A reader of the market analysis service I work for emailed me after I posted a comment about GBP/USD. He started with this: So I just read your posting about the GBP/USD on my fxdd headline. You mention that the upside is pretty limited above 1.55 and that a possible retracement might occur. Do you think it will drop back to the 1.5300 range in the next couple of days? When I get emails like this from retail traders (I don’t normally get them from institutional readers) alarm bells go off. Is this guy in a position and...

It’s that time of year again. The kids are back to school, or soon will be. Summer has passed. Markets should start picking up in volume, and maybe volatility as well. That may or may not be something you look forward to, but as an analyst who spends his day writing about the markets, I definitely look forward to more action. It’s awfully hard to write about nothing happening. But back on point. This is also the time I open my online course up to new students. I only do this 2-3 times a year, so if your trading isn’t...

Frequent emailer Rod is back with another worthwhile question. Hi John, I know you are a position trader in the stock market, using a variation of CANSLIM. You are a day trader in ES, using Market Profile. I think these are great ways to approach these markets. That’s why I would like to know how do you approach the Forex market: - Are you a position trader? If so, do you scale-in or pyramid to build large size or do you difersify as much as possible? - I know you use weekly Bollinger Bands and forex seasonals, but is that...

Can I say I told you so? The CFTC has finally come through with its new rules on retail foreign exchange, which come into effect on October 18th, 2010 (Q&A about the new rules can be found here). Despite fears to the contrary, the CFTC will not be cutting permissible leverage in retail forex trading down to 10:1. The people have been heard! There was so much contrary opinion against that move from traders and brokers that the regulators were forced to rethink the plan. That said, the CFTC will, however, be restricting leverage...

I received a pair of emails yesterday from readers of my new Trading FAQ book that blew me away. Let me share them with you. Here’s the first one. I’ve only read chapters 1 to 4 and I must say it is one of the best if not the best work I’ve read on trading, its honest and provides years of experience to the reader. I’ve only been trading a few years, managed to keep my original capital, luckily, and I wish I read something like this years ago. Wow! The best, or at least close to it? It’s hard not to be happy...

It’s almost September. That means the not just an end to the summer doldrums in the forex market (and some days have really been painful), but also the entry into a time of year full of repeating trading patterns. You can find out about them in Opportunities in Forex Calendar Trading Patterns, the research report that came out of my own trading of “seasonal patterns” in the currency market. There are times of year when certain pairs have moved in the same direction 75% of the time over the last 25+ years. And...

Buy – Don’t Hold by Leslie Masonson is called a investing book, but I’m tempted to put it in the trading category. It depends on how you prefer to define the difference between the two. The book’s subtitle is “Investing with ETFs using relative strength to increase returns with less risk”.  Using relative strength makes me think trading, but there are definitely elements of the approach outlined in the book which speaks toward what I would probably think of as investing. In any case, as...

I’ve gone off on a rant about poor market analysis before (see this post, and this follow-up), so I won’t do so again where this Zero Hedge entry is concerned. I’ll let a long-time finance professor friend of mine do it instead. His premise on the use of correlation is a stretch — made even worse by his mis-understanding of what arbitrage means — poor traders who decide to follow him… If he is correct, it is by happen-chance, not analysis On to some more positive things. Independent Trading:...

Tim Sykes seems to be someone people either love or hate. He is upfront and straightforward with his opinions, which is why I asked him to contribute to the FAQs book. That doesn’t mean I always agree with him.  His 5 Reasons Penny Stock Trading Obliterates Forex Trading is a case in point. Tim Says: The unlimited profit potential in the hugely liquid and leveraged forex market is pure marketing and deception, designed to lure the most desperate and greediest people into playing a game where the odds of success are...

Tim Bourquin has an article at TradingMarkets in which he discusses what he calls 5 Uncommon Rules of Wealthy Traders. The rules were commented upon by zentrader.ca in his 5 Unique Rules of Trading  post, and I thought I’d toss in my own two bits to the discussion. Here are the rules as Tim outlined them. 1. They plan every single trade. EVERY SINGLE ONE. 2. They stopped trying to pick tops and bottoms years ago  3. They are patient with winners – and ridiculously impatient with losers. 4. They trade one market....

In case this post’s title didn’t tip it off already, I’ll state my position as clearly as possible. What the FOMC said today about using the principal payment from the MBS and agency holdings to purchase longer-dated Treasuries is NOT NEW QUANTITATIVE EASING. With all due respect – realizing that in some cases none is due – anyone who suggests otherwise is being a moron. (I do like Mish calling it “quantitative nothingness”, though) The Fed is not expanding their balance sheet at all...