Month: January 2010

Hello this is Adam Hewison and I’ve just returned from my daughter’s wedding in New Zealand to see that we have some very interesting markets to start the New Year.

In today’s short video we take a fresh look the S&P 500 and what we think it is going to do in 2010. We will also be looking at an important “Trade Triangle” that has just flashed an important signal for this index.

To see more MarketClub videos or learn more about our Trade Triangle technology, please just visit our site.

All the best to you in 2010,

Adam Hewison
President, INO.com
Co-creator, MarketClub

*Free Bonus: Sign up for our Free 10-part Email Trading Course.

By Ashley Smith – The Australian and New Zealand Dollars are seeing a modest recovery today against the USD and JPY as demand for riskier currencies rebounded slightly on speculation Federal Reserve Chairman Ben S. Bernanke will be confirmed for a second term. The Aussie also benefited over economists’ expectations that a report due to be released on Jan. 27th will show annual inflation accelerated in the fourth quarter. The expected rise in inflation adds to speculations for further interest rate hikes by the Reserve Bank of Australia during this coming February’s meeting. Annual inflation probably gained to 2% in the fourth quarter. The central bank aims to keep inflation between 2 and 3% on average.

Australian Dollar rose 1% to currently trade at 81.75 Yen. It also gained 0.6% to 90.59 U.S. cents. The New Zealand Dollar climbed to 64.40 Yen and to 71.47 U.S. cents. New Zealand’s currency gained today after a report showed the nation’s services industry expanded for a second month on increased sales and new orders. However, while speculations of further interest rate hikes in Australia persist, such speculations for New Zealand dwindle, thus putting slight pressure on the currency. With inflation remaining moderate and a slightly shaky economic recovery, the central bank is not pressured to begin raising interest rates until the middle of this year.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

The effect of china is in such global scale that China’s growth prospects effect the entire global risk play for Equities, Bonds and Forex. In the FX space it is the commodity currencies such as the Aussie and the Kiwi that are most sensitive. However the commodity currencies are not alone, the Yen for example is also strongly affected from Chinese sentiment. Japan’s main export to China is consumer goods and unlike the Aussie and Kiwi the Japanese Yen is a counter risk trade and tends to be in opposite divergence to the Chinese growth story, although not always. The Yen’s divergence with China can sometimes be more complex than a simple risk play, as detailed below.

So how your FX position could be affected?

Watch the Chinese policy on the Yuan–Although the Yuan exchange rate is controlled by the Chinese authorities investors look at the Chinese Yuan exchange rate as an indicator of Chinese growth. During the last decade the Chinese central bank allowed the Yuan to appreciate more than 15% against the Dollar. However since the credit crisis has erupted the Chinese authorities left the Yuan exchange rate at 6.82 per Dollar to keep Chinese merchandise cheap thus encouraging growth and tackling unemployment. As long as the Chinese authorities are worried about unemployment the Yuan will be kept low.

Why is the Yuan exchange rate important? If the Chinese government allows the Yuan to appreciate it means the Chinese government is bullish on the Chinese economy and therefore all China linked trades should gain and risk appetite in general should rise.

Watch out of Chinese tightening policy- With a target of above 8% growth for 2009 of the Chinese government a 9.1% YoY growth signals the Chinese stimulus has been successful. In fact it has been too successful with Real-Estate prices surging and Bank lending expanding to new records. As a result the Chinese authorities are tightening monetary conditions to curb inflation and restrain asset bubbles. The Chinese authorities have instructed banks to lend less and raised the reserve requirements for Banks, an effective monetary tightening. Any further actions with respect to tightening monetary conditions are perceived as negative for Chinese demand and negative for risk appetite. Lately there have been some concerns that better than expected data might bring even more tightening. Thus any economic indicators that will point Chinese growth is overheating can set the stage for further tightening and move investors to avert risk.

AUD, NZD-Tightening monetary conditions is bearish, higher Yuan is bullish

EUR- Tightening monetary conditions is bearish, higher Yuan is bullish

JPY- Depends, if the JPY is gaining on an improved economic outlook, as has happened for a few times this year when the Yen actually gained on positive news. In that case a stronger Yuan is Yen positive since if the Yuan is higher the BoJ will feel more comfortable to let the Yen appreciate against the Dollar. Why? Exporters in Asia look at the Yuan as a benchmark and try to keep their currency low as well to compete with Chinese exports. A higher Yuan should make them feel more comfortable to let their currency gain.

