, would have a bullish bias but will be looking for signs of a potentially important top (for at least 3-6 months) on a move above 75.90, and especially on an approach of the mid December timeframe.

Read More..

Day Trading or Swing Trading?

here are countless ways to invest and trade. One question that immediately needs to be answered is "In what timeframe do you plan to focus your investing?" There are major differences between the active day trader and the long-term buy and hold investor. Let's break down the different stock trading strategies based upon timeframe and look at the advantages and disadvantages for each.
Day Trading

The stock or futures day trader is someone who is buying and selling intraday. They tend to do this with frequency throughout the day. A day trader may trade a few times per day or dozens of times per day.

* Advantages: No overnight hold exposure. Can profit both long and short and take advantage of quick swings in both directions. Can focus on a higher winning percentage of trades by taking quicker profits and smaller risk.
* Disadvantages: Work. Simply put, day trading requires the most effort. Your attention on the markets has to be consistent - not always constant but certainly quite active, at least during portions of the trading day. Trading costs are another consideration. You tend to run up a large commission bill when investing frequently.

Swing Trading

The swing trader could be a stock, option or futures investor. This person is looking to take larger bites out of the stock market that can stretch over a day or multiple days and weeks.

* Advantages: Slower cycle of trades, meaning fewer trades to make, fewer commissions, less chance of error and the ability to catch the more significant multi-day profitable swing trades. Technical analysis is used primarily to identify these opportunities. Average profit target percentage is much higher typically than day trading.
* Disadvantages: With those higher profit targets comes higher risk per trade. If you are looking to trade over a longer timeframe, you have to expect your average risk per trade will need to be higher simply to account for the retracements that are common in all stock and futures markets trading. There is also overnight exposure and you would be exposed to any major developments.

Long Term Swing Trading

The long term swing trader is someone who trades much like the swing trader discussed above, but he typically focuses on several weeks to months in average trading timeframe. Many times this type of investor is trading the indexes, timing mutual funds, or focusing on both technical and fundamental analysis.

* Advantages: This trading strategy certainly filters out the 'noise' that is common in virtually all trading markets. What do we mean by this? It is easy to get faked out by small moves against the trend or your trade when day trading or even swing trading. The longer-term swing trader is less likely to get caught in these normal market wiggles. The profit objectives can be quite large. It is not uncommon to target 20%, 30%, 50% or more when trading out over a few weeks and months.
* Disadvantages: Once again, the larger the timeframe usually the larger your initial risk, especially with stocks that are volatile. You must give those markets enough 'breathing room' to do their usual retracements but still stay with the trades. You'll also miss out on the numerous shorter-term swings that any market will make - even in a long sustained uptrend there tend to be quite a few solid shorting opportunities.

Buy and Hold Investing

Usually someone who has built a portfolio of stocks, bonds and mutual funds who looks to hold for the longest term.

* Advantages: If you pick right using plenty of fundamental analysis and market sentiment analysis, the gains can be quite large with very few trading costs.
* Disadvantages: Most buy and hold investors wouldn't know a protective stop if it slapped them in the face. What does that mean? It means that 98% of the buy and hold investors we've ever talked to have absolutely no plan for their investment. No idea of a profit objective and certainly no idea when to give up and move on. Why do you think so many lost 90% or more in the bear market? The buy and hold investors just couldn't bring themselves to sell. This is why we feel the buy and hold investor should re-classify himself as a long-term swing trader. You go from no strategy to a specific strategy where you always know when you enter a trade, what your objectives are, and how you'll exit should the markets go against you.

Read More..

Trading in the Retail Off-Exchange Foreign Currency Market - What Investors Need to Know

National Futures Association is a congressionally authorized self-regulatory organization of the United States futures industry. Its mission is to provide innovative regulatory programs and services that protect investors and ensure market integrity.
NFA has prepared this booklet as part of its continuing public education efforts to provide information to potential investors. The booklet presents an overview of the retail off-exchange foreign currency market and provides other important information that investors need to know before they invest in the off-exchange foreign currency market.

