Available at http://LovingHut.com.sg

or Internationally at

http://lovinghut.com

As shown by Adam Hewison:

Title: Can you use intra-day charts to time entries?

Intra-day charts can find low risk entry points in any market.

In this short video, I will show you how to use intra-day charts to time low-risk entry points in any market that has an established trend. In this example, I am looking at a 30-minute chart of July crude oil (CL.N09). With all of my indicators in a positive trend for crude oil, I am looking for low risk entry levels where we can add to, or institute new positions.

This video will demonstrate how to move into a market even if you have missed the initial buy/sell signal.

http://www.ino.com/info/352/CD3131/&dp=0&l=0&campaignid=3

You can view this new video with my compliments. There are no registration requirements. Please enjoy and give your feedback on our blog. Thank you.

All the best,

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

I totally concur with Dr Jeff on robot trading that I am also posting the second part here:

Forex Robots: The Good, The Bad and The Ugly! – Part 2

Welcome Everyone,

Forex Robots: The Good, The Bad and The Ugly! – Part 2

Last week I wrote an article called: Forex Robots: The Good, The Bad And The Ugly and I received a mountain of emails in response.

Now before I go any further…  As I already stated…  LET ME MAKE THIS VERY CLEAR!

I’m not anti-forex robots. but there is a whole lot to know and learn in order to make them work in your favor. Also please note that I am not here to be some industry watch dog to police all the systems and claims made.  I am simply trying to open your eyes a bit and help you through the mine field of outrageous claims being made and to help you seperate fact from fiction from just plain wishful thinking.  I alI do this through both my personal experiences in buying products over the past 18 years and from the hundreds of conversations I have had from traders around the world.  Anyway…

In fact I am a big fan of using a forex robot when they are done right.  What I’m not a fan of is these developers that make claims of turning $5000 into 110,000 in 3 months and telling you that it takes no effort or experience and has little risk.   Listen, if that was really, really true I would be the first to buy it.  Now lets give the developer with the above system the benefit of the doubt  and assume they really were able to make the returns they claim.

First off, at that rate of return they are multiplying their account roughly 20 fold.  If you keep at that rate you would be up to $40,000,000 in less than a year.  Do you honestly believe that the developer would want to release the program for $97.  Think about this also …   After just 2 years they wouldn’t be able to trade at that pace anymore as their positions would be too big for any one brokerage firm.

Now lets still give the developer the benefit of the doubt and assume they want to share their system out of the goodness of their hearts or they are trying to get some good credits in the great “Karmic Bank In The Sky”.  Anyway…  With the above results no one in their right mind wouldn’t snap up a copy at $97.  Heck, I think most people wouldn’t bat an eyelash at paying $1,000, $2,000, even $5000 if the thing really delivered the above results.

Back to the $97…  At such a low rate the software would literally sell 10,000, even 20,000 copies in a month.  I know that is true based on the sales of some of the well known programs like FAPS TURBO.

What do you think will happen if all of a sudden 20,000 traders from around the world all fire up their forex robot to place trades?  The system will quickly implode or start not working as good as it used to because the market can’t handle all that volume without moving the market very quickly.  It can also create horrendous fills for traders.

Sure the deveopers will tell you how the forex markets are a 2 plus trillion dollar market and it can handle the volume.  I’m here to tell you that isn’t exactly true.  Its one thing if up to 300, 500 even a 1000 traders jump in with a 1 or 2 lot at the same time, but a stampede of  20,000 forex traders placing orders will before long make the system fall apart.  Also keep in mind that the 2 plus trillion dollars is made up of all currency pairs so…  The fact is when you are looking at just one currency pair there is no where as much trading volume.  This is why 20,000 forex traders jumping in can cause some real potential  problems.

So I ask you this…  Why would the developer risk ruining their own sure-fire cash machine to make $97 per sale?  Think about it this…  Sure if they sell 20,000 copies they would make $2,000,000 but…  That is peanuts compared to making $40,000,000 in a year.  Also if they sell 20,000 copies then they can no longer trade their own system as it will eventually break down under the weight of 20,000 traders.  In a way they have killed their goose with the golden egg!

Some of you may be thinkng…  “Well Jeff, you sell your programs for $97!”.

The BIG difference is that I teach a strategy, but it requires a trader to act on their own and decide at what time to pull the trigger and when to get out. Yes I give a set of step by step rules but….   From experience I can tell you that even though all traders have the same set of rules, they don’t carry them out the same way.

