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PIP FICTION – IT’S NOT JUST THE SIZE THAT COUNTS DIGITAL TRADING OR PAPER TRADING?
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Volume 23,No.1
Volume 20, No.4
FOR OPTIONS
THE FUTURE OF FINANCIAL SERVICES
IN AUSTRALIA: THE CONSUMER-LED
TRADERS?
REVOLUTION WE NEED TO HAVE
LOUISE BEDFORD: AND... IN A FLASH... MY BABIES HAVE GROWN UP THE “REAL” SECRET TO DISCIPLINE AND PATIENCE
R IS K M A NA G EME N T I S A C OP OU T TAKE YOUR BRAIN TO THE GYM
CONTENTS
JUL/AUG 2018 VOLUME 23, NO.4
TECHNICAL ANALYSIS
39. Clinical Trading Cases:
Measure and Trade
on Volatility and Momentum
By Dr Mircea Dologa MD CTA
44. W.D.Gann´s Geometric Angles

By D.K.Burton
49. Lighting the Candles with

Factfulness
By Doug Dew
28
53. Pip Fiction – It’s not just
the Size that Counts
By Karen Wong
COVER STORY 24. 7 Bad Trading Habits and 56. Trading Approach of the
28. Does China Trump USA How to Get Rid of Them Terminal Impulsive Elliot
By Ashley Jessen
in Trade War? Wave [W5] Part I
By Jodie Nolan 31. The Elasticity Factor for By Dr Mircea Dologa MD CTA
Entries (EFE)
MARKET COMMENTARY A road less traveled TRADER'S MINDSET
7. Market Wrap by Ivan Krastins 62. And... in a flash...
With Janine Cox my babies have grown up
10. Chart Watch By Louise Bedford
With Hemal Pandya
64. Trader's Story
12. Commodities Corner Get to know your fellow traders.
With Gary Burton YTE speaks to trader Emma
Murtagh
SHARES AND TRADING 67. Trading Life

Alan Clement discusses his
17. Why Trump is so career trajectory as a trader.
good for trading 69. The “Real” Secret to
By Lachlan Elsworth
Discipline and Patience
20. The future of financial By Mandi Rafsendjani
services in Australia: The
74. Digital Trading or Paper
consumer-led revolution we
Trading?
need to have By Sinan Koray
By Pat Garrett
39 75. Marketplace
2 YOURTRADINGEDGE JUL/AUG 2018

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EDITORIAL
JUL/AUG 2018 VOLUME 23, NO.4
PIP FICTION – IT’S NOT JUST THE SIZE THAT COUNTS