INTRODUCTION
Companies and individuals may speculate in foreign currency exchange rates (commonly referred to as ?forex?), and a number of firms are presently offering off-exchange foreign currencyfutures and options contracts to the public. If you are a retail investor considering participating in this market, you need to fully understand the market and some of its unique features. NFA has prepared this booklet to educate you about off-exchange foreign currency trading.
Like many other investments, off-exchange foreign currency trading carries a high level of risk and may not be suitable for all investors. In fact, you could lose all of your initial investment and may be liable for additional losses. Therefore, you need to understand the risks associated with this product so you may make an informed investment decision.
You should also understand the language of the forex markets before trading in those markets. The glossary in the back of this booklet defines some of the most commonly used terms.

This booklet does not suggest that you should or should not participate in the retail off-exchange foreign currency market. You should make that decision after consulting with your financial advisor and considering your own financial situation and objectives. In that regard, you may find this booklet helpful as one component of the due diligence process that investors are encouraged to undertake before making any investment decisions about the off-exchange foreign currency market.
Finally, the discussion in this booklet assumes you are funding your forex account with US dollars. The principles in this booklet apply to all currencies, however.
What are foreign currency exchange rates?
Foreign currency exchange rates are what it costs to exchange one country?s currency for another country?s currency. For example, if you go to England on vacation, you will have to pay for your hotel, meals, admissions fees, souvenirs and other expenses in British pounds. Since your money is all in US dollars, you will have to use (sell) some of your dollars to buy British pounds.
Assume you go to your bank before you leave and buy $1,000 worth of British pounds. If you get 565.83 British pounds (?565.83) for your $1,000, each dollar is worth .56583 British pounds. This is the exchange rate for converting dollars to pounds. If ?565.83 isn?t enough cash for your trip, you will have to exchange more US dollars for pounds while in England. Assume you buy another $1,000 worth of British pounds from a bank in England and get only ?557.02 for your $1,000. The exchange rate for converting dollars to pounds has dropped from .56583 to
.55702. This means that US dollars are worth less compared to the British pound than they were before you left on vacation.
Assume that you have ?100 left when you return home. You go to your bank and use the pounds to buy US dollars. If the bank gives you $179.31, each British pound is worth 1.7931 dollars. This is the exchange rate for converting pounds to dollars.
Theoretically, you can convert the exchange rate for buying a currency to the exchange rate for selling a currency, and vice versa, by dividing 1 by the known rate. For example, if the exchange rate for buying British pounds with US dollars is .56011, the exchange rate for buying US dollars with British pounds is 1.78536 (1 ? .56011= 1.78536). Similarly, if the exchange rate for buying US dollarswith British pounds is 1.78536, the exchange rate for buying British pounds with US dollars is .56011 (1? 1.78536 = .56011). This is how newspapers often report currency exchange rates.
As a practical matter, however, you will not be able to buy and sell the currency at the same price, and you will not receive the price quoted in the newspaper. This is because banks and other market participants make money by selling the currency to customers for more than they paid to buy it and by buying the currency from customers for less than they will receive when they sell it. The difference is called a spread and is discussed later in this booklet.

Read More..

5 Tips for Trading During Volatile Markets

Increased volatility leads many traders to seeing an increase in trading opportunities. The huge market swings trigger thoughts of monumental upside, but also for potential loss especially if traders do not take the necessary precautions. During times of volatility, traders need to adjust their strategy to compensate for erratic market. When trading during these market conditions, traders should follow the rules below.
1. Be More Selective Before Placing Trades
Wanting to take advantage of all the trading opportunities that present themselves in volatile markets, traders are tempted to place an increase number of trades. This temptation should be avoided. It is important to remember that in volatile times, losses are likely to be big. Before placing a trading, assess risk tolerance levels. Determine the level of risk that is acceptable for the trader both psychologically and financially before placing any trades.

2. Use Less Leverage
During high market volatility, losses can be traumatic. With the average trading range increased in volatile times traders should be considering how leverage will affect trades. At a one percent or even a half percent margin, investors should be mindful of how much leverage or even the size position being traded can affect their portfolio. In normal market conditions, placing a 2 lot position is fine when you are looking to make about 50-100 pips. During a more volatile time, when the potential loss is 100-200 pips, it stops being an effective risk to reward ratio. To compensate traders should look to taking on smaller trading positions, in this case only one lot as opposed to the average 2 lot position.