• For example some will hesitate to get in because they want more confirmation.
• Some will get nervous and exit a profitable trade after just a few pips while other traders will hang in there.
• Some traders will add more indicators which changes my original strategy.
• Some traders only trade the London session and will miss trades that US trading sessions will produce.
• Some people are happy making 10 pips and calling it a day while others are shooting for 40 or more.
• Some will use my system on a 5 minute chart while others us a 30 minute chart. Each time frame will produce a different amount of trades and exit and entry points.
• The list goes on and on…  Because of this there will never be 10,000 traders jumping in or out at one time.

In contrast with a robot everyone will get in and out at the same time. Anyway, moving right along…

There are two sayings that apply to the over hyped “can’t fail” forex robots being advertised.

1.  If it is too good to be true, then it probably is.

2.  You USUALLY get what you pay for. Please understand that just because something is inexpensive doesn’t mean its crap. I just think you have to be leary when you are promised the sun, the moon and the stars for $97.

I think you have to ask yourself if you want to risk your hard earned money on a program that thousands and thousands of traders are using?

I know for me personally if I am going to use a robot it needs to meet these criteria;

1.  It needs to have steady performance over the past 1 -2 years.

2.  It can’t have any big drawdowns. To me that is less than 25% – 30%.  To some of you that may sound ,like a lot but…  The forex markets are very volatile and they need some “room to breath’.  Also a lot of the so called “Wonder Systems” have drawdowns as high as 75%.

3.  It needs to “Fly under the radar”. What I mean is that I don’t want thousands of traders taking the same signals at the exact same time as me.  A few hundred traders are ok as they won’t adversly effect the market.

4.  I prefer a system that can run on a private server that will run 24/7. What this means is that the system does not require me to login or keep my computer running.  This frees me up from worrying what happens if my computer crashes or losses power.  It also is the only truly hands free way to trade.  Robots that run on your PC require you to monitor things just to make sure there isn’t a power loss or system shut down.

I have recently found a program that meets all the above requirements.  Whats really interesting is that it has built in intelligence that helps it learn from its mistakes.  This has allowed it to never have more than 2 losses in a row.  Anyway, I won’t go into anymore detail for the moment as I am first going to throw $5,000 into an account and trade it.  As long as it keeps performing as it has, I will share the results with those of you who are interested.

I will also be testing out another robot system on the other end of the spectrum as it sells for $5000.  That may sound like  a lot to some of you, but if it does what it says then it is worth it.  Anyway, I will keep you posted.

You may wonder why I want to trade robots since I have developed my own systems.  Two reasons…

1.  Diversity.

2.  My systems all require me to manually find, execute and monitor my trades. While I don’t have a problem with that and actually enjoy the process, but there are times I am just too busy to trade.  Running a robot helps me participate in the markets when time is short.

Before I wrap up Part 2 of this series, let me leave you some tips for using the $97 robots.

1.  If you see a robot that you like, look for the contact info. If there is no email or phone number then run the other way.  There is a reason the vendor doesn’t want you to know where they are.

2.  Don’t put all your eggs in one forex basket. I would try and trade 2, 3 even 4 robots as this will help balance your portfolio out.  This way, say one robot falls apart or under performs the others should help keep your head above water.  Also risk no more than 1/2% per robot position.  You will definitely need to get your math right to ensure you risk the right amount on every trade.  If you are trading multiple currency pairs with each robot then you should drop your risk down to about 1/4% per position.  What this will do is safeguard you in case the shit hits the fan and all the robots and trades go bad at one time.  In this worst case scenario you would walk away with a small roughly 5% overall loss versus blowing out your account.

3.  It can create a bit more work, but it would be a good idea to trade with 2 brokers just to spread things out a bit.  That way in case their is a broker related meltdown it won’t effect all your positions.

4.  Don’t bet the farm on any one robot. I don’t care how good a system performs and even if it has returned 500% for the last 10 years.  The bottom-line is that forex systems can and do breakdown so you need to diversify and not throw all your money into one robot. As I just said, I don’t care how good  a system performs and even if it has returned 500% for the last 10 years.  I know it could be tempting to throw all your money into a system especially when you start playing with all the numbers and adding in the power of compounding.  Anyway, don’t be in a hurry as it could be your downfall.

5.  Don’t limit yourself to the the $97 forex robots. You need to test out ones in different price ranges so that you have a broad perspective on things.

I have a lot more to say about robots , but the 2 fingers I type with are getting mighty tired so I will say until time…  Hope this gives you some valuable food for thought!