If however the Japanese Yen will continue to be a carry trade favorite than a stronger Yuan is JPY negative. A tightening in Chinese policy in such a scenario is Yen bullish.

Daily Forex Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

© 2009 eToro Blog.

Source: ForexYard

The Dollar and the Yen, the two strongest currencies of last week’s trading session, are likely to be shaken this week, as interest rates announcement from both the U.S. and Japan are expected. Any manipulation of rates by any of the two is likely to have a massive impact on the market. This could provide unique opportunities for high profits, and traders should use this extraordinary week in order to boost profits.

Economic News

USD – Dollar Soars on Positive U.S. Data

The Dollar rose significantly against the major currencies during last week’s session. The Dollar corrected some of its losses from previous weeks, especially against the Euro and the Pound. The Dollar rose over 300 pips against the Euro and over 200 pips against the Pound, all in one week.

The Dollar’s bullish trend came as a direct result of the positive data from the U.S. economy. Last week began with a superb, unexpected Long-Term Purchases publication. The Long-Term Purchases report measured the difference in value between foreign long-term securities purchased by U.S. citizens and securities purchased by foreigners during November. The end result rose from $19.3 billion in October to $126.8 billion in November, beating expectations for a $30.3biliion result. The stunning figure came due to a record bond purchases by private investors. This showed that foreign investors have deep faith in the U.S. economy, which of course strengthened the Dollar.

Throughout the week, additional positive economic data was published, showing that the Building Permits issued during December for new residential buildings reached above expectations, and that the Producer Price Index continues to rise as well. As long as the cheering data regarding the U.S. economy continues to flow in, the Dollar’s bullish trend is likely to extend.

As for the coming week, the most intriguing economic publication from the U.S. will probably be the Federal Funds Rate on Wednesday. The Federal Funds Rate is in fact the Fed’s Interest Rates announcement for the following month. Currently the Fed is likely to keep rates at their low level. However, if the Fed will surprise and hike rates, it could boost the Dollar to levels not seen in months.

EUR – Euro Drops on All Fronts

The Euro fell significantly during last week’s trading session. The Euro saw bearish trends against most of the major currencies, including the Dollar, the Yen and the Pound. Its strongest drop was marked against the Yen, as the EUR/JPY pair dropped to the 127.00 level.

The week began with rather disturbing news from the German economy. The German ZEW Economic Sentiment fell from 49.8 points from December to 47.2 in January. The Economic Sentiment is a survey that attempts to rate the next 6-month economic outlook for Germany. This report is considered to be quite reliable, and tends to have a large impact on the market. Due to the fact the Germany holds the biggest and strongest economy in the Euro-Zone – the unfortunate figure was likely to weaken the Euro.

The German economy saw another disappointing data release last week, as the German Flash Services Purchasing Managers’ Index failed to reach expectations of 53.1 points result, as the end result showed 51.2. This means that the level of business conditions, such as employment, production and new orders have declined during December. The Euro is greatly affected by the German economy, and a series of disappointing data from Germany has weakened the Euro.

Looking ahead to this week, the German economy continues to be the main attraction for Forex traders. Traders should give special attention to the German Business Climate report on Tuesday. Following last week’s data, further negative publications from the German economy could continue damaging the Euro. However, if the end result will reach expectations for a 95.2 figure, it is likely to support the Euro.

JPY – Yen’s Bullish Trend Continues; Ahead of Interest Rates Announcement

The Yen continued to strengthen last week. The bullish trend which was initiated a couple of weeks ago, proceeds against most of the major currencies. The Yen’s sharpest rise was against the Pound, as the GBP/JPY pair fell to the 145.00 level.

What appears to impact the Yen the most lately are the statements delivered from the Japanese leadership, especially from the Bank of Japan (BoJ). Last week, the BoJ Governor Masaaki Shirakawa said on Monday that the BoJ is aiming to maintain an extremely accommodative financial environment in Japan. This has aroused speculations for greater investments in Japan, and has contributed to the Yen’s rising trend.