3. Trade with More Discipline
Traders should always follow their predetermined trading strategy regardless of market condition. During volatile markets, this is even more important to use that same level of restraint. Traders must adhere to any set stops, contingency plans or risk management benchmarks without hesitation. This will help to define how much risk is taken should price action be uncontrollable. Without this level of discipline and self control losses can be great.
4. Tighten Stops
Many traders are hesitant to use tighter stops in volatile markets because they see the large swings increasing the likelihood that the position will be taken out. Having tighter stops can also provide great risk managers in times of extreme volatility. For example, on a EURUSD trade, rather than setting an 80 pip stop to protect your position, consider placing a 50-60 pip stop. This will insure the protection of your currency position and if the stop is broken, there is a high likelihood that the trend will continue lower and the stop took you out before you could potentially lose more money.
The width of the stop being set does depend on the currency pair being trading as some pairs have wider ranges. In a Yen cross like the GBPJPY or AUDJPY, traders may be more likely to have wider stops as their average daily range is 50% more than that of the EUR/USD. With that said, stops during volatile market conditions should not as wide as before. Instead of a stop 100 pips below entry, traders may consider a 25 pip reduction and have a 75 pip stop. Below is a chart showing the EURUSD and the GBPJPY on the same very volatile day in the forex market. The EURUSD had an impressive range of nearly 600 pips! The GBPJPY far dominated though with nearly a 2000 pip trading range.



5. Be Prepared
It also helps a trader to know what is causing the current spate of volatility in the markets in order to be prepared for the unexpected. As such, an investor can accommodate their strategy to the market environment and not just the currency pair being traded. The first of these considerations is accounting for emotions in a market: is fear currently driving the market lower? Or is it buyer's mania that is keeping the bullish tone alive? Traders' overreaction and emotion tend to push markets to overextended targets. This fact alone creates volatility through simple supply and demand.
Volatility can also, and more than likely will, be sparked by economic events. In this instance, market participants may interpret fundamental data differently and not as cut and dry as the more novice trader. A perfect example of this is usually monthly manufacturing reports that are released in pretty much all industrial economies. The classic scenario has the market honed in on a particular number for the month. However, traders young and old will sometimes wonder why the market sold off if manufacturing showed positive growth. The answer is simple. The market had a different interpretation and positions were violently reshaped and shifted. These tend to create great opportunities for some and horrible memories for others. Below is an hourly chart of the EUR/USD during ISM Manufacturing for October 1, 2008. Here we can see the huge price gap that occurred due to market volatility as well as the resulting trend.


Panic and erratic momentum can additionally be found in certain market environments. Not to be confused with fear or greed, panic selling and buying can create very choppy and relatively untradeable markets. These conditions will lead some to flip flop their positions while leaving others gaping at the fact that the position was right, only to be stopped out prematurely. These two common examples will create further panic and volatility as traders abandon their own individual strategy for the possibility of instant profits or stoppage revenge. As a result, a vicious cycle of volatility ensues until a definitive market direction can be established.
The simple rules above, and a task of getting to know the current trading environment, can empower every trader through the ranks. Although some relate volatility with difficult and untouchable markets, opportunities continue to remain abound in these less than attractive conditions to those focused and fortunate.
By following these five simple steps, trading in volatile market conditions should be a little simpler. Don't forget to adjust leverage based on volatility, follow your trading plan, tighten your stops and know why you are getting into a trade before you place it.

Read More..

Money Management

Money management is a critical point that shows difference between winners and losers. It was proved that if 100 traders start trading using a system with 60% winning odds, only 5 traders will be in profit at the end of the year. In spite of the 60% winning odds 95% of traders will lose because of their poor money management. Money management is the most significant part of any trading system. Most of traders don't understand how important it is.

It's important to understand the concept of money management and understand the difference between it and trading decisions. Money management represents the amount of money you are going to put on one trade and the risk your going to accept for this trade.

There are different money management strategies. They all aim at preserving your balance from high risk exposure.

First of all, you should understand the following term Core equity
Core equity = Starting balance - Amount in open positions.

If you have a balance of 10,000$ and you enter a trade with 1,000$ then your core equity is 9,000$. If you enter another 1,000$ trade,your core equity will be 8,000$

It's important to understand what's meant by core equity since your money management will depend on this equity.

We will explain here one model of money management that has proved high anual return and limited risk. The standard account that we will be discussing is 100,000$ account with 20:1 leverage . Anyway,you can adapt this strategy to fit smaller or bigger trading accounts.

