Amazon's Best Investment Book Reviews: Have You Been Brainwashed?

Most popular investment books are published for the already rich and famous, by an industry that has become just too good at the business of selling books. Rarely will a publisher take a chance with the work of an unknown author. Certainly, it's a no brainer to sell a Jim Cramer, Peter Lynch, Robert Kiyosaki, or Maria Bartiromo effort while a uniquely new approach to solving the puzzles of Wall Street, presented by an unknown writer or commentator, requires some major financial risk.

Big publishers want to sell already big names; discovering new ones is not in their wheelhouse. Are they responsible for the problems in the financial markets? Of course not, but they do have a perverse, if indirect, impact. By constantly publishing the same Wall Street friendly message, they contribute to the brainwashing.

Without a wider distribution of new ideas based on old wisdom, Wall Street as usual remains Wall Street as usual and the average investor remains uninformed and ill advised about the dangers of the financial markets. The biggest investment mistake generators are cleverly ignored by most of the books I've read about investing--- even compounded.

The new generation focus on calendar year instead of market cycle performance; the worship of portfolio market value alone, for all securities, even those purchased solely for income production; the use of gimmicks and products instead of securities for portfolio development; the acceptance of speculations as acceptable, "alternative" investments.

Appreciating the differences between investing and speculating, and learning what to expect from your securities in cyclical markets are things that investors must learn about. Have you been brainwashed? These 15 Amazon members are learning to think outside the Wall Street box, without any help (or investment) from publishers:

1) Super Investing Book: I've read a bunch of books on investing and money management, and this is the best, BY FAR!!!!! It's so good, and refreshing, that I've read it twice. (R. Q. A., Bryan, Texas)

2) Back to Basics: This is an eye-opening and intelligent book, which at once offers an analysis of the investment industry and a practical guide for non-professional investors--- a clear set of economic principles mixed with clear commonsensical advice. The author--- describes how to benefit from the ups and downs. Great book. (Professor P. W., Jerusalem, Israel)

3) The Best Investment Book I Have Ever Read: For skittish investors such as me, [the] unique Working Capital Model reduces the emotional factor by taking the emphasis off market value and focusing on growth of working capital. I implemented and followed the trading strategy myself. You would do well to buy this book and read it two or three times. It will save you [from] a lifetime of mistakes that come from following conventional wisdom. (D. J. F., Peoria, IL)

4) Easy to Understand, Even for Non-Investors: This book seems to be much easier to understand than the stock market trading systems advertised on TV. (P. L., Manchester, CT)

5) Happy User: You can take this system to heart--- and to the bank. It works for me. (L. J., Phoenix, AZ)

6) Unique Advice that Stands Out From the Crowd: This is one of two [books] that stand out. Besides being written in an entertaining and irreverent style, it has immensely practical advice. Focus on making money on the market's inherent volatility vs. trying to guess what's next. Saves a lot of time and appears to work. (C. M. Rakes, Annandale, VA)

7) An Enlightened Self-Managed Investor: Not only did I identify many many mistakes that I had made thru the years, but the logical approach outlined [in the book] has to make sense to anybody who has tried to get meaningful portfolio guidelines for future investments tailored to individual needs. Great Book! (A. C., West Palm Beach, FL)

8) Right on the Money: I didn't want to put the book down until I was through. [The] trading strategy is refreshing information that should make a lot of people a lot of money with less risk. (D. M., SC)

9) Investing Made Successful: I heard [the Author] on a talk-radio program and was intrigued by the premise of the book. After reading it, I'm convinced. I'm migrating from mutual funds to individual, high quality equities. [The book] was a slap in the face to make me stop my destructive investing habits. (G. P., Colorado Springs, CO)

10) What a Great Read: This is really an incredible book--- [it] has incorporated very creative insight with some highly original thinking to produce one of the best "investing manuals" ever written. I wholeheartedly endorse this book! ("Jointhefreedom", NM)

11) Courage To Go Against the Pack: The [book] is written in an exciting, enthusiastic, fast moving, style that reads like a novel. Should I ever venture into the stock market, it will be with this book. (S. M., Virginia Beach, VA)

12) L-O-N-G Overdue Investment Strategy Advice: I've long been skeptical of the generic advice handed down to me by advisors over the past--- I don't know any wealthy people who do this. Well now I have a frame of reference for my doubts about the system and a simple plan to take control of my investments. (B. S., Vancouver, BC, Canada)

13) A Must Read To Save Your Money From the Sharks: Written in a conversational style with plenty of humor, this book gives you the questions and answers you need to keep and increase monies that are being put away for retirement. I have purchased three books already and am purchasing five more to give to friends and relatives--- (R. M., San Jose, CA)

14) Brainwashing of the American Investor: Finally the truth! What an eye-opener to see how the markets, and the people behind the markets, have manipulated the average investor over the years. I highly recommend [this] book for your next financial read. (A. J. L., Ft. Pierce, FL)

15) Profit Like a Trader; Sleep Like an Investor: The technique or strategy presented is almost a "why didn't I think of that?" The idea is to run your portfolio the same way you would run a business---not a get-rich-quick kind of plan. You just focus on the essential measures of quality. The key is to maintain your plan during the slow times and reign in your greed during the boom times. (P. G., Moon Township, PA)

Today's publishing industry has a no-risk attitude, and those that are brave enough to deal with new authors are intimidated by the full-return guarantee demands of the bookstores. Stuck in the middle with no choice, most new authors must turn to self-publishing.

The reviews above describe a book that Wall Street wants to keep in the closet, an educational and strategic breakthrough that would have allowed most investors to avoid the bubbles and derivatives that caused our current financial woes. There are probably others--- below the 200-level in all Amazon's best categories.

Last Bank Standing - The Wall Street Mega-Crash

Dateline Washington, October 19th (get it?) 2010: the Peoples Bank & Trust of America has now established itself as the only bank of any kind in the USA, totally owned and managed by the US House of Representatives. A 2/3 majority must now approve all investment banking transactions; your district representative's staff reviews individual mortgage applications; and all 401(k), IRA, and remaining employer pension assets have been rolled into the Social Security Slush Fund.

Only federal and state elected officials are exempt from the 45% all purpose Income Tax. The estimated time to bring new companies public is 4.5 years; all individual account dividends and interest are paid directly into your IRS "grabber" account; CEO's salaries are limited to 50% of the amount paid to a first year congressman, and any government budget shortfalls are withdrawn from corporate earnings before any corporate obligations can be dealt with.

All employees receive the federal mandated minimum wage, except senior executives who are limited as mentioned above. Scary? This is a scenario that could play out if Congress (or the SEC) does not come to the rescue of the credit markets. You missed your opportunity to help stop it, but chances are a fix is on its way.

How many more businesses, jobs, and hopes will be killed by this irresponsible Congress? When will the average blogger realize that when a corporation fails, we all suffer? One would think that the informed and enlightened could take time out from their texting for a little research and education. Instead, they show their power by influencing public opinion numbers and the marshmallow politicians who worship them. As economist Irwin Kellner and I have pointed out, this is no bailout and we are not nearly approaching a recession.

