Posts tagged: ino tv

EUR/USD-Strong Euro Bounce Breaks Downtrend

This is the daily EUR/USD outlook for April 13.

The EUR saw a strong bounce early this week, and that buying pushed the EUR/USD above the previous swing high at 1.3590.  That move negates the downtrend.

Support is at 1.3565, minor support at 1.3520, the further support at 1.3490, 1.3440 and 1.3420.

Some resistance has developed at 1.3620, 1.3660 and then Monday’s high in 1.3690 area.  If this high breaks, resistance is at 1.3730-1.3740, 1.3760 and 1.3800-1.3815.

Downtrends have been broken on the longer and short terms.  Trading remains choppy with no dominant trend establishing itself over the last 2 months.  Bias was downward, but with broken trendline that has shifted to neutral.  A rise above 1.3700 would put a short-term upward trend in place.

Cheers,

Cory Mitchell, CMT
~Know your risks when trading. Please read the Legal Disclaimer page.

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Loss Aversion: Your Long Weekend Trading Insight

The following is an article that I wrote for last week’s newsletter (sign up for free along the right hand side – it is sent out once a week on the weekend and covers the markets as well as insights like this).

In this week’s newsletter we are going to look at how we screen for trading instruments which suit our individual trading style.  We may have on our watch list stocks (or other trading instrument) that are exploding all over the place, but if the moves are not congruent with how we like to trade, those moves will go un-exploited and thus our trading coffers will remain empty.  It is not about screening for stocks…it is about screening for certain moves which line up with our trading methods.  We will look at this idea in detail in this weekend’s newsletter, along with what to expect from the markets in the week ahead.

But here is one of last week’s article:

Loss Aversion: And how it destroys our trading… and even our life

Has there ever been a time where you couldn’t accept that you were losing at something?  Admitting the loss, realizing it and taking the “bumps” was just too much? You may have noticed that “moving on” doesn’t seem to matter in those times, it is just about getting back what you had (or even a part of what you expected when you started the journey).  Holding on and not admitting defeat almost seems like the logical thing to do…but it is a disaster waiting to happen.

I am not just addressing trading here.  Have you ever had a relationship which was not going that well…but you stayed in it anyway, hoping it would get better?  Have you stayed in a job you hated?…Convincing yourself that you stay because one day you will “grow” to like it?  This is loss aversion, it is an unwillingness to accept (and thus be able to change) the things in our life we don’t like.  We expect (or really really want) them to change…and so we hold on to them (hoping to change what we already have, even when it is not working).  When put this way it sounds very illogical, but we all do it at times.

Bosses keep poor employees around because they don’t want to fire them.  Most likely the employee doesn’t like the job and is only there because they are holding on, waiting for something better.  That something better never comes along for the employee because they are stuck in the dead end job, and nothing better comes along for the boss because he is stuck with a dead end employee.  Ouch!  Have you ever considered this before?  Talk about vicious cycle.  Life is riddled with examples of how loss aversion keeps us from achieving goals.  And it is on both sides of many issues (employee and employer in this case).

Contrary to what many might think, and this is just my opinion based on my own observations, it is not from a lack of taking risk that people don’t achieve their dreams.  Rather it is that they fail to fully accept that what they are doing right now is not working.  Think about that for a moment…

Great traders, and those are successful in life in general, learn to confront their demons head on.  They see that holding onto (or staying in) a negative situation (or bad trade) will only result in disaster (disaster being we never get to see what we are capable of).  They see that trying to “get back to even” on that growing losing trade is illogical.  It is a loser and funds/resources/time should be invested in something else which is showing progress.

Let’s go back to the taking risk idea, and why I don’t think it is the reason we fail.  Traders most definitely take risks everyday, but so does everyone.  We go outside, drive cars, eat food that could be pretty much anything these days, we meet people, we date people, we don’t meet people, we don’t date, we don’t go outside, we work, we don’t work….almost everything is a risk in some way and  in some sense.  Granted there are some risks we are more comfortable with than others, but we still take risks…all the time!  And the way the sensationalist media portrays it we should all be dead anyway…everything is bad for us!  Hmmm, and yet we are all still here trying to make our personal worlds the best they can be….