Money management strategy

Your risk per a trade should never exceed 3% per trade. It's better to adjust your risk to 1% or 2%
We prefer a risk of 1% but if you are confident in your trading system then you can lever your risk up to 3%

1% risk of a 100,000$ account = 1,000$

You should adjust your stop loss so that you never lose more than 1,000$ per a single trade.

If you are a short term trader and you place your stop loss 50 pips below/above your entry point .
50 pips = 1,000$
1 pips = 20$

The size of your trade should be adjusted so that you risk 20$/pip. With 20:1 leverage,your trade size will be 200,000$

If the trade is stopped, you will lose 1,000$ which is 1% of your balance.

This trade will require 10,000$ = 10% of your balance.

If you are a long term trader and you place your stop loss 200 pips below/above your entry point.
200 pips = 1,000$
1 pip = 5$

The size of your trade should be adjusted so that you risk 5$/pip. With 20:1 leverage, your trade size will be 50,000$

If the trade is stopped, you will lose 1,000$ which is 1% of your balance.

This trade will require 2,500$ = 2.5% of your balance.

This's just an example. Your trading balance and leverage provided by your broker may differ from this formula. The most important is to stick to the 1% risk rule. Never risk too much in one trade. It's a fatal mistake when a trader lose 2 or 3 trades in a row, then he will be confident that his next trade will be winning and he may add more money to this trade. This's how you can blow up your account in a short time! A disciplined trader should never let his emotions and greed control his decisions.

Diversification

Trading one currnecy pair will generate few entry signals. It would be better to diversify your trades between several currencies. If you have 100,000$ balance and you have open position with 10,000$ then your core equity is 90,000$. If you want to enter a second position then you should calculate 1% risk of your core equity not of your starting balance!. Itmeans that the second trade risk should never be more than 900$. If you want to enter a 3rd position and your core equity is 80,000$ then the risk per 3rd trade should not exceed 800$

It's important that you diversify your prders between currencies that have low correlation.

For example, If you have long EUR/USD then you shouldn't long GBP/USD since they have high correlation. If you have long EUR/USD and GBP/USD positions and risking 3% per trade then your risk is 6% since the trades will tend to end in same direction.

If you want to trade both EUR/USD and GBP/USD and your standard position size from your money management is 10,000$ (1% risk rule) then you can trade 5,000$ EUR/USD and 5,000$ GBP/USD. In this way,you will be risking 0.5% on each position.

The Martingale and anti-martingale strategy

It's very important to understand these 2 strategies.

-Martingale rule = increasing your risk when losing !

This's a startegy adopted by gamblers which claims that you should increase the size of you trades when losing. It's applied in gambling in the following way Bet 10$,if you lose bet 20$,if you lose bet 40$,if you lose bet 80$,if you lose bet 160$..etc

This strategy assumes that after 4 or 5 losing trades,your chance to win is bigger so you should add more money to recover your loss! The truth is that the odds are same in spite of your previous loss! If you have 5 losses in a row ,still your odds for 6th bet 50:50! The same fatal mistake can be made by some novice traders. For example,if a trader started with a abalance of 10,000$ and after 4 losing trades (each is 1,000$) his balance is 6000$. The trader will think that he has higher chances of winning the 5th trade then he will increase ths size of his position 4 times to recover his loss. If he lose,his balance will be 2,000$!! He will never recover from 2,000$ to his startiing balance 10,000$. A disciplined trader should never use such gambling method unless he wants to lose his money in a short time.

-Anti-martingale rule = increase your risk when winning& decrease your risk when losing

It means that the trader should adjust the size of his positions according to his new gains or losses.
Example: Trader A starts with a balance of 10,000$. His standard trade size is 1,000$
After 6 months,his balance is 15,000$. He should adjust his trade size to 1,500$

Trader B starts with 10,000$.His standard trade size is 1,000$
After 6 months his balance is 8,000$. He should adjust his trade size to 800$

High return strategy

This strategy is for traders looking for higher return and still preserving their starting balance.

According to your money management rules,you should be risking 1% of you balance. If you start with 10,000$ and your trade size is 1,000$ (Risk 1%) After 1 year,your balance is 15,000$. Now you have your initial balance + 5,000$ profit. You can increase your potential profit by risking more from this profit while restricting your initial balance risk to 1%. For example,you can calcualte your trade in the following pattern:

1% risk 10,000$ (initial balance)+ 5% of 5,000$ (profit)

In this way,you will have more potential for higher returns and on the same time you are still risking 1% of your initial deposit.