Kellner's September 28th Market Watch article points out ten major differences between now and then: (1) In 1929, the DJIA plunged 40% in two months vs. around 30% in about a year. (2) In 1933, the jobless rate was 33% vs. 6% today. (3) The GDP shrank 25% then, but has increased 6% now. (4) Consumer prices actually fell 30% then but haven't ever since.

(5) Home prices dropped 30% then, but only 16% from the recent bubbly highs. (6) 40% of all mortgages were in default then vs. only 4% now. (7) 9,000 banks failed in the 1930s compared with just 25 or so (bigger and broader based ones) recently. (8) The Federal Reserve reduced the money supply, (9) raised interest rates, and (10) raised taxes on foreign imports.

Further, Kellner points out, we now have automatic stabilizers, deposit insurances, and market trading restrictions as protective elements. Today's Congress however, has never been good at connecting dots, has accomplished nothing under an unpopular president, and is ignoring its role as the primary creative force in today's problems. This transfusion is needed because: bad laws have obscured the values on financial institution balance sheets, and have created a clot in the credit arteries that keep the economy alive.

Educate yourselves on the Accounting Rule's that require institutions to book paying assets at pennies on the dollar. Find out why institutions are afraid to loan money to one another--- over night, at any rate of interest--- strangling the credit markets.

Doing nothing is killing jobs, killing companies, and deferring retirements for those who were counting on 401(k) and IRA dollars to provide them with income. Congress, of course has an old-fashioned pension plan, so it is unaffected by such financial realities.

Investigate the relaxation of lending standards that Congress orchestrated over the past few administrations, before blaming the companies that then extended credit to many speculators and other buyers who falsified application papers. Learn how the SEC was prohibited from regulating the CDOs and other multiple-leveraged credit market speculations. There are as many culprits outside the corporate executive suite as in it.

Congress is bursting with pride over bringing some of the Rich and Famous to their knees, and capping some of their obscene compensation arrangements at still shareholder pillaging levels. I've spoken often about how these salaries need to be controlled. But the multi-level-mortgage-marketing schemes that Congress encouraged must be unbundled somehow, and a buy out is the proper vehicle.

Congress has punished the entire world with its attack on Wall Street, and both parties are to blame. Representatives of the states listed below voted "no" to the credit transfusion, causing death and destruction that, in many instances, cannot be recouped. We have to replace them with better decision makers, representatives who can think in economic terms when they have to.

The number and letter code after the state designation indicates the number of representatives and their party: AL-1R, AK-1R, AZ-4D4R, CA-15D9R, CO-2D2R, CT-1D, FL-1D13R, GA-4D7R, HI-2D, ID-1R, IL-4D5R, IN-3D3R, IA-1D2R, KS-1D2R, KY-2D2R, LA-2D3R, ME-1D, MD-2D1R, MA-3D, MI-3D6R, MN-2D2R, MS-3D, MO-2D3R, MT-1R, NE-3R, NV-1D1R, NH-2D, NJ-3D4R, NM-1D1R, NY-3D1R, NC-3D5R, OH-3D7R, OK-3R, OR-3D, PA-3D7R, SC-1R, SD-1D, TN-1D4R, TX-8D14R, UT-1D1R, VT-1D, VA-1D5R, WA-1D3R, WV-1R, WI-1D2R (Names withheld, but available from the author.)

On Friday evening, candidates Obama and McCain gave their support to the Capital infusion, but neither bothered to explain why--- a huge audience was ready to soak up the information. Over the weekend, both attended meetings to support the plan and to generate support from their respective parties.

Is there enough time left to find a hero?

Online Trading, an Option for Transnational Trade

Global deal is exchange of capital, trade goods, and services across transnational frames or territories. In the most of nations, it acts a significant percentage of gross domestic product (GDP). While transnational switch has been represented throughout lots of history (see Silk Road, Amber Road) the economic, cultural, and policy-making importance has been along the rise in last centuries. Industrialization, manufacturers, advanced transportation, globalization, international corporations, and outsourcing are completely having a major affect on the global trade scheme.

Trading globally makes consumers and nations the chance to be exposed to trade goods and services that are not available in their personal nations. Almost each form of product can be seen on the transnational market: food, dress, spare parts, oil, jewellery, wine, stocks, currencies and water. Services are as well traded: tourism, banking, consulting and transportation. A product that is sold to the transnational market is an export, and a product that is bought from the transnational market is an import. Exports and Imports are calculated for in a country's ongoing account in the balance of payments.

According to the U.S. Department of Commerce, big companies gain up approximately 4 % of U.S. Exports which signifies that 96% of exporters are small companies. Why is transnational trade so crucial to scratch small businesses? In several cases, the products or services you may care to market are not accessible or created in your domicile area. For good example, consider about selling cashmere sweaters. You may need to turn an importer in order to compete with imported products sold by your competitors.

Online business can frequently start trading internationally with very little effort. The internet has transformed things. Your site can be your shop window in some number of nations. You don't require a physical front in each territory to deal there.

A Study by Georgios Papastamkos, MEP on Worldwide Trade on the cyberspace emphasised that the online circumstances for small and medium-size enterprises are especially good since they give more opportunities to get across conventional commercial schemes rather than they had even a . Enterprises are effective to prepare their internet sale points easily, rapidly and at small cost, thereby reaching a higher stage of competitiveness.

If your business is running in a niche, with a relatively smaller internal market, looking to another nations can help you widen your audience with surprisingly little effort. And if your trade goods or services appeal to a larger audience, moving into outside marketplaces gives you the chance to reach a wide number of potency recent clients. It could actually rise your receipts and profits.

Still, in a bigger market there will be more competitor from local companies. It can be heavy to equal up on price or fulfilment when sending internationally, so you might let to modify your proposition to have an touch.

It's not only for producer but for consumers are also receiving profits by online trading,. Since they enjoy a very large option between commodities and services, competitive pricing, lower living costs and a improve excellent of life, they as well don't require to go out to surf all products and services even from wholesale suppliers. They are now better able to compare merchandises and services since they gain access more data on online trading.

Online Trading, an Option for World Trade

International deal is substitute of capital, commodities, and services across world frames or soils. In the most of nations, it being a remarkable percentage of gross domestic product (GDP). While world deal has been represented throughout lots of story (see Silk Road, Amber Road) the economic, social, and political importance has been connected the raise in new centuries. Industrialization, manufacturers, advanced transportation system, globalisation, transnational corporations, and outsourcing are all having a major impact on the transnational trade system.

Trading globally opens consumers and nations the opportunity to be exposed to commodities and services that are not available in their individual nations. Almost each variety of product can be checked on the global market: food, clothes, spare parts, oil, jewelry, wine, stocks, currencies and water. Services are as well traded: tourism, banking, consulting and transportation. A product that is dealt to the worldwide market is an export, and a product that is bought from the worldwide market is an import. Imports and exports are described for in a country's ongoing account in the balance of payments.

According to the U.S. Department of Commerce, strong companies reach up about 4 % of U.S. Exports which signifies that 96% of exporters are smaller companies. Why is world trade so strategic to begin smaller businesses? In numerous examples, the products or services you may care to market are not available or made in your domicile nation. For illustration, consider about trading cashmere sweaters. You may want to become an importer in order to compete with established products dealt by your competitors.

