Here is a good video of how to counter-trend scalp a strong trend on the short term.
Friday, August 12, 2011
Wednesday, November 17, 2010
Quantitative Easing - Simply Priceless
Sit back and relax, and laugh at the most entertaining description of Quantitative Easing at least I have ever heard...
Monday, November 8, 2010
SmartPip.com New Forum
We now have a private forum just for full-time Forex traders / profiteer's. This is however a private forum, either by invite or referral from an existing member. Those of you who are initially invited already know who you are, I hope to see the rest of you there, just head to SmartPip.com and click the forum button, or the graphic on the right.
Cheers
Cheers
Tuesday, September 29, 2009
Never Trade Hungry!
September 29, 2009 by FXChris & Wife
Today's brief article may come off as a bit direct towards many of you, I am sorry about that but this directness is necessary to get the point across.
I would like to start by reciting a mantra that every FOREX Trader should repeat each night …
“IF YOU HEAR YOURSELF SAY . . . I CAN’T AFFORD NOT TO TRADE . . . THEN YOU CAN’T AFFORD TO TRADE!”
Let’s start with the most basic of concepts to protect you from finding yourself in this situation, don’t trade with money you can’t afford to lose. Seems simple enough, yet there are those of you out there who have deposited, our are considering depositing, your rent money into your FOREX account with the delusion that not only will you not lose it, but you will also increase the size of said account, so you can buy your groceries too. To put it gently, you are wrong! How can I make such an assertion with confidence? One word … FEAR! You can be the most confident, comfortable Trader alive, and if you put your last bit of savings into your trading account everything you know will fly out the window that fear just opened. When you are afraid to lose any part of your capital you will never again have the confidence to believe in your analysis or the trends that are in front of you. You will immediately become trigger shy, the enter button on your platform might as well have a skull and cross bones on it because you are not going to hit it. If you do muster up the courage to hit the button, it will definitely be late, you are absolutely going to be out of position, frantically chasing the pair, or heaven forbid reloading a loser trying to recover. Imagine, in your head, you are now listening to the Beach Boys echoing over and over WIPEOUT, because that is what has just happened to your account.
Let me repeat, do not trade with money you can not afford to lose! They say love is blind, but love has nothing on fear. If you are trading with money you are afraid to lose you might as well sit down with a blindfold on because you are not going to see the market clearly. You may not be seeing the market clearly, but what you will have a crystal clear view of are the friends that fear brings along to the party; for example, never far from fears side are apprehension, aggression, bitterness, anger, doubt and last but certainly not least there is self loathing bringing up the rear. It is simply not possible to be a productive, profitable trader if you are being ruled by any one of these emotions, yet that is where you will find yourself if you are trying to trade with money you can’t afford to lose.
Additionally, it is very important to remember that when you decide to invest in FOREX you not only have to be able to invest financially, but you must also be ready to invest your time, energy, and dedication. Again, don’t trade with money you can’t afford to lose, don’t trade if you don’t have the time it will take to learn and grow, and don’t trade if you lack the energy or dedication to give 100% of yourself to the cause.
I offer this message to you with the hope that it may give you a jolt, a reminder or a wake up call. Over the years I have been witness to this very situation with many traders. We all make choices in life which we believe to the best for the situation, and it is only with hindsight that we realize that some of the choices turned out to be tragic mistakes. While I firmly believe all mistakes are learning opportunities in disguise, I also believe that there is no need to recreate the wheel. If there is someone before you who has gone down a road and made the choices that you are considering, learn from their experience. Is there a chance that it will all work out for you in the end? Well, sure there is; however, the odds are not in your favor. Keep in mind that the statistics say that 95% of all traders will wipe out. I am hoping that this message will in some way help you to become a part of that 5% that do succeed.
Happy Trading!
Today's brief article may come off as a bit direct towards many of you, I am sorry about that but this directness is necessary to get the point across.
I would like to start by reciting a mantra that every FOREX Trader should repeat each night …
“IF YOU HEAR YOURSELF SAY . . . I CAN’T AFFORD NOT TO TRADE . . . THEN YOU CAN’T AFFORD TO TRADE!”
Let’s start with the most basic of concepts to protect you from finding yourself in this situation, don’t trade with money you can’t afford to lose. Seems simple enough, yet there are those of you out there who have deposited, our are considering depositing, your rent money into your FOREX account with the delusion that not only will you not lose it, but you will also increase the size of said account, so you can buy your groceries too. To put it gently, you are wrong! How can I make such an assertion with confidence? One word … FEAR! You can be the most confident, comfortable Trader alive, and if you put your last bit of savings into your trading account everything you know will fly out the window that fear just opened. When you are afraid to lose any part of your capital you will never again have the confidence to believe in your analysis or the trends that are in front of you. You will immediately become trigger shy, the enter button on your platform might as well have a skull and cross bones on it because you are not going to hit it. If you do muster up the courage to hit the button, it will definitely be late, you are absolutely going to be out of position, frantically chasing the pair, or heaven forbid reloading a loser trying to recover. Imagine, in your head, you are now listening to the Beach Boys echoing over and over WIPEOUT, because that is what has just happened to your account.