Read More..

Trading Basics: Concepts and Psychology

1. Commissions

How much commission do you pay per trade? You should know this answer without hesitation. Is your commission competitive and reasonable? That might have a number of different answers. How much you pay for commissions is critical. Before we start it's important to acknowledge that reliable and quality fills are equally as important, that customer service when needed and a well-designed trading interface are also critical to an active trader. So don't let what follows mean we think you should just pursue the very lowest commission charge. That's not the case, but you should be sure you are trading with a firm that is very competitive in all areas - commissions, service, fills and trading platform.

Let's take an example. What if you had a trading system that in 100 trades would "win" 80 times. That's a fairly spectacular 80% win ratio. If you were told you had a guarantee to win 80% of the time, chances are you wouldn't hesitate much more than the time it takes to hit "Submit" to place your first order. But do you realize that it can be fairly easy to actually lose money, even with a system that wins 80% of the time? Assume that you decided to trade 50 shares per trade and each stock averaged about $20. Your target is 5%. And sure enough, your first trade "wins." So your $1,000 investment makes an easy 5% and you made $50. That was fast. Unfortunately you trade with a broker who charges $24.95 per trade - suddenly your winning trade actually barely squeaks out $0.10 in profit. You can imagine what happens with a losing trade.

Now let's say you traded that same set-up but only paid $5 per trade (very doable) or $10 per trade. Granted you still would take a bit out of your profits but at least in this situation your big $0.10 winner turns into a $40 or $30 winner.

You're saying, "Well, I trade a lot more than 50 shares" and if that is the case, you are definitely helping yourself because the commission is a "fixed" amount in most cases. And therefore the more shares you trade as capital into the market, the more your "fixed costs" will actually go down. The trader who trades 200 shares instead could make over $150, even with that high commission. But the trader paying $10 a round turn adds another $40 - a big increase on any one trade.

Start adding it up over the number of trades you might make with an active strategy. If you traded five times per day - both in and out - and instead of paying $25 for a trade you paid $10, you could actually save or add to your wallet $39,000 in one year. Let's not even start to mention how much that savings can turn into in compounded gains. Even if you traded far less frequently, or didn't save quite as much, it makes a major difference.

The key here is to be very sure you are paying a competitive commission. Be very sure you are trading enough shares per trade. Don't try to trade every set-up and have to spread out your equity so far that your commissions keep eating away huge chunks of your gains. You have to be able to accommodate for the losing trades, slippage and even errors you might make. This is why keeping your costs low when actively trading is important. And remember, these costs are fixed - if you trade more shares, it won't cost you any more and your cost of doing business only goes down for each share added.

2. The Power of Compounding

Not everyone can start with a sizeable account and not everyone is comfortable (even those with large accounts) to have substantial capital at risk. The power of compounding is very important for an active investor to understand. An active investor has the advantage of each day being able to compound their overall profits into the next series of trades and grow their overall capital base quickly if the trading is successful. It is much like a manufacturer who measures "turns" in inventory. The more turns the better. They are using their capital more favorably than slowly turning inventory.

The active trader can do some great things using compounding and even start the cycle at a level they are most comfortable with and in the future use profits to continue to increase position sizing.

Let's take a look at an example. Let's say that you traded $10,000 per trade, made 5% on every trade, and did this ten times in a row without a loss. Sounds pretty great (ok, not that achievable but come with us on this journey!) -- but this time you always take your profits out and keep trading $10,000 each time. Well, we know you'll make $500 per trade and ten winners = $5,000 in profits. Very nice.

Now, let's say you decide to compound these gains and each time you trade you trade all the capital you have - you reinvest your gains. So ten trades that win 5% and you do not take your profits out. This time you actually profited by $6,288 - an improvement of 25%. You didn't risk any more - you started with $10,000 in risk capital in both cases but instead you decided to continue to reinvest your gains to build up your account - and without any more initial risk you added 25% to the bottom line.