TRADING IN THE BIG LEAGUES
DIGITAL TRADING OR PAPER TRADING?
NO BULL
YourTradingEdge
Jul/Aug 2018 www.YTEmagazine.com
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elcome to the latest edition of Your Trading Edge. In what feels like a
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My goal last year was to continue the exponential growth of YTE Magazine and I
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Market Wrap With Janine Cox
Chart Watch
Commodities Corner
MARKET
COMMENTARY
MARKET WRAP
With Janine Cox
As I began this report, I recalled a question from a new student from trading higher, which demonstrates there are opportunities
a few weeks earlier. He asked, why hasn’t the Australian market to find good stocks in the Australian market, even when there
risen strongly this year? is a lot of pessimism in the media.
Considering Australian economic conditions, strong This financial year, Midcaps are up by around 10 per cent,
performances from mining related stocks, the Australian dollar while the Financial sector was down by around 8 per cent
and the Royal Commission into the financial industry could for the year, until the final week of the period. Consider that
be some areas to discuss, plus ongoing global challenges our market is comprised of a diverse spread of companies,
and trade tariffs, just to keep it interesting for investors. So, a however, it is heavily weighted to the Financials sector by
response to his question could be quite complex, actually too around 32 per cent. The big four Australian banks were down
complex for someone who knows very little about the market by around 30 per cent from their 2015 highs, however, the
and is embarking on a journey to become a trader. I had to recent rise saw these stocks recover slightly.
remind myself that he’s not training to be an economist, nor is Further, Utilities fell by around 6 per cent, Industrials are
that my expertise! up 3.6 per cent, the Materials Index is 25 per cent higher,
Initially, I wanted to suggest he wait a week or two and Consumer Staples are up 24.5 per cent, Telecommunications
just watch the market, as technical analysis indicated that are down 35 per cent, Consumer Discretionary up 11.5 per
the market would head higher. A few weeks later the market cent, Energy up 38 per cent and Information Technology is up
made its move up. However, a discussion on Top Down 30 per cent.
analysis was warranted. I explained that it is important to This sheds some light on the areas that did well and how
understand what has occurred to be able to determine where others, including Financials, held the market back.
the opportunities lie. The standout sectors have continued to be Materials (XMJ)
Looking back, the current phase of the market appears quite and Energy (XEJ).
different to how it unfolded in the mid 80’s to the ’87 high, and Australian companies that generate earnings overseas can
the run from 2003 to 2007, when investors threw caution to the benefit from a lower dollar. Revenue generated in US dollars
wind, regulations were softened and taxes were cut. These are
fuel for a boom and so it was, the market traded in a euphoric
phase in both periods.
In the current 18 year cycle, the euphoric phase is yet to
unfold. Currently, we are at the mid-point of the cycle, where
the market can dip, however, this can be a risky time in the
cycle. That said, theory is one thing and a current analysis has
indicated that this period is different. The market has prepared
for the current rise for some time as it stepped higher, with
previous resistance providing support to trade up.
The market finally traded clear of significant resistance at
6,000 points in June, but it did struggle to remain above 6,200
points this year, until recently. The XAO has traded up strongly
into the middle of the short-term target zone between 6200
and 6400 points, which is positive. can buy more Australian dollars when converted to the local
Remember, the all-time high is 6873.2 points or just around currency come reporting season. Rate rises in the US can drive
8.5 per cent above this level. the US dollar higher, which has a negative impact on the AUD.
A quick review of the sectors highlights the areas of the Also, as the difference between in the FED’s funds rate and
market that have lagged, and those that have performed well. the RBA’s cash rate changes, demand for our currency by US/
The Financial sector has been heavily weighed down by the international investors falls, which means that the value of our
big four banks, however, it did bounce back in the final days dollar drops.
of the month. This is a bit deceptive for people looking at The Australian dollar has fallen from a high of 81.4 cents in
the quarterly moves, as this often hides the volatility. Isn’t it January 2018 to a low of 73.2 cents this month. Currently, this
interesting how markets will often recover around the time of represents a decline of around 9.6 per cent. Meanwhile, stocks
the end of the quarterly reporting period? in your portfolio or superfund may have benefited.
The decline in banks hasn’t stopped Midcaps and miners
JUL/AUG 2018 YOURTRADINGEDGE 7