Let me repeat, do not trade with money you can not afford to lose! They say love is blind, but love has nothing on fear. If you are trading with money you are afraid to lose you might as well sit down with a blindfold on because you are not going to see the market clearly. You may not be seeing the market clearly, but what you will have a crystal clear view of are the friends that fear brings along to the party; for example, never far from fears side are apprehension, aggression, bitterness, anger, doubt and last but certainly not least there is self loathing bringing up the rear. It is simply not possible to be a productive, profitable trader if you are being ruled by any one of these emotions, yet that is where you will find yourself if you are trying to trade with money you can’t afford to lose.Additionally, it is very important to remember that when you decide to invest in FOREX you not only have to be able to invest financially, but you must also be ready to invest your time, energy, and dedication. Again, don’t trade with money you can’t afford to lose, don’t trade if you don’t have the time it will take to learn and grow, and don’t trade if you lack the energy or dedication to give 100% of yourself to the cause.
I offer this message to you with the hope that it may give you a jolt, a reminder or a wake up call. Over the years I have been witness to this very situation with many traders. We all make choices in life which we believe to the best for the situation, and it is only with hindsight that we realize that some of the choices turned out to be tragic mistakes. While I firmly believe all mistakes are learning opportunities in disguise, I also believe that there is no need to recreate the wheel. If there is someone before you who has gone down a road and made the choices that you are considering, learn from their experience. Is there a chance that it will all work out for you in the end? Well, sure there is; however, the odds are not in your favor. Keep in mind that the statistics say that 95% of all traders will wipe out. I am hoping that this message will in some way help you to become a part of that 5% that do succeed.
Happy Trading!
Wednesday, September 16, 2009
Over-Leverage, just say no!
September 16, 2009 by FXChris
Fantastic representation of over-leverage use,
don't let this happen to you!
Thank you DukasCopy for the comedy.
Fantastic representation of over-leverage use,
don't let this happen to you!
Thank you DukasCopy for the comedy.
Saturday, September 12, 2009
The Most Ignored Secret of FOREX Trading Success
September 12, 2009 by FXChris & Wife
Here we are, trading every single day in front of our monitor array, longing, shorting, scalping, swinging, among other things, and time inevitably goes on. It is very easy to get so wrapped up in our trading that we find ourselves exhausted at the end of a trading session, and even more so at the end of a trading week. I know it happens to me all the time. However, there is still some very important work that needs to be done in order to actually have a chance to improve from day to day, week to week, month to month. Let’s dive into this head first shall we?
As a FOREX Trader it is of the utmost importance to never confuse what we will call ‘survival of the fittest’ with the concept of ‘only the strongest survive’; because, this concept is indeed a flawed one. You can be an extremely intelligent, agile, strong, and virile species; however, if you refuse to make the necessary adjustment as the situation and environment change around you, you will not survive. Failing to move to a more fruited plain when the food resources run dry will lead to starvation; likewise, failing to seek higher ground when the floods come will lead to drowning. It is not necessary to be the biggest, smartest, or strongest to be the fittest. To become the fittest survivor, you need the ability to analyze, acknowledge, accept and adapt. With these four basic traits you will not only be able to survive, but you will ultimately be able to thrive.
This article will look at seven questions which you can use to aid you in the process of adapting your FOREX trading practices. You should ask yourself these questions at the end of every trading week, and month, and actually write down, or document in some fashion detailed answers. Do NOT cheat yourself on this weekly/monthly trading ‘review’ or you will seriously regret it in the long run.
First, ask yourself “what was I most proud of this week?” It is wise to start with a question that will increase your self respect and confidence as a FOREX Trader, because as you move forward you will need this foundation of strength, as well as, a great deal of faith in yourself to support you through the remaining questions. Equally important, as you answer this question, is to have a clear understanding of the difference between pride and arrogance. According to Webster’s dictionary pride is, in part, the delight or elation arising from some act, possession, or relationship. On the other hand, arrogance is defined as an attitude of superiority manifested in an overbearing manner or in presumptuous claims or assumptions. Taking pride in what you do is your private motivator; it is you personal relationship with your achievements, there is never a reason to shout out how awesome you are for the entire world to hear. If you have pride in what you do and what you have accomplished, then this will be evident in the results that are available for those who really matter to see.
Notably, there should never be a week when your answer to this first question is nothing. You should always strive to find at least one thing that you can take pride in from the week that has just passed. Truly believing that you have absolutely no reason to feel proud about anything that occurred throughout the week will prove to be devastating to your forward progress as a trader, because it will plant the seed of self doubt and self loathing which will ultimately affect your ability to trade confidently in a negative way. So, always seek out some positive aspect of your week. As an example, suppose it has been a particularly bad trading week; nothing seemed to go your way, no matter what you did it never worked out the way you planned. All the same, you still got up each day and sat down in front of your computer and put the time in to analyze the market and perhaps even entered a trade or fifty. Well, the way I see it, you should take pride in the fact that you continued to show up, you stuck with it and went back another day to try again.
Part and parcel with the first question is the second, and that is “what was my biggest accomplishment this week?” This is not necessarily the same as what you are most proud of, although it could be. What is that one thing that has been giving you a devil of a time? Maybe, it is the inability to pull the trigger. Yet, this week you not only planned a profitable trade, overcame your fear and managed to enter in a timely fashion; but also, you accomplished completing this difficult task at least once each day of the week. Now, that is definitely an accomplishment worthy of recognition.