This is a convenient example - there will be losing trades, there will be trades that don't make full targets and so on. But you can use compounding to start with a comfortable level of risk and let market profits guide you to a larger account base and faster growth in equity. Not to mention that when you have a loss you actually scale back your risk since you only trade the equity available, making it a great way to ride out more difficult markets as well.

3. "I Always Miss the Winners"

That is the fear of the trader who looks at a list of potential trades and feels that they need to trade every single set-up for fear of missing the "big" one. First, in our type of active trading we're not looking for home run shots. We're looking for steady gains - we know some market months will be easier than others but we're not looking to make or break it off any individual trade.

Next, we learned above how important it is to trade enough equity per trade. Otherwise you'll let commissions eat away at your profit potential.

We also know that it is very difficult, no matter how good your trading platform, to track and trade a long list of stocks. You are more likely to make costly errors on the entries and exits.

And it simply is not necessary. Many of our subscribers only focus on a smaller subset of stocks. The magic number is up to your comfort level but literally any mix will work fine. 3, 5, 6, 8, etc... Do not feel you will miss something by not trading all the set-ups. You are much better off trading fewer set-ups each day and doing them correctly, and doing them with enough equity to make the potential profits worthwhile, and it will make your life in managing much easier.

You might want to take into consideration which sector/industry a stock trades in. If you trade a smaller subset of stocks from the list, you might want to avoid trading stocks that all trade in the same sector. We know on certain days all storage stocks or all chip stocks will move together as a sector. By mixing your sectors you have less chance of getting caught on those days when one whole sector moves against our trades.

4. A Trader's Fantasy - and Nightmare

We consider nice, smooth trending (up or down) markets a trader's fantasy. They are simply the most cooperative markets to trade and thankfully several times a year or more the markets simply trend for many days in a row and sometimes for weeks at a time. These are the moments we "live" for.

Now choppy markets on the other hand can be a trader's nightmare. Not always, but there is no denying that a choppy market is more difficult to trade. Actually, a choppy market that is narrow in range when compared to the prior history is the most difficult. A choppy market with sizeable trading range can work out quite nicely.

What we do know is that the fantasy always comes after the nightmare. The longer the nightmare, the better the fantasy. You can look at any daily chart of the markets - take a QQQ or SPY, for example, to see a big picture view, or any of our individual stocks - and see that there are periods where they are on a run - up or down. That's where your profits typically add up fast. The other times you'll see that the markets have no pattern. No trend, little range and they seem to fluctuate direction nearly by the day. Those markets have pockets of opportunity, but if you can make it through there without a scratch you are doing extremely well. Because move forward on any chart and see the run begin thereafter.

And our strategies catch all the runs. It is simply a matter of being patient while the market chooses to be less giving.

The trader who diligently follows the plan always catches the run.

Read More..

The Strategy

If you are new to the world of Forex trading then, before you even think about making your first trade, you need to sit down and draw up a Forex trading strategy. The foreign currency market is one of the most exciting and lucrative markets in the world, but it is also extremely fast moving and volatile and, while you can make tremendous profits, you can also make substantial losses if you don not have a very clearly defined game plan.
There are a number of different strategies which you can adopt for trading in the currency markets and you will need to come up with a strategy that suits you. At the end of the day exactly what strategy you decide to adopt is largely immaterial but, what is important, is that have you a strategy before you start to trade.
Many traders today choose to base their strategy on a technical approach to trading while others prefer to follow a fundamental approach. Both approaches are fine but the truly successful traders will tell you that the real secret lies in not selecting one or the other but in combining the two.