However, the Japanese Finance Minister Naoto Kan stated on Thursday that he would prefer to see a weaker Yen in the future. It is known that the Japanese leadership aims for a weak Yan as a resolution against the decline in Japanese exports. If this target will remain in-place, the Yen will eventually drop as a result.

As for the week ahead, the most impacting dada from the Japanese economy is likely to be the Overnight Call Rate on Tuesday. The Overnight Call Rate is the Japanese Interest Rates Announcement. Currently, expectations are that the BoJ will keep rates at 0.10%, the lowest in the industrial world. If this will indeed be the case, traders are advised to follow the BoJ statement which follows promptly, as these releases tend to have large impact on the Yen.

Crude Oil – Crude Oil Drops to $74.06 a Barrel

Crude Oil continues to decline sharply. With the beginning of last week, Crude Oil was traded at $78 a barrel, however as the week progressed, the prices of Oil fell, and a barrel of Crude Oil is now traded for around $74.50.

Two reasons led to Crude Oil’s downfall last week. The first reason is the strengthening Dollar. Crude Oil is traded in Dollars, and thus, whenever the Dollar rises, Crude Oil is likely to depreciate as a result. In addition, the American administration’s plan to bar banks from trading for their own accounts had a negative impact on stocks, which also contributed to the weak Oil.

As for the week ahead, traders are advised to follow the leading publications from the U.S. and the Euro-Zone’s major economies, as they are likely to impact Oil the most. In addition, traders should also follow the Crude Oil Inventories report on Wednesday, as it tends to have an immediate impact on the market.

Technical News

EUR/USD

The pair is currently trading in neutral territory, but traders will want to pay close attention as the 4-hour RSI chart shows the pair approaching overbought territory. This sentiment is supported by the RSI on the 2-hour chart. Still, traders may want to take a wait and see approach regarding this pair today.

GBP/USD

The 8 hour RSI is floating in the oversold territory with the chart’s Slow Stochastic exhibiting a bullish cross. A bullish cross is also evident on the daily Slow Stochastic as well as the 2 hour MACD. Going long for the day may be a good option.

USD/JPY

A bullish cross is evident on the 8 hour and 4 hour charts’ Slow Stochastic while the 4 hour and daily RSI are floating in the oversold territory. A bullish cross is also evident on the 2 hour MACD. Going long for the day may be advised.

USD/CHF

The pair is exhibiting some mixed signals. While the hourly chart’s Slow Stochastic is exhibiting a bullish cross and the 4 hour RSI is headed towards the oversold territory, the daily chart’s RSI is headed towards the overbought territory and an impending bearish cross is evident on the 8 hour MACD. Going long with tight stops may be a good choice today.

The Wild Card

NZD/USD

The pair’s 8 hour and daily RSI are floating in the oversold territory with the daily charts Slow stochastic exhibiting a bullish cross. Furthermore, a bullish cross is evident on the 4 hour MACD. Forex traders are advised to go long for the day.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

The recent tailwinds in the market shifted to headwinds last week, as riskier assets were hammered down to lower levels.  Equity markets and commodity markets lost value while the Dollar gained in value.  The S&P 500 Index declined 3.9 % in one of the worst weeks for the markets in the past 12 months.

The markets started off on a positive note on Tuesday, retracing prior loses. Bank of Japan Gov. Masaaki Shirakawa reiterated Monday that the central bank will maintain its very accommodative monetary stance in order to prevent deflation from worsening economic conditions.  This statement helped to push the markets higher.

The dollar rallied and equity markets reversed their course on Wednesday, after China requested banks to cut back on lending.  The Lending curbs appear aimed at slowing the pace of credit growth after some banks issued a heavy supply of credit at the start of the year (perhaps in anticipation of tighter conditions later in the year.)  According to recent lending data, banks issued CNY1.1 tln of loans in the first half of Jan with the four largest Chinese banks accounting for almost half (or CNY500 bln.)  The new regulation is aimed at restricting credit growth to CNY7.5 bln ($1.1 tln) this year and will require certain banks to hold extra reserve requirements for the next few months.

