The fixed income markets tend to not draw a huge amount of attention from the individual trader, even though they are massively traded by institutions.  Maybe it’s the whole price goes up, yield goes down inverse relationship thing that makes people’s heads spin and keeps them focused on the stock market, and increasingly the foreign exchange market.  Too bad.  Fixed income not only directly impacts those other two, it can really be a rewarding market to trade. (If you are unfamiliar with fixed income trading,...

Trader education has become a hot topic in recent years.  Everywhere you look there is someone offering some course, seminar, training program, or whatever.  Many are very pricey, and we can certainly debate the real value of quite a few.  The proliferation of the products and such can’t help but bring up some of the commonly debated topics related to whether traders can be taught or just have some innate talent which allows them to succeed.  This article makes its own contribution to that discussion. In the interest of...

There is a question which is sometimes asked by those new to the financial markets, and even occasionally debated by experienced participants. That question is how one differentiates between trading and investing. Because both trading and investing – when one considers them from the perspective of the financial markets – are performed in very similar fashions, they are often thought of as interchangeable actions. In my book, The Essentials of Trading, I followed along with this basic theme by introducing the idea...

Last weekend I was in Las Vegas – strictly a business trip. Although I’ve been to that city seven or eight times, I’ve not once lost a penny gambling. Why? Because I’ve never even played the slots while there. Gambling is just not my thing. I guess it’s hard to get beyond the fact that it’s a losing proposition in the long-run. Yes, there is the entertainment value, but I’m just not that interested. Trading is often compared to gambling. On the one side there is the element of chance...

I have just finished writing an article which has been submitted to Stocks & Commodities for possible future inclusion in that magazine. I’ve had other articles published there, most recently in the December issue. The latest effort is on the topic of the Average True Range indicator (ATR), specifically regarding a way to modify it for more effective comparative analysis. In the process of picking out examples for inclusion, I was caught by what I saw on the chart of the S&P 500 futures. On the above chart (monthly...

Keep in mind that you don’t have to trade. Many traders get in trouble because they feel like they always have to be active. This simply is not true. In fact, it can be detrimental to your overall performance. One of my favorite quotes is from Jim Rogers, author of Adventure Capitalist, Investment Biker (very good read) and Hot Commodities. In his interview in Market Wizards he made the statement that he just waits until he sees a pile of money sitting in the corner and picks it up. This is a great lesson from an extremely...

One of the most important elements of success in trading (and life in general) is knowing yourself. If you do not understand how you tick, you will never be truly prepared for the demands of trading, and likely your performance will suffer as a result. Let me use myself as an example. I am what might be considered project oriented. By that I mean I like to move from one thing to the next – always have something upon which to focus my attention. As my friends and colleagues can attest, once I complete a project – and sometimes...

This article is a basic introduction to the fixed income market.  It covers the primary facets and features of fixed income as they relate to trading from the individual, as opposed to institutional, perspective. The term “fixed income” is used to describe a collection of securities which have predefined pay-out terms.  An example would be a certificate of deposit (CD) in which one deposits a set amount of money and in return receives a given amount of money, which includes both the original deposit plus interest...

The financial markets provide us with the opportunity to grow in ways that most people probably do not even think about. We all know of the gains in wealth to be had buying and selling stock, bonds, commodities, currencies, and other instruments. One need not look far to find stories about the riches to be had. Successful traders, investors and portfolio managers like George Soros, Peter Lynch, and Warren Buffet have become household names. What is less commonly talked about is the personal development which takes place along...

The things which contribute to price levels and action in the financial markets are numerous and diverse, and their influences can vary through time, and across different markets. This article identifies the different types of Economic Data influences and the role they play. There are two ways economic information can influence prices. The first is in the macro sense. Macroeconomic inputs include: Interest Rates Economic Growth (GDP) Government Budget Surpluses/Deficits Trade Balances Commodity Prices Relative Currency Exchanges...

Terminology and Market Conventions If you are going to trade forex you need to understand the terms and quoting conventions used, especially in regards to the spot market. Notational Conventions The forex market uses 3-letter codes for all currencies.  These are commonly known as SWIFT or ISO codes.  For example, USD is the code for the US Dollar. Here are the codes for the other primary currencies: AUD: Australian Dollar CAD: Canadian Dollar CHF: Swiss Franc EUR: European Euro GBP: British Pound JPY: Japanese Yen ( For a complete...