What separates people that excel (trading included) is the ability to look at a situation and say “this is not working, and I am moving on to something else.”  This does not mean we flip-flop around from idea to idea, we give something our best effort, but when it doesn’t work we admit it.

Seems easy, but why is it so difficult?  There is a bit of psychological science behind it.

A study found that on average peopled viewed a loss as having 2.5 times the impact as a gain of the same magnitude (Beyond Fear and Greed, H. Shefrin – page 24: one of the most fascinating books I have ever read).  Making $100 is just making $100….but LOSING $100 on something had a psychological impact of losing $250!  Think about what this means.  All of a sudden we have a very strong emotional drive to not admit the loss.  To admit the loss is to feel like we have lost much more than we actual did.

So what do we do…we hold on, not wanting to have that feeling.  And then what happens?… the trade keeps getting worse, losing us more and more money until we eventually hit the “I don’t even care any more” stage.  This is where we give up, blame the market, eventually exit the trade and repeat the process in other areas of our life.

Ultimately it comes down to a bit of self-inflicted-tough-love.  You need to tell yourself that this is not working out and efforts are better placed in another endeavor (trade).  We may not want to take a loss (or get out of a losing situation) because we don’t like the feeling of being wrong.  But just try it, or think of a time you admitted you were wrong…. It was not that bad…in fact it was likely liberating!  Your spouse loved it and showed it, your career got better because you started coming up with better ideas and decisions because you were not stuck on old (non-working ideas), your trading improved because you were willing to get out of losing trades before they got out of hand.

Take pride in being someone who accepts and admits that something is a losing cause.  It takes dignity and shows that you respect yourself and everyone else who is impacted when you do this.  Learn to enjoy it.  Hurdles and choices such as these are not meant to stop you…they are meant to stop everyone else.  The truth is we can all get to the point that we want, but we must first accept our present reality, admit it is isn’t working for us (whatever area of life this applies to), cut the cord and simply say “Next!”

Have a wonderful long weekend,

Cory Mitchell, CMT

P.S.  I did not include this in the original article, but it is a good point.  If this is something you struggle with – cutting your loses – try not to think in terms of “losing” something.  Instead think of it as a “transfer.”  You are moving your money, time, skill, passion, love, etc to another area.  You are not losing something you are just transferring your focus to something else which will likely yield better results.  Try it…

And if you want further information on trading psychology or actual methods for trading check out the following product this weekend.  If what you are doing in the markets is not working…accept it, and be open to learning from those that have succeeded.  Be willing to change.

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EUR/USD-Possible Re-Test of Lows, Choppiness Continues

The broader perspective on this pair can be seen here: EUR/USD and Stock Market Weekend Briefing.  I will not post a lot in this daily outlook for March 22 since I continue to think there are better opportunities until a legitimate breakout occurs.

As we begin trading this week, the pair continues to be weak after the selloff late last week.  Having broken below support at 1.3540 a test of range lows is quite possible.

Support comes in at 1.3500-1.3480, followed by range lows between 1.3450-1.3430.  Movement below indicates another leg down in the downtrend.

Resistance comes in at 1.3550 and 1.3590-1.3600.  Beyond this resistance comes in at 1.3640 and 1.3690-1.3700.

Ultimately the pair remains in range within a longer term downtrend.  False breakouts remains a high probability as we have already seen several.

Cory Mitchell, CMT

~Know your risks when trading. Please read the Legal Disclaimer page.

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EUR/USD Forex Outlook for Jan 22

A more normalized day on Thursday with the EUR/USD stabilizing.  It moved lower in the early session but did recover to only finish down slightly.  The correction mentioned yesterday did occur; a new low was made first and then the EUR moved higher to test resistance which developed at 1.4140.  Now that the correction has taken place, albeit minor, overall the technical outlook for the EUR is weak going into Friday and next week.

A move above 1.4150 would provide evidence that the EUR/USD is not due to go lower quite yet.   The push through 1.4150 is likely to target the resistance of 1.4160-1.4180.  Beyond that there is further resistance at 1.4200-.4220.

On the downside, a move below 1.4050 is likely to test recent lows near 1.4030.  Beyond this support is likely to develop between 1.4015-1.3985, at 1.3960 and 1.3920.