Online business can oftentimes start trading internationally with very little effort. The cyberspace has metamorphosed things. Your web site can be your store window in some number of nations. You don't need a physical front in every territory to deal there.

A Paper by Georgios Papastamkos, MEP on Transnational Trade on the cyberspace emphasised that the online circumstances for smaller and medium-size enterprises are especially great since they receive more chances to get across conventional commercial systems instead than they had even a last decade. Enterprises are effective to set up their cyberspace sale targets easy, speedily and at little cost, thereby achieving a higher level of fight.

If your business is operating in a niche, with a relatively smaller domestic market, looking to another nations can help you expand your audience with surprisingly little effort. And if your commodities or services attract to a bigger audience, moving into international marketplaces makes you the probability to touch a wide number of potency recent customers. It could really boost your receipts and earnings.

However, in a larger market there will be more competition from local companies. It can be heavy to match up on cost or fulfilment when shipping internationally, so you might let to modify your proposition to have an impact.

It's not only for manufacturer but for consumers are also receiving benefits by online trading,. Since they enjoy a very bigger choice between commodities and services, competitive pricing, lower living costs and a better excellent of life, they as well don't demand to go out to browse all products and services even from wholesale providers. They are today better able to compare productions and services since they take access more selective information on online trading.

Are Traditional Banks Better Than Internet Banking?

With the ubiquitous internet as it is today, you have the convenience of doing a variety of banking transactions online from the comfort of your home, in your office or while traveling. This extraordinary technological creation has so made life easier for a lot of people including professionals, the business community, housewives and scholars even for banking purposes. Notwithstanding, this new communication phenomenon people have not stopped patronizing the usual off line banks . The orthodox banks will always be there for those people who still choose to interact in an real bank in where they see staff and call them by name.

The banks that have gone online and their offline counterpart have their advantages and disadvantages. It's up to you to consider and decide whether to transact your financial affairs with either an online bank or an off line one . What really count s is that you should know your financial demands so as to be able to actually be on the look out for the latest tendency in the banking industry and understudy them to see how it favors you. Even if you are loyal to your usual offline bank, you may also have the need to sometimes use the online banking service for an urgent transaction or when you are where the bank is not near by.

Accomplished banks continue to use pen and paper for organizing financial transactions off line while in their online virtual offices computer and internet and keyboard are the instruments for banking transactions . The fact is that a lot of people are now online with financial products that are internet-only services meant to compete with the normal off line banks . Though these conservative banks cater mainly to their old customers, people who should know are advising them to also open online offices to serve the internet-savvy young people and by so doing attract more customers

Security and person to person interactions are the main reasons people maintain the use of traditional banks. A lot of people feel that human contact is a necessity in any bank transaction; they want to hand their hard earned cash over to real teller.

Banking online is quite the same as when you do the same thing in an offline bank. The significant dissimilarity is that your computer replaces paper or phone for accessing your account information for payments and statements reconciliations . You don't really have to worry about going to your local bank branch when you can do all the things necessary to effect a bank transaction in the comfort of your home with a desktop computer or laptop and internet connection.

A principal advantage that internet banking offers people who go for online banking is cost effectiveness. Certain banks are known to charge their customers lower fees if the bank online banking services.

Forex Money Management part 2

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.

Forex Money Management

Forex money management is one of the most important things you can learn before you actually begin making live trades.

The money management principles discussed here will teach you how to avoid the costly mistakes many new traders make, often to the degree that they lose their entire investment on the first handful of trades.

Psychology is really the most important factor to money management in forex. You have to be able to separate yourself from any emotional attachment you may have to your money. This is not very easy to do, but it works and it can be done.

If you allow yourself to become emotional on a trade, you will not exit the trade properly, and this could mean holding on to a trade when you should have let it go, or letting go before the trade had a chance to turn profitable.

First and foremost, you should consider leverage and risk. It is advisable that you never risk more than two percent of your account balance on any trade. However, some go further and allow for as much as ten percent, but never more than that. This gives you the ability to withstand market fluctuations, and if the trade goes bad, you still have money to try again. You should never operate under the assumption that you will profit from every trade. You should also plan for losses. Therefore, most traders will tell you that the best thing to do is to keep your gains large and your losses small. Develop your trading strategy around this idea.

Keep track of your gains and losses. Keeping accurate and detailed records of your account activity will allow you to see whether or not the strategy is working, or if it needs to be re-built.

Never go blindly into trading without a way to keep track of results. You will lose all of your funds and never understand why it happened.

Finally, it is highly advisable that you first practice a strategy on a demo account. Nearly all brokers offer a virtual account whereupon you make trades in real-time, but with imaginary money, so nothing is risked. This is the best way to test a strategy before you put your real money on the line.

However, be careful, once again, of the psychology of trading. When you play with fake money, nothing is risked. When real money is on the line, you must not get emotional. If you do, you will find yourself with very different results, most likely losses, than you had with the demo account.

How far can the dollar go down?

How far can the dollar go down?

Theoretically, the US Dollar can go to zero. While unlikely, it should be remembered that nearly every currency that has ever existed throughout history, eventually has a crash that destroys 90% of absolute value, or more.

Won't foreign Central Banks support the dollar?

Why should they? If you are hungry, and your 600 lb. neighbor (who is now so fat he can't even walk anymore he needs to use one of those little carts) missed a few meals, which happen to be 5x expensive as yours, would you finance his dessert? Of course not. You are thinking many things, but supporting his habit of overeating isn't one of them. The US consumes over 25% of the world's resources but produces less than 10%. Economists may not care for such a crude analogy, but the situation with the US Dollar is very, very simple, and should not be overcomplicated. The USD has been a reserve currency for the post WW2 world, but since Nixon abandon gold standard, the USD is backed by only the belief and faith in US Government. We are seeing a commodity boom, not because of a bubble in commodity asset prices, but because of a decline in the USD, the world's reserve currency in which many commodities (especially Oil and Gold) are priced. In any event, it's not likely that foreign central banks will bail out the dollar, because that would in effect make them eat a realized loss in their current account. Moderately wealthy nations cannot afford to take the loss of the US, the largest and wealthiest economy in the world. The US has been a financial big brother who have bailed out other failing economies  but the US has no big brother to lean on, except maybe Russia, although that wouldn't go over too well in Washington. So if the US Defaults, who can come to the rescue?

Gold is cheap

Adjusted for inflation, Gold should be above 1500  without considering any boom. Many are wondering if commodities can continue to increase, without considering how depressed commodity prices were in the late 90's. An economy can live without services, or money, but people cannot decide not to eat or use Oil. Gold is money, the high price in Gold is reflective of investors concern about the value of money  any money. The US Dollar is a reserve currency so when USD goes down, so do many other currencies. The majority of USD holders are foreigners, but that is changing (in the past 10 years foreign USD holders have decreased from 77% to 62%).

What to do?

