• So You Wanna Be A Trader
• The story of a former Wall Streeter now part of the Occupy movement: Leaving Wall Street
• On Covestor, Copycat Traders Auto-Buy as Mirror Trading Takes Off
• How You See Affects How You Trade
• Blasphemy from @PeterLBrandt? Why high/low/close bar charts have become worthless
• For those interested in the supposed high failure rate in trading (suggested at 95% or more), give this article a read… The Bell Curve Is A Myth — Most People Are Actually Underperformers
• I’m a member of this “award-winning IFR Markets Forex desk”. Reuters creates a Buzz with new intraday FX News
• Intelligence Is Overrated: What You Really Need to Succeed
• When is the best time of day to trade forex?
• How The Power Of The Masses Drives The Market

• Emotions, Decisions and Discipline
• Sell in May?
• Four Quick Ways To Get Better At Trading
• The truth about stop hunting
• Trading and the Null Hypothesis
• This isn’t strictly about trading, but since education is a focus here, it’s worth sharing … What I’ve Learned About Learning
• It’s as if this author has been reading my stuff. Will the Dollar Be Replaced As a Reserve Currency?

• Do you involve others in your trading? … Trading Alone
• Learning To Let Go Of Past Trades
• 15 Of The Most Spurious Correlations In The Stock Market
• From the data: One reason traders struggle
• Do you not know, or do you not do what you know? … Trading Mistakes
• Don’t forget about the month-end iPad3 giveaway open to Essentials of Trading newsletter subscribers.
• Prospects for USD/JPY looking forward
• Currensee is Hiring!
• ‘Real’ investors eclipsed by fast trading
• 4 Easy Tips to Prevent Recency Bias
• Seems real estate investors need to learn lessons from those in the financial markets. (HT to Michael Covel) Falling home prices drag new buyers under water

First Prize: A new 16GB iPad 3 ($579 value)
Second Prize: 4 hours of 1-on-1 coaching with me ($400 value)
Third Prize: 2 hours of 1-on-1 coaching ($200 value)
(I’m open to substitutions if the winner wishes to pick something else of comparable value)

The only requirement for eligibility is that you be a subscriber to the newsletter on April 30th. Signing up is quick and easy. Just go to www.theessentialsoftrading.com/nl

As an added incentive to sign up, there is also a referral feature subscribers can take part in to increase their chances to win a prize. Details will be sent once you’ve signed-up.

Let me know if you have any questions.

PS: An archive of my past weekly newsletters can be found at here.

I’ve pull the following set of numbers on trades which include USD pairs (no crosses), of which my data contains over 2 million records.

Winners: 1,280,459
Average Profit: $60.03
Average Pip Profit: 28.20

Losers: 752,614
Average Loss: $105.14
Average Pip Profit: 63.88

Notice there are many more winners than losers. They represent 63% of all trades. These are retail traders, so it just goes to show that you don’t want to get too crazy about looking to trade against the collective.

Notice also that the average loss is about 75% higher than the average profit. That completely offsets the 63% win rate and results in a negative overall expectancy for the group.

It must be noted, however, that that average loss appears to be due to holding on to losers too long rather than risking too much money. Notice how the average loss in pip terms is more than double the average gain. Traders actually had lower pip values on their losing trades than on the winning ones (on average). They just held on too long.

Here is the problem is for most traders. They are quick to take profits and slow to take losses. This is referred to as the Disposition Effect in Behavioral Finance research.

Much more analysis of the data needs to be done, but these results are very interesting nevertheless.

• My first ever market participation was a Dow Chemical DRIP using my paper route money. Do kids even still deliver newpapers?… Investing in Dividend Reinvestment Plans (DRIPS)
• The Goal is Not the Driving Force
• Looking at yield spreads to understand EUR/USD
• If you haven’t already, sign up for my weekly email newsletter for a chance to win an iPad3.
• Apparently the meek shall inherit the trading profits. Q&A with Susan Cain on the Power of Introverts
• Essentials of Trading 6th Anniversary
• How correlations change

It’s kind of a humbling thing, now that I think about it.

I like to do something special to mark important dates. This anniversary is no different. So here’s what I’m going to do.

Between now and Monday (April 23), anyone who owns the book can enroll in the supporting course for only $37, which is a MASSIVE discount. The course is an excellent complement to the book, and includes a fair amount of additional bonus and supporting material.