MARKET WRAP - JANINE COX
Where is the Australian market headed? 2016. However, given the way the market is moving at this
Price, pattern and time indicate there’s more upside ahead for time, it may pull back into the zone mentioned above.
the Australian market. From a fundamental perspective, the From a technical perspective, it is positive to observe a market
good news is that economists believe that our economy will pulling back to the angle of the previous trend, as this provides a
continue to expand in the next few years, but a great deal of solid point of reference for determining future targets. Gann Fan
caution remains even though our market is essentially bullish. enthusiasts would be excited by such a move.
Whenever the mood isn’t swinging significantly one way or the The DJI has a hurdle to jump at 25,400 points. If the Dow
other; from bearish to bullish and vice versa, the market will is able to trade strongly above this level, it is likely to have
trade higher, but the masses still largely focus on negativity. sufficient momentum to continue higher to between 29,000
While I don’t believe that our market is likely to trade through and 30,000 points this year.
the current all-time high in the next couple of months, it’s Currently, you may have observed that oil prices continue to
probable that we will see the All Ordinaries Index (XAO) achieve rise strongly, with NYMEX crude trading back above US$70 this
a new all-time high within the next six to twelve months.
Currently, the XAO is on track to achieve a short-term target
of around 6,450/6,500 points, to be followed by a further rise
to a new all-time high. Generally, the market may rise for three
to five months from a low and as the prior low occurred in
April 2018, it is possible for the market to continue to rise to a
temporary peak in August/September.
Remember, this year’s worst performing sectors may be next
year’s best.
Global news
The Dow Jones Index (DJI) is trading at around 24,300
points and has so far failed to trade above the all-time high
in January 2018. There’s little doubt that the Trump tax cuts
accelerated the market’s rise, which means the high occurred week. The price recently broke an important resistance zone
above a level that could not be sustained and therefore, the between $68 and $71. The next level of resistance is around
current correction simply allows the market to fall to a more $74, however, given the bullish nature in which oil has unfolded,
sustainable level at this time. a target set some time ago between $78 and $81 is realistic.
The chart of the DJI demonstrates the acceleration of the rise Negotiations with the Organisation of Petroleum Exporting
and how it gained around 35 per cent from the low in January Countries (OPEC) producers has resulted in a commitment
2017 to the all-time high. Following the low in 2015, it has risen to boost oil production, however, the US State Department
faster in time and price than it has run in history. announced this week that companies must cut all oil imports
What you may find interesting is that as the DJI was from Iran, the third largest producer in the OPEC group.
languishing recently, the NASDAQ Composite Index (COMPX) To Asia, and I mentioned in the previous report that the Hang
continued up to a new all-time high of 7,806 points in June. If Seng (HSI) would fall to between 27,600 and 28,700 points in
you trade the US market, it’s worthwhile having a look at the the short-term. At the time of writing, the HIS has traded to
stocks that make up the DJI in your spare time. Identify the a low of 28,505 points. This decline, from the all-time high of
stocks that have been rising, those that are falling and which 33,484 in January 2018 is similar to what I anticipated would
ones are trading sideways. Interestingly, Walt Disney and occur on the DJI. It appeared likely that both markets would
American Express have traded sideways, while Citigroup and move together, however, a further decline on the DJI is yet to
Caterpillar have been trending down. unfold as mentioned.
As mentioned in my previous report, I would like to see the From here, the HSI has the potential to rise to test 30,000 points,
DJI trade lower so as to exhaust the sellers. A support level and it must move up to around this level before this month’s low
exists at around 23,500 points and therefore if this is broken can be confirmed. Remember, there remains the possibility of
the US market will in all likelihood, continue down to the next further downside in the short-term for this market.
zone of support between 21,500 and 22,350 points. That said,
the market is in the zone for a cycle low and the recent decline Janine Cox is Senior Investment Analyst at Wealth Within
allowed the market to pull back to the angle of the trend in www.wealthwithin.com.au

