Trading Pits – Open Outcry Handsignals
Video OpenOutcry Trading Soybeans Chicago Mercantile Exchange
Dont understand what’s going on……………..
Palms facing toward body.
Palms facing away from body.
Numerical hand signals are generally constant throughout all trading floors but slight variations are made with figures greater than 99. Price is displayed away from the body and the quantity is displayed close to the face. Generally price is displayed before quantity (“price on quantity”) to buy and it’s the opposite to sell (“quantity at price”). When contracts are quoted in increments of 10ths, generally the signals used will be 1-9 and rather than increments of 10s.
LOTS 1 – 10
Index finger pointed upward at chin level, rest of fingers closed.
Index and middle fingers pointed upwards at chin level, rest of fingers closed.
Pinky, ring, and middle fingers pointed upwards at chin level, thumb holds down index finger.
Pinky, ring, and middle fingers pointed upwards at chin level, thumb holds down index finger.
All five fingers spread open at chin level pointed upwards.
Index finger pointed horizontally at chin level, rest of fingers closed.
Index and middle fingers pointed horizontally at chin level, rest of fingers closed.
Pinky, ring and middle fingers pointed horizontally at chin level, thumb holds down index finger.
Pinky, ring, middle and index fingers pointed horizontally at chin level, thumb closed in palm.
Index finger pointed upward at forehead level, rest of fingers closed.
LOTS 20 – 100
Index and middle fingers pointed upwards at forehead level, rest of fingers closed.
Pinky, ring and middle fingers pointed upwards at forehead level, rest of fingers closed.
Pinky, ring, middle and index fingers pointed upwards at forehead level, thumb closed in palm.
Index finger pointed upwards at forehead level and then becomes a fist.
ONE THOUSAND LOTS
Horizontal arm crossed by vertical arm which indicated number of thousand.
Trader Cheat Sheet #4 – Murrey Math Lines
Trader Cheat Sheet #3 – Harmonic Patterns
Harmonic Patterns In The Markets
Harmonic trading combines patterns and math into a trading method that is precise and based on the premise that patterns repeat themselves. At the root of the methodology is the primary ratio, or some derivative of it (0.618 or 1.618). Complementing ratios include: 0.382, 0.50, 1.41, 2.0, 2.24, 2.618, 3.14 and 3.618. The primary ratio is found in almost all natural and environmental structures and events; it is also found in man-made structures. Since the pattern repeats throughout nature and within society, the ratio is also seen in the financial markets, which are affected by the environments and societies in which they trade. (Don’t make these common errors when working with Fibonacci numbers – check out Top 4 Fibonacci Retracement Mistakes To Avoid.)
Issues with Harmonics
Harmonic price patterns are extremely precise, requiring the pattern to show movements of a particular magnitude in order for the unfolding of the pattern to provide an accurate reversal point. A trader may often see a pattern that looks like a harmonic pattern, but the Fibonacci levels will not align in the pattern, thus rendering the pattern unreliable in terms of the Harmonic approach. This can be an advantage, as it requires the trader to be patient and wait for ideal set-ups.
Harmonic patterns can gauge how long current moves will last, but they can also be used to isolate reversal points. The danger occurs when a trader takes a position in the reversal area and the pattern fails. When this happens, the trader can be caught in a trade where the trend rapidly extends against them. Therefore, as with all trading strategies, risk must be controlled.
It is important to note that patterns may exist within other patterns, and it is also possible that non-harmonic patterns may (and likely will) exist within the context of harmonic patterns. These can be used to aid in the effectiveness of the harmonic pattern and enhance entry and exit performance. Several price waves may also exist within a single harmonic wave (for instance a CD wave or AB wave). Prices are constantly gyrating; therefore, it is important to focus on the bigger picture of the time frame being traded. The fractal nature of the markets allows the theory to be applied from the smallest to largest time frames.
Famous Traders – Japanese Housewife Trader’s & Video
Definition of ‘Japanese Housewives’
In the foreign exchange world, a collective term for the legions of Japanese housewives who resorted to currency trading in the first decade of the new millennium. With Japanese interest rates near zero percent for most of the decade, their motivation for currency trading was to increase the low returns on their portfolios.
These homemaker-traders are also called “Mrs. Watanabes.”
Investopedia explains ‘Japanese Housewives’
Japanese housewives have had a discernible impact on currency markets. Bank of Japan officials said in 2007 that the housewives’ trading activity helped to stabilize currency markets because of their tendency to buy on dips and sell into rallies.
