Month: July 2016

NU – Weakening Move

Posted on by Anatoliy Schneider

25 - NU

Despite the fact that NU is the strongest pair of the last week, it’s been really struggling in its descend.

NZD is mostly flat on basically all pairs other than NU.

USD has been growing during the past week, but it really struggled in all pairs other than the commodity group. UH is looking especially interesting, with its 3 consecutive failures to break the high of the last week.

Here is the strongest pair of the day for Monday:

25 - CJ

CJ made a determined move today, but only on the smaller scale. If we look at it on higher TFs, we can clearly see that today’s bearish move is just a part of quite a weak bearish cycle on H4. Compare the momentum to the previous bullish cycle.

JPY does not look like it will be growing much longer. BOJ is meeting Thursday-Friday and they are expected to introduce new easing measures. Interestingly enough, the Market is not pricing these planned measures at all, and the price in all JPY pairs are growing towards significant resistance.

JN looks like an interesting trading pair on higher TFs.

GJ – Weak correction after a strong week

Posted on by Anatoliy Schneider

18 - GJ (H1-H4)

A very weak and conflicted price action today. Not a single currency managed to dominate, but GBP and JPY are the two strongest in the end.

After a strong bullish week on GJ, clearly visible on H4, it closed with a strong bearish day on Friday. The worst possible scenario for bulls is to see price action in their direction, but showing clear signs of struggle. Bulls did manage to raise the price by the end of the day, but given that this is the strongest move on the Market today, and comparing it with the prior bearish move on Friday, it looks like the bears are far from done in this pair.

The Market is already offering good selling price right now, it will be very interesting to watch how the traders bet their money tomorrow.

GN – Strong continuation, NC – Possible daily reversal

Posted on by Anatoliy Schneider

14 - GN (H1-H4) small

After showing strong bearish move yesterday, today GBP completely reversed and put up a bullish move. Interestingly, half of this move happened in the very early hours, before BOE kept the interest rate unchanged. No matter how much fear mongering media will create, at some point there will not be any trader willing to sell GBP this low. It will be interesting to see if it creates a significant bullish cycle on Daily-Weekly.

NZD has been the most bullish currency in the past couple weeks and now it also starts correcting – possible even reversing. RBNZ will be meeting on 10th of August and unless NZD depreciates by then there is a very good chance of a rate cut. The Market would normally price upcoming change before hand, so we might see a bearish cycle on NZD for the next 3 weeks.

Together, GBN and NZD represent two of the most interesting currencies at the moment, because they have been leading the whole market (together with JPY) recently.

NZD is also interesting because together with CAD it represents the strongest bearish move this week so far:

14 - NC (H4-D1)

The bullish move created by NC at the end of the last week is completely cancelled now. The price is approaching Daily TL.

Looking at NZD profile on H4, many pairs have broken below their recent swing lows.

Looking at CAD, the bullish move this week is very well sustained so far (with exception being CG). However, CAD is slowing down and is very likely to correct in the last couple days, before it can continue higher. Supply is coming at these higher prices virtually on all CAD trading pairs.

GC – Reversal after a strong move

Posted on by Anatoliy Schneider

13 - GC (D-W)

13 - GC (Daily Picture)

GC reversed from minor SR zones on Daily. However, CA and CN were rejected from major Weekly support zones.

Interesting to see how H1 was interacting with prior SR levels. First real support came around the middle of the day. If we look at currency profiles, the pause was caused by bullish moves in NZD, AUD and to leser extent CHF. As soon as these other currencies stopped pushing CAD down, it instantly broke through the support.

A bit later price overcame another significant support area from the previous day. Will be interesting to see if the price will come back to retest it tomorrow and it can be key to the future direction of this pair.

Note CJ and CH – both pairs came to a resistance that they were unable to overcome. These If JPY and CHF push higher tomorrow, CAD will have to wait with its ascendance.

“I cannot find a good trading system”

Posted on by Anatoliy Schneider

I cannot find a good trading system. The signals my system is giving me are really poor.

How do you act, what do you feel when you believe this?