Over in the U.S housing data weighed on investor’s sentiment.  Housing starts slid by 4.0% from the previous month to a seasonally adjusted 557,000 annual rate in December, according to the Commerce Department.  Economists surveyed had expected starts would dip by 0.2% to an annual rate of 573,000. Furthermore, Wednesday’s data showed building permits in December jumped 10.9% to a 653,000 annual rate. Economists had expected permits to rise by 0.2% to a rate of 590,000. In addition to housing data the US producer price index for finished goods was released on Wednesday.  PPI rose a seasonally adjusted 0.2% on the month in December, according to the Labor Department, after increasing an unrevised 1.8% in November on the back of surging energy prices.

On Thursday the markets continued to face pressure as the Chinese government reported that its economy expanded 8.7% in 2009, surpassing the 8% target Beijing had set early last year. The number exceeded analyst’s expectations, which were hoping for a 5% growth figure. Growth in the fourth quarter of 2009 was up 10.7% from a year earlier, reflecting the recent recovery in global trade and a continued surge in domestic property and infrastructure. In addition, the US president Barack Obama stated on Thursday that he wants to see proprietary trading removed from commercial banking company.  He said that no commercial bank could own a hedge fund or a private equity fund.  This news perpetuated the selloff in the equity and commodity markets as well as riskier currencies.

Forex:

The Pound was hit hard this week, despite mixed news on the UK economy.  U.K. annual consumer-price inflation increased by its greatest ever amount from the previous month in December, due to the comparison with a cut in the sales tax, a sharp fall in oil prices and pre-Christmas sales in late 2008. Inflation spiked to 2.9% in December, well above the Bank of England’s 2% target and analyst expectations of 2.5%. Jobless claims fell more than expected (-15.2K vs. -4.6K exp in December) and the November data were revised to -10.8K from -6.3K.  While seasonal factors may have contributed to the improvement in the data, the claimant count rate remained unchanged at 5.0% – this news adds to the view that the UK economy picked up in Q410.  The BoE’s Agents summary of business conditions also showed some signs of strength. UK December retail sales rose just 0.3% m/m compared to a consensus forecast for a 1.1% gain and after falling -0.3% in November.

From a technical point of view the GBP/USD is still trading in range. Even though the chart presented selling pressure during the second half of the week, the price could find support around prior levels.

A double bottom is formed on the US dollar vs. CAD, USD/USD after the Bank of Canada (BOC) decided to leave their benchmark interest rates unchanged.   The BoC kept its pledge to leave rates unchanged until the middle of 2010.  That may have disappointed some looking for the central bank to drop the pledge after core CPI rose 1.5% y/y in November.   In fact, the BoC noted that Canadian dollar strength could exert downward pressure on inflation in addition to acting as a significant drag on growth.  The BoC lowered its GDP forecast for 2010 to 2.9% (from 3.0%) and said it expects production to remain below full capacity and inflation to remain below its 2% target until Q3 2011, in line with the October MPR.

The week ahead

Next week the markets will be watching the Bank of Japan as it makes its interest rate decision.  Analysts are expecting the bank to hold as its economy continues to mend the recent downfall.  Also on Tuesday the UK will release its GDP result, followed by US Consumer Confidence.  On Wednesday, Australian consumer prices leads off, followed by US New Home Sale and the Fed and RBNZ interest rate decisions. Up until the Fed’s decision we expect the markets to trade steady. Most investors will be focusing on the fed’s speech rather than the decision itself which isn’t expected to change.  On Friday is the EMU Employment rate.  The market is expecting a rate of 10%.  This is followed by US GDP.

Daily Forex Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

© 2009 eToro Blog.

By Danielle Franklin – Forex trading requires a lot of learning and practice. One of the basic and necessary skills in Forex is charting. Why are charts so important in trading? How to read forex charts? How to make charting a useful tool? Are forex charts reliable and what are the pitfalls?

A successful technical trader relies on real time charts in order to understand Forex market and plan trades according to the information obtained. The skill to interpret and comprehend Forex charts effectively comes with experience. It is a learned skill and every beginner in Forex can master it.

Why are Forex charts important?

* Visual chart patterns allows technical trader to focus only on price action without analyzing the reason behind the price movement.

* Fundamentals appear quickly in price movements, therefore by observing the charts a trader is able to monitor not only the news, but also how other traders react to each news release.

