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All time highs

 

 

 

 

jan effect

 

We have seen an all time high in the market in March and are now midway into April. Interesting stuff coming up ahead this week includes Taxation in the Middle of April, FOMC at the end of the month as well as May’s NFP incoming.

We also can now see a tightening range of trades which may signal a significant move soon. Again whichever the direction,we are ok as predominantly we are non directional traders!

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January effect this year?

jan effect

There’s a saying in the stock market

“As January goes, so goes the year?”

This barometer of the stock market generally says, that the rest of the year will follow the start/finish of the entire month of January.

It has been right 62 out of the last 85 years. We can see now that January of 2015 is negative. Then again, if you’re a non-directional trader, you have absolutely nothing to be concerned of.

To a great trading year ahead!

 

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Happy Holidays

happy holidays

 

Greetings all Smart Traders.

Its been an awesome year in 2014. Our weekly hedged strategies have been performing well. Please note that there’s one more FOMC announcement to go and note your entry days and timing. On behalf of our Entire team at Wealth Mentors. I’d like to send out blessed holiday greetings to all in our Smart Traders Family.

Here’s towards 2015!

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Daylight Savings timing (Nov 2)

Hi all,

Do take note that those living in the USA should adjust their clocks for DST adjustments. And for those of you in Asia, the market will now open an hour later.

What a move we had in the market during the FOMC announcement. Whatever that was given away in the last 2 weeks had surged back to all time highs in the market.

We’re still trading as per normal and enjoying handsome profits with our weekly non directional strategies.

Have an awesome trading week ahead.

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Update As At 29 Sep 2014

hedgedThe market had a bit of a pullback over the past week. I would not be surprised to see a bit of rally for the coming week as it is the last week of September and also the end of a quarter.

Generally the end of a quarter represents what is called Window Dressing which has a bit of a bullish tendency.

The only thing that could derail a potential window dressing rally would be the anticipation of the NFP event on Friday.

We look forward to seeing the outcome of that event.

October will be a very key month as we will have an FOMC event and it is also the month where the Federal Reserve has hinted at ending its bond purchasing program.

Might higher interest rates follow?

WEEKLY HEDGED TRADE

The sustained market pullback over the past week rendered our Weekly Hedged Trade (a trading method that I teach) a success.

I missed that move since I was unable to  enter on Monday expecting to be able to enter on Tuesday.

Since I did not enter the trade I took a guess that the Monday trade would create quite a return.

For the coming week the entry is on Monday (and I will be around).

Loved this style of trading :)

Here’s what one of my member said, “Weekly hedge is fun and much easier than the other short term methods I learnt 2 years back.”

OTHER STUFF

October is also a key Earnings month where we should have quite the candidates.

The Smart Traders October 2014 3-day training in Singapore and Malaysia will be very, very exciting as we share a simpler calculation, higher percent winning trading method.

If you like to find out more about my live training, check out http://www.wealth-mentors.com.

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The Week Ahead…

fas

As a reminder the US stock market will be closed on Monday of next week (1 September 2014) as it is a US banking holiday.

Typically ahead of a US banking holiday the markets have a tendency of rallying however the FAS has a separation of more than 10% from their 200dma.

On the daily chart with the 200dma you can see we have had several times where the separation of more than 10% has created a market reversal however the degree of the reversal is the issue.

In some instances the fade is small however in July the reversal was almost 12%. It was actually thought that this was the potential start to the market shift only to catch many bears by surprise by rallying to yet even higher prices.

So it will be interesting to see what transpires this coming week.

In the event the market does not rally into the holiday there is also the likelihood that it may rally after the holiday. That is why when trading directionally, it is best to be out or to be hedged.

With the VXO back at 10% I have begun to keep my contracts smaller than usual as I experienced minor whipsaw in recent two weeks.

The key is the market has to move.

I do believe that keeping it small will enable me to ride out these whipsaws so that when the market gets its rhythm back I can start adding additional contracts.