  1. Frustrated – “No matter how hard I try, I cannot be successful with such a poor trading system”
  2. Depressed – “I don’t even want to trade anymore, I have tried so many systems and all them don’t work! The Market must be purely random after all.”
  3. Apathetic – “It’s not worth it, there is no point to continue. I must be a complete failure!”
  4. Lost – “What do I do now? No matter how many systems I try, the signals are still poor!”
  5. Disorganized – “I might as well just take random trades”
  6. (after a couple random losses) Hesitant – “I am not sure I should take this next trade…”

While it is true that a trading method is still necessary in order to be successful on the market, it will be of no use while you have so many conflicting beliefs about trading. After all, how many trading methods have you tested properly? By that, I mean taking 30-50 trades, without hesitation, in real account (demo just doesn’t cut it – better open cent account and risk $0.50 per trade), precisely following one method, not adjust any rules whatsoever?

In my experience, we are often impatient to get the positive results and so we cannot even stand a couple losses in a row, thinking that something must be wrong with our trading method. Of course, this is interrelated with our refusal to believe in uncertainty – we want to know what the outcome will be before we place the trade.

So let’s try and turn this around and see what happens:

The trading system I have right now is good enough for all practical purposes. I will not judge it until I collect live track record of at least 50 trades following this method.

How do you feel now?

  1. Liberated – “I can concentrate on the Market instead of constantly reading forums in the search of the next Holy Grail”
  2. Calm – “All I have to do is take the next opportunity, as defined by my trading method”
  3. Confident – “I know that the next trading opportunity will be provided by the Market. I know that whatever its outcome might be, it will take me a step further on my path towards trading success”
  4. Interested – “I wonder what the next trading opportunity will be? What lesson will it teach me?”

As was already mentioned before, when you have a proper trading mindset you might not become profitable in an instant. But you will be open to progress in your endeavors freely, without any internal resistant. The Market will teach you how to trade, it will become your friend, not an enemy – but you must take the first step.

“I should only take 100% certain signals”

Posted on by Anatoliy Schneider

I should only take 100% certain signals – the ones that I know will not fail me

This one is tricky. It seems that it makes good sense. Shouldn’t we all analyze the market properly and find the best possible trading opportunities? Why should we even bother taking the trades that we are not certain about?

So how do you feel, think and act when you believe this?

  1. Reluctant – “This signal does not look quite certain yet…”
  2. Frustrated – “I’ve been analyzing the market for hours now, but no trades look certain enough yet!”
  3. Reckless – “Now that I found this 100% certain signal, I can scale up my position and I don’t really need Stop Loss either – this trade can’t fail!”
  4. Worried – “Well, this trade does not behave quite as I expected, but I am sure it is just a temporal correction.”
  5. Hopeful – “I should just double my bet while Market gives me better price…”
  6. Afraid – “This does not look good so far, I don’t have much margin left…”
  7. Numb – [just stares at the screen…]
  8. Horrified – “It’s all #u?king gone! My whole account!”

The above example might be over-dramatized but it shows what can result from your inability to accept uncertainty.

You certainly get a lot of excitement trading that way, and I guess for some traders gamblers excitement is a goal in itself.

Let’s consider the opposite belief:

I should take any signal my trading system offers, knowing that none of them is certain

How do you feel when you believe in the above statement?

  1. Calm – “I am just doing my job, taking each opportunity I find”
  2. Quiet – “Every trade feels completely the same inside”
  3. Composed – “I know exactly what I am doing”
  4. Safe – “My account is always protected when I trade like this”
  5. Optimistic – “I am looking forward to positive long term results of my trading regimen”

Not much excitement, nor fun. Reminds me of one of my favorite quotes from “Market Wizards” in interview with Larry Hite:

“Larry, how can you trade the way you do; isn’t it boring?” I told him, “I don’t trade for excitement; I trade to win.” It may be very dull, but it is also very lucrative.

If you are excited about your trades, you are doing it wrong. If excitement is what you want, just go to Las Vegas – at least you get free drinks as you lose your money.

Thinking ahead of the crowd

Posted on by Anatoliy Schneider

 

When reading Price Action, one of the important concepts is to trade according to your bias before it is already obvious to everyone. You need to look for such price setups where you can already see some hints that the price is likely to move in the direction of your bias. At the same time, there is still no obvious entry setup. At this point we ask ourselves how other traders are likely to interpret the current situation.