An argument of this nature should end in a that's next or that you should do. Unfortunately, this is a complex situation with no magic bullet solution. On a basic personal finances level, one should sell your mortgage at any price and become debt free with low cost of living. Don't bet on any economic upturn that will save your finances, things will only get worse. Second, do what you do well  no matter what the value of the dollar or the state of the economy, there will always be demand for goods and services (unless you happen to be in real-estate business, in which case you could start looking into farms.) The good news is that in any time of chaos, uncertainty, and reorganization, there are always massive opportunities. Taking advantage of them may not require huge amounts of capital. Knowledge of the situation can cause one to be in the right place at the right time or at least not in the wrong place at the wrong time for example it would not be smart to be in south Florida amidst economic suffering which could lead to crime, rioting, overall fraud, and a depressed local economy.

Property surrounding small country towns has been doubling in 1 year! Farmland has increased by as much as 500% in some areas over the last few years. There are plentiful opportunities in this market, but they may not be the traditional opportunities that investors are accustomed to.

It's 2008

There is a new market thinking, accept it or not. We don't live in the 1970's, it's not 1970 it's 2008. In 1970 Russia was communist, now there are more billionaires in Moscow than in New York. In 1970 Oil had not yet peaked, there was no Internet, financial markets were not deregulated to the extent that they are now, there were no derivatives, no climate change, and no Oil hungry China. In 1970 Europe was scarcely organized, only 25 years of reconstruction post ww2, and there was no Euro.

Thinking Different

Therefore, the only way to survive in the New Investment Paradigm is to be nimble and stay ahead of the information curve. In any field, applied intelligence can earn a solid position and even great profits. Safe havens are no longer safe as they were, the bond market is getting destroyed by inflation, TIPS (inflation protected bonds) are trading negative for the first time ever, meaning you are betting inflation will be worse than the small loss you will take on the bonds.

A trader named Paulson made a record Wall Street profit on single trade, shorting SubPrime loans. Gold investors are happily sitting on 300%+ returns since 2002. Those holding US Dollar short positions have doubled their money in several years. CTA programs have achieved 70% - 150% in 2007, trading currencies, commodities, and futures. Anyone long Oil or Gasoline futures in the past months would have been very profitable.

Clearly, there are hundreds of opportunities but no clear magic bullet solution that could be recommended, compared to 5 years ago when a US Dollar short or Long Gold portfolio could have been safely recommended. It is for this reason Elite E Services is launching a Global Opportunities Hedge Fund, which should be ready by late spring. If you are trading for yourself, take quick profits and don't hold any positions for the long term, and seek new opportunities. Keep in mind the opportunities may be biased toward the Short side than the long side, as DOW and NASDAQ components will be hit by a sinking dollar, sinking US Economy, and credit problems.

Forex Options Tips - Tips to Increase Profits and Decrease Risk!

If you have never considered sing Forex Options then you should. They can simply overcome the major problem most Forex traders face - getting stopped out by short term volatility...

A Forex Option gives you unlimited profit potential and your risk is simply the price you paid for the option. This means, prices can go anywhere in the short term but so long as the option trades above the price you bought it at, in rising market or below in a falling market you make money.

How many times have you been stopped out by short term volatility, only see the price go right back the way you thought they would, make thousands of dollars and your not in the trade?

It happens to most traders!

Picking the direction of the long term trend is easy; balancing the risk reward in the short term is the hard part. You want to be in the trend - but you don't want to have to worry about short term risk. Staying power is the key advantage Forex options give you.

Options are a great tool to limit short term risk - but you need to use them correctly and here are two simple tips.

1. Always Buy at or in the Money Options.

Never buy way out of the money options, as these are long shot bets.

Sure the profit potential is bigger, if the strike price is hit but the key word here is "if"; out of the money options, are the equivalent of outsider bets and the outsider doesn't normally win!

2. Get Time on your Side

The closer the option is to expiry, the more time decay plays a role in option value. Never buy options with less than 3 months to expiry, so you have plenty of time on your side.

Options the Ultimate Risk Control Tool!

Forex options are a powerful tool any Forex trader should look at to deal with volatility and gain staying power. The problem most of the time is not deciding where a currency will go long term but where to place your stop and options take care of this problem, by giving you staying power.

If you don't know much about options, then make them part of your essential Forex education and add a valuable tool, to your armoury for bigger Forex profits.

Forex Money Management - The Foundation For Huge Gains and Forex Trading Success

Most traders use solid Forex trading systems but they fail to poor money management and really poor money management is the reason most traders lose lets take a look at in more detail...

If you watch any good football team it will have a strong defence it keeps the team in the game, until the offence gets an opportunity. If a team falls to far behind it doesn't matter how good the attack is, the team will lose and it's the same in Forex trading you need to defend what you have and keep your losses small until you get good high odds opportunities.

In Forex trading lose 50% of your account and you have to make a 100% to get back to profit and that's hard!

In Forex trading picking trend direction is easy but getting in at the best risk to reward is hard. So what tips can I give you?

The first is to cut leverage sure most brokers give you 200:1 but 10:1 is really plenty for most traders. Leverage up to far and you will have to have your stop to tight and will get taken out by the market noise so cut back leverage.

Next don't put stops to close!

This isn't being rash but you need to have stops outside of random volatility, so you don't get clipped out. Even more important is never jack your stop up to far to lock in profit - leave it back and accept short term dips in equity, to make a longer term gain.

Most traders either use to much leverage or think by having stops close, they reduce their risk but they don't, all they do is increase the probability of being stopped out to 100%. Many traders calculate their risk reward as - their target minus their stop but this is just an opinion! It does not take into account the probability if the trade.

To Win You Need to Deal with Volatility

When I ask traders I teach, do they know anything about standard deviation of price?

They look at me with a blank look yet; this should be essential knowledge for any Forex trader's essential education - why?

Because it gives you the volatility of the market and allows you to place stops more effectively. If you don't know what it is, make it part of your essential Forex education and look up our other articles.

Here are some simple money management tips.

- Always assume the worst when you enter a trade and things can only get better, there is no sure fire winner!

- Never place stops inside random volatility

- Never leverage up to hilt, keep leverage low

- Never trail a stop to quickly give the market room to breathe

- Never trade in random time periods so no day trading or scalping!

- Be patient and wait for high odds trades

- Don't place mental stops, they affect discipline and you may let a loss run

- Risk reward is NOT Your target minus your stop! Don't fall into this common trap

- If in doubt get out - any doubts liquidate

In forex trading your only trading the odds, you need to preserve your equity above all else fall too far behind and you will never recover. Forex money management is the key to this and always keep in mind the old gamblers saying:

To bet and win you need to be at the table but you can't bet if you lose your chips!

Obvious really - but very true. The foundation of your success is sound Forex money management SO pay attention and make it part of your essential Forex education or lose.

Forex Trading - A Simple Tip to Increase Your Profits and Reduce Your Effort Instantly!

I have been a Forex broker, taught Forex and been in contact with several thousand traders. The enclosed tip is simple one the vast majority of traders I have come into contact with don't understand - but if they did, the tip would increase their profits dramatically.

The tip is based on the 80 - 20 rule which is used in a wide variety of areas of life for example, in business it says 80% of your profits will normally come from just 20% of your clients. In Forex terms it means - 80% of your overall profits will come from just 20% of your trades.

The reality is that most Forex traders take far too many trades, if they cut back on their trading frequency and only hit high odds trades their profits will increase dramatically.

