Buying Into Bitcoins

With the 21st century demand for quick and big profits, one of the most controversial new investment vehicles has been Bitcoins, the virtual currency. It’s gained controversy partly because of its volatility, partly through the instability of Bitcoin exchanges and partly because their in-traceability meant they were a favored payment method for criminals.

Things are changing and after a particularly volatile spell in which one of the main exchanges, MtGox, filed for bankruptcy, the currency seems to have settled into a more stable pattern allowing investors to be able to take a measured view of whether to risk their money in a currency that technically doesn’t exist.


Although Bitcoins are becoming increasingly popular, the market is still quite small, meaning that good and bad news can have a disproportionate effect on the price. The long term outlook for Bitcoins is potentially good, meaning that the upside on price is stronger than the potential for a decline over the long term. Most brokers recommend that you consider Bitcoin a medium to long term investment because of its volatility. Think of it in terms of real estate. No one buys and sells houses many times a day and there can be significant drops in property prices but the long term trend for property prices is usually up. The same can be said for Bitcoins. Whilst there is a significant daily trade in the currency, many Bitcoins are held as investments as analysts believe that it’s likely the price of Bitcoins will rise long term because they are becoming more widely accepted.


As with all financial instruments, prices are influenced by supply and demand. Bitcoins are no different but what has caused big fluctuations in price has been the unusual nature of the news that influenced the supply and demand:

• The bankruptcy of MtGox, one of the biggest Bitcoin exchanges

• The closing down of Silk Road which allegedly accepted Bitcoins for drug trading

• The disclosure by the US government that, despite the negative uses of Bitcoins, they believed that the currency had a future

• The media has also stirred up interest by reporting on milestones in the currency’s rise and fall, trumpeting the rise to over $1000 and its subsequent plummet on bad publicity.

Generally the advice on investing in Bitcoins is to sit and watch the market for a couple of weeks to get an idea of how the currency trades, its volatility and trends. It’s difficult to find rumor that hasn’t instantly affected the value, so many suggest investing a small amount and simply watching for opportunities, a little like setting take profit levels with shares and Forex, you can do the same on Bitcoins; it’s just a bit longer process and a little less automated.

Just like with any investment, the value can fall, and events like the collapse of MtGox and the closing down of Silk Road, negatively affected Bitcoins; not just because demand was reduced but also because Bitcoins were falsely linked with the companies by urban myth. The market seems to be becoming more regular, but not necessarily regulated, as more exchanges come online. Some of the exchanges will go the same way as MtGox but others will consolidate and become stronger and more reliable. No doubt official regulation will be applied to Bitcoins in due course at which time the volatility is likely to reduce.

Bitcoins represent an exciting and potentially lucrative medium to long term investment vehicle. Exciting because it hasn’t yet been accepted into the mainstream of currencies or investment vehicles. One thing investors like about Bitcoins is their conviction to prospects as was in gold

FXLORDS offers a full range of premium services such as Forex trading signals, Forex managed accounts and Forex training courses to give our clients the opportunity to benefit from day-to-day Forex market trading, and so, became one of the finest sources of financial services and information.

Why It Is Tough To Deal With Uncertainty

One of the most frequently asked questions I get from traders at all levels of experience is how to deal with uncertainty. Undoubtedly we have a tough time to deal with uncertainty. This isn’t only true for traders, it is true for life in general:

Usually our discomfort around uncertainty is highlighted when we work towards a larger than normal goal

Traders and investors are particularly aware of the issue because they make more “important” decisions in the face of an uncertain outcome daily then most people. Your trading system may back test extremely well, you may use a fully automated system, or a fool proof hedge, none of these strategies ease the fact that our brains find it tough to deal with uncertainty.

We are having a hard time with uncertainty because your brain can’t see into the future

You read that correctly: From a neuro scientific perspective the brain can only see in the past.

It makes all its decisions from past reference points. Past reference points are the experiences that have built up in your life from the moment of conception to the present day.

The problem is that most of us have not had a plethora of blissful, positive experiences to fall back on, rather there is a mixture of good bad and traumatic, as the brain’s memory bank recalls it.

The discomfort of “uncertainty” is deeply rooted in our survival instincts.

Man has had a tough time to survive until now. Humanity is still in its infancy, relatively speaking. We are still operating is if we are living in an environment that is dangerous. The appearance of danger is directly linked to the level of our evolutionary development. The lower down the evolutionary scale you reside the more you are influenced by your environment. As you move up the evolutionary scale you begin to have more influence over your environment.

We have not yet adjusted to the next evolutionary step in our development which is using our mental muscle to co-create our lives in line with our desires. The fear of uncertainty is a survival emotion, hence it feels “natural”.

Becoming aware of what you feel and understanding why you have these seemingly uncontrollable emotions and feelings is always the first step that enables you to initiate change.

