- I did an interview with Stocks & Commodities magazine which will be published in the October issue. The focus was on forex trading and markets. The October issue is handed out to attendees at the Vegas Futures and Forex Expo in late September. That’s the one I’m presenting at on September 25th.
- I’ve begun reading the book Buy – Don’t Hold by Leslie Masonson. When I’m done I’ll post a review.
- Trading FAQs contributor Billy Williams has an article in this month’s Futures Magazine: How to find stock market trends.
- I took on the Chief Market Analyst at Currensee on his ideas for what the Fed should do.
It’s coming up on four and a half years since I did my first post on this blog back in January 2006. That was First of all, know thyself. It’s a post which in some ways introduced me, but is also one which introduces a big portion of what I try to get at in what I write here and what I tried to make come through in my book, The Essentials of Trading. The blog now has well over 600 posts, a few of which have some value. 🙂
One of the posts I most enjoyed writing was The Secret to Trading Success. I must have done something right with it, as over the last two years and change since it was posted there have been over 10,000 readings.
The best discussion that’s taken place on this blog was around the subject of “hedging” in the retail forex market. When the NFA came out with it’s restriction on that practice I wrote No More â€œHedgingâ€ for Forex Traders. It generated something like 250 comments, with both sides of the debate covered.
Given how little most retail traders understand about how important and influential the interest rate market is in the grand scheme of the global markets, I think one of the most valuable posts here is An Introduction to the Fixed Income Market. It’s something I wrote in the early days of the blog to provide a basic overview of the rates market, its primary instruments, and what tends to move it around.
One of the best post titles I’ve writen is for How much leverage to use? Wrong question!. Well, at least I think so anyway. :-)Â It was motivated by the repeated questions I’ve seen about leverage ratios in forex trading by newbie members of trading forums. I was trying to make the point that they were fixated on the wrong thing. Can you tell?
A post that’s been read a fair bit, butÂ I think should be right at the top of the most read posts on this blog, is Taking the Trading Long-Term View. So many traders get very fixated on the short-term, and especially on making a quick killing in the market that they fail to realize the potential in a moreÂ measured approach, both in terms of their performance and their psyche.
For the seventh entry, I’ll actually point you to Brett Steenbarger’s blog. He wrote a bunch of posts before putting things on hold that I wish I had written. His stuff is a great resource for traders of all levels. He’s got a bunch of very useful “Best of..” posts on his front page which will get you where you’re going.
Have your own favorite posts here? Let me know.
My post from yesterday, Some of the worst market analysis ever!, generated a bit of a response (I’ve also noted that another blog picked up the post to which I was reacting). While my main focus was on showing readers of this blog the sort of analytic pitfalls one can fall into, I’ll admit that picking a bit of a fight with Zero Hedge was on my mind as well. I didn’t really expect a reaction, as I’ve written about the posts there before without any, but this time someone actually made note of what I said in the comment section of a ZH follow-up post on the same subject. That generated a few reactions there.
Actually, one reaction was left as a comment on my post. It was left by someone who apparently is very shy because he/she left no name and a bogus email address. The comment was
“um you trade them in a ratio, the author assumed you would get this.”
I can perhaps understand the commentor’s reluctance to attach their name to this brilliant bit of insight which has absolutely nothing to do with the problem I have with the analysis in question. It speaks not at all to the whole “risk free” question, nor does it address the viewing of converging lines on a dual-scale chart as representing a spread going to zero.
On the ZH site the author left his own reaction to someone named sumo posting my assertionÂ “There is absolutely no mathematical or other directÂ linkage between the S&P and EUR/JPY.” At least I think it’s the author. As I understand it, several people actually author on ZH under the same nom de plume (that’s pen name), so it could have been someone else on the staff. In any case, the response was:
“I assume the gentleman has never heard of the carry trade and its implications.”
Hah! We’ll leave out a discussion of the fact that I was in the forex market long beforeÂ “carry trade” became common parlance and focus on the mechanics.
The assumption implied by the above statement is that all carry trading is done through stocks. It most definitely is not. In fact, the simplest and easiest carry trade is to just borrow the low interest rate currency and invest the proceeds in a debt instrument of the higher interest rate one. The carry trade need not have anything at all to do with stocks. That means, as I indicated, there is no direct linkage between the S&P 500Â and EUR/JPY, meaning carry trade related movement in the likes of EUR/JPY need have nothing at all to do with the stock market. It can move independently. The current market environment is such that the risk tolerance of traders/investors creates a common driver of action in the forex and equity markets. Were something to happen like a Bank of Japan rate hike, however, there could be a very serious sell-off in EUR/JPY on yen appreciation which probably would have a very minimal impact on US stocks.
I’m not sure whether this comment by aldousdÂ was directed at me:
“it’s ridiculous to say that it isn’t related. it’s been going on all day. I keep reading people saying that it’s a coincidence… a second by second coincidence.”
In case it is, though, I certainly never said anything about “coincidence”. In fact I noted that the drivers for the comparable moves are similar.
There’s another reactionÂ offered up by BeerGogglesÂ to the first comment posted:
He’s going on about zero prices as well and clearly has never looked at the ATRs of EJ and S&P.
