Archive for Articles
The Most Critical Time Since The Start of The Financial Crisis: July to September 2013
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Europe has been on life support ever since the start of the financial crisis. One key mechanism that will be put in place is the ESM starting July 1, 2013. It is supposed to replace the existing temporary solutions including EFSM and EFSF.
Notice that this new mechanism is different from the case by case deals so far done in Europe. There will be strict rules in place for any financial assistance going forward. It will be the ultimate test of the unity of EU and the determination of ECB in enforcing the rules should countries fail to meet the necessary requirements but in dire need of capital to survive.
During this time there are 2 more key events happening within the month.
1. July 5 is deadline for the 18 large US bank holding companies to submit the result of their midyear stress tests
2. June 18-19, July 30-31 FOMC meetings
After that there are the German elections to deal with in September.
It will be a very eventful 3rd quarter this year. Be prepared.
MBO Issue 17 (Apr 2013) Special Update 2
Posted by: | CommentsSpecial update on long term timing of the stock market indices.
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Linda Raschke: Setting up your workstation
Posted by: | CommentsAnother video nicely done with a good summary on how to setup your trading pad and trading accounts.
My perspective is that it is not necessary to have many monitors especially if you are not monitoring multiple markets. Some traders find that less is more. One big chart with your primary timeframe plus a few smaller charts is often enough. Ms. Raschke trades many markets with just a few trading setups. Hence the need of more monitors.
Linda Raschke: Fix mistakes immediately
Posted by: | CommentsThis video is a very good condense summary why you should fix your trading mistakes immediately.
One thing I like to add here is that sometimes the mistake is not yours.
It can be your broker who made the mistake for call in orders. It can also be technical problems like internet outage, power outage, brokerage side connection to exchange is down. You name it, I probably experienced that.
It is not, however, an excuse or reason to not fix the problem right the way.
Sir Ken Robinson: The Element
Posted by: | CommentsIt is a lecture given by Sir Ken Robinson at UCLA back in early 2009. It is a talk of connecting your natural aptitude with your personal passion to achieve more. It is a very long lecture under the Hammer Lecture series at UCLA.
I have included this video in one of my article Essence of Trading: Daytrading (or Trading) May Not Be Your Best Career Choice. I am posting this separately here so that it is easier to find in the video section.
This video is a very good one for all young people at the crossroad of finding a career. It is good to listen to Sir Robinson as he explained on the pros and cons of following your passion quite clearly. Informed decision is the keyword here. Be able to decide on what to do and no need to regret it late in life is priceless.
Linda Raschke: Have a plan before you begin trading
Posted by: | CommentsThis is a great introductory video I wish all beginners at least watch it once. It summarizes the reasons why it is very important to have a trading plan in place.
The funny thing is that I am thinking of writing about trading plans and then I found this video.
Coincidence or is it something meant to be? (wink wink …)
Market Breadth Primer: Advance / Decline Spike Low
Posted by: | CommentsAn interesting usage of advance / decline issues is to identify the market extremes. Here is one setup that has emerged as one of the best short term bottom picking signals since year 2000.
Following chart marks the points where the signal occurred.
The most powerful thing with this setup is that if the market is going higher, it happens the very next trading day.
The Setup
1. Advance Issues / (Advance Issues + Decline Issues) <= 0.25 two days in a row
2. Open greater than close on the signal day
It is simple and it works.
Variations
You can lower the threshold form 0.25 to 0.24, 0.23 or even lower to reduce the total number of signals but it is not necessarily a good idea as the best reversals do not correlate well with more extreme selling. They correlate more with the context on how the market sold off into these extremes.
The price filter can be removed and it will still work, just that the reversal would have happened on the signal day and leaving not much room to go higher for the next trading day. As a longer term signal, the price filter can be removed with your own rules to improve the entry.
Notes
For daytraders, it may not be as useful as the statistical biases you get from Market Breadth Primer: Advance / Decline Issues since this setup only occur a few times a year. But it is a very strong setup that daytraders should be aware of. Turning into roadkills by the raging bulls who step into the market to pick bottom, or a floodgate of shorts covering their positions, is not funny.
Larry Smith: Why you will fail to have a great career
Posted by: | CommentsThis is an interesting TedTalk that gathered quite a number of comments from the viewers. It is about the excuses people made to avoid following their passions.
It is a funny talk. Mr. Smith delivered a great talk and it is very much to the point.
To follow your passion – you may not even know what your passion is. And when you do, you may not have the courage to pursuit your dreams. And most important of all, you may fail and it is something you have to learn to accept and move on.
To my younger readers – you may not know for sure trading is where your passion is. You may have chosen the wrong instrument to start with. Until you experiment enough you may never know. Most of us may not have what it takes to be great traders. But there is always room for decent traders to make a living. If trading is something you truly love to do, you can make it work too.
Weekly STOPD Pattern: S&P Bearish Continuation 1
Posted by: | CommentsThere are quite a number of patterns that work around the weekly STOPD price levels giving us a solid edge. This one is a classic bearish continuation setup.
Net gain chart below.
The Setup
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The VIX Bearish Bias Play
Posted by: | CommentsThe bearish property of VIX that no one talks about.
If you need background information about the Volatility Index (VIX) please read The VIX Bullish Play. It has more background information about VIX that I do not want to repeat here. I am going to focus on the bearish trading setup here.
First, the net gain chart from day trading this VIX bearish bias.
The Setup
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