They hold the following beliefs which are simply not true

- They can make money by scalping or day trading

These short term trades are low odds trades in fact - the odds are you will lose, as you are trading the market noise.

- They need to be in the market just in case they miss a move

If course this is rubbish, you can spot a move and enter when the time is right!

- The harder the work and the more trades they make the more money they will make

The work ethic doesn't apply in Forex; many people think with effort they can force money from the market and they lose.

Be Smart and Aim for 100% Annual Profits

I know traders that trade less than once a month yet still turn in triple digit annual profits! There not interested in working hard or trading all the time, their interested in making money and that means hitting the high odds trades and milking them for all their worth. These traders make a lot of money, not by working hard but working smart.

Less is More Hit the Big Trends

The high odds trades don't come around every day and you need to wait for them but when they do, they will give you high odds set ups, greater chances of success with less work and that is something all Forex traders want!

Forex Charts - Make Bigger Profits by Following These Key Points

Forex charts are a great, time efficient and proven way to make bigger profits but most traders don't use them correctly and here we will give you some key points to help you make bigger profits...

Let's look at some key points for more profitable technical analysis with forex charts.

If you look at any forex chart you will see big trends that can last for many months and trend following these can be very profitable and if you want to make money out of them you must understand this key fact:

Most big trends start and continue from breakouts to new highs and lows on the chart and you must go with these breaks - most traders don't. They want to wait for the pullback and of course it never comes and they are left behind. While it appears like you have missed the first part of the move, the odds of continuation are high so go with them.

Always be patient when using forex charts. You don't get rewarded for your efforts or how many times you trade but being right with your trading signal. I know traders who trade just a few times a month yet make triple digit gains - so wait for the right opportunities.

When you have a trend you want to hit always check price momentum is on your side and make sure that you use momentum indicators that show price acceleration in the direction you wish to trade. Two great ones, you can learn, in about 30 minutes are - the stochastic and RSI. These two combined will increase your odds of success by getting the odds more on your side.

Never believe anyone who tells you there is a mathematical formula for market movement - there isn't. If of course there was, we would all know the price in advance and there would be no market. So forget trying to predict and only trade the reality of price.

Its probabilities that you need to understand and like a successful poker player, you won't win every hand - but if you keep trading the odds, you will win long term. When using forex charts, the simpler your forex trading method the better, as simple systems tend to be very robust and have fewer elements to break, than complicated ones.

I have used a simple breakout method which uses trend lines, RSI and the stochastic and made money with it for over 20 years sure, it's simple but it works. Forex charts give you the reality of price before your eyes and you can spot areas of over valuation and under valuation. Humans create trends and they also (due to their emotions) push trends to far up or down in either direction.

You can of course ride trends - but you will also see big price spikes and history tells you they don't last long and taking trades contrary to the majority can be very profitable. Charting is an art not a science and you need to practice your art. The successful captain of a ship uses charts to navigate safely, but he also knows that use them wrongly and he will drown and it's a very similar situation in forex.

The Good News

You can learn forex charting in around 2 weeks and soon be piling up big profits in around 30 minutes a day spotting and hitting high odds trades and enjoying great profits. The good news is forex trading and using technical analysis is a learned skill and one you can master with a little practice.

TRADING RULES - The Basic Rules of Trading

MONEY	Never trade with money you cannot afford to lose
TREND	Always ride the trend and never try to decide a trend
SELECTION	Always select the stocks, for there are always bullish stocks in a bearish market and bearish stocks in a bullish market.
TIMING	Never initiate your trade at the opening bell, wait for a market to make initial high and lows
QUANTITY	Always try to trade with same amount for averaging not the same quantity , ex: if have trade 50000/- in one, trade 50000/- in another rather than trading 100 shares in each trades
LEARNING	Blaming market is trying to hide your mistakes from yourselves,making fool of one’s self, thereby losing an opportunity to learn, markets are never wrong, the blame lies with trader.
INTROSPECTION	Always introspect at the end of every trading day, next day will work wonders.
R/R RATIO	Never ever enter a trade where the risk to reward ratio is less than 1:4
NO OF TRADES	Always trade in 2 to 3 stocks at any given point of time, how lucrative the market be, be master of some than being jack of all, keep buffering profits, you’ll find stock markets a wonderful place to be in...
STOP LOSS	Stop loss is essence for trading, never trade without a stop loss
AVERAGING	Averaging has no place in day trading, either u get out of the trade with the stop loss getting triggered or get the target
SUCCESS	Always use trailing stop loss, when the trade initiated, starts bearing results, to get maximum profit.
GREED	Always be ready to take the profits home, if the initial trades have worked for you, be ready to go home , do not trade for the broker
CONFIENCE	If the markets are not making you confident do not trade, just for the sake of trading , wait for clear signals
RUMORS	Never trade on news or rumors, always follow the levels, remember, news does not make levels, it just triggers levels.
LEVELS	Never get panicked or exited by the happenings on the screen, stick to the levels and stop loss, else you’ll always end up loser
PSYCOLOGY	Never follow the mass [the people sitting besides u], for 95% of them do not understand market
DECISION	Be ready to book loss if the ship starts to sink, do no pray , just jump.
PATIENCE	Patience is the name of the game, always exercise patience and restrain during the course of trading, for if a couple of trades have worked against u, take a gap and try to get the trend.
SPECULATION	Check on the speculative tendency, every rise or fall has a logic behind it, just do not speculative, without logic.
FAILURES	Always treat failures [losses] if any, as an learning opportunity, for every failure opens the doors of success, failures should be used as a source of motivation rather than depression.

BY : http://www.jogibedi.webs.com

What makes a good Trading Strategy?

Ask most NEW traders, and they will tell you about some moving average or combination of indicators or a chart pattern that they use. This is, as the more experienced trader knows, an entry point and not a strategy.

Any trader who is more experienced will say a strategy should also include money management, risk control, perhaps stop losses and of course, an exit point. They might also say that you must let your profits run and cut your losses short. A well-read trader will also tell you that your strategy should fit with your trading personality.

BUT there is one other vital ingredient that many traders forget - and that is to fully understand the "personality" of what you trade. Some traders specialise in say, gold or Brent crude or currencies or they might specialise in a particular index such as the FTSE 100 or the Dow but many traders choose to trade shares. Indeed some traders dabble in a bit of everything. I think this is the area that causes many traders to fail or at least not reach their full potential.

In my view: You absolutely MUST specialise.

I am sure that on the surface most people would say that sounds sensible but here is why it is a MUST!

Superficially, many charts look the same. I bet if you had not seen the charts for some time and someone where to show you a chart of Brent Crude over 6 months and then a chart of Barclays PLC over the same 6 months you would be hard pushed to say which was which purely on the look of the chart.

However, I bet that if you found a trader who trades ONLY Barclays day in and day out and also found someone who trades ONLY Brent Crude day in and day out, both of them would easily identify which was which. WHY?

Because every share, index or commodity has it’s own "personality".

Some will be volatile intra-day, some will follow their sector or the main index (market followers), some will do their own thing, some will spike up and down regularly, some will stop at key moving averages and some will just plough through. Some will move by 5% on average before they retrace and some by 2%. Some will gap up or down regularly, some will not. You get the idea!

