Trading is Not As Hard as You THINK

I love getting up in the middle of the night to find that the market is at an extreme for the week and it's been pausing for an hour or two; then continues on its way.  A low risk entry and potentially unlimited upside. 

In the last 2 weeks of December I cease my trading. Since markets are a "human behavior" phenomena, just about all the stupidity for the year has already been expended by mid-December, and everyone [rational] who trades has either booked their year's profits or accepted that they aren't going to recoup their losses until 2016.

The few irrational confirmed losers that feel the need to trade past the 15th are welcome to whatever profits I might miss from their passing my way. Trading statistics have proven it too, so feel free to avoid the anemic volatility and waste of time playing a lowered-edge environment.

And have an extra single malt or two over the two weeks. Preferably an 18 year old Macallan, recommended it to me by Barry Eisler- known for his John Rain series. Thanks Barry.

Trading is Not Hard

How you think about yourself, the markets and its other participants really helps you maintain an overwhelming edge.

In an interview Paul Tudor Jones was asked about his overall trading philosophy.

His reply:

I have very strong views of the long-run direction of all markets. I also have a very short-term horizon for pain. As a result, frequently, I may try repeated trades from the long side over a period of weeks in a market which continues to move lower.

When it was suggested that it sounded like he was performing a series of "probing trades" before he hit gold... 

He replied:

I consider myself a premier market opportunist. That means I develop an idea on the market and pursue it from a very-low-risk standpoint until I have repeatedly been proven wrong, or until I change my viewpoint.

The reason I mention this is due to his comment about pursuing the market from a very-low-risk-standpoint. Whether you do this from a trending standpoint (my preference) or a counter-trend point of view; the fact that you are doing it completely cognizant of the risk and make that part of your series of actions - is why your odds of success rise significantly over competitors who H-O-P-E that the market will go their way every time they put on a trade.

There are a lot of them - thankfully. Even governments get wrong minded. As large and as wrong as they can get; they represent Trillions in total profits-to-the-prepared when they're wrong.That's why trading is still a great feeding ground for prepared speculators who have their monkey under control.

Knowing without a doubt that you will act correctly when something big happens makes you the odds-on favorite in the race.

Over the next week, see if you can round up a copy of Zen in the Markets, by Edward Toppel. A perfect read this time of year, even if you've read it before. It'll get your mind right for the beginning of 2016.

ZITM is great not because it tells you the secret of making profits from the market. But because it lets you realize that you already know how and then facilitates you to do it.

Ed came up with some great TradeStation software that emulated what he wrote in the book for the E-mini S&P. I know that a few tried using it, but I doubt anyone does any longer. 

You have to have absolute faith in the concept that the market knows better than you where it is going.You turn it on and it buys the market if it goes up and turns around and shorts the market if it goes down, and then long..., and then short.... Until you either lose your account or make a ton of money.

If you do a tick-by-tick simulation over many years..., always-in-the-market; it is slightly profitable after commissions. But where it was REALLY profitable was when you are in a well-defined trend, the market is just paused-- and then it takes off again. What an idea to trade only at those times!!!!

If you haven't read Zen in the Markets; make a point of it.  Let me know if you can't get a copy.

We are at a serious juncture in the Forex markets. 

Oil prices are as low in real dollars as they've been for decades. Same with most commodities, and gold and silver. Countries (and currencies) that depend on commodity sales for their financial health are affected negatively. When commodities bottom and turn up, so do their respective currencies. We'll be watching the Aussie and Canadian Dollars closely this year.

Speaking of silver, the 1330 ounces of silver carried over from last year currently have a liquidation value of $18,526.90 (based on the 12/31/15 spot price of $13.93).

In the last few weeks I took some low risk breakouts in the AudUsd and the GbpJpy that I am holding over to the new year. And ONS has been treating us well this year.

I wish that I had been even more attentive to the Challenge account, as I'm sure I could have doubled the profits very easily. The forex side of the Challenge account from 2014 was $1,156.60, and we added an additional $619.78 this year.