Now, let’s take a moment and talk about time. Time could be considered one of life’s most precious gifts, it always moves forward never backwards, you can not stop it, nor can you expect it to wait for you. Therefore, it is crucial that you not waste one moment of time, particularly when it comes to your trading, bringing us to our next weekly question, “what was my biggest waste of time this week?” This can be a difficult question to answer because we don’t always recognize or wish to acknowledge what may be a waste of time. What could be considered a waste of time when trading? Perhaps you spent your week waiting for someone to tell you when to enter or exit your trades. Yes, this is definitely a big waste of time because you personally did not grow as a trader. Your skills did not improve, you learned nothing of the how’s and why’s of trigger pulling. Another waste of time would be obstinately waiting on a trade opportunity with a pair that is experiencing absolutely no volatility. Crosby Stills and Nash put it perfectly when they said “If you can’t be with the one you love, love the one you’re with.” Don’t get tunnel vision, be open minded and your time will be spent more productively.
The time must come when the questions you are asking yourself become harder to deal with, start by asking yourself “what was hard for me this week?” When answering this question you absolutely must include why it was hard for you. Recognizing why something was hard for you is significantly more important that merely saying to yourself ‘wow that was hard’ and moving on. If you don’t take the time to analyze why or how something was hard for you, you will never be able to improve or correct what you were doing to make the task in question less difficult if not downright easy for you. Honesty is crucial when answering your questions; no one is going to judge you, especially not yourself. So look in the mirror and find all the faults, weaknesses, and difficulties that you can. Call them out into the open freely so that you have nothing hiding in the closet that could hamper your ability to thrive as a FOREX trader. If all the cards are on the table then you will be able to improve and grow each and every day.
The next question could conceivable be the most difficult to answer, that is “what did I do this week that made me ashamed?” Being the polar opposite of pride, shame is perhaps the most difficult emotion to come face to face with, in an open and honest manner. Yet, if you don’t acknowledge what you are ashamed of you will never be able to accept it or adapt your trading practices to overcome it. Walter Anderson, the American painter and CEO of Parade Magazine once said, “our lives improve only when we take chances and the first and most difficult risk we can take is to be honest with ourselves.” Positively, you must risk being brutally honest with yourself for the journey, surviving and thriving, in the FOREX industry to be a successful one. Equally, you have to maintain the insight and strength to recognize that you are able to make the necessary changes in your practices to move past this action. Consequently, if you are unable to move past moments like these in a productive manner you will be condemned to a future of failed emotionally motivated trades for the remainder of your trading career, which will undoubtedly be a very short one.
The significant correlation between the questions that have been asked so far is that the results can considerably affect your answer to the next question, “What have I done to get closer to my life goals this week?” Everything you do, no matter if the results are positive or negative, affects your ability to reach your life goals. Understandably, for many, the idea of a life goal is overwhelming, to say the least, and if something is overwhelming the likelihood that it will be ignored is increased. When creating your life goals take the time to break them down into smaller more achievable goals. Take the life goal and create a ten year goal that will help you to achieve it. After that, create a five year goal, a one year goal, one month, one week, one day etc. By making the goals smaller they become easier to visualize and accomplish, and before you know it you are ticking off achievement after achievement, and you have reached your life goal. It is vital that you review and update your goals periodically so that you are continually learning and growing in the direction that you see yourself going.
Without fail the most important question you must ask yourself each and every week is “WHAT WILL I TRY TO IMPROVE ON NEXT WEEK?” To quote Henry Ford “Life is a series of experiences, each one of which makes us bigger, even though sometimes it is hard to realize this. For the world was built to develop character, and we must learn that the setbacks and grieves which we endure help us in our marching onward.” Without the struggles or occasional faltering step there would be nothing to let us know when we are doing the right thing or heading in the right direction. You see, when we make errors we have the opportunity to learn something new, try something different. It is this ability to reason and react that sets us apart from so many other creatures on this planet. Therefore, you should embrace the chance to review your actions and make the needed changes so that you are always moving forward and improving on everything you do. It is important that you make your plans not only definable but also achievable, for heaven sakes don’t make plans that you will never have a chance to follow through with. There is nothing worse than an over inflated plan that is unobtainable to crush your motivation and determination. Furthermore, be steadfast in your communication with yourself. Be clear and concise about what you are going to work on and how you are going to work on it. The ambiguity crutch will not support you when you become injured it will only run interference for all the bad habits just waiting to wipe out your capital account.
The questions that we have discussed here are from a discussion given by an extremely respected and gifted FOREX Trader and Mentor, whom we are privileged to call friend, thank you for your contribution to the FOREX community.
These questions are an excellent starting point for you to use each week when you are going through and evaluating your performance. This is not meant to be an exercise in self abasement, it is meant to strengthen you as a trader. There is no better day than today to get started in a new direction, so long as that direction has a clear destination in view.
Safe Travels Fellow FOREX Trader’s, may your journey be both gratifying and profitable.
Here we are, trading every single day in front of our monitor array, longing, shorting, scalping, swinging, among other things, and time inevitably goes on. It is very easy to get so wrapped up in our trading that we find ourselves exhausted at the end of a trading session, and even more so at the end of a trading week. I know it happens to me all the time. However, there is still some very important work that needs to be done in order to actually have a chance to improve from day to day, week to week, month to month. Let’s dive into this head first shall we?