Set the intention to become aware of your feelings of uncertainty, observe them for their validity. You will find that most of these automatic feelings are false flags.

Mercedes Oestermann van Essen is a thought leader in the field of trading psychology. She is the author of “The Buddhist Trader” and “Holistic Feng Shui For Your Brain” and other books on trading psychology and inner growth.

Her Transformational Guided Meditations increase cognitive awareness and improve focus and create mental clarity.

“Market Quality” Concept With Market Internals

In today’s article, I would like to share with you a concept that I have presented to some of my students. It’s a pretty simple, yet powerful concept on how Market Internals can be used:

Take an existing Market Internals, let’s say NYSE TICK.

Use NYSE TICK to define market “quality” zones: non-trending, trending, and strongly-trending.

By doing this, we have created 3 different zones of quality for this given market, which I will call “Market Quality” (MQ).

For each MQ zone, we can either set up different risk exposure/numbers of contracts or even switch between different trading strategies.

Let’s take a look at an example:

If we use NYSE TICK (this MQ concept can be applied to all other Market Internals, anyway), then the first step is to specify the zones as non-trending, trending, and strongly-trending.

According to my experience, the limit when a non-trending market changes to a trending one is at 300 to 400 for a long position, and -300 to -400 for a short position. Then, we need to set up the limit in which trending goes to strongly-trending, which is, based on my experience, somewhere at about +1,000/-1,000.

The definition of these 3 different MQ zones, when using TICK NYSE, looks like this:


Non-trending: 0 to 400

Trending: 400 to 1,000

Strongly trending: above 1,000


Non-trending: 0 to -400

Trending: -400 to -1,000

Strongly trending: below -1,000

Now, when we have defined the different zones for market quality (MQ), we need to ask ourselves, what do we do with this information? And there are two viable options.

The first one is risk management, or changing the number of contracts.

You simply test the number of contracts (1-3 or 0-2) for each zone and see how your system behaves when you use a different number of contracts, according to the MQ zone you are in. In this same way you can work, not only with the number of contracts, but also with your stop-loss. It is clear that each zone represents a different volatility and, therefore, using different stop-loss levels for each MQ zone can bring interesting results.

This is one of the basic applications of the MQ concept (it can be further developed into a more sophisticated form).

The second option is using MQ zones to switch the systems – something like this:

Switching systems based on Market Quality zone:

Non-trending: scalping system

trending: trend-following system

strongly trending: mean-reversion system

For non-trending market conditions, you will simply use a scalping system that doesn’t need big moves for profits. As soon as the Market Quality changes to a trending market, you will switch to trend-following strategies (for example a breakout strategy). And, as soon as the market reaches a certain level, when the trend might be reaching its end (when NYSE TICK gets above +1000/ below -1000), you should start looking for some counter-trend entries (mean-reversion) strategies, that are waiting for a counter-trend correction after a significant market move (and you try to make some profit from this correction).

Using this approach, you will get one “universal” system that will change its settings according to the Market Quality. This is just a theoretical example – the practical application is up to you. And it is quite a load of work to get from theory to practice. So, let’s get to it!

You can also work further on this concept, develop it to more forms and find other ways to use it – the example with TICK is just one of many ways in which Market Quality can be used. Or, you can use a “hybrid” of both these approaches – according to the MQ zone you can switch strategies, change your stop-loss, or maybe alter the number of contracts.

What I would do is keep the number of MQ zones low. 2-3 zones are absolutely enough – in the case of more zones, there is the risk that you could not have a sufficient number of trades in each sample.

Anyway, now you have a strong and interesting concept, so roll up your sleeves and get to work!

Happy trading!

Could Your Trading Improve With Waking Meditation?

The idea of entering a state of waking meditation while you trade seems almost bizarre, I know. Yet, I can assure you if you took the time to master the art of waking mediation your trading would be greatly enhanced:

Let me explain why:

It all begins with your mood: The University of Massachusetts found that 33% people who meditate regularly felt that their mood improved.

When we are in a good mood, mind and body relax. Suddenly what appeared to be a problem, or challenge becomes manageable. You get a sense of being in control, rather than being at the mercy of your environment.

If this alone weren’t enough to convince you of the benefits of meditation, the next piece might convince you that learning the waking meditation technique is an absolute must to help you enhance, or maintain a high trading performance:

When you learn to remain fully conscious in the deeper meditation frequencies like the waking theta brain wave, you have access to information your brain cannot access when it operates in beta or the lower alpha waves.

Your brain use used to operate in beta and in the lower alpha states.

Typically when you focus on a task you are in some form of alpha state. At this frequency you function on auto pilot: You don’t have to think about every step you take, feel at ease and in flow. You are not focused on time, or on your body, your focus is on the task you are performing.

