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发表于 2009-4-7 20:54
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Posted on July 9, 2008 at 19:12 in Uncategorized by Pierre Charlebois4 Comments »
How many times have you heard someone say that? How does it apply in trading?
One of the biggest psychological challenges we face as traders is making a plan and then sticking to it. We usually see the potential target when we first enter a trade but as my Mom used to say… after a little while we can’t see the forest for the trees.
We become distracted and loose sight of our original goal in a trade. We get caught up in the fear of loss. If we are in profit when we re-examine the trade we fear loosing what we have gained short term and get out too soon, or if in draw-down we fear loosing more. In both cases fear drives us to make a short term decision contrary to our original gaol. We must fight the resistance of closing the trade without re-checking our plan and where our goal is set. If you can follow this one simple rule of no trading without review of the plan you could be on your way to lager profits.
Trading is unlike anything else we do for money. If we are working for someone or a company and we work for a week, even if we leave after that week we are usually still paid for the time we put in and loose only future earnings. But in trading this is not the case. Trades can often go into profit by 100’s of pips only to retrace back to negative or worse, hit our stop as a loss. So this is akin to working for a week not knowing if we are going to be paid AND in fact we may have to pay money at the end of that week. Not one of us would work on that basis for anyone would we?
So how do we overcome this problem? What do we need to change in ourselves and how do we do that? Well… it’s back to developing discipline in order to make progress. We need to change our programming by creating new experiences we can trust. In order to do this we have to start with one very basic rule. Do not make any trade unless your plan is documented. With an entry point, a stop-loss point and a profit point. At the top of this plan write down:
I will remain in the trade to my target goal or in the case of a loss, I will accept it as a risk well managed. (Of course you must use good money management of less than 2% risk of your account and look for opportunities that reward better than 1:1 Risk/Reward ratio)
Make it a win either way. When we learn to accept both losses and wins as forward momentum in our trading we will then see acceleration in the capital of our accounts.
Here’s the opportunity on the EUR/JPY
We appear to have a proper triangle unfolding that at this time is providing a few different possibilities for trades. If the assessment is correct, we should see a return close to the bottom trend-line, so a sell here is appropriate. At the bottom trend-line we should see a reversal and should buy as then new highs above the upper trend-line should print. Remember good money management and stop-loss use.
Good trading.
Be ‘Smart Lazy’ when you work your system
Posted on July 7, 2008 at 19:29 in Uncategorized by Pierre CharleboisNo Comments »
I can’t remember where I read this before and I wish I could credit the writer. I learned a lot from remembering this simple edict. I searched the Net to see if I could find the article without success. However I did come across an interesting website http://www.lazyway.net that seems to depict the meaning the writer had intended. I would suggest you follow up with a visit to this site as I have subscribed to their blog feed and am finding the daily input very helpful.
What the original article was trying to say was… STOP outsmarting yourself by adjusting the trading system. That’s right… almost all new traders constantly break the rules of the system they are employing. In turn what happens is when introduced to a new system, they see it as the Holy Grail and do what I call ‘System Jump’ as the new system is the answer to better trading.
What we need to do to be successful is not become better at understanding a new system but rather at simply following one. Be LAZY and just follow the rules of the current system you’re using. Don’t change them, don’t adjust them, don’t add to them, and most of all… Don’t blame the system for your lack of capital growth in your trading account. Be LAZY and try not to think too much!
In the book the way of Way of the Turtle, there is a lot of reference to how difficult it is for anyone to follow even the most simplest of rules when trading. That there is a disconnect between what rules traders say they are following AND what it is they do.
Bottom line is that it is not knowing a good system to trade that will make you profitable in the long run; but rather it will be your ability to apply your system consistently that will make you a successful trader.
Why Market Psychology Points to a Possible Multi-Year High on the EUR/USD
Posted on July 4, 2008 at 4:49 in Uncategorized by Pierre CharleboisNo Comments »
Based on the move down from Thursday’s NFP and ECB’S Interest rate increase and press release we have to look hard at how dramatic the move is and ask ourselves what the market psychology might be based on such a move.
What has become the group mentality of the EUR/USD traders for such a reversal to happen? Why in the world would we see such a rejection of the current highs when this seems to go against what should have happened logically on news such as this. Indeed I would suggest that logic has very little to do with the current move and it is completely based on the current ‘feelings’ of the majority of the group trading. What could the evidence be telling us? Let’s consider the following.
I’m an Elliotticien, and as such, believe in the effect of the combined psychology of traders on the markets and that it can (at times) be read by the action of the market based on patterns and severity of the move. Having said that, I tend to use Elliott Wave for the bigger picture and try not to get too caught up in the subtle moves on the lower time frames. There are so many situations when multiple counts are valid, that I always consider each possible count when trading. Oh ya… Back to the move today…
1. The rejection of the price level is clear - No ambiguity here
2. The rejection comes extremely close to the 1.6018 top that was the previous strong rejection point
3. The rejection comes in face of a rate hike by the ECB and more negative news for the US - (Opposite move would have been normally expected).
Also the move down appears to be a 5 wave Motive Impulsive move as coined by Elliott. These moves come also as first legs of corrections so this is where we need to temper our view and not be overly confident about the top. However we can be Bullish for now, expecting a correction upward and then a resumption of the downward move. As each trend-line along the way down is breached, we can increase our confidence in the top being in place.
So for now, look to sell on bounces, knowing that the combined psychology of all the EUR/USD traders is strong rejection of any price above $1.59
BTW. In the outside chance a new high is reached, it should be very short lived.