A significant amount of this trading was carried out through online margin accounts, which offered leverage of 20 to 100 times. Carry trades, which involve borrowing in low-interest rate currencies and investing in higher yield assets, were also a favored strategy for many of the Japanese housewives.
Pros’ & Con’s – Intraday , Swing & Positon Traders
Also known as ‘Intraday’, positions are usually entered & exited within the same trading day. Obviously scalping fits into this category. Traders in general are interested in quicker, smaller amounts and making multiple trades per day.
Swing trading is typically a short to intermediate term trend following system lasting anywhere from 1 to 30 days. Traders who swing trade typically look for trend reversals & retracements for their entry/exit points.
Position trading, also known as ‘trend trading’, can best be described as a ‘buy and hold’ method. Positions can be open for a few days, a few weeks, a few months or longer. They are also held during periods of minor retracement with the expectation that they will eventually continue trending in the desired direction.
*** My Coments ***
– Smaller take profit target = Smaller risk per trade.
– Because of the amount of trades being placed, compounding has a greater effect on your overall profits.
– You can make money faster.
– Makes you ‘Feel Good’. Can be a rush! (Is this really a pro?)
– Allows you to always be actively participating in the market (Is this a pro?)
– Because of the last two, traders can exhibit addictive behaviour (gambling).
– Because most positions are closed out at the end of the day, able to take advantage of interest earned in their account.
– Risk control – positions are closed out overnight so unexpected market changes will not affect your bottom line.
*** – You are constantly monitoring the markets so you have a faster reaction to potential market moving info.
– Spread has a larger effect on your overall profits.
– You can lose money faster.
– Very difficult to learn – by some estimates less than 1% of traders become successful.
– Time consuming – very difficult to trade properly if you have a full-time job.
– Fast pace & necessary concentration can make day trading very stressful.
– Extremely Risky! Traders can lose a substantial amount of money in a very short period of time.
– Discipline, proper money management, risk/reward and a profitable system are a lot more important when day trading. Even a small mistake can result in a huge loss.
– Can be harder to predict the market.
*** You are more vulnerable to Internet disconnections for a few minutes or even hours with your positons exposed without stops.
– Manageable take profit and stop losses.
– Easier to learn than day trading – higher success rate than day trading.
– Spread has less of an impact into overall profits than day trading.
– Less time involved in actively trading – it is not necessary to ‘babysit’ your trades.
– Can be worked around a regular job – a couple of hours per day should suffice.
– Less stressful than intraday trading.
*** Better Risk/Reward profiles (expose less frequently your capital) and larger pip rewards.
*** Could capture some carry interest %.
*** You do less and more sustainable technical & fundamental analysis. Bigger picture view…
– Can be difficult to learn and become profitable.
– While it requires less time than day-trading, preparation and analyzing the markets is still necessary and can be time consuming. Tending your positions daily is a must!
– Some traders have a tendency to develop emotional attachments to a trade.
– Discipline and keeping emotions in check are very important. It is not uncommon to exit on a retrace or trend change only to have the market immediately change back and head in the original direction.
*** You have to tolerate the ups and downs with a higher chance you will close the position and not follow your plan and ride the trend.
– The most forgiving type of trading – small mistakes are more easily absorbed in market movement and the size of your eventual profit.
– The easiest to learn. It is estimated that up to 25% of position traders learn to become profitable.
– Less stressful than intraday or swing trading.
– Easier to become successful with smaller startup capital.
– Much easier to predict the market as in general you will be following the overall trend.
– In general position trading is the most profitable.
– Less time consuming than day trading.
*** Big picture view with a less technical work.
*** Much higher returns, carry interest (depending currency cross) & less frequency of trading.
*** Much better Risk/Reward potential .
– Compounding has a lot less effect on profit than both intraday and swing trading.
– Because positions can be highly leveraged and trades remain open for extended periods of time, unable to reap consistent benefits of interest.
– There is inherent risk in keeping positions open over night. It is quite possible for drastic changes to occur in the market while you sleep.
– Money can be tied up for an extended period of time. This can prevent entry into new positions as they arise.
– Because of the length of time involved in position trading, traders can experience significant drawdown with the expectation that it will turn around and start trending back in the desired direction. Psychologically this can have a very negative effect.
*** Impatience could be your worst enemy.
*** Entries & Exits could take much longer than you think, so use alarms!