Therefore, no matter how good you are at analysing indicators, moving averages, trends and patterns, the same strategy WILL NOT work for everything. I would go so far as to say that a strategy that works well for Bovis Homes, for example, is likely NOT to work for BT Group - they have very different "personalities".

So let’s return to our question: What makes a good trading strategy? Let me answer with a series of ten questions that you need to find answers to, in order to build a REALLY GOOD strategy.

1. What do you want to trade (share, index, commodity, currency, etc)? If your answer is shares (plural) I would urge you to pick one typical share at this stage to really specialise. You can add more later.
2. What "personality" does that share, index etc have?
3. What entry system is the most reliable for that share?
4. What stop loss system is the most effective for that share?
5. What average risk will a typical trade carry?
6. What exit system works well for that share?
7. What is your trading personality (attitude to risk, losses, discipline, how much do you worry etc) and can you trade that strategy without overriding it?
8. What timescale do you want to trade? (Using intra-day or end of day data)
9. How much data do you keep on past trades to help identify strategy weaknesses?
10. How does all this fit with your trading objectives?

Once you have an answer to each question you need to do one final thing. Make sure all those things fit together and complement each other. For example, if the ideal stop loss position represents a big average risk and conflicts with your own attitude to risk, you need to start again. If you will override your exit point because greed makes you hang in for more, you need to think again. Perhaps you shouldn’t trade that stock in the first place - look for one with a different "personality" which will lead to a strategy you can trade comfortably.

It is a long and sometimes painful iterative journey. You might need to go round and round in ever decreasing circles over a long time. Testing and refining, testing and refining before you can truly have a reliable and repeatable strategy that REALLY WORKS for you.

THEN, you can look for other things to trade that have the same "personality" as your specialist stock, index, commodity or currency.

Forex trading basics

Forex Market Basics

The Foreign Exchange market (also referred to as the Forex, FX market, "Cash" Forex or Spot Forex market ) is the largest financial market in the world, with more than $1.5 trillion changing hands every day — 30 times larger than the combined volume of all U.S. equity markets. Another major feature of the Forex market is that it operates 24 hours a day, corresponding to the opening and closing of financial centers in countries all across the world, starting each day in Sydney, then Tokyo, London and New York. At any time, in any location, there are buyers and sellers, making the Forex market the most liquid market in the world.

What to trade in Forex Market?

In the forex market, currency trading is always done in currency pairs, such as EUR/USD or GBP/USD. Accordingly, all trades result in the simultaneous buying of one currency and the selling of another. The base currency is the "basis" for the buy or the sell. It is useful to consider the currency pair as an instrument, which can be bought or sold.

Understanding Forex quote

* Base currency: The first currency in the pair.
* Counter Currency: The second currency in the pair. Also known as the terms currency.

The US dollar is the centerpiece of the Forex market and is normally considered the ’base’ currency for quotes. This includes USD/JPY, USD/CHF and USD/CAD. For these currencies and many others, quotes are expressed as a unit of $1 USD per the second currency quoted in the pair. For example, a quote of USD/CAD 1.1302 means that one U.S. dollar is equal to 1.1302 Canadian dollar.

BID and ASK Prices

When trading forex you will often see a two-sided quote, consisting of a ’bid’ and ’ask’. The ’bid’ is the price at which you can sell the base currency (at the same time buying the counter currency). The ’ask’ is the price at which you can buy the base currency (at the same time selling the counter currency).

Commission-free, but with spreads

Most Forex brokers offer commission-free Forex trading. Spread - The difference between the bid and ask price of a currency. Normally 3-5 pips on the Majors.

Rollover - What happens to my open positions at the end of the trading day?

Process whereby the settlement of a deal is rolled forward to another value date. The cost of this process is based on the interest rate differential of the two currencies. Most brokers will automatically roll over your open positions, allowing you to hold a position for an indefinite period of time.

Fibonacci Trading Techniques

Introduction to Fibonacci trading techniques.

First, a few words about Fibonacci himself…

Leonardo Pisano (nickname Fibonacci) was a mathematician, born in 1170, in Pisa (now Italy). His father was Guilielmo, of the Bonacci family. His father was a diplomat, as a result Fibonacci was educated in North Africa, where he learned "accounting" and "mathematics".

Fibonacci also contributed to the science of numbers, and introduced the "Fibonacci sequence"

The Fibonacci sequence is the sequence 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, introduced in his work "Liber abaci" in a problem involving the growth of a population of rabbits.

Aside from this sequence of number where every next number is the sum of the proceeding two, 0, 1 (0+1), 2 (1+1), 3 (2+1), 5 (3+2), 8 (5+3), 13 (8+5), etc.

There are the "Fibonacci ratios".. By comparing the relationship between each number, and each alternate number, and even each number to the one four places to the right, we arrive at some fairly consistent ratios.. The important ones are .236, 50, .382, .618, .764, 1.382, 1.618, 2.618, 4.236, and for good measure we include 1.00 ..

It turns out that the ratios are mathematical principles prevalent in nature around us, and is also in man-made objects. There are many interesting, entertaining, and poetic observations about Fibonacci numbers and ratios in the universe (see the reference section below). Fibonacci numbers appear in ancient buildings, in plants, planets, molecules, the dimensions of human bodies, and of course snails… But of what use is all that to the lowly trader?

What really interests you, the application of Fibonacci techniques in the trading environment..

Traders usually study charts! Fibonacci ratios may be applied to the Price scale, and also to the time scale of charts. I study the price scale. My focus here will be on the price scale for now, perhaps in the future I’ll add some time-scale studies.

Prices never move in a straight line. Look at any chart, you will see many wiggles, as price advances and retraces.. Stocks, Futures, Forex, all instruments which are liquid, will often retrace in Fibonacci proportions, and advance in Fibonacci proportions. Not always, and not precisely to the penny. But very often, and reasonably close! This happens often enough that profitable trades can result. I will show you some examples below.

I used Fibonacci ratios with a few simple indicators to help determine probable price turning points, optimum entry, exit and stop-loss levels. My complete techniques are available in on-line video seminars, in-person seminars, and via my real-time on-line chat facility. For more details, see the this web page

The application of Fibonacci to trading can be very complex, and take much time and experience to perfect. Many traders enjoy making the process as difficult and as complex as they can tolerate.. I do the opposite, I try to simplify, try to bring clarity.

Fibonacci example - Microsoft Weekly chart.
This lesson demonstrates a very basic way to use Fibonacci levels. You just read about Fibonacci ratios. We will use just one of those ratios for now, the .382 Fibonacci ratio. In this chart MSFT made a high of (approximately) $59.97 in December of 1999. After that, it moved down to make a low of $30.19 in May of 2000.



The down move was $29.78 (59.97-30.19), quite a substantial amount.

Projecting from that low in May, and using a Fibonacci ratio, we can calculate 29.78*.382=$11.37 . So 38.2% of 29.78 is 11.37 . If MSFT were to rally 38.2% of the down-move it would reach $41.57 (11.37+30.20). I’m using rounded numbers in my calculations, the chart above calculates it to be $41.564, we don’t need that degree of accuracy!

