Free Markets Benefit Man Best!

Most people are not aware of how difficult it is to trade systematically.

At first it may not seem like such a big deal, but after you do it over a long period of time, and you see the markets move counter to your method at times that you "just knew they would" ..., you start wanting to deviate more.

Market Wizard Bill Dunn -

Below are links to two great videos with a man who has had serious experience trading in the forex and futures markets over the decades. He has had volatile results (read: severe drawdowns), but he also has had an unending series of new equity highs to show for his consistency.

His message: follow your system exactly! After you have proven statistically that it will work.

He also has strong views on the benefit of "free markets" and the likelihood of success of those who would think that they can "do better" than the markets.

Watch Bill Dunn's 2 videos....

Part 1

Part 2

See what you think.

Joel Rensink

Trading Review

The last month has seen spectacular results.

The trading review is coming....

NFP day-

Two economists meet on the street.
One inquires, "How's your wife?"
The other responds, "Relative to what?"

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Thoughts specially for traders who've been in the battle for the last few weeks:

"Genius is only a greater aptitude for patience."--
George-Louis Leclerc de Buffon ('Buffon's needle problem' came from him, he is one of few Frenchmen I've appreciated.)
"The two most powerful warriors are patience and time."--
Leo Tolstoy (Brilliant inveterate gambler who wrote War and Peace)
"I am extraordinarily patient provided I get my own way in the end."--
Margaret Thatcher (I wish she were our president.)

Later this morning we will have the NFP (Non-farm Payroll) news. Perhaps that will trigger some OneNightStand trades. I wouldn't be surprised if they find out that projected job losses aren't as bad as they've thought.

More later....

JR

Fibonacci and Inflation! -Thursday, April 30, 2009

I was sent a very interesting link from a trader buddy who agrees with my long-time-held assessment that super inflation is on its way, whether anyone wants to believe it or not.

This is the beginning of the FIBONACCI SEQUENCE:

0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, ...

I'm sure most of you who have heard of Fibonacci's sequence probably think it's main application is in price movements and retracement levels-- it is highly revered by many in that use.

Where it finds greatest power is in the application of time cycles. Walter Roman wrote an interesting article about inflation and Fibonacci you can access here:

http://www.financialsense.com/fsu/editorials/2009/0430.html

I'll be adding this week's trades to this post.....

Joel Rensink
www.infiniteyield.com

April 13 - 20 recap

Last week's recap--

Letters from Readers! - IFCN WK 71 -Thu - Equity: $2,635.76

We've had a lot of swinging in the markets, mostly negative to my equity since posting earlier today.

XAG took it on the chin again. The Gbp/Usd dropped as did the Eur/Usd. In general, the market is listless. I'm glad the weekend is coming.

I got a few emails recently from readers who've had some success following this site. I'm reprinting them below:

Subject: Re: Happy IFC follower

Hi Joel-

I had the good fortune of finding the infiniteyield forex challenge eight months ago and have been consistently placing the trades ever since
All I can say is WOW , after trading for 4 years with little to no success it feels great to finally be on the right track , not only have I earned money in the last eight months but I have also gained a great wealth of knowledge following your blog and the Infiniteyield newsletters. I sincerely thank you for helping me and other struggling traders , you truly are a kind soul for sharing . I "KNOW" I am on my way to becoming a professional trader.
All the best to you and in your trades

Mxxxxx Rxxx
British Columbia ,Canada

--And from earlier in the week---

3 of the 4 orders came in beautiful today.
Whether they will hold for the week though, I dunno, I think the Eur/USD is going to head down, whether it will get stopped at 1.3123 we shall see.
(I primarily trade Eur/Usd exclusively, I'm placeing these FS orders on a demo, to see how they work, your equity growth has been pretty impressive with this method so far)
I've read the rules, but haven't yet tried placeing any orders until last nite.
I must admit, I do like the set-it-and-forget nature of this style; it takes out alot of guess work out of trades. If they get hit fine, if not, fine too.
Probably the most difficult aspect of this, is it has to be executed continually, even with drawdowns.
My normal stop is 100 pips, placeing a 191 pip stop is quite different for me.
Thanks for the effort you put into this, I'm learning about 4 different Forex methods, and at times my brain feels like toast.
I really enjoyed the presentation you did on Larry Jacob's DVD.

Great job Joel!