As a FOREX Trader it is of the utmost importance to never confuse what we will call ‘survival of the fittest’ with the concept of ‘only the strongest survive’; because, this concept is indeed a flawed one. You can be an extremely intelligent, agile, strong, and virile species; however, if you refuse to make the necessary adjustment as the situation and environment change around you, you will not survive. Failing to move to a more fruited plain when the food resources run dry will lead to starvation; likewise, failing to seek higher ground when the floods come will lead to drowning. It is not necessary to be the biggest, smartest, or strongest to be the fittest. To become the fittest survivor, you need the ability to analyze, acknowledge, accept and adapt. With these four basic traits you will not only be able to survive, but you will ultimately be able to thrive.
This article will look at seven questions which you can use to aid you in the process of adapting your FOREX trading practices. You should ask yourself these questions at the end of every trading week, and month, and actually write down, or document in some fashion detailed answers. Do NOT cheat yourself on this weekly/monthly trading ‘review’ or you will seriously regret it in the long run.
First, ask yourself “what was I most proud of this week?” It is wise to start with a question that will increase your self respect and confidence as a FOREX Trader, because as you move forward you will need this foundation of strength, as well as, a great deal of faith in yourself to support you through the remaining questions. Equally important, as you answer this question, is to have a clear understanding of the difference between pride and arrogance. According to Webster’s dictionary pride is, in part, the delight or elation arising from some act, possession, or relationship. On the other hand, arrogance is defined as an attitude of superiority manifested in an overbearing manner or in presumptuous claims or assumptions. Taking pride in what you do is your private motivator; it is you personal relationship with your achievements, there is never a reason to shout out how awesome you are for the entire world to hear. If you have pride in what you do and what you have accomplished, then this will be evident in the results that are available for those who really matter to see.
Notably, there should never be a week when your answer to this first question is nothing. You should always strive to find at least one thing that you can take pride in from the week that has just passed. Truly believing that you have absolutely no reason to feel proud about anything that occurred throughout the week will prove to be devastating to your forward progress as a trader, because it will plant the seed of self doubt and self loathing which will ultimately affect your ability to trade confidently in a negative way. So, always seek out some positive aspect of your week. As an example, suppose it has been a particularly bad trading week; nothing seemed to go your way, no matter what you did it never worked out the way you planned. All the same, you still got up each day and sat down in front of your computer and put the time in to analyze the market and perhaps even entered a trade or fifty. Well, the way I see it, you should take pride in the fact that you continued to show up, you stuck with it and went back another day to try again.
Part and parcel with the first question is the second, and that is “what was my biggest accomplishment this week?” This is not necessarily the same as what you are most proud of, although it could be. What is that one thing that has been giving you a devil of a time? Maybe, it is the inability to pull the trigger. Yet, this week you not only planned a profitable trade, overcame your fear and managed to enter in a timely fashion; but also, you accomplished completing this difficult task at least once each day of the week. Now, that is definitely an accomplishment worthy of recognition.
Now, let’s take a moment and talk about time. Time could be considered one of life’s most precious gifts, it always moves forward never backwards, you can not stop it, nor can you expect it to wait for you. Therefore, it is crucial that you not waste one moment of time, particularly when it comes to your trading, bringing us to our next weekly question, “what was my biggest waste of time this week?” This can be a difficult question to answer because we don’t always recognize or wish to acknowledge what may be a waste of time. What could be considered a waste of time when trading? Perhaps you spent your week waiting for someone to tell you when to enter or exit your trades. Yes, this is definitely a big waste of time because you personally did not grow as a trader. Your skills did not improve, you learned nothing of the how’s and why’s of trigger pulling. Another waste of time would be obstinately waiting on a trade opportunity with a pair that is experiencing absolutely no volatility. Crosby Stills and Nash put it perfectly when they said “If you can’t be with the one you love, love the one you’re with.” Don’t get tunnel vision, be open minded and your time will be spent more productively.
The time must come when the questions you are asking yourself become harder to deal with, start by asking yourself “what was hard for me this week?” When answering this question you absolutely must include why it was hard for you. Recognizing why something was hard for you is significantly more important that merely saying to yourself ‘wow that was hard’ and moving on. If you don’t take the time to analyze why or how something was hard for you, you will never be able to improve or correct what you were doing to make the task in question less difficult if not downright easy for you. Honesty is crucial when answering your questions; no one is going to judge you, especially not yourself. So look in the mirror and find all the faults, weaknesses, and difficulties that you can. Call them out into the open freely so that you have nothing hiding in the closet that could hamper your ability to thrive as a FOREX trader. If all the cards are on the table then you will be able to improve and grow each and every day.
The next question could conceivable be the most difficult to answer, that is “what did I do this week that made me ashamed?” Being the polar opposite of pride, shame is perhaps the most difficult emotion to come face to face with, in an open and honest manner. Yet, if you don’t acknowledge what you are ashamed of you will never be able to accept it or adapt your trading practices to overcome it. Walter Anderson, the American painter and CEO of Parade Magazine once said, “our lives improve only when we take chances and the first and most difficult risk we can take is to be honest with ourselves.” Positively, you must risk being brutally honest with yourself for the journey, surviving and thriving, in the FOREX industry to be a successful one. Equally, you have to maintain the insight and strength to recognize that you are able to make the necessary changes in your practices to move past this action. Consequently, if you are unable to move past moments like these in a productive manner you will be condemned to a future of failed emotionally motivated trades for the remainder of your trading career, which will undoubtedly be a very short one.