* Trends are visible and repetitive. Once you learn the set ups, a Forex trader can analyze trends from last week/month/year and place the trades accordingly.

Here are some tips in using forex charts:

1. When you long the position (aka buying), you have to figure out when the currency pair goes up. In order to make profits, the base currency has to become stronger then the term currency.

When you short the position (aka selling), you have to spot when the currency pair goes down. To make a winning trade, you need to catch the base currency becoming weaker than the term currency.

2. Make sure to check the time frame. It can be 4 hour, 30 minute, or even 1 minute charts. Sometimes you need to use several time frames in order to determine the overall trend. The useful indicators are MACD, support and resistance lines, momentum etc. The long-term frames show the overall direction of the price movement, while short-term frames (for example, 5 minute frames) are useful to spot a rise to determine the trade entry.

3. Understand that there are no scientific laws behind Forex chart indicators. If we knew the price in advance, there wouldn’t have been any market at all! Forex market is all about uncertainty, so don’t waste the time trying to define Forex with scientific theories.

4. Don’t try to predict. Every time you catch yourself hoping and guessing, stop trading immediately, otherwise you will lose money. Instead of predicting, act on confirmation and learn about momentum oscillators, since this is the basic instruments for forex trading success. Without the knowledge of price momentum, you are doomed.

Forex is not a guessing game. It is a game of odds! The words that will kill you are: WISH, HOPE and PRAY.

5. Learn to use indicators the right way. Here are couple of common Forex charting mistakes a lot of beginners make:

* Buying dips according to moving average. (No!) * Using outer Bollinger bands to set stops. (No-No!) * Using pivot points on meaningless data, for example, on short time frame. Remember that all volatility in daily periods is random and there is no technical indicator that can give you any hints.

6. Make it SIMPLE! Using all indicators available is not the right way to go. Simple strategies based on support, resistance and few momentum indicators are all you need to make profits.

Forex trading is not about showing off your IQ. You win when you are right, so the simple it is, the better.

7. Stay disciplined and emotionless. When used correctly, forex charts can lead you to success and a lot of money, but you have to follow the trading rules.

8. Always check the times of your forex charts. The times have to correspond to the opening/closing of the candle. Different charting software can vary from one another, therefore it is your responsibility to double check.

Forex charts are the primary tool for technical analysis. With forex charts, you can analyze the price patterns along the time history of forex market and forecast the potential move in the near future. Don’t be lazy and invest enough time in learning and understanding the basics. With forex charts you will become a successful trader.

About the Author

Forex Brokers Reviews – Forex brokers reviews and rating, comprehensive forex tutorials and articles, latest forex news and forex blog.

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By David S Adams – Channels and bands of various origins have been used to study market price movement by day traders from many disciplines. They have an uncanny ability to point out the obvious, which is not always as obvious as it might seem, that is to say bands and channels can show the volatility and direction of the market and be read at a glance. They are easily read and interpreted.

Let’s start with the methodology of Keltner Channel. The Keltner Channel is similar to most channels or “envelopes” in that it uses three lines. The center line is a moving average set to a specific time period of your choice, and the default on most charting programs is set to ten, though day traders have adjusted this number to their specific needs in a variety of ways. The outer bands are then calculated by multiplying the center moving average by another number of the day traders choosing, usually 1.5x or 2.0x. This simple math should point out one major difference between the Keltner Channel and Bollinger bands; the line tend to stay equidistant most of the time. This makes sense since the multiplication factor produces a linear relationship to the moving average on both outside lines.

The best known day trader who utilizes the Keltner Channels and has published some articles on the topic is Linda Bradford Raschke. Without quoting her verbatim, if you have the multiples set up for a particular day and most, say 90% of the price action stays within the channel, you would be able to spot overbought and oversold signals to work around. But this explanation also points out what is, for me, the real weakness in using Keltner Channels.

How do you know, on a daily basis, which multiples of the moving average to use and, for that matter, what time frame is appropriate for the moving average itself. I suppose with years of experience you might develop the ability to judge the market and set the appropriate variables, but it sounds like a fairly tall order for a novice trader. Raschke has done work integrating the Average True Range indicator into the moving average with some success, which seems a more accurate methodology to my way of thinking. The point is simple, though; the Keltner Channel methodology would take some very specific mentoring to be an effective trading tool for your indicator set. At best, it serves as a nice filtering device for other primary trading indicators.