If you already own a copy, all you need to do is send me a photo of you holding the hard copy version of the book, or if you have the Kindle edition, a picture of you holding your device with the cover page of the book showing to author @ theessentialsoftrading.com. When I get it I will send you a special discount code to sign up for the course.

Now, if you don’t already own The Essentials of Trading, have no fear. If you purchase a copy online between now and Monday and send me a copy of the receipt, I will send along the discount code, so you can get in on this as well.

Nice and simple. Right?

I look forward to seeing your photos!

• Never Buy Stock Again!
• Here’s a shocker. Earnings expectations are often way off. 12-Month Forward Earnings, What Do They Predict?
• Getting ready to start answering some trading questions
• Tips to keep the trading fires burning
• Looks like the forex volume train is still chugging along. Uncertainty pushes FX volumes above $5 trillion
• I once did a panel discussion with the subject of this interview. Emotional Trading: Why Traders Need to Avoid Hope
• RT @alphatrends: RT @ivanhoff Mean-reversion works better during corrections… Ummm, aren’t corrections mean reversions? #
• Technical analysis in manipulated markets

I threw the question of what I should write about this week to a former manager of mine who was a forex dealer back in his younger years and now makes a living telling folks what’s happening in the markets. He tossed back a surprisingly good question:

How can technicals be relevant when central banks are trying to manipulate the market- BOJ with USD/JPY and SNB with EUR/CHF?

I’m sure this is something that others have pondered as well.

Here’s my view on it – speaking as someone who is very much a practicing technical analyst.

Currency intervention by a central bank or other monetary authority (in the US intervention is directed by the Treasury, though it’s executed by the NY Federal Reserve Bank) is just another news item or event that influences exchange rates. Those of us who’ve been around the markets for a while have seen a great many dramatic market reactions to all kinds of developments. Some of them have been triggered by data releases. Some have been driven by news events. Some have been caused by speakers. And some have been the result of intervention action. Heck, some of the moves have come just from the suggestion of intervention without it actually happening.

In other words, intervention is just one more thing that is reflected in the price action we see on the charts. Furthermore, it’s also something that is incorporated into the market’s expectation of the future as part of the price action we’re seeing now. The more market participants anticipate intervention, the more they will factor that into their trading and by extension the more it will influence the price action we see. It works in the same way that stock traders will price in anticipated share buybacks or weak earnings. All markets are discounting mechanisms in some fashion or another, and we can analyze the patterns that are developed in the price action through that process.

So, from my perspective, I don’t view technicals as any less useful in a market where intervention may happen. I use the same methods I would in any other case.

Now, having said that, intervention certainly presents the potential for a major volatility spike on the event (or even the hint of it). If your trading strategy or market analysis is ill-suited to that kind of thing, then while that risk is in the markets you may be best advised to either change the pair(s) you trade or to lengthen your trading time frame out to one where sharp intraday moves aren’t so much of a concern. Alternatively, you could adjust your risk so that you have less exposure for trades going against the likely direction of intervention (like when going short USD/JPY if you think the Bank of Japan is going to sell yen). The analysis doesn’t change, but how you then use it does.

1) Make sure you take some time off.

2) Do things outside of work so that you do not value yourself from your trading. Trading is the game we play. It is not who we are.

3) Be grateful for the privilege of trading. It really is so cool that we get to do this for a living. Be thankful for this opportunity, no matter how short or long.

4) Stop judging your trading by your PnL. For example that trader on our desk had a better month than the prior though he did not make more money. He worked on his sizing. There was less opportunity this month than the prior so comparable results are an improvement. He gained another month of experience.

5) It is ok to fail. How is Oprah doing with OWN? Remember that Michael Jordon commercial about all his failures before triumph. Oh man if you only knew how many stupid mistakes I make every week as a trader. Failure is a blessing to learn.

Now it must be noted that Mike very much looks at things from the perspective of an active day trader. That’s pretty obvious in #3. That doesn’t mean the same ideas aren’t useful for someone who only trades part-time. They definitely are. We all need to take a break from the markets from time to time. We all need to realize we are not defined by our trading. We all need to realize that mistakes and losing trades are part of the process and that we shouldn’t be looking at what others are doing to determine our success (which is something that get’s talked about in Trading FAQs).