Quick summary:

Silver value:        $18,526.90

Forex account:     $1,776.38

---------------------------------------

Total:                  $20,303.28

Still significantly above the $500 (40 times initial capital) we started with, but very significantly below the peak of over $50K a few years ago. Since big money is made in the fullness of a major trend I have no doubt the financial mistakes of numerous countries will provide some great opportunities and launch us into new equity highs.

I encourage you to take note of a quote by ― Sun Tzu, from The Art of War:

“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”

Knowing that there are things that can't be known-- is valuable too.

If I KNEW that silver would be at $13.93 today back in early 2010, I wouldn't have as much silver in the Challenge account. But I do know from history that when the rush into metal starts, it can be fast and furious and very difficult to accrue. And having actual physical silver, while currently a less-preferred investment globally, is part of a larger risk/reward scenario – for me.

Fortunately, even with imperfect knowledge of the future, knowing how and having the WILL to trade your specific assets precisely is more than enough for any success you could desire.

Best wishes to you in 2016.

Joel

leonardo@infiniteyield.com

PS: Check back in a week or so. I'll post some data that I think you'll find useful. JR

What goes Up...,

Up, up, up, down, down, down....

I am impressed with all the movement in the forex markets. And pretty tired.

But happy.

I've had some good trading this week, and some difficulties. When markets ratchet up and down so quickly and you need to put on large positions, you place your trade and within 15 seconds are thousands richer or poorer.

Usually poorer when you're trading breakouts like I do. No matter how long I've done this it still isn't fun to have those immediate losses when you enter a new trade.

Most of you know that I trade many more markets than just forex. I trade the meats, grains, metals, energies, interest rate futures (CME eurodollar is my favorite interest, then the 30 year bond) foods (coffee anyone?) on both longer term and shorter term methodologies. When currencies go into a spin, so do most of the other markets-- so it's been a carnival ride out there for guys like me.

You can get pretty tired after the necessity to stay up longer than you normally have to..., for days at a time. I'm sure it will get better soon. The other people on the opposite sides of my trades have to sleep too, eventually. I finally got some rest last week when the markets calmed down Then this week started it all up again.

Not complaining mind you. This is my best personal trading year. It is this kind of action which provides serious traders most of their yearly money. The majority of traders, banks and hedge funds included; don't commonly have the motivation (or tools) to reap the rewards possible from this volatility. Since this action is relatively uncommon, most trading firms don't get set up to take advantage of the market when it moves like greased lightning. Instead, they are the meat of the move, pushing buttons on large size orders and “hoping” everything goes all right.

“Hope” is not a strategy. FirstStrikePlus is a strategy that has held on fairly good through these crazy markets. And many of you are profiting. I'm glad.

After the markets close on Friday we'll do a recap of the week.

Best wishes to all of you.

Stay as sane as you can.

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!

Euro is Skittish! --IFCN Wk 31 -Mon- Equity: $714.40

After very interesting closes last week in most of the currency pairs, I figured this week could be challenging.  I hate being right about that.

It is very rare for a market to reverse to the downside like the Eur/Usd did and not at least make an attempt at correcting. When the market doesn't correct, you have a great opportunity because most traders count on a correction for their methods.

The market is correcting as I write this, and we have entered all five of our FirstStrike trades for the week. Two have already been stopped out. I don't have great expectations for the other three either, even though currently we have small profits overall.

This brings up a question(s) sent to me by a reader-

Dear Joel,

Do you exercise some discretion in exiting trades in the First Strike system?

For example, from 6 PM (CDT) last night until 3 AM this morning, price indicated bearish divergence for the Dollar (Price going up, MACD going down) which was confirmed by a bearish candle closing out of Overbought at 9 AM. At the time we were long the USDJPY and short the GBPUSD which both promptly stopped out.

One question is, do we stay with the program when there's a high probability of being stopped out or do we use discretion and exit early? Unfortunately, we've only been with the program for a short period and, as you know, neither the First Strike or One Night Stand has been performing well. Fortunately, we're only trading [reasonable size] until we get comfortable with the system (I refuse to demo because I'm the world's greatest trader when its only play money}. Another question, how about red news events affecting the pairs we're trading?