Jeff Wilde

Forex Robots: The Good, The Bad and The Ugly! Part 1

As forex continues to explode I asked a good friend, Dr. Jeff Wilde from AskJeffWilde.com, to bring us his expert opinions. As the title states he’ll be bringing the good, the bad, and the ugly! He’s also asked for personal stories (of good, bad, or ugly) to be left in the comments!

==================================================================

Unless you haven’t turned your computer on over the past 12 months you can’t help but notice that practically every week another forex robot comes on the market.  My inbox is getting bombarded with offers lately all promising me a life of riches with little or no losses by using these forex robots.  Anyway…  I am blowing the lid off of the robots and taking an in depth look at them.   I have a lot to say about that and will get to it in a moment.

I pretty sure most everyone reading this knows what a forex robot is but for you newbies let me explain briefly…

A forex robot is a computer run program that is designed to analysis the forex markets for trade setups based on a particular trading system.  Whats more they can easily analyze multiple currency pairs at the same time.  In addition they will automatically place the trades for you without you even having to be present.  The most popular forex software to use forex robots with is Meta Trader.

The GOOD things about robots are…

1.  Save a lot of time
2. Prevent you from having to do  a lot of manual analysis on your charts
3.  Eliminates user error
4.  They can even place the trades for you automatically.
5.  They can easily trade multiple markets in real time.  This is something very hard for a great many traders.
6.  Allows you to be doing something else while it trades for you.
7.  Allows traders with minimal experience to start trading very quickly.
8.  Helps remove user emotions and indecision

Now for the BAD…

For starters…

1.  What happens if your computer crashes while the robot has you in a trade?  Unless it is able to put all its commands onto your forex brokers server, you could be screwed.

2.  You need to realize that a forex robot is not magic.  It is simply a set of trading rules designed by a human being.  And, the system is only as good as the person that created it.

3.  There is a lot of “smoke and mirrors” in the wold forex robots.  What I am talking about is the use of a  thing called optimization.  This is a feature that allows you to go back in time and analyze all the trades your system would have taken and then what it does is … It will change the parameters of the system to improve the results.  For example say your system uses a 8 period and 21 period moving average crossover as one of the triggers for  a trade.  Well when the software goes through the optimization process and it will examine hundreds of moving average combination’s and determine which would have provided the best performance.  Lets dig a bit deeper…

A little optimization is ok as it may help you discover a better combination of indicators then you could have come up with on your own, but…

The big problem is when the robot creator gets carried away with the optimization process,  because they can literally keep tweaking things until they show little or no losses on the test  results.
The trouble with this is that the robot creator is doing a thing called “curve fitting” the results.  This gives a false sense of security and can be very misleading as a  curve fitted robot will ALWAYS eventually fall apart in the real world.  This is one of the reasons you see some of the forex robots boasting extraordinary profits fall apart within days or weeks of using them.

Now for the UGLY…

1.  A lot of the new forex robot systems are claiming no losses.  Now I have to say this as clearly as possible, that is BULL S*&#!  Yes they may show no losses but there are some dangerous things going on.  The systems that say no losses don’t use stop losses.  Their reasoning is that eventually the trade will close out profitably.  Well maybe many of the trades will, but what happens if just one doesn’t?

I was evaluating a robot the other day that claimed 100% wins.  Well guess what?  It was sitting on a GBP/USD trade that had an open loss of over 500 pips. Sure its not a loser until you sell it, but who wants to see a trade down that many pips?  To give this a different view, look at investors who bought a stock for say $200 a share back in 2000 and now it is trading at $2.  Technically they don’t have a real loss until they sell it, but the bottom-line is their account is down huge.  And it could take 20 years for the stock to come back to break-even, if it does at all.

So back to forex… What happens if something happens on the GBP/USD that forever devalues it?  It means that the 500 pip loss could keep growing and never comeback to break even.  What then?  That one trade could wipe out your account.

2.  Other forex robot systems claim very high win rates of over 90%.  That is great until you dig deeper and read the actual trade reports.  What you will see is something like this… Nine trades will make small profits like 5 pips – 10 pips and then all of a sudden it gets a big loser of 50 to 100 pips.  In one trade all the previous gains are wiped out and you have to start again.

3.  Another form of robots have truly impressive gains when you look at their back tested results.  You will see that they made say 457% over  the past year.  The trouble is when you look at a thing called the equity drawdown, the account could have dipped down in value as much as 75%.  Now I don’t know about you, but most traders can’s stomach that kind of draw down.