The significant correlation between the questions that have been asked so far is that the results can considerably affect your answer to the next question, “What have I done to get closer to my life goals this week?” Everything you do, no matter if the results are positive or negative, affects your ability to reach your life goals. Understandably, for many, the idea of a life goal is overwhelming, to say the least, and if something is overwhelming the likelihood that it will be ignored is increased. When creating your life goals take the time to break them down into smaller more achievable goals. Take the life goal and create a ten year goal that will help you to achieve it. After that, create a five year goal, a one year goal, one month, one week, one day etc. By making the goals smaller they become easier to visualize and accomplish, and before you know it you are ticking off achievement after achievement, and you have reached your life goal. It is vital that you review and update your goals periodically so that you are continually learning and growing in the direction that you see yourself going.
Without fail the most important question you must ask yourself each and every week is “WHAT WILL I TRY TO IMPROVE ON NEXT WEEK?” To quote Henry Ford “Life is a series of experiences, each one of which makes us bigger, even though sometimes it is hard to realize this. For the world was built to develop character, and we must learn that the setbacks and grieves which we endure help us in our marching onward.” Without the struggles or occasional faltering step there would be nothing to let us know when we are doing the right thing or heading in the right direction. You see, when we make errors we have the opportunity to learn something new, try something different. It is this ability to reason and react that sets us apart from so many other creatures on this planet. Therefore, you should embrace the chance to review your actions and make the needed changes so that you are always moving forward and improving on everything you do. It is important that you make your plans not only definable but also achievable, for heaven sakes don’t make plans that you will never have a chance to follow through with. There is nothing worse than an over inflated plan that is unobtainable to crush your motivation and determination. Furthermore, be steadfast in your communication with yourself. Be clear and concise about what you are going to work on and how you are going to work on it. The ambiguity crutch will not support you when you become injured it will only run interference for all the bad habits just waiting to wipe out your capital account.
The questions that we have discussed here are from a discussion given by an extremely respected and gifted FOREX Trader and Mentor, whom we are privileged to call friend, thank you for your contribution to the FOREX community.
These questions are an excellent starting point for you to use each week when you are going through and evaluating your performance. This is not meant to be an exercise in self abasement, it is meant to strengthen you as a trader. There is no better day than today to get started in a new direction, so long as that direction has a clear destination in view.
Safe Travels Fellow FOREX Trader’s, may your journey be both gratifying and profitable.
Sunday, August 30, 2009
Leaked Video - Paul Tudor Jones- Trading Documentary
August 30, 2009 by FXChris
Back in 1987 PBS apparently ran a special series on Traders. I am unsure how many entries were in this series, if anyone has that information by all means please share it. One of these entries, however, I had heard about a couple of years ago but could not find the video anywhere on the net, it was as it had just vanished. It is just about an hour long video of a couple of trading days in the life of Paul Tudor Jones.
Wikipedia entry - http://en.wikipedia.org/wiki/Paul_Tudor_Jones
Forbes 400 Richest - http://www.forbes.com/lists/2008/54/400list08_Paul-Tudor-Jones-II_L6IH.html
Paul is a very successful Hedge fund manager. He trades Stocks, Forex, Futures, Commodities, you name it. He made $750 million in 2006, and predicted the 1987 stock market crash as you will see a little bit of in the video. He was also featured in Jack Swager's book Market Wizards: Interviews with Top Traders, which is a wonderful book of interviews of successful traders.
This video has recently popped back up on the web, which I thank fellow trader Darko for bringing to my attention. Instead of linking you an outside source for the video, I chose to host it myself here at SmartPip.com, should it ever try and vanish from the internet again.
This video is a wonderful insight of the trader's mindset that many do not ever get to see. Sure it is old news now, but the same intuition and emotions that you see him deal with in this video are still extremely relevant in today's trading environment. If you are a trader or working on becoming one, I highly recommend you watch this in it's entirety.
I truly hope you enjoy this video as I did, grab a cup of java, and watch it as much as you like, just click the picture of Paul to head to the video. I love the "Losers Average Losers" comment on his wall here by the way. If you like this video, please take a moment to leave any quick comment here on the blog. Thanks =)
ps. Take note that in one part of the video Paul talks about helping inner city children get into college. With a little research I found very recent talk that Paul gave where he discusses how that worked out. He calls it the Perfect Failure. If you wish to read this, please look for the PDF link right under the video, or just click the PDF logo if you have already seen the video.
Please share this link via your Facebook, Twitter etc., so that other traders can possibly benefit from Paul's video.
Back in 1987 PBS apparently ran a special series on Traders. I am unsure how many entries were in this series, if anyone has that information by all means please share it. One of these entries, however, I had heard about a couple of years ago but could not find the video anywhere on the net, it was as it had just vanished. It is just about an hour long video of a couple of trading days in the life of Paul Tudor Jones.
Wikipedia entry - http://en.wikipedia.org/wiki/Paul_Tudor_Jones
Forbes 400 Richest - http://www.forbes.com/lists/2008/54/400list08_Paul-Tudor-Jones-II_L6IH.html
Paul is a very successful Hedge fund manager. He trades Stocks, Forex, Futures, Commodities, you name it. He made $750 million in 2006, and predicted the 1987 stock market crash as you will see a little bit of in the video. He was also featured in Jack Swager's book Market Wizards: Interviews with Top Traders, which is a wonderful book of interviews of successful traders.
This video has recently popped back up on the web, which I thank fellow trader Darko for bringing to my attention. Instead of linking you an outside source for the video, I chose to host it myself here at SmartPip.com, should it ever try and vanish from the internet again.