My gut feeling is that these programs work because they have proven themselves over time so don't meddle - my cautious side says lets move stops, etc., to preserve some of the gains. I don't expect a detailed response but would like to know if you do exercise some discretion in your serious money account....

Happy Trading,

Kxxxx & Mxxxx

Thanks for the note:

Appropriate question.

I take the trades whether or not I like the trades. Especially in the Forex Challenge account. In my personal trading for serious money, I do occasionally use some discretion.

You are right about "these programs work because they have proven themselves over time so don't meddle."

But, for me to indicate you shouldn't be prudent about large positions facing extreme conditions would be incorrect.

In my personal trading of FirstStrike, I am able to increase overall returns by 50% to 100% over time. The majority of additional edge comes from exiting at better levels than the standard exit at the end of the week. Occasionally by getting in a little sooner, when it is "obvious" that the buy/sell price will be hit.

Thanks.

Joel

Thanks again for the questions---K&M--

The best thing I can add to this is this-- If discretion works out so well for you, maybe you should be trading completely discretionary.

FirstStrike is admittedly a simple method. What is particularly good about that is, you can improve the results of it quite easily.

But not if you can't trade it straight up. If you can't make yourself enter at the times you should, with the appropriate position size without discretion, you will never learn how the method works over the long haul and see how some simple discretion may actually help or perhaps hinder your profitability.

There was an additional question about news. For all intents and purposes, FirstStrike doesn't care about news. News will likely improve our profitability. If we have entered a market, haven't been stopped out after a few days-- there are better odds for our continued profitability than sudden loss due to any news event.

I stay in through news reports!

____________________

The following are this week's FirstStrike entries:

• Eur/Usd: long @ 1.5691, stop 1.5631. Trade in progress.
  
• Gbp/Jpy: short @ 211.23, stop 212.13. Trade in progress.
  
• Gbp/Usd: short @ 1.9717, stopped out at 1.9777 for a 60 pip loss.
  
• Usd/Chf: short @ 1.0251, stop 1.0311. Trade in progress.
  
• Usd/Jpy: long @ 107.75, stopped out at 107.15 for a 60 pip loss.
  

Note: Any FirstStrike trade not stopped out before Friday gets exited on Friday just before 15:00 CST.

Current equity is $714.40.

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, Yahoo or Hotmail addresses. Nothing personal, but 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!

Trading is Mental!-- IFCN Wk 26 -Wed- Equity: $757.20

First, note the new box on the upper right hand of the page about- "I am going to be this rich in the next 10 years." I found the site on a search about utility theory. It is a must-try site for burgeoning traders.

Answer just 15 questions and find out what kinds of choices can dictate huge changes in your future rewards. The result you see on the button is what I received my first try-- answering truthfully. I'm really not sure what it all means. Considering---

I believe “The Devil” answering the questions got $25,000.000. A guy I know who works for the government in social services who received -$1,300,000 for an answer. Really! I think he better keep his job.

It may just be in fun, but it's definitely something to think about.

Trading for InfiniteYield – Utility Theory and You!- is still available here for FREE. Click here....

We are fortunate to have some of the more intelligent readers in Cyberspace at this blog. That is good for you and me. For you, you get to see how other intelligent traders perceive risk and opportunity, and for me, I don't get irritated enough to quit the site. I've seen other trading sites and the comments that come from readers and shudder. I'm not as tolerant of idiots as I was years ago.

I got a great email from an eloquent reader of which I will print the pertinent issues below--- (It is so good and valuable, I can't edit it much)

Joel-

I was glad to read your piece on your blog today (Monday) regarding trailing stops. I had been demoing the account for last few months to understand the mechanics of the trading as well as back testing it myself as well in order to feel comfortable about the system. I am okay with the winning percentages and P&L per trade. Over the long term catching the trends seens to be beneficial for the system and its just a matter of really waiting for those to help trip the system into higher gear. I have no idea whether the system is for me or not and trading a demo account is a little like asking your sister to go to the movies with you because you are too scared to ask the girl you like. You never really will get the full effect of the emotional response to winning or losing money until it becomes real. I couldn't agree with that statement more. 3-4 weeks ago I decided to open an account with oanda and go ahead and start trading. I have definitely had a few missteps along the way but nothing that was untowardly painful. i did however, decide to try and utilize a trailing stop. I read in one of the hundred articles or books that I have studied somewhere that utilizing a trailing stop is good money management technique. In theory that is probably true, in practice, I am not so sure.