Technical analysis holds that prices follow trends and that markets possess clearly identifiable patterns which can be recognized if you know what you are looking for. Both knowledge and experience play an important role in technical analysis but here it is a case of knowledge and experience of not just the patterns in the market but of working with the barrage of tools which are know available to the technical analyst.
Within technical analysis many traders like to work with what are called support and resistance levels. In this case a support price is a low price to which a currency repeatedly returns, effectively representing the bottom of the market or the price at which it supports the market. By contrast, a resistance price is the high price which a currency reaches from time to time but above which it tends to resist rising.
The importance of these two levels is that once a currency price drops below its support level it will commonly continue to fall and, similarly, once the price exceeds its resistance level it will continue to climb.
It is also common for technical analysts to make use of moving averages which show the average price of a currency over a given period of time within a longer period. This is extremely useful for eliminating short term fluctuations in a currency price and producing a clearer picture of the movement of a currency over time.
These of course are just two of the many tools available to Forex traders who are following a technical approach and there is a wide range of far more complex and powerful tools available today.
In addition to technical analysis, many traders also believe strongly in fundamental analysis which holds that currencies move in response to a wide range of factors including political events, changes in trade agreements and trading patterns, economic numbers, interest rates, employment figures and much more.
Fundamental analysis is clearly a complex area which requires considerably knowledge and experience to master, which is probably one reason why many new traders are fairly easily drawn towards technical analysis and tend to use fundamental analysis to a limited degree at first while they acquire the necessary knowledge and skills to put it to work effectively.
Both technical and fundamental analyses are of course not in themselves trading strategies but are the foundation on which you will need to build your trading strategy. Your starting point should be to decide upon the basis on which you are going to analyze the market and thus make your trading decisions. Once this has been done you then need to look carefully at the mechanics of your trading and it is detailing just how you intend to trade that forms your trading strategy.

Read More..

A New Exit Strategy

Recently I've been doing quite a bit of research on new systems for stock trading. The research is on behalf of a new hedge fund that will be starting later this year. The fund will be managed by Tan LeBeau LLC, the company that funded this research project. After some serious internal discussion about the advantages of keeping this new exit strategy a company secret, the LLC has graciously given me permission to share this discovery with our System Traders Club members. Here is a bit of background on how the new exit strategy came about.

In the process of testing various exit strategies for our stock trading systems we found that we needed a profit-taking exit that performed somewhat along the lines of the Parabolic SAR but that could be made more flexible and easier to code and apply. We found that the Parabolic was hard to use because it was often on the opposite side of the market from our trades or it was starting from a point that was too low for what we wanted. After spending a great deal of time with the Parabolic we decided it was not helpful for the particular systems we were creating. As an alternative to the Parabolic exit we decided to test some new exit ideas based on my extensive work and experience with the Average True Range. After a great deal of tinkering and experimentation we were pleased to learn that the new exit strategy worked surprisingly well for profit taking and had many very useful features and applications. I decided to name this new exit strategy the "ATR Ratchet".

The basic idea is quite simple. We first pick a logical starting point and then add daily units of ATR to the starting point to produce a trailing stop that moves consistently higher while also adapting to changes in volatility. The advantage of this strategy over the original Parabolic based exit is that when using the ATR Ratchet we have much more control of the starting point and the acceleration. We also found that the ATR based exit has a fast and appropriate reaction to changes in volatility that will enable us to lock in more profit than most conventional trailing exits.

Here is an example of the strategy: After the trade has reached a profit target of at least one ATR or more, we pick a recent low point (such as the lowest low of the last ten days). Then we add some small daily unit of ATR (0.05 ATR for example) to that low point for each day in the trade. If we have been in the trade for 15 days we would multiply 0.05 ATRs by 15 days and add the resulting 0.75 ATRs to the starting point. After 20 days in the trade we would now be adding 1.0 ATRs (.05 times 20) to the lowest low of the last ten days. The ATR Ratchet is very simple in its logic but you will quickly discover that there are lots of moving parts that perform a lot of interesting and useful functions; much more than we expected.

We particularly like this strategy because, unlike the Parabolic, the ATR Ratchet can easily be implemented any time we want during the trade. We can start implementing the stop the very first day of the trade or we can wait until some specific event prompts us to implement a profit-taking exit. I would suggest waiting to use the exit until some minimum level of profitability has been reached because, as you will see, this stop has a way of moving up very rapidly under favorable market conditions.

The ATR Ratchet begins very quietly and moves up steadily each day because we are adding one small unit of ATR for each bar in the trade. However the starting point from which the stop is being calculated (the 10 day low in our example) also moves up on a regular basis as long as the market is headed in the right direction. So now we have a constantly increasing number of units of ATR being added to a constantly rising ten day low. Each time the 10-day low increases our ATR Ratchet moves higher so we typically have a small but steady increase in the daily stop followed by much larger jumps as the 10 day low moves higher. It is important to emphasize that we are constantly adding our daily acceleration to an upward moving starting point that produces a unique dual acceleration feature for this exit. We have a rising stop that is being accelerated by both time and price. In addition, the ATR Ratchet will often add substantial additional acceleration in response to increases in volatility during the trade.