Let me wrap this article by giving you a real world, real money example of a robot. Two years ago a friend of mine had developed a robot to trade the emini futures markets.  Over the past 6 years it had averaged 92% winning trades and never had more than one losing trade in a row.  It also produced huge returns each year.  My friend had traded it for a year and it performed with real money exactly as it had done over the past 6 years. So far so good…

I told him I wanted to open an account and I started with $15,000.  In just 3 weeks the account was up to $35,000 and at that rate I was sure I was going to be a millionaire within a year!  Well out of nowhere it had 2 losses in a row and they were big.  In the blink of the eye the account had dropped to $20,000.  I was blown away at how it could fall apart and have 2 losses when they hadn’t occurred in over 700 trades in the past 6 years.  At this point,  my friend said something wasn’t right and that we should be really careful from here on in.  Fortunately I pulled the plug on the system and closed the account because the system had a 3rd loss in a row the next day.  According to all back tests this was mathematically impossible, but that didn’t stop it from happening.

In hindsight we have no idea why the system fell apart, but what I do know is that its fatal flaw was that the losing trades were 8X-10X bigger than the winning trades.  That’s how it got the 92% winners.  It may be obvious to you that the risk to reward values were really bad, but…

This is generally how forex robots can claim few losing trades.  The reality in trading is that it is almost impossible to create a trading system that has a 90% plus win rate with A small risk and huge reward ratio.  If it does exist, no one will sell it to you for $97 because it it could easily be sold to a financial firm for tens of millions of dollars.

Anyway…  I have a lot  more to say on forex robots.  This is just to get you thinking and to open your eyes because there are some really crazy claims being made out there.  I’m not anti-forex robots. but there is a whole lot to know and learn in order to make them work in your favor.

Dr. Jeff

To read Part 2 please visit AskJeffWilde.com

Chee Kiang Lim, an attendee to my 6-week webinar asked:”S&P futures up >2%. Was your prediction based on charts or historical performance over the Easter period?”

I had similar questions from some of the Indian viewers of NDTV-Profit.

Here’s my answer.

My approach to the markets involves multi-disciplines. I am looking for confluence from different information sources. For example, I see little point in using a MACD, RSI and Moving aAerages to identify the trend: the tools all measure the same thing – price.

The basis of my approach relies on 3 major categories and 2 supporting ones.

Major:

• Price Structure: Barros Swings, Market Profile, the Ray Wave. This includes price targets based on statistics and ratio analysis.
• Price/Volume Relationships
• Time: using statistics, seasonals. Hurst analysis, and Ratio analysis.

Minor:

• Sentiment: COT and Sentiment Surveys
• Momentum: Ray’s Clock and Average True Range

In this call, I had:

• On the 18-d, a target for this move at 936 to 903
• a seasonal move up for end April to early May
• A Hurst cycle, looking for a low in the first week of April followed by a move up to early May
• On the 1-d swing, I saw a running correction – this denoted strength. The S&P stopped on Monday at the optimum retracement for a running correction.
• The pull-backs on April 6 and Tuesday 7 were on light volume.
• The average target for the first leg of a running correction is 1.6% +/- 0.7%.Since a running correction denotes strength, my target for the 1st leg was 1.6% to 2.3% from the end of the correction.

Putting those factors together, I came up with a plausible scenario. The market would make a low (target 814 t0 822, basis cash) either Wednesday or Thursday and would rally from that point until May. I am looking for seasonal. Hurst high end April/early May.

Hope this helps.

Cross ref:http://awanginvest.com/?p=984

Having started on the significance of Volume and briefly touching on the four phases of the market, I would like to finish off tonight on the impacts these phases have on volume.

These four phases are also evident in the Tubbs Model which I am familiar with, namely, Accumulation, Mark-up, Distribution and Mark-down.

Impacts on Volume:

Accumulation phase – This always takes place at bottoms over a long period of time. Operators build up their holdings in anticipation of selling at higher prices, taking from six weeks to two years. They will accumulate quietly to keep price down until near inventory level. This is the start of the Mark-up phase.

Volume: Although quiet most of the time, we may see occasional small spikes in volume and price here and there due to operators buying sizeable blocks but doing their best to keep their buying quiet.

Mark-up phase - There will be plenty of positive press releases with names like Warren Buffet who has been buying. This starts the mark-up phase in the equity. There will be those who charge in to push prices higher. The operator may buy more to push the equity beyond breakout levels to create a frenzy. There will be corrections in the market and the operator will support by buying up more. When the correction is over, the operator will mark his equity up until his plan is fulfilled or he alters his strategy.