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CHART WATCH
Hemal Pandya: BP/USD set to challenge key support at 1.3
Hemal Pandya: EUR/USD: The calm before the storm.
H
ello and welcome to the (highlighted by the blue rectangle), which if we were to see a break above 1.35, we
latest issue of YTE. I hope is an area of congestion of previous have short-term possible resistance at
you’re well and had a support and resistance from late 2016 1.36 & 1.37, as the market challenges the
productive first half of the and early 2017. swing high at 1.4350.
year. It’s been an incredible Alternatively, should the pair be unable As always, plan your trade and trade
few months in the market to break below 1.32 and if it was to break your plan.
H
with the USD showing signs of continued
strength as well as sustained weakness
on the EUR being the key areas of focus
FIGURE 1 - USDCAD WEEKLY CHART
for us. That said, the GBP/USD ello currency
and welcome to the
pair has breached the critical 1.37 level
latest issue of YTE Chart CHART 1
mentioned in the May-June issue of
YTE and this article will beWatch. focussing Ionhope you have
the Cable in order to establish had potential
a great few months
trading opportunities.
As mentioned, the low attrading the 1.37 level and are looking
from early March was a critical forward area toof the second half
support for GBPUSD pair. The level would
of the trading year. With a combination of
be regarded as the neckline support from
erratic
the Double Topvolume in the
chart pattern, FX market and global
indicating
equities remaining buoyant,
the bullish momentum was fading and traders have
indeed a new bearish bias was re-
been forced to adapt
established. The break of support at 1.37
to market conditions
was metin order to capitalise
with significant on opportunities.
volume, driving a
break lowerMany European traders have been on
by around 500 pips towards
the 1.32 level. The break itself through
the sidelines ahead of the recent ECB
the rising trend line support from the lows
at 1.37announcement
is likely to bring intoand play aare crossnow looking for
of ourfresh
Monthly 20 &
opportunities.50 EMAs, which
would be regarded as a bearish indicator
by many.InWe this
havearticle
since seen we’lla small
be continuing from
the YTE
retracement May/June
towards the 1.3470 edition
level Chart
back Snapshot
above 1.35, we believe a ‘stop and
in early June, however, the pair found reverse’ stance would be required. This Hemal Pandya is an independent forex
and will take a close look at the EUR/USD trader specialising in shortterm and
resistance off the Monthly 50 EMA. At the would limit any downside potential and
currency pair medium-term trading opportunities. As
time of writing, the pair in an attempt
seems to be re- toinidentify near
fact call for a move towards the swing
managing director of Alpha Markets,
testingterm target
the swing levels
low at 1.3200,that where we’re
we monitoring
high at 1.4350. onAlthough there is some Hemal runs various Forex training
appear to have some interim support. We immediate potential resistance at 1.36
the ‘trading floor’.
have now two scenarios to consider. & 1.37, we do not expect this to cause
courses and mentorship programs,
In the previous article, and operates the Alpha Trading Floor:
In the first instance and in keeping with I mentioned
much of an issue the for bulls as we expect
www.alphatradingfloor.com
importance
our short bias, we would of the expect1.33 & 1.4 alevels
to see numberacting
of participants being stopped
a breach of 1.32 and a sustained move on short positions. So, if nothing else, a
as key support and resistance.short-term
lower with the major psychological level
If we take a
burst of bullish momentum
look at inthe
at 1.3-1.3050 EUR/USD
sight, which is (Figure
also a 1)would
on be thelikely.
daily
previous area it
chart, of appears
support from November
that the pair has In summary,
failed we to are currently holding a
2017. Looking further, if the pair was to bearish bias on the pair with a view to see
breakbreak
the 1.3out of we
region, thiswouldrange with aa break
expect few months
below 1.32 for a sustained move
to seeofa move
consolidations
towards 1.26-1.27 taking placelower
region close to the
towards 1.3 and 1.27. Alternatively,
psychological 1.4 level.