The acceleration due to range expansions is an important feature of the ATR Ratchet. Because markets often tend to show wider ranges as the trend accelerates the ATR will tend to expand very rapidly during our best profit runs. In a fast moving market you will typically find many gaps and large range bars. Because we are adding multiple units of ATR to our starting point, any increase in the size of the underlying ATR causes the stop to suddenly make a very large jump that brings it closer to the high point of the trade. If we have been in the trade for forty days any increase in the ATR will have a forty-fold impact on the cumulative daily acceleration. That is exactly what we want it to do. We found that when a market was making a good profit run the ATR Ratchet moved up surprisingly fast and did an excellent job of locking in open profits.

Keep in mind that this exit strategy is a new one (even to us) so our experience and observations about it are still very limited. However I am going to discuss a few observations about the variables that might help you to understand and apply this exit successfully.

Starting Price: One of the nice features about the ATR Ratchet is that we can start it any place we want. For example we can start it at some significant low point just as the Parabolic does. Or we can start it at a swing low, a support level, and a channel low or at our entry point minus some ATR unit. If we wait until the trade is fairly profitable we could start it at the entry point or even somewhere above our entry point. The possible starting points are unlimited; use your imagination and your logic to find a starting point that makes sense for your time frame and for what you want your system to accomplish. Our idea of starting the Ratchet from the x day low makes it move up faster than a fixed starting point (as in the Parabolic) because the starting point rises repeatedly in a strong market. If you prefer, you could just as easily start the Ratchet at something like 2 ATRs below the entry price and then the starting point would remain fixed. In this case the Ratchet would move up only as the result of accumulating additional time in the trade and as the result of possible expansions of the ATR itself.

When to Start: We can very easily initiate the exit strategy based on time rather than price or combine the two ideas. For example, we can start the exit only after the trade has been open for at least 10 days and is profitable by more than one ATR. My general impression at this point is that it is best to implement the ATR Ratchet only after a fairly large profit objective has been reached. The ATR Ratchet looks like a very good profit taking exit but I suspect it will kick you out of a trade much too soon if you start it before the trade is profitable.

As I mentioned, one of the things I like best about the ATR Ratchet is its flexibility and adaptability. Here is another idea on how to start it. We can start it after fifteen bars but we don't necessarily have to add fifteen ratchets. The logic for the coding would be to start the Ratchet after 15 bars in the trade but multiply the ATR units by the number of bars in the trade minus ten or divide the number of days in the trade by some constant before multiplying the ATR units. This procedure will reduce the number of ratchets, particularly at the beginning of the trade when the exit is first implemented. Play around with the ATR Ratchet and see what creative ideas you can come up with.

Daily Ratchet Amount: After testing it the daily Ratchet amount we chose when we were first doing our research turned out to be much too large for our intended application. The large Ratchet amount (percentage of ATR) moved the stop up too fast for the time frame we wanted to trade. After some trial and error we found that a Ratchet amount in the neighborhood of 0.05 or 0.10 (5% or 10% of one 20-day average true range) multiplied by the number of bars the trade has been open will move the stop up much faster than you might expect.

As a variation on this strategy the very small initial Ratchet can always be increased later in the trade once the profits are very high. We could start with a small Ratchet and then after a large amount of profit we could use a larger daily Ratchet increment. There are all sorts of interesting possibilities.

ATR Length: As we have learned in our previous uses of ATR, the length that we use to average the ranges can be very important. If we want the ATR to be highly responsive to short term variations in the size of the range we should use a short length for the average (4 or 5 bars). If we want a smoother ATR with less reaction to one or two days of unusual volatility we should use a longer average (20 to 50 bars). For most of my work with the ATR I use 20 days for the average unless I have a good reason to make it more or less sensitive.

Summary: We have just scratched the surface on our understanding of the possibilities and variations of the ATR Ratchet as a profit taking tool. We particularly like the flexibility it offers and we suspect that each trader will wind up using a slightly different variation. As you can see, there are many important variables to tinker with. Be sure to code the Ratchet so it gets plotted on a chart when your are first learning and experimenting with it. The ATR Ratchet is full of pleasant surprises and the plot on the chart will quickly teach you a great deal about its unusual characteristics.

Be sure to let us know if you come up with any exciting ideas on how to apply it.

Good luck and good trading.

Read More..