This mark-up phase can go on from a few months to years. It is important to realize the cause building up before the move into the mark-up phase to give us a heads-up to move fast through the mark-up and into the subsequent distribution.

Volume: Trading activity escalates and stays relatively strong during the mark-up phase with operators picking up to start a commotion to attract the public with press releases and stock flipping. Volume begins to wane when the crowd is finished responding and buying becomes minimal.

Distribution phase – This phase starts before the equity sees a top. Operators do not and cannot get out of large positions quickly. So they start working their way out of their postions when their price goal has been met or some other information. This is when stock moves from strong to weak hands.

Volume: Like in Accumulation phase, volume here is also very quiet. Operators unload their shares quietly to keep prices steady. When they finish unloading and prices are slipping, they may also quickly dump what is left of their position. We will then see a downdraft, a heavy volume day ie ‘volume off the top’, which begins the mark-down phase.

Mark-down phase – The end of the distribution phase leads to the mark-down phase. Mark-downs are accomplished by hedge funds as mutual funds are precluded from selling short. Mark-downs facilitate a new line of ownership support. Also operators will help to drive prices down by shorting and selling into rallies and make money along the way. Operators have a plan on the way up as well as on the way down, enjoying the best of both worlds by driving equity up, unloading and then driving equity down. The whole process starts all over again.

Volume: Both volume and price activity are more intense during mark-down as opposed to mark-up. Once volume quiets down and price stabilizes, the accumulation will crank up, commencing the price cycle once again.I reiterate: the more time a stock spends in the accumulation phase, the more protracted the mark-up phase will be, and the longer the cause, the longer the effect, which will be another topic another time another opportunity to write.

IDKIT aka ANA

Cross ref http://tradingsuccess.com/blog/

Yesterday I was speaking about the unrealistic expectations of some of the advertising material. Today I want to illustrate the points I was making with a personal example.

Figure 1 is my VAMI (Value Added Measurement Index. The index measures the value today of an investment of $1000. As at October 31 2008, the VAMI stood at just over $370,000.00.

Last year, I had third best year; but for an error brought about by the fact that I was rushing back to Sydney (Mom was taken seriously ill, it could well have been my second best year. (She is fine now).

I tell you all this as a context to my comments below.

After closing out all positions in October 2008, I re-entered the markets this month. Heading towards the last week, I had six open, non-correlated positions (well as uncorrelated as you can get nowadays). Some of the positions had a small profit, others were carrying a small loss. My loss to that date was a little under 4.5% of capital. This was nudging the top end of my normal monthly-loss range.

Then all six positions were stopped out, making the loss for March 2009, the largest single loss since 1990, coming at over 21%. This was for me, what Nassim Taleb, calls a Black Swan event.

And, it is the Black Swan events that put paid to the assumptions that somehow knowledge of the markets coupled with ‘new technology’ will make it different this time.

At the end of the day, the key to success is the consistent execution of our risk management and trading strategies and tactics – in short, the consistent execution of our trading rules.

To forestall the e-mails, let me answer this question: How do I handle Black Swan events?

Answer:

1. Firstly, I take some days off. In this case, I took off 3 days.
2. I then re-assess my position size. I went to half normal size as my ‘normal size’.
3. Finally, I formulate new short-term goals: to trade to recover the losses. In this case, I aim to recapture the losses over the next 7 to 8 months i.e. by year end. If I do it earlier, it’s a bonus. But I certainly won’t be pressing my trading just to quickly recover the losses.

So, here’s the point to my story: by accepting the hype thrown at us, we ensure our own lack of success. There is no magic; there is no quick way to success.

To succeed, we need to:

• Put in the work in understanding our tools and ourselves;
• Manage our risk;
• Create contingency plans for Black Swan Events;
• Be patient in seeking to build our wealth and recover losses. Profits and losses, they too shall pass.

FIGURE 1: VAMI

This week, I want to share with you a chart pattern that the pro’s use everyday to great effect. The chart pattern we will be looking at, is one of my favorites as it has a high reliability factor.

The chart pattern in this short video is well known inside the professional trading community. However, outside of the pro circle it seems to be shrouded in mystery.

In this new 3 minute video, I peel away the layers of mystery and show you step-by-step how you can personally benefit from this chart pattern that occurs in all time frames.

What’s amazing to me about this chart pattern, is the fact that after over 3 decades of real world trading, it continues to repeat itself.

http://www.ino.com/info/329/CD3131/&dp=0&l=0&campaignid=3

With that fact on our side, I think it’s a safe bet that this chart pattern is likely to stick around for the next generation of traders.

All the best,

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