As a reader of this site, I thought you might be interested in the four complimentary videos on Trend TV:

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The videos cover a wide range of topics, markets, and ideas, so please take time to watch them.

Cory Mitchell, CMT

~Know your risks when trading. Please read the Legal Disclaimer page.

Setting Stop Levels When Trading – How, Why & Where.

Stop levels are an often overlooked aspect of trading, and yet they are one of the most important.  Many traders spend hours, days and years searching for the ideal entry criteria, when simply they could adjust how they set stops to become more successful. Too often traders place stops at arbitrary levels which means they get stopped out before a real move happens.  Increasing the problem, traders begin to narrow stops even more in order to reduce losses and in turn end up trading more low quality signals.  Often problems can be related back to position sizing.  A trader is will only willing to risk a certain amount of money on a trade, but they take an arbitrary position size.  Determining proper position size is crucial in trading as position sizes should be adjusted instead of changing stop levels to only risk a certain amount of capital.

In forex trading stops and position sizing are very easily managed by most any forex broker.  Same with any market (but the example below is a forex example, but the concept applies to all markets) so there is no reason for this to a problem.

If you can only risk $100 on a trade, don’t take 5 mini lots if the proper stop level is 50 pips away. Many traders take 5 mini lots anyway, and just make their stop 20 pips.   This is a sure way to get stopped out more often than not.  Instead, reduce the size of your position and keep the appropriate stop level.  In this case, take 2 mini lots with a 50 pip stop.  Remember that stop levels, in dollar terms will be a little different each time.  Don’t use one stop all the time.  For example, don’t use a 50 pip stop all the time just because it seems like a nice round number.

Stops should be placed at levels which indicate that the original trade idea was wrong. Chart patterns (that link will take you to my ebook on chart pattern trading) allow us to do this in a methodical way.  We have a clear set up, which provides profit targets upon a breakout, but the pattern also provides a stop level in that if a breakout occurs in one direction, the opposite side of the formation offers us our stop level.

If a break downward occurs from a triangle chart formation, a break above the top of the formation shows that the downward break was false – our stop level should be here.  This stop level can also be a stop and reverse.  In this case this means we go from being short the pair, to long, with our original short position be stopped out and a new long position being taken.  Whether a stop is used, or a stop and reverse method, is up to individual trader.

In another example, a head and shoulders pattern, once completed, can have a stop placed above the right shoulder.  If rates move back above this shoulder we no longer have a classic pattern.  We may still be able to trade the pattern but we want to stop our position out to see what develops.

Ranges are one of the most common chart patterns people look for, but one of the toughest to trade.  Since they are heavily watched and easy to spot, many false breakouts occur, and since the profit target is roughly the same as the risk level, we need to be right more than we are wrong to make a profit.  With some of the other patterns mentioned the risk is less than the reward when using proper profit target techniques and stop levels.  When trading ranges trade for the breakout and set a stop just outside a recent swing within the range.  This reduces the risk but keeps the target the same.

With all patterns, especially ranges, false breakouts occur, so have a stop in place.  Multiple entries occur often as initial positions are stopped out.  A trader can’t be a afraid to reenter a position if the trade was stopped out once before, but this should not be the case.  We know false breakouts occur, they are part of trading.  But if we stick to guns and trade according to our rules we will come out ahead.

Remember, false breakouts are just as tradable as real breakouts.

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For those in the US, have a great long weekend, and elsewhere in the world have a great start to your week.

Cory Mitchell, CMT

~Know your risks when trading. Please read the Legal Disclaimer page.

An Alternative to High-Price Trading Courses…

It’s rare that I come to you like this, but I’ve had a revelation after a
recent email I received. You and I both know there are plenty of good
trading courses out there, but in these economic times, they’re a bit
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All my best,

Cory Mitchell, CMT
-Know your risks when trading. Please read the Legal Disclaimer page.

Watch the Market Wizard Insight Seminar for FREE

So it is coming up to Christmas, the market have been a little slow…so give yourself a treat, a free treat, and watch a free seminar on Market Wizards.  Visit the link and you have access to the video.