How to trade the EUR/USD this month - Identifying ‘Risk’
Posted on July 2, 2008 at 18:06 in Uncategorized by Pierre CharleboisNo Comments »
I love it when the market reaches these important price levels. Not just because of the overall opportunity but also because we can now start to zero in on where risk belongs. With risk defined the potential takes shape.
The previous top at $1.6018 ended in a ‘Wedge’ or in Elliott Wave terms an ‘Ending Diagonal‘. These diagonals show up after extended moves and mark a place where the market strongly rejected any new extremes. So what will happen next time this level is re-visited? Let’s look at the psychology of it.
As the level was strongly rejected the first time, what should we expect the sentiment to be the second time we reach or breach this level? Ask yourself what happens when you enter unfamiliar territory. When you cross the line to a place where you are not so sure you belong. Did you ever sneak in somewhere you shouldn’t be? Or maybe found yourself in a room full of people you simply didn’t relate to. Anxiety rises and you start looking for a way out.
So watch any new top with anticipation of a reversal pattern. When a top appears to be in place, then we will know where risk (stop-loss) belongs.
Can You Describe The Trades You’re In? Why we need “Good Habits”
Posted on July 1, 2008 at 17:40 in Uncategorized by Pierre CharleboisNo Comments »
If someone asked you why you entered a particular trade, would you be able to list the criteria you used to enter? And what about your stop-loss; can you provide a clear explanation as to why you chose it? And do you have a clear target on where you will exit in profit? And if not, do you have a clear price or set of criteria for moving your stop-loss when you are in profit.
Whether you are new to trading or have been doing it for some time, successful or not, you need to be able to answer these questions before entering any trade. I’m not suggesting you need to recite each trade from memory, however if you can’t, then do you have the trade(s) logged?
Why is this so important? You were clear in the moment you made the trade right? The trade met all you’re criteria for entering right? Well I ask you… How would you know if you can’t explain it clearly now or refer to it in you trade log?
For me personally, I have learned that with a plan, I stay in trades much longer for much greater profit. It was certainly difficult at first, especially when waiting to move my stop-loss based on my criteria for better swing trades. In fact, having a good set of rules and criteria for when I move my stop has made the biggest difference to my trading success over the years.
So, fight the resistance of not documenting your rules and keeping a trade log. This one small task may be the best ‘good habit” you ever got into.
Keeping your cool in a swing trade + Opportunity on the USD/CAD
Posted on June 27, 2008 at 22:56 in Uncategorized by Pierre CharleboisNo Comments »
I said I would focus on
addressing finding an easy way of doing what’s hard (being
disciplined enough to stay in a trade for greater profit) and that I
would share the occasional chart. Well here we go.
Why is it most traders
can’t stay in a trade beyond the first wave? Entering trades at
break-out points or important technical levels means you are entering
at very high volume times along with many other traders who also see
the potential at the same level.
After a brief move to
profitably, the price action often goes into a period of re-tracement.
As traders see their trades reverse and begin to loose money; fear
based thinking takes hold and as the price moves back towards their
entry level, a mini panic ensues by a portion of the group of traders
and they sell quickly before their gains return to zero. So the price
you enter your trade at is often re-visited on a retrace due to this
phenomenon.
Therefore; for greater profit in ’swing’ and
‘position’ trading, risk should be maintained at its original level,
until a clear swing high/low is established.
In the example
shown here the trader entered the order at the
trend-line break placing his stop at the low. If
the trader moves his stop to break-even on the first profitable move,
the position would be stopped out on the next swing-low.
By
waiting until the next swing low is defined and then moving the stop
to break-even, the trader is now in a profitable trade rather then
just a break-even one.
Now that you have this
knowledge we need to practice it (in a demo account of course).
Please see my posting on the FX Weekly report for more detail about
how to trade the USD/CAD this week.
How To Stay In Positions Longer For Greater Profits
Posted on June 27, 2008 at 7:56 in Uncategorized by Pierre Charlebois2 Comments »
I knew that would get your attention… That’s what everybody wants right… The Holly grail of trading right? Staying in positions for days or even weeks and gaining 300 to 700 pips in a trade, right?
Well this is possible but very few traders actually want this. It would seem anyway, because I would argue that if this were the case, I (and you) would know a lot more traders that actually stay in positions for a number of days or even weeks. And I know very few. So there is a disconnect between what traders SAY they want and what they DO.
I don’ know the exact statistics but from my experience in coaching and training other traders I would say that learning trading isn’t what’s difficult, but rather learning to remain in the right position at the right time for greater profits is what the real challenge is. Simply knowing this and actually doing it is what separates the really good traders from the rest of the pack.
What is, in my opinion, the biggest single difference between the average trader and the best of traders is in the way they approach their own challenges around the psychological pitfalls we all encounter. And what is the one trait these extraordinary traders have in common? Is it their technical expertise? Their knowledge of economics? Luck? Experience? Here it comes… the part where you say to yourself: “Yeah this guys is going to say it’s discipline and that this is what will make me a better trader‘. BINGO!
What irony. Most of us got into trading because of its promise of providing freedom. And now, you keep being told you need more focus and discipline. This doesn’t sound like freedom does it.
So this is what my focus on this blog will be: Finding an easy way of doing what’s hard. Cause let’s face it folks. We either act… or we are acted upon. So let’s learn to trade smart, not hard. (And I’ll share the occasional technical chart set-up too).
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