If this week was any indication, trailing stops, for this system, is not truly profitable but may be "safe". The euphoria I felt at having my account show an unrealized P&L 10% higher heading into Tuesday slowly diminished as each and every one of the trades hit my trailing stops. I was stopped out of most trades early with the exception of USD/JPY until today. Amazing. I was able to break even this week without any losses. I gather from your response in the blog that this is rather an anomaly to the system and 1 week does not make a trend in the statistics. I have been trying to create a backtesting systm utilizing trailing stops with this particular system but I haven't quite got it programmed properly yet. Once, i do I will share the results. I am sure you have already done this so please don't tell me what the resulting answer is as I want to figure it out for myself (yes, I am a masochist and like to do everything the hard way. That's why I play golf. I don't really like it but where else can you learn some humility?)
As an aside, in talking with the developers of oanda, they tell me they are developing an OCO for their platform. This will be good. no time frame given. Frankly, one of the reasons I didn't go with other platforms is i wanted to instill the discipline in myself to be prudent about trading and not make it so mechanical that I don't think about the ideas behind it and make sure I am diligently closing out the other trade in a pair after one order is placed.
Again, i have no idea if this system is for me yet. It takes discipline, that's for sure. The behavior is truly wanting to adjust something during the trade and I have to constantly remind myself to leave it alone. What is funny, is i am less worried about a significant drawdown then I am about missing a breakout. Maybe that will change with time. One of my biggest takeaways i have learned from your readings (i also purchased the disc from Tradersworld which has a plethora of articles) is to make any system you utilize simple and straightforward. There was a Harvard (i think it was harvard) study a few years back about the effects of variables on a betting system. They took succesful handicappers at the horse races who make a living betting on horses and studied them. They learned that these handicappers, for the most part, utilized about 5 variables to make their decisions on the horses in a race. They would typically win 55% - 60% of the time. Enough of a win to make a good living. The study went on to look at all the factors that could go into the decision making process and came up with a list of 20 - 30 for these same folks to utilize. The stats would show that this could improve their odds. In practice, these professional handicappers utilizing the new statistical model had a drop in their performance that after a few weeks of this they all went back to their 5 characteristics and went back to their winning percentages. Simplicity.
Thanks for creating this blog. It is a great resource for a beginner trader to hear the ups and downs of trading. I can certainly tell that my biggest challenge will be dealing with my own psychological dramas with respect to trading. Please continue to write. I am sure for many it is just like having a mentor to reinforce the basics.
Thanks.
Xxxx

----------

Dear Xxxx-

Your email was very welcome. You know how to accurately turn a phrase.

FirstStrike is a very decent sytem. Yes, as you mention, even though it is truly a “simple” system, it does take substantial discipline. I enjoyed your comment about deciding to stick with Oanda for order purposes because it would keep you move involved in the process, thereby training you even more.

You obviously "get it". Skillful trading is not a heartless affair. It has at its core an emotional readiness to do what must be done to get to the goal, whatever that may be for the trader. More of that kind of training is needed, not some automatic trading robot that magically churns out money. (If those Pandora's Boxes really worked, the marketers wouldn't be marketing them, but using them.)

Trailing stops can work on a -specific- system. Not all breakouts are the same, not all systems trail the same. Some not at all.

Good analogy with the horse racing methodology. Same with Blackjack counting.

Many know that besides my trading, I also played blackjack professionally when I was younger. Almost anyone can easily learn a single level +/- count, where some cards are considered +1 and others -1 as they are played, but the more accurate and very powerful counts, 2 and 3 level, where the values are +2, +3, +1, -2, -1, 0, etc., you can have twice the edge in playing but 5 times the complexity, needing to divide matrix numbers and keep side counts of Aces. It can be done-- but at a cost.