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COMMODITIES CORNER
Gary Burton
H
ard commodities continue to remain buoyant. The
major trading nations of the US continue to grapple
with President Donald Trump’s threats to impose
tariffs around some commodity based products.
In response, Canada and the European Union have
announced plans to increase tariffs on selected U.S.
goods in response to U.S. duties on steel and aluminium imports.
One of the surprising outcomes from Organization of the
Petroleum Exporting Countries, OPEC is the continuing surge in oil
exports from the United States. Shale oil projects that were once
facing hard financial times as oil dwelled below $50 barrel, have
now shown a resurgence in production outputs and cash flow.
However, there’s a slight problem with the prevailing theme
for the iron ore market this year: China has been increasingly
interested in using higher-grade ore as part of an effort to boost BHP has announced a new Iron ore mine in Western Australia-
output and lower per unit pollution, but this isn’t exactly showing the first major spend in 7 years.
up in the import numbers. The $2.9bl expenditure with its first production due in 2021 will
Overall, commodities have support from major economies on the replace the 80ml tonne Yandi mine.
recovery path and the continuing decline in current mine life without For traders in the commodities markets, this offers volatility and
any extensive exploration and development by major suppliers. opportunity.
Oil West Texas Weekly chart
Oil demand will grow steadily during the 2018 - 2019 period,
thanks to a solid global economy. However, the world may face
a large supply gap by late next year if OPEC cannot cover any
supply shortfalls, the International Energy Agency recently stated.
OPEC is considering whether or not to raise its oil production
to prevent the global market from becoming too squeezed.
The boom in U.S. shale shipments has outstripped OPEC’s
production cuts and pushed millions of barrels into European
waters, where more crude is being stored on ships than at any
time in the last 18 months. It’s not just the volume of oil aboard
ships. At a monthly average in May of 12.9 million barrels, or 26
percent of total global floating storage, Europe had more oil in
floating storage than the Asia-Pacific region at 9.7 million barrels.
Buyers in China, India and Indonesia have taken growing
amounts of U.S. crude rather than their usual cargoes of
Nigerian, Angolan or Middle East fare, some of which have
unusually ended up in Europe. I have highlighted the “outside range”- this type of large range
Last Comments: From pure price analysis, the recent movement where the closing price is lower than the open is often
higher low above the $59 resistance and support level- the a marker of a volatile high ($72.83) in the market for an extended
primary trend remains up without indication of reversal. period of time.
The Weekly chart of WTI is displaying a well-defined trend Currently, the primary trend for oil remains up and a further
line 1-5. retest of the $70.00 level is expected.
Recent price action has resulted in a bullish hammer. Although The relative strength indicator (14) shows bearish divergence
prices moved outside the trend line, a close back in the trend and has recently turned higher above the critical ‘50’ level- a sign
line underlines the bullish state of this primary UP trend. of higher price momentum.

COMMODITIES CORNER
Iron Ore Continuous contract
As mentioned above, there is a problem with the prevailing theme

for the iron ore market this year, as China has been increasingly
interested in using higher-grade ore as part of its effort to boost
output and lower per unit pollution. While Chinese steel mills may
well be seeking to boost the use of high-grade iron ore fines and
pellets, this isn’t exactly showing up in the import numbers.
The overall figure for Chinese iron ore imports is one of stability,
with customs data released on June 8 showing 447.5 million tonnes
arriving in the first five months of the year, up a scant 0.7 percent
from the same period last year. However, port data indicates that
China is still taking large quantities of medium and low-grade iron
ore. This is good for Australian lower grade suppliers.
For the first five months of the year, 289.3 million tonnes of
Australian iron ore arrived at Chinese ports, the vast majority of
Australian ore is 62 percent iron content, such as that mined by
top producers Rio Tinto and BHP.
The lower 58 percent content is produced by the country’s Currently, the weekly chart of iron ore (continuous) has developed
third-ranked miner Fortescue. further consolidation within a Pennant pattern beginning early 2017
Overall, a 4.9 percent gain has occurred from the first five (1). This would be expected to continue as the lower trend line is
months of 2017. again tested (3).
Another producer of high-grade iron ore is South Africa, which The Pennant currently displays 3 significant lows as it nears the
is the third-biggest supplier to China at 15.4 million tonnes. completion point. As the recent price action shows that a small
The last data print shows that China’s daily steel production consolidation of price between USD$62 and $66 has occurred, a
surged to record highs of 2.62 ml tonnes in May. breakoff price below point 3 at USD $60 would be very bearish. As
Last Comments: As the primary trend remains up, a retest of the primary trend still remains up a retest of the upper pattern now
the upper pattern at $69 would be expected in the coming months. at $68 would be expected in the coming months.
Zinc Weekly
Zinc consolidates as inventories rise, indicating that supplies