This video is a wonderful insight of the trader's mindset that many do not ever get to see. Sure it is old news now, but the same intuition and emotions that you see him deal with in this video are still extremely relevant in today's trading environment. If you are a trader or working on becoming one, I highly recommend you watch this in it's entirety.
I truly hope you enjoy this video as I did, grab a cup of java, and watch it as much as you like, just click the picture of Paul to head to the video. I love the "Losers Average Losers" comment on his wall here by the way. If you like this video, please take a moment to leave any quick comment here on the blog. Thanks =)
ps. Take note that in one part of the video Paul talks about helping inner city children get into college. With a little research I found very recent talk that Paul gave where he discusses how that worked out. He calls it the Perfect Failure. If you wish to read this, please look for the PDF link right under the video, or just click the PDF logo if you have already seen the video.
Please share this link via your Facebook, Twitter etc., so that other traders can possibly benefit from Paul's video.
Saturday, August 22, 2009
A Message From the Forex Trader's Wife...
August 22, 2009 by FXWife
To start, as a FOREX Trader’s Wife I will be so bold as to speak for all those who fall into my category; those who are the husband, wife, partner or significant other of a FOREX Trader, or stocks/options trader as well. This message could really come from anyone who has intimate knowledge, of who you are, someone who is personally invested in your life and well being. This message may seem simple, and easily dismissed; but, it is very important for you to understand. So here is to hoping that you are both open and receptive to what we are about to say to you.
WE KNOW MORE THAN YOU THINK WE DO !
Admittedly, we are clueless, for the most part, when we look at all those fancy charts of yours. No, we may not know exactly what a Bollinger band is, or the importance of a stochastic cross. Nor could we possibly fully embrace the elation felt when seeing a carefully planned, successfully executed trade run to its fullest potential without drawbacks; also, it is beyond our scope of understanding to clearly empathize with the horror of knowing that our capital account has just taken a severe hit due to our inability to let go of a trade that has clearly gone to hell in a hand basket. However, what we do know is you, both inside and out. The good, the bad, and the ugly, we are intimately in tune with who you are; and we are able to read those small non verbal cues that let us know what you are experiencing.
YOU ARE NOT IN THIS ALONE!
Seriously, do you think the weight of the entire world is on your shoulders alone? We are in this with you, so have a bit of consideration and communicate with us. We know when you are having a great trading day; more importantly, we know when you are having a bad trading day. Honestly, it is no secret when things are going poorly for you in the market, so if we come to you and offer you a word of encouragement, or support don’t go dismissing us arbitrarily, it may be just what you need in that moment of self loathing and self doubt. Every now and then we understand the importance of a strong dose of confidence boosting and how it can help to realign you with yourself and your positive attitude. Conversely, we also know when it is time for a good swat on the back of the head to bring you back down off that cloud your floating on. That is our job; we are here for support and understanding; as well as harsh truth and straight talk.
SO HOW ABOUT A LITTLE TRUST ?
Trust that we are not going to judge you when you mess up; also, trust that we know when the time has come for you to step away, and heed our advice and step away. Trust that we will be open to your need of reinvestment capital when you have a devastating trading day. However, trust that when we ask you what you are going to do to improve, that we are only looking to help you move forward and not dwell on the previous mistakes. In return, we will trust that you are working confidently on always doing the best you can with what is admittedly an extremely difficult profession. We will trust that you are not holding back any bad news from us that will hit us like a steam roller when you hit rock bottom.
TOGETHER
Together we will always be stronger and more confident than we are on our own. Together we can make this journey a joyful and profitable adventure.
Together we are in this for the good and the bad. Now let's make some pips!
Sunday, August 9, 2009
SmartPip.com blog introduction and purpose...
August 9, 2009
Hello everyone!
My name is Chris, and I am a full time currency trader in the FOREX (Foreign Exchange Market). I began trading in September 2005, and had quite a tumultuous beginning to my Forex career. It was not until I battled the emotional demons within that I was able to realize consistent success in the Forex marketplace. It does not take one very long to realize that this trading business is a far more involved, intricate, complicated, and challenging endeavor than most take it for when first introduced to it. Forex absolutely demands your complete commitment if you wish to ever have any hope of long term success.
With that said, me and my wife chose to start this blog at SmartPip.com. I have lived through a lot (and so has my wife), first bad, then fantastic, in the Forex world. I have now been a full time Forex trader for three years or so since posting this introduction. I plan to use some of the growing pains I went through to create in-depth articles along with my wife, who is far better at wording my thoughts, that might help others avoid the some of the same pitfalls I endured. Forex is a lonely business, you need to know you are not the only soul on the other end of that chart you are looking at. Also, I wish to share many of the fantastic resources out there that helped me along the way. All in hopes of helping, even if only a few of you potential traders out there, find your path to success.
Hey make no mistake about it... Forex is HARD, and you must commit long term to make it work. There is a reason most people lose in this business, they do not put in the necessary time and work to get through to the other side. This blog will NOT be here to 'Teach' you how to trade Forex, nor will I go over any specific trades, or methodology. There are more than enough resources on the internet, and in print, to fulfill that need. Consider SmartPip.com more as an inside look of a full time traders mindset, good and bad, over the course of several years, for you to possibly connect with and relate to.
I do hope you will gain some help from what we post on this blog in the future. I cannot promise extremely regular intervals of updates, but I will promise that everything that is posted will be of value to a 'real' trader.