The Bollinger Bands, on the other hand, also use a preset simple moving average (SMA) as the center of it’s three line array. I generally see the Bollinger Band SMA set around 20, but any number will cause a set a bands to be formed and Bollinger, in his book, thought variations on the twenty period SMA in different markets could produce sacrosanct results. Instead of using a preset multiple of the SMA the Bollinger Bands set the outer lines at two standard deviations from the center line. The level of standard deviation can be altered, but the generally accepted norm seems to be about two standard deviations. So we are dealing with a non-linear outer line formation now, since the standard deviation changes in size depending upon the position of the center line. When the market is consolidating, Bollinger Bands tend to draw very close together, showing a very low level volatility. Conversely, when the volatility is increasing, the bands will swing wildly away from each other and the width between the outer bands becomes greater.

Contrasting this with the more equidistant demeanor of the Keltner Channel will immediately show the casual day trader the difference in these two indicators. One is linear, one is non linear, and the reality is that they appear very different on a chart. Oddly enough, though, I consider the Bollinger Band to be a secondary indicator, though there are trading systems that use them as a primary indicator. The general rule of thought on both the Keltner Channel and Bollinger Bands is fairly simple: a close outside the channel is indicative of overbought and oversold conditions and hence, there is a potential counter-trend trade in the offing.

My experience has been that the Bollinger Bands are more accurate at predicting countertrend moves. Again, I would use them as a filter device and see if, in fact, my primary indicators show the same information. I think you could say the same for the Keltner Channel, which I have used less.

About the Author

Day traders have used channels and bands in a variety of capacities to determine the volatility and range of the market. The Bollinger Band is most popular, and today I introduce the Keltner Channel which is popular with several day traders.

USDCHF failed to break above 1.0507 previous high resistance and pulled back from 1.0495. A short term cycle top had been formed on 4-hour chart. Sideways movement between 1.0350 and 1.0507 would more likely be seen in a couple of days. Support is located at the rising trend line now at 1.0320. As long as the trend line support holds, the fall from 1.0495 is treated as consolidation of uptrend from 1.0132. One more rise towards 1.0600 is possible after consolidation and a break above 1.0495 could signal resumption of uptrend.

Forex Forecast

By David S Adams

5 Tips for Fighting Day Trading Burnout

If you are like me, you get to see a good number of charts everyday, sometimes hundreds. In addition, you may be actively day trading the ES Emini contract, perhaps in dual times frames, or a host of other configurations. Why do I go through this routine everyday? Day trading is my passion, and I suspect if you are reading this short article, trading is a passion for you, too.

But having a trading passion does have a downside. Too many charts. A couple of poorly thought out trades. More charts…you can suffer from day trading burnout. It has happened to me on a regular basis, at least once a year. I feel like I am just worn thin as a result of looking at charts and trading indicators and sitting in front of a computer for hours.

And I don’t think there is anything terribly unusual about becoming burnt-out, even with a activity you love. As a matter of fact, it is to be expected. I find my decision making process is greatly impaired when I am not excited about trading, and the results are usually indicative of that fact.

So what do you do? That’s easy to talk about, but tough to implement:

1. Stop trading for a few days. This is one of the toughest things to do. For many, trading is the way they make a living, so stopping trading stops the income. However, if your trading effectiveness is suffering as a result of burnout, stopping day trading is the smartest course of action. Read some books, exercise, or spend some leisure time in the manner you enjoy most. The important point is simple, stop trading until your state of mind is correct.

2. No matter how hard we try, day traders often get into bad habits that can result in unacceptable losses. This is where the trading journal (with the days charts saved) can be very crucial. Look at your trades with an open mind, as if they were someone else’s trades. Do the entries and exits make sense? Even more important, are the entries and exits compatible with the parameters of your trading system? Be honest and thoroughly examine your trading results.