were healthy. Aluminium gained after the United States imposed
tariffs.
Zinc inventories in warehouses certified by the London Metal
Exchange jumped 7 percent to 245,750 tonnes, the highest
since November. Inventories have surged 84 percent since late
February.
Recently, the trends in the zinc market have been quite
encouraging in China. The expectation going forward is for zinc
prices to remain stable to lower into 2019.
Last comments: Using the Relative Strength Indicator, the
current Q4 2017 and Q1 2018 shows bearish divergence to the
rising price.
The Shanghai exchange price for zinc shows support at
23,600 CNY (USD $3688 tonne) with resistance coming back
into play at 24,900 CNY (USD $3891).
Overall, prices have entered a sideways trading range, is shown at 20,500 CNY. The first indication of a move towards
however, with the Relative Strength Indicator 14 moving back this level would be a decisive break below current support at
towards the key ’50’ level, current momentum would suggest a 23,600 CNY.
retest of the Q1 highs of 27,300 CNY.
On the bearish side, the next current price level of support

COMMODITIES CORNER
Copper
One of the standout features of China’s commodity imports

this year has been the surge in copper, which has taken place
without a seemingly strong market narrative as justification.
According to customs data released on June 8, imports
of unwrought copper climbed to 475,000 tonnes in May- up
22 percent from the same month last year and the highest
in 17 months.
Imports for the first five months reached 2.15 million
tonnes, up 16.7 percent from the same period in 2017.
It’s not just unwrought copper shipments that are booming,
imports of ores and concentrates are up 14 percent in the
January-May period to 7.8 million tonnes, the most for the
first five months of a year since at least 2000.
The obvious reasoning is Beijing’s decision to ban the
import of certain types of copper scrap (announced in April),
which is scheduled to be implemented from the start of 2019.
However, it appears that the authorities are already Copper Weekly chart shows a similar consolidation with a current
limiting the importation of copper scrap, which includes retest of the $3.30 high. With 3 lows in place, and support at $2.90
coiled copper cable and waste motors. unbroken, the momentum is now firmly with the buyers. A breakout
Last comments: The primary trend has moved to higher would be expected with an extended target of $3.50lb.
consolidation as the $2.90 support is tested and $3.30 The Relative Strength Indicator initially showed divergence as
resistance comes back into play on any price rally from here. price moved through the extended trend line. This has now been
For copper, the primary UP trend remains in place. resolved with RSI momentum swinging back over the key ‘50’ level.
Similar to Q4 2016 to Q2 2017 consolidation pattern, the
Gold Continuous Weekly
The well-established negative relationship between the

price of gold and the U.S. dollar will lose some of its power
in the near future. Allowing gold to climb further seems to
be the popular consensus. Except in the first quarters of
2018, the USD index has moved higher by some 6% and
gold has largely held a trading range.
However, gold prices continue to weigh up the
expectation of inflation in the U.S. Current prices are
also supported by a weaker U.S. dollar and geo-political
uncertainty with Korea and the South China sea.
Gold supply is currently running at 120 million ounces
per year, there is expected to be some decline during 2018
as years of under investment weigh on current mine life.
Last comments: With resistance developing at $1375
and key support shown at $1307, further consolidation is
expected.
At first glance, the consolidation in the gold price may
look benign. However, the important development around
the marked range trading area of $1306 to $1367 is the A closing price back over the $1306 is required to remain on the
breakdown back to the trend line. bullish side of this commodity.
The Weekly Chart shows the past 4 weeks of smaller Although the projected price target of $1410 remains in place,
ranges. Price volatility is very low, this has traders on a breakout over the $1375 resistance level is needed to bring the
edge as the market maxim states that low volatility leads price target of $1410 into play in this primary up trend.
to high volatility.
In the coming weeks a break down below the trend
line at (3) would place the commodity back into a primary
down trend.