This is a great state to be in which also reduces habitual feelings of tension and anxiety, however these brain waves don’t allow you to access additional information.

In order to access additional information which you cannot fathom with the intellect you need to go deeper.

Learning to operate in the waking theta brain wave requires practice. It also requires unlearning of old conditioning, because old conditioning acts like an interference wave that throws you continually of course whenever you try to enter the waking theta state.

In order to create a noticeable shift in the quantum field you need to be able to focus without interference for a minimum of 17 seconds. You probably think that 17 seconds doesn’t seem very long. If you were to try to focus on one subject for 17 seconds you will be surprised how difficult it is.

In the waking theta brain wave you lose a sense of time while also becoming hyper aware. It is a form of super focus. Regular practice with pyramid energy is one way to train your mind to become comfortable in these higher frequencies.

If you were to learn to be comfortable to perform ordinary tasks in the mental state of waking theta your entire life would change, because you would lose the need to constantly react to what is going on inside of you and around you. Would that have a positive impact on your trading? I should say so.

Mercedes Oestermann van Essen is a thought leader in the field of trading psychology. She is the author of “The Buddhist Trader” and “Holistic Feng Shui For Your Brain” and other books on trading psychology and inner growth.

The ABC of a Successful Trader

Forex Trading is built upon appropriately educated, disciplined and self-controlled individuals whose years of expertise in the field of Foreign Market Exchange has led to true mastery of trading skills. A successful trading business functions much like a team of highly adept soldiers: Like good soldiers, professional traders must visualize the battle before entering into the fight with their opponents. To secure victory both soldier and trader alike must take the proper steps before diving into action.

The “Holy Market” and its “Commandments”

Market treats all traders equally as such; it is the accurate implementation of strategy that determines the fate of a trader. Being a successful trader is an indication of outstanding work being done hours before markets open as well as long its working, simply in booking profits and controlling urges fore example that relentlessly instruct you to “go back in and make some more money”

Preparation is half the battle

The key to successful trading is good planning. A great trader is a person who knows exactly what he is looking for. He will put in the time and effort required to research and develop strategic plans that encompass short- and long-term goals.

Planning includes establishing a list of the actions required for a successful trading day, namely one that is set to yield profits. The first step is to review the trading journal of the previous day to prepare for the next trade. The second step is to perform a chart analysis to find out which currency pairs you will follow. Finally, the third is to prepare your trading platform; do so by reading the latest global economic data from the international economic calendar. This will reveal whether the currencies you are monitoring have been affected by the latest economic developments.

Develop your trading sense

Having the dexterity to trade is an advantage for any trader, but such skills can take years of practice to develop. Most traders use their “6th sense” to spot and grab opportunities of small price discrepancies both within and between the markets.

Much like a manager, the trader has to rely both on analysis and his intuition to spot the trade set ups at the right moment. However, a novice trader can still develop this sense and make consistent money by rigidly following the principle of risk and reward in Forex trading. This principle demands careful study of what the trader is going to risk.

Discipline 100%

The best traders are intensely self-aware. They know their limitations and focus on what can go wrong by investing their energy in limiting and controlling their risk.

To achieve success in Forex Trading, the most essential step of all is to stick your strategy. A carefully laid plan will guide the trader through the fundamental and technical analysis required to interpret the price movements, translate the technical indicators, and identify the ideal trading positions. A good trader is a disciplined trader; he is like a hunter, preparing for days to achieve the perfect trading set up. He chooses an appropriate stop loss point which marks the amount of acceptable risk; he never allows more than the most efficient amount of risk. He is never gripped by greed, fear, hope or regret and does not exaggerate his expectations of success. His excellent decision-making skills prevent the opinions of others from leading him astray, and he does not over-analyze or over-trade. Despite his success, he remains humble and always provides honest guidance to novice and fellow traders.

Detach from the need of money

Successful traders view trading as an exercise, and they focus on getting the most out of the market in accordance with their plan. In short, a good trader should not be motivated by financial reward. If this rule is broken, as it unfortunately often is, the market will turn and move against any trader who has an excessive desire for money.

Greed is the main enemy of all traders. It presents a profound hurdle on the way to the success. Desire for possession must never govern a trader’s actions; the results of such loss of control are always catastrophic. In small part, trading is an opportunity to make money in a certain amount of time if all rules are obeyed. However, it is also a chance for self-fulfillment and a test of one’s worthiest capacities, and it must be respected as such.

Stand strong like a rock

A good trader must stick to the rules of his strategy. He must not allow emotions like greed, fear, hope and regret to overtake him; these in particular are the four worst emotions for a trader. Consistently profitable traders have an unshakable emotional system regardless of conditions.
Like greed, dealing with emotions during trading is also a constant challenge. The first thing that a trader must do is follow a strategy that is comfortable for him. To avoid emotions, the trader has to enter trading with realistic expectations; bet a logical amount of money on a trade; and learn to enjoy trading by risking less money, gaining experience, and developing belief in his strategy.