As a reminder September is a month for an FOMC event.

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Psychology of a Professional Trader (Part 2)

attractionRemember that the stock market has its own rhythm and while trading is never 100% accurate we can learn to stack the probabilities of success in our favor.

What things can we do to stack those probabilities in our favor?

  • Make sure to align the proper style of trading with your timeframe. For example buying stocks and hedging with Put options are ideal for individuals who do not want to be involved in the day to day monitoring.
  • Trading without fear is not the same as being “fearless” in trading. Trading without fear simply refers to not being concerned with the outcome. The way to trade without fear is to trust the strategy you are participating in. How do you trust the strategy? You have already virtually traded sufficiently to recognize that a losing trade or two will not define the entire strategy. The strategy will go out of sync with the market and when it resumes will more than make up for the time period it was out of sync! The key is not to give up.
  • Feel positive about yourself, your efforts at success and you will attract all that you are seeking from the Universe.

Attracting Trading Successes

The mind is an amazing and powerful tool.

Nothing can exist without it first being a thought.

Remember too that the Universe responds to positive and negative thoughts equally. So given the choice don’t we want to make sure that
our thoughts are always positive?

Remember that I am saying our speech or that which we talk about.  Of course what we talk about can impact how the Universe responds, however I am saying what we think about.  That has the greatest impact in our lives.

Once we learn to master the positive energy of our thoughts we can live amazing, prosperous and healthy lives.

The Universe conspires to make sure that we get everything that we think about – so make it good!

Just remember that when the Universe begins to respond to your positive energy the amount of time that it appears to have taken for us to see results will be a very distant memory so make sure to stay positive, decide to succeed and never give up – it is a Universal Law!

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Psychology of a Professional Trader (Part 1)

When I began trading live I believe I became my own worst enemy – sabotaging certain successful trades into losing trades because I became emotionally involved in the outcome.

My issue was specifically closing out winning trades too soon and hanging on to the losing trades too long.

I read many books on the subject of the psychology of a trader and realized that most of those books were written by psychologists who dealt with traders who had one issue or another on my same matter.

The writers of these books were individuals who did not actually trade. Believe me (and I am sure you will agree) there is a difference.

The recent webinar with our members was quite exciting since it covered certain psychological traits that a successful trader could utilize in our quest for success through trading.

It was all based on my own personal experiences and while there was so much content I had to condense it a bit so here we go.

The stock market is and continues to be an enormous source for the generation of wealth.

It is a place to conduct business and having that business mindset will enable us to see trading differently than if we were participating in a hobby.

What I mean by a hobby is we are casual about our trading parameters especially in the area of money management and virtual trading.

We can however swing in the other direction and that is that we find ourselves to be reaching “information overload on the market.”  We need to get up first thing in the morning to see how the market closed and if it rallied we need to know why. So we read everything we can about the markets.

That other side of the coin can be equally damaging since the markets do not behave in the fashion that most people think. The market does not respond equally to certain economic news environments.

One day housing data is a cause for celebration and the next time it is a cause for selling off the market.

Could that have been the intent all along? Could the news media be nothing more than an arena to justify market moves?

If that is the case then could we place our energies elsewhere and not allow ourselves to get “sucked” into the black whole of stock market media analysis?  It does not matter what we think, believe or feel – the market is always right.

Remember that the stock market has its own rhythm and while trading is never 100% accurate we can learn to stack the probabilities of success in our favor.

What things can we do to stack those probabilities in our favor?

(… To be continued in part 2)

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My Trading Methods

method

Today I like to talk about some of my trading methods.

Retirement Portfolio Trading Method

We are fast approaching the end of our time period for the completion of the retirement portfolio. Of course I have since been out of the trade and the feedback we received from some of the Smart Traders who participated was nothing short of fabulous!