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And of course, check back in a few hours and my nightly EUR/USD will be posted as well.

Have a great (rest of the) day!

Cory Mitchell, CMT
Chief Market Strategist
-Know your risks when trading. Please read the Legal Disclaimer page.

Economic and Labor Stats Scam?

If you have been reading all my comments, I have posted some notes which shed light on some curious stats coming out in the economic data.  Here is one more piece.  The interesting thing about economics, and money in general, is that belief in something can in fact create it.  Although, it can also have very detrimental effects when the truth comes out…if the problem is not fixed before the truth is revealed.  In the mean time, lies and conjured numbers are heaped on top of each other in the hopes that that truth will not come to light and everyone lives in blissful naivety.  Hmmm, well unfortunately all too many people right now can’t be blissfully naive.  Why?  Because they are living proof that there are still MAJOR problems in our financial and monetary systems which have not been fixed, and have actually been made worse.

The following is just one such example of this curious economic data.  I am not saying to believe it.  Take from it what you will, inform yourself and think beyond what is splashed across media headlines.  This interesting notes is from Colin Twiggs of Incredible Charts (.com)

The dollar rally was initially spurred by a Bureau of Labor Statistics report of surprisingly low job losses for November. Jeff Nielson, however, points out that their monthly figure of 10,000 job losses does not tally with weekly layoff stats. The market is in equilibrium (with zero job losses) when weekly layoffs are around the 300,000 mark, but November layoffs have been averaging close to 500,000 per week — which would indicate job losses of around 1 million for the month. Let us hope that this is not another BLS conjuring trick.

I live in Canada which is supposed to be in better shape overall than the USA.  And yet I have had countless friends who have had to move because they were laid off and are still not working.  Also, I have many other friends who had to leave professional jobs to take more casual work such as waitering or waitressing.  This of course is completely subjective, but it does make me question the numbers coming out in these news releases.  And when we dig deeper, they just plain don’t make sense.

I encourage you learn what you can and to form your own opinions.  And as for right now, just enjoy your weekend and prepare for the holidays.

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Cory Mitchell, CMT
-Know your risks when trading. Please read the Legal Disclaimer page.

EUR/USD Forex Analysis for Dec 9

The aggressive fall in the euro against the dollar today (once again) was eerily similar to Lindsay Lohan’s career…you could see both coming.   But alas, we are only interested if the EUR will see a revival after a few days of selling.

The pair never rallied to 1.4900; a level which if reached may have given some hope to EUR fans, but alas, no no.  The pair hit a low of 1.4667 as US dollar rallied again today.  That is current support, with a move below 1.4660 targeting 1.4625 followed by 1.4600-1.4680.  1.4660 and 1.4630 provide support beyond if the pair continues to fall.

Minor resistance is at 1.4715 on the upside, with a move above 1.4720 targeting 1.4740, although technical resistance does not really come in until 1.4770-80.  Further resistance comes in at 1.4810, 1.4840 and the recent swing high at 1.4860.

While there may be pullbacks, at the moment this forex pair is technical weak.  1.4900 was the level which may have ended the decline, but now it sits 200 pips away and until those swing highs are taken out, this market is in, at minimum, a short-term correction.

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Cory Mitchell, CMT
Chief Market Strategist
-Know your risks when trading. Please read my Legal Disclaimer page.

EUR/USD Day Trading Signals – Dec 1.

Wow, I can’t believe it is December already.  Oh well, nice weather here where I am so I can’t complain :)

Relatively calm day on Monday for the pair as not only did it stay within the range mentioned in yesterday’s post, it  only moved about 100 pips.

There are short term trades in here, but ultimately this remains a range bound pair.

Resistance is at 1.5040 with a move beyond that indicating a move to test swing highs at 1.5080.  Targets and resistance beyond is at 1.5100, 1.5120 and 1.5140-1.5150.

Minor support is at 1.5000 with more substantial support just below recent swing lows at 1.4970.  Support beyond is at 1.4950 and 1.4920.  While a move below this is not highly probable, targets beyond are 1.4890, 1.4870 and 1.4840.

Cory Mitchell, CMT
Chief Market Strategist
-Know your risks when trading. Please read the Legal Disclaimer page.

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Dansette