Adapt to change

The very best traders are always eager to learn and improve their skills to keep up with the continuing changes in the market and technology. A trader should be flexible enough to cope with the technological advances and read intensively.

In the constantly changing Forex environment, the trader must be flexible. If the market throws something unexpected at him, the trader should be able to analyze it and take action quickly. Success in the Forex market demands a non-stop learning process through which traders come to understand the volatility of the market and in return gain the expertise needed to make profits.

Good decision-making skills

A successful trader must possess excellent decision-making skills. Once you realize that your trade is going to close at a loss, exit immediately. Successful trading is mainly based on good decision-making and is highly related to the relevance of the present data collected. Successful traders are also independent in their decision making.

The primary difference between the professional Forex trader and the beginner is that the first knows exactly what he is looking for and when to enter the market.

Successful Forex brokers who gain recognition respect each of these rules. They work hard to be successful and even harder to stay in front and remain profitable. They know that the market will reject those who disobey these rules in favor of money because trading is a practice of passion not of greed.

The successful trader

George Soros gained international recognition when he toppled the Bank of England on September 16, 1992, a day that is preserved in history as “Black Wednesday”. He was given the nickname “the man who broke the Bank of England” because Britain was then forced to abandon the Exchange Rate Mechanism aimed at fixing the pound’s rate to the Deutschmark.
Soros risked $10 billion and generated $1 billion in profit in a single day.

“The money that I made on this particular transaction would be estimated at about $1 billion. We very simply used the forward market-you borrow sterling and you sell the sterling that you have borrowed. And then you buy back the sterling when the loan expires”. (Soros, 1992)
George Soros was also accused of triggering the Asian financial crisis by selling the Thai baht and Malaysian riggit short in 1997. Thailand proactively spent almost $7 billion to protect the baht against speculators and finally asked the International Monetary Fund for its help. In The Crisis of Global Capitalism: Open Society Endangered, Soros (1998) responded, “The Prime Minister Mahatir of Malaysia accused me of causing the crisis, a wholly unfounded accusation… We were not sellers of the currency during or several months before the crisis; on the contrary… we were purchasing ringgits to realize profits on our earlier speculation”.

Soros gained more than $790 million in this trade. “It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong”, he summarizes.

The 3rd most notorious trade that Soros ever made came in 2012, when he recognized the possibility that the yen could go down after the damage that Japan’s economy had suffered during the devastating tsunami of 2011. Sure enough, the yen did indeed weaken, and when it did, in order to boost the economic situation, many speculators opened USD/JPY positions betting that the value of the dollar would rise against the yen. In this case, Soros gained $1.4 billion.

The main technique of Soros and other top-notch traders is to spot upcoming vulnerabilities in a country and then go right after currency before it falls. A currency pays off better when its rate is fixed in relation to other currencies, as in the case of the pound and Thai baht.

Vulnerable countries try to buy up their currency when it is being sold, as people can turn around and sell the currency themselves. These countries do so in an effort to artificially sustain the fixed rate. However, this artificial balance is very sensitive, and when the countries cannot fight the market forces any longer, the balance collapses. This is exactly what happened in the Soros cases.

As Soros demonstrates, a threat for others can turn into a profound opportunity for traders who are alert and prepared to act. Soros is an example of a good soldier who used his disciplined mindset, an analytical approach, and all his market commandments to become a successful currency trader. He both masterfully and calmly conducted himself within the currency war market and demonstrated a combination of patience with discipline to identify the perfect time to execute his trades. Clearly, an adept soldier’s qualities can become the qualities of a great currency trader as well.

FXLORDS offers a full range of premium services such as Forex trading signals, Forex managed accounts and Forex training courses to give our clients the opportunity to benefit from day-to-day Forex market trading, and so, became one of the finest sources of financial services and information.

When Will The Next Market Crash Happen?

If only would be paid for every prediction of the next market crash I’d be very rich. We are so used to being brainwashed that most of us don’t even notice any more to what extend this is happening 24/7.

Fact:You are not thinking for yourself, you are constantly told what to think

The permanent barrage from the financial media that only serves one objective that is to make you do something that is not to your benefit, but fills their offers in one way or other, has reached a point of beyond excess. Today you simply cannot turn on CNBC, Bloomberg or any other news channel without being brainwashed. This is not news any more.

I regularly receive emails from so called “leading market analysts” telling me of the big crash. Big crash mean that we must see a price drop of at least 15% in a short period of time.

Artificially induced fear rules the world of trading and investing

I just have one question: What happened to the big gold rally forecast by well respected analysts like Martin Armstrong for the last two years?

