In the forex market there are tons of strategies which basically boil down to being carry trades. By that I mean the primary thrust is holding positions which produce income from the net positive carry produced by being long the higher interest rate currency and short the lower interest rate one. Carry trades can be very lucrative – so long as a depreciation in the value of the position doesn’t trigger a margin call. When that happens the trader generally gives back all the net interest earned and quite a bit more. Lehman...

Picking up on the thread from Those Who Can’t Trade Teach, ducati998 authored Selling education and trading methodologies. Actually, he’d entered a previous post on the subject, but that was just cutting and pasting my own entry and not anything which contributed immediately to the discussion. By the way, if you’re a blogger, web author, or someone looking to do that sort of thing, a couple of quick points. First, if you mention someone, spell their name right (ducati got mine wrong). Second, if you use...

Ray Barros included his beliefs on trader development in his recent Plan & Personality post. Here they are: I believe that newbies fail because they focus mainly on getting the plan right. I define a newbie as anyone who has not consistently made money over 3 years. I believe that the plan is the least important mandatory element for success. It’s not hard to devise a plan with some sort of edge. I believe newbies fail because they fail to manage risk and fail to learn from their mistakes. I believe that by learning...

One of the things everyone who trades needs to do is to keep things in perspective. Trading is something we do, but it’s not the only thing we do. There are a great many other parts of our life and what makes us who we are. Trading needs to account for that and be incorporated into your life in a compatible, supportive fashion. Be cautious about identifying yourself as “a trader”. I say that because when you label yourself in that way you automatically create an association in your mind based on what you have...

A member of the Trade2Win forum posted the following set of trading rules. I love it when people do this – in a twisted sort of way. It lets me poke holes in them because the almost always tend to rely on a set of assumptions, ones which are often not uniformly applicable. Here we go. •Always use stop losses to your position at a smaller loss preventing a large devastating loss Not all trading strategies work well with stops, for one thing. For another, I personally don’t use “stop losses” because...

Consistency is the key. When I was coaching volleyball I was involved in a discussion with one of out players after her freshman year. She had had some very good match performances. She’d also had some real stinkers. It was clear to us coaches that she could be an outstanding player if she could just put forth a consistent effort from game to game. With some help she was able to do just that and had a fantastic sophomore year. She was selected 1st team All Conference and broke a few school records along the way. Consistency...

Trading discussion forum sites and chat rooms can be great resources, but they can also become major sources of conflict if you let them. I came across the following post on Trade2Win active trader forum today. I’ll not list the poster, though if you really wanted to you could probably find it (unless the moderators have deleted it at this point). I beg your pardon? I did not insult you personally…I stated something that is my opinion…as you, or anyone else does and to which you and they are entitled. You have...

The other day, Brett Steenbarger posted something which I think really is worth some thought and follow-up. Brett made the following statement: We talk about losing discipline in trading as we might talk about losing our car keys or our way out of a forest. But losing discipline is not about a simple act of forgetting. It is an active process of refusing to act upon one’s knowledge, of blotting out uncomfortable realities. One of the big gripes I’ve always had with trading psychology discussions is that most of them...

Brett Steenbarger asked me to help him with the new book he’s writing on the subject of trader self-coaching by answering the following question: What are the three things you’ve found most helpful that traders can do to coach themselves?” Here’s what I wrote up in response: The first thing a trader needs to do is step back and take a big picture view of things. This is extremely important for new traders as they need to figure out how trading is going to fit into their lives, but even folks who have...

I’ll admit it. One of the less enjoyable parts of my job is covering earnings conference calls that companies do after they’ve announced their quarterly results. Some of the guys on my team are really into the calls and listen to all of the ones they can get on. Being primarily a technician, they just aren’t my thing. You can imagine how much of a drag it can be to have to spend a hour plus listening to managers talk about their business and analysts asking them questions, especially when you don’t really...

Corey over at Afraid to Trade posted a piece in which he discusses the use of ATR percentage. I’ve already submitted a comment on that post complaining about how he’s stealing my ideas. Well, sort of stealing. He got the idea from someone else. I, however, wrote about what I called Normalized ATR (N-ATR) in an article for Trade2Win like three years ago and mentioned it in a post on this blog (Volatility Pointing at More Stock Market Upside) more than two years back. I also had an article in Stocks & Commodities...