COMMODITIES CORNER
Wheat
Chicago wheat has eased as rainfall in Western Australia

took the edge off global weather worries, while investors
awaited a U.S. government crop report to gauge the possible
impact of dryness in a clutch of exporting countries. Wheat
prices have been buffet in recent weeks by concern over dry
weather in several major exporting countries, which could
change the complexion of a global market currently laden
with record inventories.
The upside might be limited as wheat stockpiles are still
pretty big in the United States and fresh supplies from the
northern hemisphere harvest have started coming to the
market.
Hot and dry weather looks to stay over the Black Sea
region, further drawing yield potential for Ukraine wheat and
corn, and Russia wheat.
Russian agriculture consultancy IKAR recently said that it
had downgraded its forecast for Russia’s 2018 wheat crop to
71.5 million tonnes from 73.5 million previously. Also, severe
drought in eastern and southern regions could further shrink Gary Burton is the Director of The Australian School of Technical
Ukraine’s 2018 wheat harvest by 15-30 percent versus Analysis- For those who choose to start in the right direction.
original forecasts, the state hydro meteorological centre
recently stated.
Last Comments: A tentative trend line is now in place. A
breakout above this level would be very bullish price with a
retest of the Q2 and Q3 2017 high in play.
The recent uptrend is being rejected as the global over
supply news spreads. The Weekly Chart of wheat shows the
recent retest of the $556.0 levels with immediate rejection.
Recent price action would suggest a retest of the lower level
of the current range at $400 bsh.
There are support levels on the way at the $480.0 pattern
line and the $437.0 higher low point.
Twitter.com/YTEmag

Why Trump is so good for trading
The future of financial services in Australia: The
consumer-led revolution we need to have
7 Bad Trading Habits and How to Get Rid of Them
Does China Trump USA in Trade War?
The Elasticity Factor for Entries (EFE)
A road less traveled
SHARES
AND TRADING
WHY TRUMP IS SO GOOD FOR TRADING
WHY TRUMP
IS SO GOOD
FOR TRADING
By Lachlan Elsworth
N
ot even Europe can escape the market volatility being created by
Mr Trump. Are you ready to take advantage of the ‘TRUMPED Up
Volatility’ that may be here to stay?
Lachlan Elsworth is the Founder and Trading System Architect
at the International Day Trading Academy, based on the Gold
Coast of Australia. Lachlan has for many years been an advocate
of transparency in the markets and also for the potential of both long-term
and short-term trading. In this interview, Lachlan discusses the rise and rise
of TRUMP Volatility and why the suggested trade wars are one of the biggest
opportunities traders have been handed in a long time.