How do you know that these early signs of reversal are not obvious to everyone else? Simple – the Market is not reacting to that setup just yet – the price is not breaking through support or resistance levels with enough conviction to show that the majority of market participants are trading in this direction.

If these signs are not obvious to everyone else, how do you know that these are correct signs? You don’t. That’s the main trick in trading – to act under uncertain circumstances. You want other traders to push the price in your direction, BUT after you are already in the market. We are seeking such a situation where not only there are enough traders who will see similar opportunity and start trading with us, but also there are enough traders who are holding the opposite position at this moment and who are ready to take a loss if the price goes against them.

If expecting a bearish move, start trading on a correction, on a bullish failure, on double top, on a bounce, etc. If you wait for the price to break a significant level, you are already too late.

The problem with waiting for too many confirmations is that we really can never be sure enough. Looking for confirmations only strengthens your desire to be right, to find a perfect opportunity. There is no perfect opportunity on the market, there is no situation when you can take a trade with absolute confidence that it is going to be a winner. But, there can be confidence that the Market is already providing a great selling/buying price and refusing it is foolish.

You see, there is nothing we can do on the market without our fellow traders. On the one hand, you need them to create liquidity and take the other side of your bias. On the other, you need them to move the price to your target after the entry – you want enough volume that will agree with your analysis as well. Whether this volume is generated through new entries aiming for profit, or taking old losses, is irrelevant.

 

“I cannot accept uncertainty”

Posted on by Anatoliy Schneider

I cannot accept uncertainty

Imagine how difficult it must be trading with such belief. In our daily lives we constantly strive for certainty, we want the outcome to always be expected, and yet there is just too much we can’t account for.

How do you behave and feel when you try trading with this belief?

  1. Afraid – The Market can take my money at any given moment!
  2. Helpless – Anything can happen and I have no control!
  3. Restless – How can I be at peace when I have no control over my trading even a minute from now?
  4. Frustrated – All my work is for nothing, because no matter what I do, I am not certain of any single trade!
  5. Miserable – I try so hard, but all I get is more frustration each day!
  6. Lost – There are no trading opportunities I can see! Any trade I consider might lose!
  7. Panicking – I just placed a trade and the Market already behaves not the way I expected!
  8. Embarrassed – All I do is making a fool of myself, I always buy at tops and sell at bottoms!
  9. Withdrawn/Apathetic – I don’t even want to look at the Market, there is no doubt it will just go against me yet again…
  10. Tired – The more I analyze, the worse results I get, my efforts – all for nothing…

Well, I don’t want to go to “Suicidal”, but it is true that our beliefs can push us into dark corners of our minds indeed.

Why are we doing this to ourselves? Why do we need to be certain of the future, when we know for a fact that it’s impossible? If you need to be certain, be certain of this:

I have no idea how the Market will look a second, a minute, an hour, a day or a year from now!

So how do you trade, when nothing is certain? Just like Bruce Kovner said in “Market Wizards”:

…making your best judgment, being wrong, making your next best judgment, being wrong, making your third best judgment, and then doubling your money.

Let’s see if your thinking changes when you consider just the opposite of the belief we started with:

I completely accept uncertainty on the market. I have no idea where the price will go.

How do you feel now?

  1. Liberated – How great it is not having to know!
  2. Concentrated – Now that I know what I don’t know, I can concentrate on my analysis better, without having to be right.
  3. Confident – Actually, now I know exactly what the outcome of my trade will be – uncertain!
  4. Relaxed – My job is to explore the opportunities, Market’s job is to show me if they work or not. I simply concentrate on my business and let the Market do its own.
  5. Amused – Each single step the Market makes is always a pleasant surprise for me – it simply teaches me and shows me where it goes.
  6. Fascinated – It is amazing how balanced, harmonious the Market is, if I but let it go!

You can have the best trading system in the world, only to be ruined by your own thinking.

True, you might not become profitable even when your beliefs are in harmony with the nature of the Market, but you will become the greatest learner, watching and following the greatest teacher there is in trading.

 

Your Diary

Posted on by Anatoliy Schneider

We can all agree about the value of books, from which we learn so much. But how about the most important book you could every have?