You can tire too easily, causing mistakes, and unless you play for very large stakes the potential benefit wanes. You are much better off playing a counting system that you can do effortlessly for 10 hours without a mistake than a more accurate powerful method that you can only maintain for 1.5 hours at a time, with the easy risk of making dangerous (read: expensive) errors.

Professional blackjack players today team-play using single level counts, and make substantially more than playing individually with a “super” system.

By the way, most people going to casinos won't play a simple counting system at Blackjack even though they know they should. And why Vegas continues to be able to pay its light bill and grow even further into the desert.

Trading is the same. You are better off trading a simpler method that has a good solid edge that you can definitely execute than a more complex and potentially more profitable method which you might not be able to trade as it needs to be. Compensate by taking bigger positions and more markets and you can multiply your edges almost infinitely.

Oh, that's right. Some hedge funds do that already don't they?

If everyone could get the grasp of what we're doing here, the world would be a different place. No worries, it will stay much the same. People don't change.

Thanks for the email. These are points that others need to know but do not have the elegant capacity to dictate as yourself.

I may use parts of these emails for the blog. As usual, your identification will remain anonymous.


Thanks again, Xxxx--

JR

I wish I could answer all the letters I get from traders, but I do what I can. Trading takes most of my mental energy. If I just traded one system, no problem. I like a little overall volatility in returns, so I spread the risk around.

Have a good week.

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, Yahoo or Hotmail addresses. Nothing personal, but 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!

Can You Really Handle the Way the Market will Pay You Off? IFCN Wk 24 -Wed- Equity: $697.89

With the markets as choppy as they've been currently, I thought I would cover some applicable material.

Tons of people think that the ideal life is to sit on a beach, mountaintop, hotel room in Venice, or wherever and trade the markets. They believe that it's possible to make money almost every day and be able to consider the forex market a virtual ATM. That's obvious by the ads Google chooses to supply up on the righthand side of this site. (You know they now own Blogger too? Pretty soon they will own every search concept and internet delivery idea out there!) The ads change every time you load the page, but the messages are similar.

Some are pretty interesting too. But they center on the idea that there are secrets that no one else has (some truth in that) and you don't have to know very much about the markets and trading to do very well. (No truth at all in that.)

The big reason that trading is so difficult for the average Joe to exploit is because Joe is average. And at the very least, when he starts trading – he acts like the average guy who trades – and loses. He expects the solution to his problem will happen in a certain way, like a paycheck; and when it doesn't work out that way, he bolts and looks for another simple and ultimately costly solution.

The main problem is having solid information to base your decisions on. If you absolutely know some task is difficult to perform, like heart surgery; you would study it for many years before you would attempt going “live” in someone's chest. The same thought process should apply with becoming a trader, but doesn't because the ads say differently.

Even simple-appearing methods like those highlighted in this site such as FirstStrike and OneNightStand are simple only in their execution. The mental aspect that you have to get around which would enable you to trade significant size with them is gigantic.

There is no “something for nothing” in life. No (working) perpetual motion machines. But there are loads of people in this world who are very predictable, some extremely well financed; who have “tells” sticking out a mile and tend to lose because they really don't expect to gain. Some are world bankers.

They are our meat as traders.

But only if you can handle receiving the pay offs the market gives you, in the way it will give it to you.

Sometimes it only takes a change of mind for you to become a profitable trader.

Think about the following:

1. If the only way you could get paid for your trading was in so many copper pennies per day, you'd probably take them and find an easy way to convert the pennies into dollars.
   
2. If the only way you could get paid for your trading was from huge payoffs once every 2 years, and have to pay for small losses out of your pocket until the big payoff, you might  still be in, if the math makes sense.
   

I am sorry it's the case, but some of the best and ultimately the most profitable methods for independent traders fall much closer to the second example than the first. Some viable methods are in between the two extremes. But not many.

