Larry Williams published a description of a short-term trading method in 1979, a valuable one that is based on a pattern observed often in markets. The methodology was presented in his book, How I Made One Million Dollars Trading Commodities. It is still used by many traders with varying adaptations. The OOPS signal is a gap trading method that fades the direction of the opening gap. It is named thus, according to Williams, because when a broker would report to his clients that they were stopped out, he would call them and say, “Oops, we lost.” Read the rest of this entry »
1) Knowledge Deficiency – Most new FOREX traders don’t take the time to learn what drives currency rates (primarily fundamentals). When news or a statement is due out they must close out their positions and sit out the best trading opportunities. They are taught to only trade after the market calms down. So essentially they miss the whole move and then trade the random noise that follows a fundamental price move. Just think for a moment about technically trading the aftermath of a price move; there is no potential.
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At some point, if they last long enough, all traders discover that successful trading is not the inevitable result of a good trading strategy or system. If all we needed was a good system or indicator we would all be successful traders. Yet clearly we are not, far from it, there are very few traders making their living consistently from the markets.
Technical analysis is a vast and well researched subject. Many minds have poured their heart and soul into searching for the holy grail of trading: the system, strategy or indicator that will yield to them unlimited wealth and glory. Yet with all this depth of knowledge readily available, trading profits remain as elusive as ever.
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A large number of traders that I work with express the feeling that they are somehow sabotaging themselves: repeating the same mistakes day after day, giving back valuable profits in a fraction of the time it took to earn them. Their intuition is that there is some kind of pattern to what they’re doing; they’re repeating the same mistakes again and again. They realize that they’re not mentally ill and don’t have a history of out-of-control behavior, so they are understandably confused as to why they can’t stop shooting themselves in the foot.
In this article, I will summarize a few ideas central to brief therapy, a discipline which uses very active techniques to accelerate change processes that might otherwise take months or years. Brief therapies have been subjected to considerable research scrutiny, and the consensus is that they are highly effective in changing emotional and behavioral patterns over a period of weeks, especially among people who do not have chronic, diagnosable mental health problems. A summary of this research, as well as a thorough description of the how-to’s of brief therapies, is included in a text for beginning therapists that I recently co-edited. Applications of brief therapy to trading can be found on my free website and in my book The Psychology of Trading. All of those sources are linked below. This article will focus on ways that traders can serve as their own brief therapists.
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After hitting an all-time high of 13,676 on Monday June 4, 2007, the Dow Jones Industrial average fell 1.5% through Wednesday, and is down again today, along with other broad market indices.
In terms of reaction, analysts and pundits can be divided into three groups. The “Bears” argue the market was overvalued, is still overvalued, and that the US economy is in trouble unless the Fed cuts rates. In other words this is just the beginning of the bad times.
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