I don’t know about you, but I am sick and tired with these pumped up hysterical market calls designed to get your attention and flatter their producers’ egos. If I make the same market call long enough eventually it is going to happen.

Alas this is not the worst part of it:

Our brains simply cannot cope with this constant overload. If you think that listening to the news will help you become a better trader, think again. All it does it panders to a deeply rooted insecurity inside you that makes your mind susceptible to authority, fuelling insecurity, greed and dysfunctional trading behaviours.

Today everyone has guru status who has appeared on TV at least once

The entire guru industry is a media machine designed to disempower you and make the many trade forecasting services a lot of money. Unbeknown to your conscious awareness your brain is addicted to this kind of information overwhelm. If I asked you to stop listening to the news from today on for the next week or so, you’d find it very hard to do.

Most of what you are told is plain fabrication with no base on reality

Yet the story is repeatedly sold to you from many angles that eventually you believe it. Welcome to the biggest brainwashing machine out there.

Fact: Most of so called gurus are brilliant at selling and lousy at trading

I know quite a few of them and have seen their trading accounts. Believe me, you would be shocked.

I wonder: How many times have you been caught out in a trade you took just because you got swayed by the opinion of some trader who comes across as extremely knowledgeable and competent? I dread to think. I used to do it too. In fact, I lost way more money following the advice of other traders, brokers and famous analysts than I managed to lose trading my own style.

Distinguishing between what is true for your trading psychology and personality and separating the wheat from the chaff is a tall order.

Most traders’ brains are simply not trained to manage their minds in a constructive way that serves them. They are too immersed in their unconscious addiction to know ahead of time where the market is going. I know this is tough talk, alas it is one of the few truths out there. Freeing yourself from the addiction to market news is one of the kindest things you can do for your brain and your trading account.

Mercedes Oestermann van Essen is a success coach and trading psychology coach. She works with financial professionals and entrepreneurs assisting them to create brain coherence and manage their internal states.

She is well known and respected for her cutting edge insights in the field of trading psychology. Mercedes Oestermann van Essen is the author of “The Buddhist Trader”, available on and other books on personal development and trading psychology.

3 Important Trading Tips and Tricks

In today’s article I would like to wrap up all the important things I have learned in trading in the last decade. So let’s get to it!

1. Risk management and positive RRR

We started to work on our private fund and application with our team three years ago. At the beginning, we asked ourselves one fundamental question: “How can we shift risk management to a really high and sophisticated level?” Please take notice of the fact that our first steps towards working on our own fund weren’t about which broker to use, what server to have, or what strategies we should use. All these questions wouldn’t be significant unless we understood that the base for successful trading is mainly a high-quality risk and portfolio management.

The edge in the market doesn’t last forever. Strategies fail in time (even though some may work for years), markets change faster than they ever did before, and drawdowns were, are, and always will be present. Therefore, the question is – what is the best way to deal with that? These are all aspects that need to be resolved on a risk-management level and not on the level of brokers, servers, and strategies.

From my point of view, the most important thing is to create a concept of how to look at money management as a whole. Our elemental approach is based on the philosophy that each strategy in a portfolio is like a single employee in a large firm. And the point of managing such a firm isn’t based on the fact that each employee should receive the same part of the firm’s resources (same percentage of capital), but each employee should have dynamically allocated resources based on how they are doing; how effective they are, and how they are contributing to the firm as a whole. Therefore, our risk management is based on a very dynamic real-time evaluation of actual effectivity of all the “employees”. That means, not only from a point of view of their singular effectivity, but also from the viewpoint of their functionality as a whole. Based on such evaluation, different resources are allocated dynamically to each “employee” in time.

Simultaneously, it is important to take into account all the firm’s resources as a whole (we can look at it as a cash flow) and such resources are also globally increased or decreased based on how the firm is doing as a whole.

In such a model of management, it is important to consider many different aspects, from analysing the quality of each trade, the distribution of the latest ones, as well as of all existing trades through different analysis of equity, volatility, and current quality of markets. The model is therefore very dynamic and literally it can change every minute the distribution of resources to each “employee” and also the whole firm. Naturally, I won’t give out any more details about this subject.

The point for which I am writing this is very simple: It is really important to have a clear idea of how to manage the capital. You don’t need sophisticated models if you don’t plan to manage big money, but if you are a small “ordinary” trader you have to know what percentage of the capital you risk per trade. If such risk makes sense from the point of the Monte Carlo analysis (and maximum possible Monte Carlo drawdown) and also to have a specific plan on when and how to increase or decrease the amount of contracts, and how to deal with strategies and patterns that currently have a bad period (such strategies shouldn’t receive the same resources as those that are doing well).