I sent an eight page missive to IFCN subscribers this afternoon entitled, THE HOLY GRAIL- Learning to Handle Variance in Returns. It is about the live trading experience of Ray, a local friend of mine, who recently started trading a daily volatility breakout method in addition to the systems on this site.

He started trading the daily system about 2 months ago and immediately went into drawdown. After 88 trades his new account is down 17% due to his higher leverage. His anticipated return (expectation) at this point would be approximately 15% gain on equity.

Is the system broken? If you would like to get a free copy of THE HOLY GRAIL- Learning to Handle Variance in Returns- just click on this link.

Look at this Monte Carlo representation below of the system's edge. As you can see, the Kelly Criterion number indicates a better than 10% potential edge. And still the volatility in potential returns is amazing. Just because you have a big edge doesn't mean you will win every time. Even Vegas has people take them for millions once in a while, and they have THE edge on every game.



Over the equivalent of 453 trades you can see how many ways your equity curve could end up. It is that variance in return that you have to understand which exists in your system and thereby your tolerance or lack thereof to trade it.

If you and I both start trading a winning system, and then I stop trading because I have an unacceptable (to my perception) string of losses, but you understand that what we've both experienced is typical for the method – you will very likely end up the winner, and me the loser.

That is the very essence of trading, profiting due to information you have that others don't. Maybe those Google ads aren't all bad. At least some of them offer free test accounts, something that can help you see what options are now available. I have tried 5 different test accounts and most of them have features that I would love to see Oanda adopt.

Like automatic OCO orders. Meaning, one-cancels-the-other orders. You can place a buy order and a sell order and whichever gets filled first gets filled and the other order is cancelled immediately.

Maybe soon.

Have a good evening.

Current equity still is at $697.89.

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. Nothing personal, but 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!

Another other shoe to drop? -- IFCN Wk 9 -Thu- Equity: $531.23

We really did get a nice move in the EUR/USD this week.  It's about time.

My money management algorithm placed a bit more size on the EUR/USD and USD/CHF than on the other pairs, so I am up fairly good going into Friday.

I will repeat the one constant among traders. You never have enough size on the winners. But I always try....

Also, there is a possibility of one or two OneNightStand orders getting executed on Friday.

A note about the action we are currently seeing in the currency markets. It is extremely likely that we have a bottom in the dollar for a while. The old "sell the news, buy the fact" brand of thinking in forex. Just about all the bad news that can be found or manuafactured has found its way to the markets. People have finally committed themselves. What other shoe is there to drop?

Also, America is incredibly inexpensive relative to most anywhere anyone wants to be, and a majority of its products and services are cheaper too. The countries that have been absorbing dollars pell-mell for years, are now sending them back to pick up bargains. Even our stock market is in a much cheaper position for them to slide money into at wholesale prices.

Don't expect much more downside on the dollar very soon. Later--- yes!

Current status on the Alpha account, nicely up this week-- $531.23.

We'll see how tomorrow shapes up.

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.

Week 3 -Thu- Current Equity: $557.20

Well, it is turning out to be a decent trading week after all.

This morning I got triggered on the long USD/JPY trade and quickly got stopped out for a 56 loss. That makes 3 total losses, the GBP/USD, GBP/JPY, and the USD/JPY. The short USD/CHF and the long EUD/USD – entered yesterday – are on a tear!

I'm pretty sure that none of the potential OneNightStand trades will execute tomorrow. The long term trends of the non-US currencies appear to be reasserting themselves. That is good for us. Trending markets are easier to make money in.

I mentioned last week Friday that I would suggest how it is possible for you to get additional profits for little extra risk. This situation arises when you have already taken a trade in a currency pair that is subject to a potential OneNightStand trade.

Example:

You are already long the EUD/USD from some other system and then Friday comes along and one of the OneNightStand trades is to go long the euro if the price of yesterday is exceeded. If your exit criteria on your current trade is not triggered and the ONS trade triggers you have the opportunity to take advantage of the additional “new” trade potential of ONS and exit your current trade on Monday morning. Since profits tend to have strong correlation with time in the market, converting a trade that would normally only have a life of around 4 days can safely be converted into a trade with 6 days.