Thanks,
Jxxx Mxxxxxx

--And some comments about Nassim Taleb's books, "required" reading for traders---

Hi Joel,

I finished my second re-read of "Fooled by Randomness" by Mr.Taleb and been half way through his "Black Swan" book.

Frankly, I am still digesting what I've read. It seems that luck and randomness plays a much bigger role in forex trading than most of us are willing to admit. We attribute most of our success to our skills but many times it is just pure luck... Well, it probably takes some time until one is truly ready to accept Mr.Taleb's point.

Being just a very small fish in a forex lake (and influenced by Mr.Taleb), I am able to see your FSP method in a different light now. As I understand it now, every now and then, black swan occurs (or at least a gray one) causing bigger than average moves in the markets. Those who follow simple, robust methods will hit new equity highs if they are patient enough.

Pxxxx

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Thanks to MR, JM & P for your comments. I'm sure they'll help others who are also trying to succeed in the markets.

Trading is a journey where everyone starts from a different location. It's great to have someone else mention a landmark that can shorten your trip.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent. Please do not use AOL, Hotmail or Yahoo addresses. They've been known to filter out more good mail than actual spam. Try a Gmail address. It's free, simple and perfect for traders!

Taxing? - IFCN WK 71 -Thu - Equity: $2,870.23

Yesterday was "Tax Day" for the USA. It was the last day to file our taxes for 2008. And for those who have to pay, the deadline for paying.

Not my favorite day, as I always end up paying in since I'm self-employed. Fortunately, there are a few benefits from being a trader in the USA, tax-wise. Thanks to Ronald Reagan, our taxes are a bit lower when obtaining profits from trading forex and futures than stocks. And we can write off applicable expenses in the course of our occupation.

Another good reason to focus on forex and futures.

Last week there was an anonymous comment (I usually don't answer anonymous posts -- it could have been an oversight on the part of the poster) but the question was appropriate for the season.

It was as follows:

How do you account for the impact of TAXES on your lovely equity curve? Seems that would put a serious dent in the CAGR plans in fact...?

My reply, in case you didn't read it:

Very good question---

Everyone has a different tax situation. If this trading account was the only income you had, very likely you would not have any taxes to pay. Standard deductions would have you paying very little or nothing.

Some of you trading forex are in other countries with varying tax situations - some taxed, others with no tax whatsoever.

In the USA, some trade forex from a Roth IRA, where there are no taxes to pay from the gains.

I've already paid taxes on the Challenge account's increase last year. I will probably continue paying the taxes from profits from my other trading operations until the equity gets over $50K.

I have a pretty good idea (based on my plans for increasing the account) that a majority of the profits will come near the end of the "challenge" and most of the taxable gains will be paid from the completed total.

JR

We have some decent trades this week.

The Usd/Jpy from last week has turned decidedly profitable. The Gbp/Usd was profitable out of the gate and has turned into a trend week.

The Usd/Chf short was good earlier, now backing up a little, with lackluster results so far in the Eur/Usd.

The short Gbp/Jpy trade from last week got stopped out when the long FSP trade from this week triggered, with less than half of it's original risk of 526 pips.

And silver (XAG) picked up a little. I'll be happier when it stays above $14. Then a bigger move should be on it's way.

All in all, a decent week. The trades follow:

FirstStrikePlus positions from last week:
*usd/jpy: Short @ 99.51, stop 101.12. Currently profitable.
*gbp/jpy: Short @ 146.66, stopped at 149.15 for 249 pip loss (less than ½ of original risk)

This week's executed FirstStrikePlus trades:

• eur/usd: Long @ 1.3314, stop 1.3123.
• gbp/jpy: Long @ 149.15, stopped at 146.83 for 232 pip loss.
• gbp/usd: Long @ 1.4783, stop 1.4632.
• usd/chf: Short @ 1.1454, stop 1.1601.

FirstStrikePlus trades will be exited on Mondays at 00:00 CST if profitable. (First-Profitable-Open Exit)
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Trading account equity: $ 2,136.23
Silver position equity: $ 744.00
(Current XAG price: $12.81 – 400 unit position average: $10.95)
TOTAL Equity: $ 2,870.23

Have a good morning.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent. Please do not use AOL, Hotmail or Yahoo addresses. They've been known to filter out more good mail than actual spam. Try a Gmail address. It's free, simple and perfect for traders!