I strongly suggest to trade with positive RRR. From my personal experience – it is easy to find a beautiful, smooth equity with negative or RRR 1:1, but later on commissions and slippage come in and cards radically change in your disadvantage.

Also, I suggest a book called “Definite to Position Sizing”, which I used to get inspiration for my fund.

2. Regular maintenance and adaptation

From the experience I have gained over last few years – whatever edge in the market you have, whatever approach and trading path you have, your edge will need occasional changes, updates, and maintenance (even if you trade discretionary).

Some changes are changes in stop-loss and exits (better adaptation to new volatility); sometimes it is regular optimization; sometimes small changes in a fundamental idea of the edge. Occasionally, some of this work will be done by auto-adaptive requirements and algorithms on your behalf. But even so, some different levels of regular maintenance will be needed.

A definite edge that you could trade without any changes constantly doesn’t exist. Markets are changing too quickly and therefore it is necessary to make adequate changes in parallel. Occasionally, it is necessary to change the composition of the portfolio; occasionally to change a market or timeframe, or to change the amount of positions thanks to the ever-changing volatility. These are all things that come with experience and are very important.

If you would look at this from a different angle – it is like in any other profession in life. Whatever you do, new trends, new tools, new requirements are constantly coming in and we need to learn to adapt. If we don’t, we can’t become successful in anything in this dynamic world (not even in trading).

The good thing is that it isn’t as bad as it may look. Simply put, it is important to trade and gain experience, to reconcile that we will never be perfect and occasionally we will make mistakes – to learn from them. The more as we trade, the simpler it will be to make a decision about occasional changes to be able to adapt. Not always will our decisions be correct, but that’s how it is in life (if we are reasonably diversified, the occasional wrong decisions will be balanced by series of good decisions. In our fund we are dealing with volatility a lot and on many different levels; from regular optimizations of systems to proprietary auto-adaptive algorithms and indicators, up to concepts working with adaptability on the level of the whole portfolio.

The necessity to know how to adapt is an elemental part of survival in life. This is actually great news because it means that in our genes there is everything necessary for us to adapt. We just need to learn how to use it.

3. Learning is a never-ending process

The previous paragraph leads to the last important point which I need to discuss here – learning is a never-ending process. Trading is a lifestyle, it is a life path. If you have chosen trading, and I mean really chosen, then it probably will be with you for the rest of your life. And that means that there will always be something to learn, there will always be something new. And this is something that makes the path of a trader even more exciting.

To be honest, I have a feeling that I still don’t know much even after more than 10 years in trading. Yes, I have noticeably moved forward. In our fund, with our team, we are realizing and discovering some really incredible things. Even though I have a feeling I don’t know much about trading. Maybe today I know more about risk management than why markets move the way they do. Maybe today I am capable of developing a larger trading and risk management concept than before, but that doesn’t mean that I have found more certainty in the markets. Trading is still a path without certainties. That’s why it is trading, that’s why it is a speculation. But what is certain these days – it isn’t even a civil servant position anymore.

I have a feeling there is always something to learn. Every day we are amazed by new findings that need new, creative thoughts and ideas to be able to implement them in the right way. Even after 10 years I still read trading books; I learn from other traders and I am finding out newer and newer things.

In trading there is always something to improve.

And that’s how it’s probably always going to be for traders. This is a reason why you need to enjoy trading, why you need to be passionate about it in order to be successful for the long run.

On the other hand, I have to say that you will learn a lot, not only about trading, but also about yourself and life. I am actually surprised myself of what I have learned about myself and life thanks to trading.

Try to approach trading also with an open mind and not only from a logic point of view. That would be a mistake as trading needs logic, heart and creativity.

10 Day Trading Tips to Become a Better Trader

Warren Buffett once said, “The stock market is a device for transferring money from the impatient to the patient”. This applies to both – traders and investors alike. However, if you are an absolute beginner, there is always some room for improvement. We have listed below the 10 best day trading tips that successful traders follow. Learn them mindfully and take note to level up your trading. Moreover, you can also check out the best day trading tips and make money from online trading in Indian stock markets.

This is why rookie traders often look for advice from experts who have carved their names in the industry. Read on to find out what you may require before venturing in this high-risk but ultimately-rewarding industry.

1. Learn from a Professional Trader – Day Trading Tips

It is always better to learn to trade from an expert before you jump directly into the ocean. Try and find out who has a good teaching methodology and carefully choose the one that suits your style. Most of the trainers or masters will definitely charge a fee for the time spared. Don’t you worry! It is no fee. It is called investment.

After all, you are a trader and one day when you have made it big, you may be approached by newbies and you likewise charge them. But most importantly, if you invest into education, you are saving on market tuition from learning the lessons the hard way, on the expense of your account balance.