Best Regards,
Chris
Hello everyone!
My name is Chris, and I am a full time currency trader in the FOREX (Foreign Exchange Market). I began trading in September 2005, and had quite a tumultuous beginning to my Forex career. It was not until I battled the emotional demons within that I was able to realize consistent success in the Forex marketplace. It does not take one very long to realize that this trading business is a far more involved, intricate, complicated, and challenging endeavor than most take it for when first introduced to it. Forex absolutely demands your complete commitment if you wish to ever have any hope of long term success.
With that said, me and my wife chose to start this blog at SmartPip.com. I have lived through a lot (and so has my wife), first bad, then fantastic, in the Forex world. I have now been a full time Forex trader for three years or so since posting this introduction. I plan to use some of the growing pains I went through to create in-depth articles along with my wife, who is far better at wording my thoughts, that might help others avoid the some of the same pitfalls I endured. Forex is a lonely business, you need to know you are not the only soul on the other end of that chart you are looking at. Also, I wish to share many of the fantastic resources out there that helped me along the way. All in hopes of helping, even if only a few of you potential traders out there, find your path to success.
Hey make no mistake about it... Forex is HARD, and you must commit long term to make it work. There is a reason most people lose in this business, they do not put in the necessary time and work to get through to the other side. This blog will NOT be here to 'Teach' you how to trade Forex, nor will I go over any specific trades, or methodology. There are more than enough resources on the internet, and in print, to fulfill that need. Consider SmartPip.com more as an inside look of a full time traders mindset, good and bad, over the course of several years, for you to possibly connect with and relate to.
I do hope you will gain some help from what we post on this blog in the future. I cannot promise extremely regular intervals of updates, but I will promise that everything that is posted will be of value to a 'real' trader.
Best Regards,
Chris
Understanding the magnitude of the multiple facets of managing your risk … yes, it is that important.
August 9, 2009 by FXChris & Wife
Each day you wake up in the morning and immediately begin to face the many risks that are present in your lives. From the very start you face small risks that could prove to be the start of a rough day; for example, you risk stepping onto the cold floor, stubbing your toe on the edge of the dresser, slipping in the bathtub, or cutting yourself shaving, Generally, none of these risks may seem to be particularly alarming to you as a singular event; however, what you need to consider is not only do they exist, but any one of them will set the tone for whether your day proceeds in a positive or negative manner when it comes to your disposition; and that one small seemingly insignificant event could be the trigger to what in the end turns out to be a nightmare of a day. With that said, it is extremely important as currency traders to understand that forex trading is really no different given that there are inherent risks that come from trading currencies. It is indeed, the very nature of the beast that is forex to be full of risks that are to be anticipated and sometimes manipulated; additionally, there are the unforeseen, unpredictable and uncontrollable risks that come from the fact that the world is a living, breathing force that is ever changing. Furthermore, it is imperative that as traders you not only understand that there are a multitude of risks to be faced each trading day, but that you embrace this fact firmly, since until you do there is no hope of your being able to discover your personal risk tolerance level, or perform any type of risk assessment, which could likely be the most important aspect of your trading, since without the proper assessment of risk there can be no effective form of risk planning or management.
Notably, proper risk management is an integral part of any trade plan, whether you are trading long or short, or you are a carry trader or a scalp trader, the management of your risk can not be successfully accomplished until you have a clear and concrete understanding of what your risk tolerance level is. In the world of foreign exchange trading the term risk tolerance means your ability to handle any type of decline in your trade fund account. Realistically, it is absurd to think that there will never be a time when your trade account sees a decline. It does not matter who you are or how good you are at choosing, planning and executing your trades, there are always going to be circumstances which are beyond your control; therefore, it must be a critical part of your trading routine to know with one hundred percent certainty what amount of money you are willing to accept as a loss. This leads naturally to the question, how is your tolerance of risk determined?
First, it is especially important to understand that risk tolerance is not a fixed amount that is etched in stone. Your tolerance level, whatever it may be, must be reevaluated and readjusted when the circumstances warrant it. Now back to the question at hand, how is your risk tolerance level determined? This is a question that can be answered best by you. Yes, there are professionals out there who make their living by providing guidance in this area; however, it is more often than not the case that you yourself are the one that has the clearest understanding of what is a reasonable and acceptable level of tolerance when it comes to any level of fund depreciation. The challenges typically come from a person’s inability to be completely honest about who they really are, therefore there is the tendency to over or under estimate your specific level of tolerance.
Vitally, you must be completely honest with yourself about who you are and what personality traits make you uniquely you. Own your quarks and embrace them whole heartedly, given that if you don’t the consequences of miscalculating your risk tolerance level could singly destroy your ability to execute your trades, thereby prohibiting any gains in profit; or worse, it could wipe your trading funds out completely. Ask yourself, do you tend to be driven by fear or greed when it comes to your money. Do you thrive on taking risks in your daily life or are you so overly cautious that you never leave the safety of your home. If you enjoy the occasional game of poker, are you constantly trying to get all your chips in the pot or are you hording them so tightly that you are getting blinded to death. You see, there is no wrong answer, you are who you are and there is absolutely nothing wrong with that. What is key though is being completely honest about who you are so that you can make the necessary adjustments in your trade plans to protect yourself from any potential harm, and this is what the determination of a proper risk tolerance level can do for you, protect you from any potential harm.