One of our beloved members shared her experience:

“I would like to thank you and Mirriam for teaching us the strategy of how to trade to the  S&P 500 option as the retirement portfolio. I attended the Oct 2012 class, and tried this out in last Nov. I’ve achieved 83% return in 5 months. It not only recovered the tuition but also built up my retirement portfolio greatly. I am here to let you know that I’d appreciate the opportunity that you’ve given me…”

Congratulations to you and all the Smart Traders who participated!

Volatility is on its Way

Within the next few weeks we can begin to see some changes in the US market environment (undoubtedly this can impact global markets as well).

It is something we have been sharing with our Smart Traders for some time at previous webinars where I shared how the market has a bullish 4-5 year cycle followed by a 1-2 year bear market.

This time period will soon be upon us and the reason why I am mentioning this is for us to begin to prepare.

I myself will only focus on being in hedged positions and these include:

  • Purchasing Stocks with Puts (as long as the SPY is trading above a key moving average);
  • Investing After Earnings
  • Hedged with Weekly Options where I am in the trade for no more than 4 days being in cash over the weekend.

As far as directional trading goes I may participate in fading Earnings candidates and when the VXO goes into the high to extreme price I can then fade stocks.

Being hedged enables us to hold our trades through all sorts of economic data such as FOMC and Non Farm Payroll.

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Flash Trading

flash

 

On my way back to the US from a diving trip in the Philippines with my husband, I passed a few book stores that were selling a book regarding aware high frequency trading.  I did not purchase the book as it was not something that interested me.

However when I arrived home the author of the book was being interviewed on TV and as it would happen I had brought home a section of the Strait Times from Singapore and lo and behold there was an article on the subject there too.

So while I was still not interested in the book I became interested in the subject.

The reason is that the interview on TV raised some disconcerting questions regarding whether the stock market is rigged against the retail investor or not.

To determine whether this is the case let’s first define what is meant by high frequency trading (“HFT”).

There are individuals who possess computers that are programmed to “see” stocks trades as they are getting ready to be processed. For example a person wants to purchase 100 shares of IBM and the computer quickly purchases those shares and then instantly (in milliseconds) makes them available for that order.

“A controversial computerized trading practice offered by some stock exchanges. Flash trading uses highly sophisticated high-speed computer technology to allow traders to view orders from other market participants fractions of a second before others in the marketplace. This gives flash traders the advantage of being able to gauge supply and demand and recognize movements in market sentiment before other traders.” – Investopedia

The owners of these HFT computers pay an average of US$30,000+ per month for the ability to participate in this type of trading. You can see how they need to extract thousands of dollars just to get to the point of paying for that seat on the exchange. The key is to get in ahead of the investors.

This is called “front running” a trade.

While this is illegal if done by an individual (I want to know how that would even be possible) it is not illegal if it is done by a computer.

Why is this not good for the investor? Because the investor is paying slightly more for the stock than they would normally be paying.

Because of this environment the news in the US has jumped all over the stock market indicating that it was known all along that the markets are stacked against investor.

How can this be? The computer is not concerned with whether the investor is buying or selling a stock.

They are not causing the stock market to either go up or down! They are simply front running the trades which is far different from the rigging of the stock market.  I do not believe, therefore, that the stock market as a whole is rigged.

However can some stocks be rigged?

I believe that stocks that are lower priced, small volume stocks can be rigged.

The SEC has in the past and currently continues to crack down on this type of activity.

If anyone is interested there was a really good movie with the actor Ben Affleck called “Boiler Room” that clearly drives the point home regarding the dangers of investing in these types of stocks.

As Smart Traders how do we make sure that we are protected?

We would want to avoid participating in stocks that have 500,000 shares or less traded per day.

In addition how can I make sure to always get the best possible price when we get ready to purchase a stock?

The key is to always use a Limit order.

The limit order does just that – limit how much I am going to pay so that when my trade goes to the floor I can’t pay more than it was being offered at my time of entry.

How cool is that!

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