2. Pay Attention to the Financial News

Want to be the best trader around? Keep a close eye on the world around you especially business news. Stay updated about firms entangled in IP issues, Failed FDA nod, Board reshuffle, International projects, and dismal earnings estimates of the quarter.

Every news related to the firm you are making an investment in makes sense. Back your decision with these inputs. For a smarter decision while trading, keep abreast of every piece of information on your preferred investment firm.

3. Found Your Niche? Ace It!

Nobody can guarantee you a blockbuster return. You make your own choices and decisions and learn from your mistakes. Only you know which strategies or niches worked for you and which don’t. If you really have the zeal to excel in day trading, you need to be right on top of your business.

Once you have found the niche to work upon, become really good at that. Master it and it will enhance your odds of success in the trading manifold.

4. Treat it like a Business!

Have a hobby? Pursue it somewhere else. Making money and day trading is a serious business. You don’t do it for fun so even before you start to trade, you need to settle with the fact that it is a serious, time-consuming business and it will take time to break even. If you want to gamble, Las Vegas might have better odds.

5. Follow the Pros

Julius Caesar once said, “Experience is the teacher of all things”. Trading experts, despite their level of training, have a lot to boast, thanks to experience.

Follow the moves of the pros and find out what are they investing in? When do they buy? When do they sell? For how long do they hold? Try and understand how profit is made. You can learn a great deal from the mistakes they once made and then harness them to your advantage.

6. Have Patience

Rome was not built in a day. It takes time to master any skill and the same goes with stock trading. It can give you the best returns only if you trade wisely. Researchers have shown that those who trade less tend to earn better than the one who trades very frequently.

This is just like stalking your prey and then striking when you have absolute chances of success. Always remember that when you trade in average and not-so-good setups, you lose on good deals and eventually your profits take a hit. Therefore, one crucial day trading tips are that quality matters over quantity.

7. Don’t be Emotional & Follow Day Trading Tips

The world of trading calls that you keep a level mind and remember that if you let your emotions get the better of you while trading, you will most likely lose out on your money. Emotions make you take irrational, impulsive decisions which should never happen.

Frequent errors like letting your losses get out of proportion, adding to a losing position, not making timely withdrawals et cetera are made time and again. People fall into the emotional trap and make unconsidered decisions. And while you cannot help having them, learning to control your emotions will go a long way in positioning you as a shrewd trader. Work on the emotional quotient and you’ll make wiser decisions.

8. Sharing is Caring

Now that you have learned from your mistakes and other’s as well, it is time to share. You must share the experience you had while trading. You can start a blog, a YouTube channel or other medium for reaching out. Furthermore, you can have a comment section for answering the questions of your visitors.

This will not only help others but will certainly keep you disciplined. This habit will make you more accountable and you might think twice before making a trade you know, you should not be making.

9. When There Are No Good Plays, Don’t Trade!

What? Do not be shocked as this is no less a practical tip than the rest. Sometimes it is good that you don’t trade. Trading just for the mere fact is not a smart choice.

Trade only when you see money lying on the floor or the offer is too lucrative to let it go. Take your chances and remember that this is a highly dynamic world so weigh all possible benefits of making a move against sitting back and speculating.

10. Have Confidence

As obvious as it may sound, this is a key component of a refined trader. Whichever trading style you choose, you got to believe in yourself as failure to believe in the efforts you are putting or the decisions you are taking will never make you a winner. I might sound strange but people do not get good returns just because they cannot believe they will. This negative thinking results in negative returns.

Remember! Successful traders were also amateurs and novices when they started out. Their success has come from the hard work and efforts they have put in. Make mistakes and learn from them to continue trading until you start making profits.

As mentioned in the beginning, these day trading tips shared will let you learn some important hacks to improve Your game. Apply these diligently and you are sure to advance in your endeavors.

Principle of “Statistical Arbitrage” Applied on Market Internals

In one of my previous articles I focused on the concept of Market Quality created with the help of Market Internals. In today’s article I will get back to the original topic of Market Internals. I would like to present another interesting concept of their application.

So, what is it about?

One of the generally popular styles of trading is called Statistical Arbitrage (or StatArb). The principle of this trading style is very simple:

1. We take two highly correlated shares; often from the same industry – e.g. PEP and KO.

2. These kinds of shares correlate very closely. Thanks to that, they are occasionally converging and sometimes diverging. These are great opportunities for trading. How?

3. First of all, we calculate the difference between either the prices of both shares, or their ratio.

4. Afterwards, we calculate the “usual” difference or ratio – the so-called MEAN. To do this, we use a simple moving average of the price difference or ratio.

5. Then we look for extremes, i.e. +2 standard deviations (STADEV) and -2 standard deviations from MEAN.

6. If the difference is above +2 STADEV, we sell share A and buy share B; if the difference is under -2 STADEV, then we sell share B and buy share A.