3. Take a close look at the market from an objective viewpoint. Has something changed? Often times you will become accustomed to day trading in a trending market and the markets demeanor will change from the trend. Since you may have your mind set fixed from months of trading a certain market, the change in market fundamentals may be sabotaging your trades. Is the market still trending? Take a look at the market from different time frames for a realistic point of view. Look at daily, weekly, monthly charts and see what information you may be able to glean. Has the VIX changed drastically? These are all questions you need to answer before you resume trading. The market can change personalities quickly yet subtlety, if you have been counting on a trending marketing and possibly entering trades of higher risk because you assume a certain trend, you need to reconsider your strategy. Get back to the parameters of your personal trading system.

4. If you burnout is debilitating, take a week vacation and go somewhere and don’t even think about trading. I love to fish, and there is nothing more relaxing than a nice trip to a remote part of the country and test my skills against salmon, or trout, or bass…you get the idea. Don’t give trading a thought. Many times on trips of this nature I lose track of the day and date; that is when I know that I have reached a nice relaxed state, especially if I haven’t given trading any thought. When I am fixated on fishing or hunting, not trading, I know my mind has cleared some of the muddle I have accumulating over many months of trading. Or take a great family vacation, or take your wife or significant other to an exotic beach resort…all these things are wonderful ways to break the monotony of day trading for months on end. Clear your pipes out.

5. I think this is the most important step, call your mentor and ask for his advice. Perhaps he will want to review your trades. If you trade the same contract, he will be familiar with the trades he took that day and the market action of the day. He may be able to shed some light on what he thinks you may do to improve. If you decide on a break in trading, call your mentor before you start trading again.

Ultimately, trading is about confidence, and when you are burnt out you have generally lost your confidence. It is very difficult to trade when you are indecisive. This is not a business that lends itself to indecisiveness. You can get your confidence back, and that is an important point to remember. The secret is realizing when things are not going well and taking time to analyze the cause of your burnout.

About the Author

You can learn to trade from a 15 year veteran trader, not a salesmen. This program comes with a lifetime mentoring program and an educational package that is second to none. Additionally, the trading system is time tested and has been in use more than ten years. You can get your emini starter pack (valued at $500) by going to Cllick here for your trading pack at Trading Concepts, Inc

By David S Adams – I am often invited to sit in on trading groups and observe what and how they trade. I generally don’t jump in and start spouting advice or “you ought to do this”, or, “you ought to do that.” I am much more content to watch and learn, and answer any questions, to the best of my ability, anyone might have. To be honest, I often have a heck of a time figuring out how many of the groups trade, that is, what criteria are they using to time their entries and exits.

But one rule that I have for myself is never observed, and it’s a very simple rule: I only trade at the end of the bar I am observing. I do this for a number of reasons, the most important being that my indicators are all based on opening and closing prices and trading mid bar would make the oscillator readings irrelevant. More importantly, each bar, whether it be a 3 minute, or 15 minute, or 1 hour, is essentially a tiny battle between buyers and sellers and the bar closing is the ultimate arbiter of just who won the little battle. These bar formations are the basis for trade set-ups and active trading.

As a trader who is looking for pure set-ups, at least as I define them, trading mid bar puts me in a position of guessing just what the price action actually is for the time period. It can be painful to watch a nice long bar appear out of nowhere and rise for a great gain as you sit on the sidelines waiting for the bar to close. On the other hand, it can be just as excruciating taking a poor entry point and watching your hard earned money evaporate as you run headlong into a poorly timed trade that decimates your trading account.

I never like to feel like I am guessing when I trade, or hoping for a positive outcome. I expect a positive outcome because I have done my homework. I should point out that no matter how good a set-up looks it can easily turn into a losing trade. This is the nature of trading, but probabilities are also the basis of trading and I want to take the highest percentage trades, the ones that experience and knowledge have proven they can be effective, not trades where I am simply hoping for a positive outcome.

So, forget all the movement inside a bar, whether they are candlestick or bar charts and concentrate on the opening and closing prices, they are all that matter, and most oscillators use these numbers to calculate the articulated lines they produce. I make each and every decision to trade at the end of the time period I have chosen, usually 2 or 3 minute bars, and never take a trade mid-bar.

About the Author

I write mainly about financial topics, specifically daytrading the emini contract, and many of my more technical techniques can be found at my blog, The Fractal Futures Trader.