Note: I would recommend making this “trade conversion” ONLY when the ONS trade is in a profitable position by the end of the day of entry. Otherwise, in the case of any other system you might be following..., follow its exit criteria. In the case of the other system being FirstStrike, exit just prior to 3:00 PM CST – Friday. There is strong mathematical evidence that suggests that trades which are profitable on the day of entry have much stronger potential than those which experience longer loss periods before going into profits.

I have a floor trader buddy (now retired) who made more than half of all his lifetime trading wealth only holding exceptionally profitable daytrade winners overnight.  He considers it the greatest secret he possessed.  You didn't hear this from me.  : )

By switching trades you avail yourself of additional edge and potential to increase your return without increasing your risk materially. Feel free to test this concept with any other methods (that have an edge) you wish, and you will be pleasantly surprised how beneficial this can be. I call this effect: The Power of Being In.

Until tomorrow.

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 which address you would like it sent to.

Welcome Forex Traders

Welcome traders, to this new forex trading blog.  It is designed for forex traders who are serious about getting positive returns from the forex markets.  And are willing to do what it takes to take the edges available and execute them, over and over.

While most people might assume that all traders are trying to obtain excess return, in reality most people starting down the trading path get sidelined because they give in to incorrect beliefs about the market.  

Incorrect beliefs cause losses. Often, devastating losses. Since the first rule to success as a trader is: "Survive each trade so that you can get to the winning trades", making sure your understanding of fundamental trading principles is correct is paramount. And shortens your learning curve to success.

As a counter-point, correct beliefs enable success.  

Winning traders want the TRUTH.  Not what is popular.  Truth works.

No less than Ayn Rand (note the quote below) regarded traders as rare and special types of humans, set apart by something unique in themselves that forces them to act in a fundamentally different way from average people.

Trader Priniple

The symbol of all relationships among [rational] men, the moral symbol of respect for human beings, is the trader. We, who live by values, not by loot, are traders, both in matter and in spirit. A trader is a man who earns what he gets and does not give or take the undeserved. A trader does not ask to be paid for his failures, nor does he ask to be loved for his flaws. A trader does not squander his body as fodder or his soul as alms. Just as he does not give his work except in trade for material values, so he does not give the values of his spirit—his love, his friendship, his esteem—except in payment and in trade for human virtues, in payment for his own selfish pleasure, which he receives from men he can respect. The mystic parasites who have, throughout the ages, reviled the traders and held them in contempt, while honoring the beggars and the looters, have known the secret motive of their sneers: a trader is the entity they dread—a man of justice.

Ayn Rand - Galt's Speech, For the New Intellectual.

A little about me.

I have been trading for most of the last 3 decades in the futures (derivatives) and the forex markets. I have traded successfully in the futures pit environment for 7 years and "off-floor" for more than 2 decades. With the electronic trading frontier we now have, the opportunities for obtaining profits due to individual intelligence and knowledge are unparalleled in the history of man.

I didn't achieve success as rapidly as I wished. I had success, then failure. I had greater successes, and then greater failures.

It took 3 solid years of determined trading and learning until I was certain that I had a mathematical edge that, if exploited carefully and consistently, I could survive and then thrive financially.  I have no doubt that anyone who is determined to have success as a trader has the capacity to obtain it.  

Unfortunately, it may end up being the answer for the popular curse, "be careful what you wish for!"

Learning more is inevitable if one keeps at the business, but you have to survive financially to stay in the business. Run out of capital, and you're done until you can get another stake or give up and do something easier.  Believe me, 95% of the people who are sure that they are meant to be traders could make five times the money they'll end up making from trading by selling used cars!

I'm sure some of you understand what I'm saying.

I'm happy that you can check in on this blog.  Feel free to drop me a line or make a comment.  

As I do trade for a living, and it tends to keep me busy about 5 - 6 hours a day (down from 12, thank-you very much, because of technology) it might take a little while to get an answer from me when conditions are busier.

Joel Rensink
www.infiniteyield.com
infiniteyield@gmail.com