The book that matters most in your life can only be written by you. No one (at least of this world) knows you better than you are. Much of this knowledge is hidden deeply in your unconscious mind and it is up to you to uncover it.

I consider my habit of writing in my diary as the most important aspect of my personal, professional and spiritual development. Your diary is the best friend you can ever hope to have in this physical world and it will honestly reflect the most important lessons back to you.

How many words have you already written in your diary this year? Six months have passed, how much did you learn, how many lessons did you uncover? How many mistakes have you documented, hopefully never to be repeated again?

If your answer is “zero”, you honestly can say that most of the past six months have been wasted for your growth. You are not aware of where you were going, and therefore, you cannot know where you are. But I can assure you of this – where you’re right now, is the only place you need to be. This is your path, you had to live these last 6 months unconsciously. And reading these words right now is not an accident either. Now, you may decide to change the road you’re on, never to look back.

If you say “less than 10 000”, you may have skipped many days, or even weeks, not reflecting on your day, not being aware of your path. Or maybe you are so concise that less is really more for you – not having such gift myself, I can only congratulate you!

“About 50 000” would mean an average of about 300 words a day. A great point of balance – just enough to state yourself clearly, reflect upon your lessons and move on with your life. On a couple more difficult days, however, you may consider expanding the self-analysis.

And if your answer is “more than 100 000”, I am glad I am not alone in knowing not the limit and suffering from verbal diarrhea.

“I cannot Accept the Losses”

Posted on by Anatoliy Schneider

I cannot accept the losses

One of the biggest problems of any trader is accepting this essential part of trading business.

So how do you feel and behave when you believe this about yourself?

  1. Scared – “I cannot pull the trigger because it could end up being a loss!”
  2. Powerless – “It seems there is nothing I can do to remove the possibility of losing”
  3. Hesitated – “Something must be wrong with this trade, let’s wait another day, the Market just does not feel right”
  4. Annoyed/Frustrated – “I am trying as hard as I can, and yet here is another loss!”
  5. Angry – “Damn this Market and its stupid rules!”
  6. Reckless – “I am sure this trade is right, I will not let the Market play against me and stop me out with another spike, I will just put this trade on without a stop loss…”
  7. Inconsistent – “My trading system is just not working, I must change the rules to avoid such stupid trade in the future”
  8. Depressed – “It is all hopeless – how can I ever win if I keep allowing these losses?”
  9. Disgusted – “I swear I’ll never trade as long as I live!”
  10. Foolish/Embarrased – “I was so sure about this trade, I kept telling everyone how much money I’ll make in this one!”

Notice when you allow your brain to enter into any of these patterns of thinking. Take a look through the list, see what applies to you personally.

It is a great thing if we are able to catch ourselves breaking predefined trading rules, such as our Risk Management or Entry rules. However, it is our thinking patterns that lead to breaking the rules or to any other problems in our trading. Consider for a moment, have you ever caught yourself thinking any of the above thoughts?

Being aware of our thinking is much harder than being aware of the fact that we did not put a stop loss in a trade. If you learn catching the moment when you talk yourself into not putting the stop loss you will start working with the cause of the problem, not the effect.

So let’s reverse the original statement:

I can easily accept the losses

Now, this may not be true for you at the moment, but try to imagine how you would feel, behave and trade if this thought would be your reality.

  1. I am confident – the losses do not frighten me.
  2. I am comfortable with my trading system – I accept all parts of it
  3. I am at peace with anything the Market will do – I allow it to behave in any way it needs to.
  4. I am grateful for every opportunity to place a trade – whatever the outcome of that trade might be.
  5. I find all the circumstances helpful – any outcome is completely acceptable to me and therefore I am making myself available to learn from it.
  6. I am looking forward to getting a loss – it is the greatest signal the Market could possible offer to me.

Consider the last point – isn’t it really the greatest feedback the Market could ever possibly offer to you? The Market is not against you, it is simply there to teach. It is clearly telling you, from its perspective, that your view of the circumstances was not correct at the moment when you placed the trade. What did you believe about the current market situation just before you pulled the trigger? Take that belief, reverse it and you have the corrected point of view, available to you with Market’s help.

I you are serious about working with your beliefs, consider trying this method – Katie Byron’s “The Work”.