In addition to the consideration of your personality traits, you need to have a firm understanding of the value of your forex fund account. You have to know positively what the amount of money available for trading is without worrying about any other financial obligations; this money should be considered risk capital. Moreover, it is crucial to be aware of your forex account value because as your account value increases your level of risk tolerance should decrease proportionately. For example, if you are trading a mini account with $10,000.00 and you have decided that you are willing to lose no more than $300.00 on any one trade then you have a risk tolerance level of three percent; however, after slowly increasing the value of your forex account over time to a respectable $1,000,000.00 that three percent now becomes a staggering $30,000.00 loss. Now, to be honest, if you have a disposable income of $1,000,000.00 you may not think that $30,000.00 is that bad of a loss; never the less, it should stand to reason that there is no reason to be risking that large a part of your funds on any one given trade. Sensibly, you should be decreasing that level of risk to say .05 percent by this time, because frankly how much money does one person genuinely need to not only survive, but to maintain a particularly comfortable lifestyle?
This brings us to the practice of risk assessment, which according to businessdictionary.com “involves the identification, evaluation, and estimation of the level of risks involved in a situation, their comparison against benchmarks or standards, and the determination of an acceptable level of risk.” This is an excellent description of what risk assessment is, nevertheless it does nothing to help you understand why it is so critical to perform this assessment, or more importantly how to make this assessment so that you can successfully manage your trades.
Plainly put, the question of why assess your risk comes down to two simple words, margin call. For those of you who have not experienced this calamitous moment in your trading career, it is best likened to H.G. Wells Time Machine, where the scientist sits upon the time machine watching as the rest of the world passes before his eyes at an unimaginable pace, saddened and sickened by what he is witnessing, yet he is powerless to change any of the events that are going on around him. What is a margin call? It is likely to be the end of countless forex trading careers; more specifically, it is the point in time when your trading account equity is equal to or exceeded by the amount of used margin.
The margin call occurs in your margin account due to the fact that you are using the leverage graciously being loaned to you by your broker to achieve the prodigious profits that all forex traders dream of. In today’s trading market the amount of leverage granted by the individual brokers varies anywhere from 100:1, 200:1 or even 400:1 depending on several different factors which vary from brokerage firm to brokerage firm. The key to leverage is to remember the simple mantra, just because you can doesn’t mean you should. Meaning, just because you can trade at leverage of 200:1 thereby augmenting your available capital to achieve those pie in the sky profits that you hear of, doesn’t mean you should risk your entire fund account to do so. You see, no matter how tempting it may be, the risk is in no way worth the gamble; and it is indeed a gamble, because as we discussed earlier there are always going to be the unexpected volatile swings in the market that you have no control of and cannot recover from fast enough to stop the devastation.
Having an understanding and respect for the proper amount of leverage allows you to clearly and judicially put into place the protection mechanisms necessary for good risk management. Considerably, one of the best protective mechanisms available to the educated trader is the placement of the stop loss. Simply, the stop loss is exactly as its name implies, it is a point in the trade where you place a stop behind the support or resistance so you can comfortably let the trade work its way to fruition without exceeding you predetermined risk tolerance level, without staring at the screen with eyes the size of saucers, holding your breath to the brink of unconsciousness, or on the verge of a mental break down due to the stress that comes with uncertainty. Consequently, by not understanding the enormity of the danger that comes with this uncertainty, you open the door to emotional trading, and that is a house guest that will definitely overstay its welcome. When you understand and respect the risk and have a predetermined level of tolerance to this risk you can employ the tools that are available to you that will all but eliminate the deadly emotional trader who is hiding in the dark recesses of your soul. Without this predetermined level you release the fiend that is emotional trading allowing the possibility for chasing price, over-leveraging, eliminating stops, revenge trading doubling up, living in denial and having no diary or journal, and worst of all having NO TRADE PLAN! Your sign now reads: “Hello, my name is Tom the Trader and I am a proud member of the 95% club, I have proudly joined 95% of the traders out there who fail as a foreign exchange trader, and now I am off to see if Joe the Plumber has any job openings”. Don’t join Tom in the 95% club, follow the example of Trader B and use the properly placed stop illustrated below, so that you don’t miss out on the potential for profit like Trader A who was stopped out due to the fact that while he did put in a stop, he was driven by the money not the proper technical support which caused him to get stopped out before realizing any profit; thereby, exsaserbating the potential for more emotional trades.
In the end, you can now see that it is essential to understand that with a predetermined risk tolerance level, combined with diligent risk assessment you will be able to manage the potential risk to your trading account with confidence and effortlessness, allowing your trading to expand to levels that you have heard others speak of but to date have been completely clueless as to how they were achieving such rewards. By understanding the importance of risk acceptance, tolerance, and management you can go on to confidently adjust your trade amount to fit the plan, not to adjust the plan to fit the trade. In doing so you are eliminating any possibility of emotional trading where you freeze on the trigger preventing profit, that you deny the fact that your trade is a loser and let the profit disappear, or perhaps worst of all, that you refuse to accept any loss what so ever and continue to throw more money into the losing trade anticipating a different result. It is of the utmost urgency that you understand to be a successful trader you must first and foremost preserve your capital, then capital acquisition, and finally capital appreciation. This can all start with the acknowledgment that risk is indeed inevitable and it is better to be prepared for its arrival than to be blindsided by it when it shows up, because like a hurricane in August it will arrive with deadly force.
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