Several weeks later, MSFT rallied and resisted right near that .382 Fibonacci level !!

So we were able to predict a future probable turning point (after the low of May 2000), using the Fibonacci ratio of .382!! If only it were always so easy.

The steps involved are:

1. Calculate the total value of a significant price-move (high to low, or vice-versa).
2. Calculate a Fibonacci retracement (in this case .382) of the prior move.
3. Look for price to confirm, by resisting (or support in an up-move) near that predicted retracement area.

Fibonacci example - Microsoft Daily chart.
This chart shows how a different Fibonacci level (61.8%) predicted resistance and a market turn.

Notice how the market behaved at the .382 level (30.80 area). Initially the market spiked through, then fell back to that level (late October). We cannot expect a chart to retrace at every Fib level. We can expect some support/resistance as buyers/sellers enter the market at these levels, but we can’t always predict whether the market will actually turn at any particular level. Fibonacci techniques are used to alert you to a possible trade, if that price level does cause support or resistance. These techniques are not used as a trigger for entry. Other indicators are used in conjunction with Fibonacci studies to provide higher-probability entries.



As mentioned before, there are several Fib levels, .236, 50, .382, .618, .764, 1.382, 1.618, 2.618, 4.236, and 1.00 .. So there are several places to look for a market turn. They can be calculated in advance, but trading blindly at a fib level can be dangerous, because you never know for certain (in advance) whether the market will turn at any particular Fib level. I use other indicators to help overcome that problem, click here to learn how to determine which Fib ratio is likely to be strong enough to turn the market.

Important notes from this lesson:

1. There are several Fib levels.
2. It takes some skill to determine which Fib level is likely to cause the market to turn.
3. There are some techniques to help you determine where a market is more likely to turn.
4. Do not blindly anticipate a market turn at a Fib level.

More Fibonacci examples.

QQQ Weekly chart with a deep retracement to .618 and a weak attempt to rally after that. However, consider the daily chart and intraday traders. they would have enjoyed the rally from $75 to $100, after going long from a support level that could have been predicted in March!



QQQ daily chart. Multiple Fib levels timing the market perfectly in 3 consecutive waves up!



Intraday chart, QQQ 30-minute. Notice the two market Fib retracements (there are others in this chart too).. The rally from 29.26 stopped at 31.10, then it supported **twice** at 30.39, for two good scalps. The next highlighted Fib support is at a retracement of .618 from the move up 30.47 to 32.49 .. Both of these support levels were predictable before the market supported there.. Hint:--- See how the rally continued after the shallow retracement to 30.39 ... See how the rally after the deeper retracement to .618 near 31.25 was a weaker rally.. This is common, a deeper retracement often foretells a weaker rally... See the next lesson in the table of contents for more on these advanced Fibonacci trading principles.



Another intraday chart, S&P 5-minute.. The first Fib retracement is on a bearish move, an opportunity to short. The second is bullish, with a long entry near 999.25 .. Note that popular charting software will calculate Fibonacci to rediculous precision, we don’t need anything closer than one tick! Actually, you should allow some room don’t expect precision every time. Allow the trade some room to develop, or you will be stopped out too often.



More Advanced - Microsoft Daily chart.

By now you’re probably quite interested, perhaps applying all those Fibonacci ratios to many charts.. You should experiment with your own charts. As long as the instrument traded has a lot of liquidity (not a penny stock for example), you should start to see Fib support and resistance at work. You will start to notice that Fibonacci levels "work" sometimes and not others. Sometimes the trades are not profitable, or are less profitable than others. You need to develop the skills required to select better trades.
In this mini-lesson I want to show you how to evaluate price action based on which Fib levels it responds to, and how the market behaves immediately preceding the Fib support/resistance.

The chart below actually has many Fibonacci levels "performing well", providing support or resistance to the market. I want you to focus on the two that I have identified, for the purposes of this lesson.



The first up-move that I have identified topped out at $26.90, and then retraced 61.8% before supporting at that Fib level. There was a pause at the .382 level, but it was not sufficient to hold the market. Now look at the rally from the support level near .618, it rallied but did not exceed the prior high of 26.90 … As a general rule, a retracement to .618 or below indicates that the preceding up-move is losing steam. A shallow retracement which supports at .382 is more likely to rally beyond the prior high than one which has a deep retracement beyond .50 all the way to .618 ..

The impressive thrust from 22.55 up to 26.90 was negated by a quick move back to .618 at about 24.20, so a trader should not be too optimistic about a continuation of the initial up-thrust.

Similarly, the move up in June, from 23.50 to almost 26.50 would also not inspire much optimism for a huge rally above the high of 26.50 … In general a shallow support at .382 would indicate a probable rally beyond the prior high. However, if the up-move preceding the retracement was sluggish rather than thrusting, you also should temper your enthusiasm.

If the second rally which only retraced to .382 had the thrust of the first rally, it would be a more attractive trade!

These are not firm rules, instead they are used as a guide, to help you filter for better trades. Every Fib level is not equal, some are more attractive than others.

Important notes from this lesson:

1. Not all Fib levels are alike.
2. No technical study is perfect, you must develop the skills to filter out bad trades, and improve the odds of finding better trades.
3. Price action just before a Fib retracement can tell you something about the future.
4. Which Fib level causes the end of a retracement also can give a hint to future price action.
5. No technical study is perfect, you must develop the skills to filter out bad trades, and improve the odds of finding better trades.

An Analysis of Secular Bear Markets and Secular Bull Markets since 1900

From a historical perspective since 1900 there have been 3 Secular Bull Markets and 3 Secular Bear Markets as shown by the tables below of the Dow and S&P 500. As you can see during a Secular Bull Market the Average Annual Return (highlighted in red) is considerably higher than during a Secular Bear Market (highlighted in blue). Thus the long term Buy and Hold strategy that worked well in the 1980’s and 1990’s for investors may have not worked very well during the Secular Bear Markets of 1906-1921, 1929-1949 and 1966-1982.

Secular Bear Markets vs Secular Bull Markets and Dow Performance

The big question is now are we in the beginning stages of a 4th Secular Bear Mark

et which started in 2000. The average length of the previous 3 Secular Bear Markets was 18 years with a minimum of 16 years and a maximum of 21 years. Thus if you add 18 years to the year 2000 and take + or - 3 years on either side then the next Secular Bull Market may not begin until sometime in the 2015 to 2021 time period if we are now entering a 4th Secular Bear Market. However I would like to point out that even in a Secular Bear Market there can still be Bull Markets lasting a year or two as the longer term charts of the Dow show below.

Notice after the Secular Bull Market of 1922-1928 which was followed by a Secular Bear Market from 1929-1949 that the Dow still had impressive gains during the early to mid 1930s (points A to B) before going through another Bear Cycle prior too and during World War II (points B to C). This was then followed by another Bull Cycle from 1943-1946 (points C to D). However from the early part of 1937 (point B) until the end of 1949 (point E) the Dow virtually had a net gain of 0% as its basic overall pattern was a series of up and down movements which pretty much cancelled each other out.