7. We simply speculate on the return of the difference/ratio of price back to its usual MEAN where we exit the trade.

If you look at the shares of KO – PEP. From the first point of view, it is obvious that both shares correlate very closely; they are occasionally converging and sometimes diverging:

The basics of StatArb trading is very simple – we create MEAN from DIFFERENCE or RATIO, we define +2/-2 STADEV, and, once exceeded, we buy and sell simultaneously. This is the reason why StatArb is also called “pairs trading”.

How can we apply this concept on Market Internals?

It’s actually rather simple:

1. Some Market Internals are also “paired”, e.g. UVOL-DVOL or ADVN-DECN.

2. It means we can create DIFFERENCE or RATIO from these pairs and, therefore, we can also create MEAN and +2/-2 STADEV.

3. The only difference is that instead of Market Internals which we can’t trade, we buy or sell the underlying asset.

We can create an example with a pair of UVOL-DVOL:

1. We create the difference for UVOL-DVOL.

2. We calculate MEAN (MovingAverage (DIFFERENCE) ) – the period is entirely up to you.

3. We define +2 STADEV/-2 STADEV.

4. Once +2 STADEV is exceeded; the volume on the market as a whole is in favour of the LONG side. We can use this information to trade any stock index markets (ES, TF, YM, EMD, etc.).

5. Once -2 STADEV is exceeded; the volume on the market as a whole is in favour of the SHORT side. Again, we can use this information to trade any stock index markets.

And now: how can we make use of such information?

Again, there are many possibilities:

1. As a “Master-filter” to enter the trade (on stock index markets).

2. To increase/decrease contracts.

3. To tighten SL.

4. For early exits with part of our positions.

5. Anything creative you can come up with – it is necessary to think and experiment.

The exceeding of standard deviation won’t always mean trend trading. For example, exceeding of +2 STADEV can mean (in certain situations) trend exhaustion and a possibility of correction – i.e. the opportunity for short-term trade against the trend.

There is a need to test each and every system, as there isn’t just one universal use. This concept is possible to use in many other ways.

There are many advanced ways to use this concept but that is a topic for some other time. Today was just a brief introduction so that the more aggressive and advanced traders can continue to work with this idea further.

Happy Trading!

5 Proven Steps To Doing Really Well In Trading

Hi. Have you ever wondered what it takes to do really well in trading or what necessary steps you need to do? I keep receiving these questions quite often. So let me give you my five proven steps. I’ve been doing really well with them in my own trading, so I believe they can help you too.

Step #1: Questions
You may or may not like it, but successful trading is about the ability to come up with new, fresh ideas. Fortunately, it’s not as difficult as it sounds. All you need to do is to keep asking this question: “What happens if… ?” What happens if I buy when the RSI indicator is overbought instead of oversold? What happens if I start moving my stop-loss according to my moving average? By asking the “What happens if… ?” question constantly, you start to move forward really fast and I can guarantee you some of your ideas will be sooner or later really big winners.

Step #2: Robustness testing
Most strategies are crap. That’s the fact. But how do you know which ones aren’t? You can always find it out through extensive robustness testing. What does it mean? In my case it mainly means three things: A) A good strategy can easily adjust to changing market conditions. An extensive walk-forward testing is needed at this stage. B) A good strategy performs reasonably well in other markets. C) A good strategy has been developed only on a part of all your historical data and performs well on the rest. To be very honest with you, about 95% of all my strategies never pass my robustness testing criteria, but when they do, it’s time to move to the next step.

Step #3: Portfolio
One strategy will help you learn, but a portfolio of strategies will help you grow. You don’t need to have a big portfolio at the beginning, but even three strategies are much better than just a single one. Remember, if you want a smooth equity and a steady income from your trading as soon as possible, the only way is through diversification and portfolio. Very few people are aware of this and even fewer spend significant time by modeling different portfolios. I personally spend a lot of time trying to find out the best way to combine my strategies together to make a really good portfolio.

Step #4: Position sizing
Let me ask you a question: Do you want to make it big or do you want to stay small? Because if you want to make it really big, then you need to start seriously thinking about position sizing. This topic can be pretty complex, but it can be also extremely rewarding. So, where do you start? I highly suggest reading Van Tharp’s book “The Definitive Guide to Position Sizing.” You will learn a lot. Personally, it has moved my trading to a whole new level.

Step #5: Persistence
Listen, it can be done. It doesn’t matter what education you have, how old you are, or even how confident you feel at this moment. I’ve seen many people succeed. I’ve seen traders making it from zero to quite a nice living, and that’s why I believe that you can do it too. Yes, it does take some time, effort and learning, but once you’re finally there, it’s all worth it. So, stay persistent and mainly never give up, and that’s really all.