I have no idea what this person is going on about. I definitely didn’t say anything about zero prices. Maybe he’s referring to the author, but aside from talking about a zero spread (which I contend is incorrect) I don’t recall him saying anything about zero prices either. For the record, though, as of June 7 the normalized 14-day ATR (meaning ATR expressed as a % of the 14-day average) was about 2.8% for the ES and a touch under 2.5% for EUR/JPY.
Here’s a comedian:
Does he use charts for his trading, or some secret method of essentials we haven’t yet heard of?
Whitty, but the incorrect application of the charts is exactly the problem I have with the analysis. For the record, I use charts all day, every day.
Here’s someone who gets it:
I’m not a trader or an FX expert, but I do know maths and you guys are missing the point.
What the “non-fan” is saying, is that a graph of two variables NOT on drawn on the same scale, is going to lead the observer to false conclusions about trading opportunities when they see a gap. It’s perfectly possible (and in this case highly likely), that you’d loose money by trading ONLY based on the existence of a large gap.
By all means do all the carry trades you wish, but not based solely on this gap information. You need more information to guarantee an easy trade.
Thank you virgule (commentor’s handle)! In case you were wondering, “non-fan” is me. 🙂
As I said in my post yesterday, it’s not about whether doing this kind of pair trade is the right thing. It’s about not employing faulty analytic methods to get there, and not thinking that this is aÂ zero risk arbitrageÂ trade.
For those who may not have heard, Brett Steenbarger has called a halt to his blogging. Brett, who is one of the contributors to the trading FAQs book I’ve put together (and author of [easyazon-link asin=”0471267619″]The Psychology of Trading[/easyazon-link], Enhancing Trader Performance, and The Daily Trading Coach) has been enlisted by a hedge fund to help them with their trader development on a permanent basis. That’s created a situation where it would be a conflict for Brett to also be writing for public consumption on the subject. As a result, he’s been winding things down on the blog the last couple weeks.
Brett is not taking the blog down all together, though. It remains up as an on-going resource on the subject of trading psychology. If you’ve never been there, I encourage you to visit http://traderfeed.blogspot.com/
John, I have a question.
I am a novice trader who has been trading the emini S&P’s for the past two months. I’ve always been fairly good at self-teaching. However, I keep hearing / reading everywhere that its important for beginning traders to have a mentor. How does one go about finding a mentor (aside from paying someone for “mentoring / coaching” ). Are there successful traders out there that are looking to help newbies like me, purely out of the goodness of their heart? If so, where do I find them?
This came in by email a short while ago. This is a question which comes up quite a bit, and I’ve addressed it from different perspectives a few times in this blog. Here are some posts worth reading on the subject of coaches, mentors, and finding ones to work with.
- Choosing the Best Trading Coach
- Trading Coaching and Mentoring
- Trader Development: The Value of Coaching and the Difficulty of Finding One
- Does coaching of trading psychology, require a successful practitioner?
I realize I’m doing this a little bit early, but I’ve got a lot of work to do over the New Years weekend on the site and other projects, so I wanted to get this posted will I’ve got the time and opportunity to do so.
I’m looking at the 2009 traffic figures for this site. Google tells me there’s been about 106,000 unique visitors and 234,000 page viewsÂ in the last 12 months. I realize that’s no match for the most popular sites on the web, even in the trading space, but if someone had told me back in 2006 when I started this thingÂ that’s where I’d be, I’d have been quite surprised.
Here’s where it get’s really cool, though. The number of unique visitors was nearly double the 2008 tally (54,000), and page views were about 65% higher (142,000 last year). Very nice growth if I do say so myself. 🙂
Now here are the 10 biggest reasons why the traffic has been up. These are the ten most popular posts from 2009Â based onÂ page views, comments, link backs, etc.
- Trader: The Paul Tudor Jones Documentary Video
- No More “Hedging” for Forex Traders
- Most Active Forex Currency Pairs
- Using Unusual Options Activity to Predict Large Stock Moves
- Afraid to Trade? Build Your Trading Confidence
- Volatility, Stops, and Other Topics
- Book Review: The Daily Trading Coach by Brett Steenbarger
- Book Review: The Motley Fool Million Dollar Portfolio
- Trader Tax proposal in Congress
- Forex “Hedging” Continued
I’m a little bit surprised by a couple of the ones which landed in the top 10, especially the book reviews, but I can only report what people have most wanted to read and/or comment about.
Here’s hoping things continue along the same path in 2010. The next blog post will come after a site revamp that I’m doing to improve visitor’s ability to find just what they are looking for on the site. As always, your thoughts and feedback are both welcome and encouraged.
Best wishes for 2010!
A milestone was just reached for this blog. The number of RSS feed subscribers has finally cracked the 1000 threshold for the first time.
For a while there I was starting to think this would never happen. The count was stuck in the 900s for a long time.
As much as I love to see the page view and visitor counts for this blog rise, to my mind its the RSS feed subscriber count which is the more important. After all, it represents folks who think enough of what I’m posting day-in and day-out to want to have the posts automatically coming to them.