Meanwhile after the Secular Bull Market from 1950-1965 the Dow once again went through another Secular Bear Market from 1966-1982. Notice after the Dow peaked in early 1966 (point F) that it had a lot of upward and downward movements from 1966 through 1982 but it basically went nowhere and actually was lower at the end of 1982 (point G) versus its peak in early 1966 (point F).



Looking at the current chart of the Dow shows that it has been exhibiting a choppy pattern similar to previous Secular Bear Market environments after experiencing a Secular Bull Market from 1983-1999. One has to wonder during the next 10 years or so whether the Dow will continue to exhibit a similar pattern that occurred from the mid 1960’s through the 1970’s in which it had a lot of downward and upward moves but the overall net gain was negligible.



Even if we go through another Secular Bear Market over the next several years there will still be plenty of smaller Bull Markets and if taken advantage of properly will still lead to some excellent investment opportunities in the future.

Day Trading Indicators and Indicator Trading

Did You Begin Day Trading As An Indicator Only Trader?

Did you start day trading after buying a book on technical analysis, and getting a charting program - probably a free one that you found online - in order to save money? While reading your book you learned about trading indicators which could ’predict’ price movement, and what do you know, the ’best’ indicators were actually included in your free charting program - let the games begin.

Now that you have all the day trading tools that are necessary, the book for education AND the free charting program with those ’best’ day trading indicators, you now need a day trading plan so you can decide which ones of those ’magic’ day trading indicators you are supposed to use. This really is a great book, besides telling you how to day trade using indicators to ’predict’ price - it also said that you need a trading plan to day trade.

So what should this plan be? The book told you about trend following using an indicator called macd, and it also told you how it was possible to pick the top or bottoms using an indicator called stochastic; my guess is that you picked the stochastic indicator to start your day trading - this must be the ’best of the best’ since this indicator was going to ensure you of entering your trades with the ’best’ price. Amazing, simply amazing how easy this day trading stuff really is. In fact, why even bother taking the trades, each time your indicators give a signal - just call up your broker and tell him to stick $100 in your account.

My book was Technical Analysis of the Futures Markets. My charting program was TradeStation with an eSignal fm receiver; that was the one that if you hung the antennae wires just right, and you put enough foil on the tips, you might even get quotes. I had sold a business before I started trading so I did have some capital - isn’t that how everyone gets into trading, you either sell a business or you lose your job? My indicator was the macd as I had decided that I was going to be a ’trend follower’ instead of a ’top-bottom picker’. I also decided that I was going to be ’extra’ clever, if one indicator was good than two indicators must be better, so I added a 20 period moving average. My first trade was a winner, then after many months of extensive therapy, I was finally able to forget the next twelve months - ahhh the memories ƒ؛

Learning To Day Trading - The Learning Progression

Beginning to day trade, or learning to day trade, as an indicator trader is very typical. This is also logical when you consider - HOW are you supposed to initially learn how to trade? Trading indicators are available to anyone who has a charting program, and simply using line crosses, or histogram color changes, provide ’easy’ signals to understand. If you will also take the time to learn the arithmetic behind your indicators, as well as learning what each indicator is specifically intended to do, not only is this a logical way to begin, it is also a good ’step’ in your learning progression - understanding the WHAT you are doing, instead of attempting to create ’canned’ indicator only trading systems, without any regard as to WHY you are trading this way.

This does become one of the ’sticking’ points in your learning progression, as you come to find out that you are unable to profitably trade indicators as signals only - now what? Now what - you ’can’t’ develop your own indicators, so you start doing google searches for day trading indicators and start buying your ’collection’ - they don’t ’work’ either. Now what - you buy a mechanical trading system - what does hypothetical results may not be indicative of real trading or future results mean? Now what - you start subscribing to signal services OR you start joining the ’latest and greatest’ chat room - am I really the only person using the signals who isn’t profitable?

Now what - you never learn how to trade.

I began trading as an indicator trader, and I did try to learn everything that I could about the various indicators, as well as trying to combine indicators that were consistent with how I wanted to trade - I just could never develop a mechanical day trading system from what was available to me. I read a couple more books that didn’t really help me, so I then started looking for someone who could teach me. From what I now know about gurus -vs- teachers, I am very lucky that I got involved with a money manager-trader who taught me a tremendous amount, but I still couldn’t get profitable, in part because there was also ’pressure’ to learn how to trade using real money. As well, any discussions or thoughts about trading psychology and the issues involved, especially to beginning traders, was non-existent.

Now what - learning but losing - I stopped trading. Learning to trading using real money, and ’scoffing’ at trading psychology as simply individual weakness, really was something that I now regard as misinformation. I always mention this as I now feel that this cost me as much as a year of time, and was very close to costing me my trading future, as stopped trading was VERY close to quitting trading. How can’t trading psychology be real to a beginner, when you consider that you are risking losing money at a very fast pace as a day trader, and when you further consider that you are also doing this when you really don’t know what you are doing - this is NOT by definition being weak. And if trading psychology is real, how are you going to learn to make ’good’ trading habits with real money while you are fighting the implications?

Now what - not trading and not ready [quite] to quit - still studying and searching.

Probably the single most important ’thing’ that got me to a next step in learning how to trade, was the concept of a trading setup, and that a setup and a signal were not the same. This was extremely meaningful to me, as it also led to an understanding of how to better use trading indicators for the information that they can provide, but not to use them as trading signals - in essence I began learning about trading method where discretion could be consistently applied -vs- trading system that was mechanical and arithmetic rules.

Traders who are indicator only traders, are also what I refer to right side only traders, that is they are always looking at the right side of their charts for an indicator signal. BUT what about the left side of the chart, what about price and patterns, what about market conditions - WHAT about the relevant ’things’ that are ’moving’ price, instead of indicators only as an arithmetic derivative of price, and thus, one that is dependant on the time frame that you have chosen to trade from? These ’thoughts’, along with the concept of trade setup, became instrumental in the development of a trading method, and how I came to turning my trading around.

When I think about the steps in my learning progression - I would list them as follows:

2/95 - 6/96 indicators only teaching service that included signals learning to trading with real money and trading psychology issues stop trading

6/96 - 3/97 understanding of trading psychology issues learning about trading setups concept trading method -vs- trading system trade setup - trade trigger are not the same method development understand the importance of the left side of the chart and what is happening ’across’ the chart related trading setups and how/when they triggered indicators + pattern indicators + pattern + price indicators + pattern + price + market conditions

3/97 - 11/97 able to paper trade profitably able to real money trade profitably able to trade for a living

Indicator Only Day Trader - Setup Including Indicators Method Day Trader

I have attempted to discuss the way I started day trading, and the way I think many-most traders typically begin. Along with this, I have pointed various issues and problems that I had - those regarding how to learn to trade, and then progressing into a profitable trader. My experiences have been both personal, as well as those of many traders that I have worked with over the last 8-9 years through Tactical Trading - that a very large number of these problems are due to day trading only with indicators, the specific indicators used, along with trying to turn these indicators into a mechanical trading system. This is not to say that this can’t be done - I simply couldn’t do it. However, I would strongly suggest that anyone who is in the early stages of day trading, or struggling with their day trading, consider these things that have been discussed.