YTE: Lachy, you have mentioned TRUMP Volatility, this YTE: Can you show us exactly what the strategy looks like.
sounds exciting, please explain!
Lachlan: Absolutely, it would be my pleasure.
Lachlan. Great question. Having presented with Mr Trump One of my favourite markets to trade is the German stock
personally, prior to his presidency, may I suggest he is a lovely guy. exchange otherwise known as the FDAX. Why do I like the FDAX?
In saying this, he is very Pro-America, so I am confident his stance I like the FDAX because it starts trading at 5 p.m. in the afternoon
will be the guiding principle for his economic and fiscal policies (Gold Coast time) and trades very well all the way through to
and clearly, we are seeing proof of this already. Understanding midnight. It’s a volatile market that gives traders the opportunity
that Trump is likely to be steering the US for some time, I think it is to have a normal 9-to-5 job, and once they have returned home,
important to recognize this and tailor our trading and investment trade arguably one of the best markets in the world. The market is
strategies accordingly. Trump and trade wars mean volatility, and also very well suited to trading both up and down and clearly this
this is what we need to get used to. means it is very well adapted to Donald Trump’s volatility.
To prove the suitability of this market to volatility, I would like to
YTE: Why would you suggest that volatility is a good thing? look at two back-to-back trading sessions that clearly show that
you can trade the markets both up and down. I have chosen to
Lachlan: Volatility is a great thing for traders who have the show you the same trading session, the US Pre-Market, two days
freedom to trade the markets both up and down. Volatility is also in a row, to prove that the strategy works in rising markets and
a great thing for people who have a short-term perspective on falling markets simultaneously. Ironically, the uptrend in Image 1
the market and don’t really care for the longer-term trend. The was indeed created by positive news out of the US which was
current market volatility has proven once again that a short-term subsequently Tweeted by Donald Trump. It shows the power of
perspective may in fact be significantly safer than a long-term volatility but also suggests that if you want to be very successful
perspective, particularly if that long-term perspective does not at trading and investing in the current market environment, that
have the freedom to take advantage of a falling market. a short-term trading strategy may well be your new best friend.
YTE: If there are traders that want to take advantage of YTE: Can you show us the trades?
the current volatility, what would you suggest is a strategy
they could use? Lachlan: Absolutely. Let’s go straight to the images.
Image One on 14th June 2018 is a classic uptrend that resulted
Lachlan: My first tip to those who want to trade very well in from positive news out of the US and a Donald Trump Tweet to
volatility is- do not hold trades overnight or over the weekend. compliment this news.
Both of these trades introduce unnecessary risk into your trading My trend indicator is green meaning that I am only allowed
as we simply do not know when Donald Trump will be sending to buy the market with the uptrend. Further, my entry prices
out his next Tweet. The key to success in volatility is to simply get are defined for me by an algorithm I have coded to these exact
out of the market when you’re not watching your computer and markets. The horizontal blue lines (in the yellow circles), with the
certainly not have any money in the market over the weekend in corresponding blue arrows pointing up, are these defined prices
case there is an unexpected global correction or an unexpected that we can buy the market at if we choose.
Tweet from Donald Trump. The blue box in the middle of the chart is a reference box worth
My second tip would be to adopt a strategy that capitalises AU$200.00. If you can get the market to move ‘one blue square’
on short-term trends and by this I mean trends that are typically in your favour, then you have earned AU$200.00 on that trade. In
2 to 3 hours in duration only. As much as this means traders are the case of this up trend, provided your risk control (stop-loss)
moving towards a ‘day-trading style of investing’, it is this style of was in the right place, you have had a win on every trade. This
investing that seems to suit the Donald Trump Tweet environment uptrend produced 8 trade opportunities inside the designated
very well. I am happy to prove this fact in the charts that I am 2-hour trading session and if each of these trades was worth
about to work through. AU$200.00, I am sure you will agree this was a reasonable 2 hours
My third tip is to encourage Ttaders to use shorter time frame in the charts. The red arrow on Image One is a trade you are not
charts with the intent of deriving more trading opportunities within allowed to take, as per our trading rules. Even though it was a
these short-term trends. I meet a lot of traders who like using Daily clear winner, we are not allowed to trade directly into a Pivot, as
Charts and 4-Hour Charts and these traders just do not have the they quite often act like brick walls in the market. In saying this,
advantage in the market that I do. The 5-Minute Chart gives us the these Pivots are automatically generated for us as well.
opportunity to trade short-term trends and also get multiple trading The past performance of this product is not and should not be
opportunities on a daily basis and almost every trading day. taken as an indication of future performance. Caution should be
exercised in assessing past performance. This product, like all other

IMAGE 1: FDAX UP TREND 14 JUNE 2018 IMAGE 2: FDAX DOWN TREND 15 JUNE 2018
financial products, is subject to market forces and unpredictable

events that may adversely affect future performance.
In the case of Image Two, all of the same caveats apply. This
is the same market traded at the same time just on the following
day, 15th June 2018. The trend indicator is red indicating that I
am only allowed to take sell signals with the down trend. Each YTE: Thank you so much for your time.
horizontal red line (inside the yellow circles) is an algorithmically
defined sell signal that produced 7 trade opportunities inside Lachlan: It is my pleasure. Have an amazing trading week!
the US pre-market 2-hour trading session. All 7 trades hit their
AU$200 profit target provided your risk control (stop-loss) was Lachlan Elsworth, Founder and Trading System Architect | The
positioned correctly. The red arrows indicate three trades that we International Day Trading Academy.
are not allowed to take as they are either into a Pivot or assume a To watch an ‘On-Demand’ 90 Minute Trading Lesson with
close over that pivot. These are two very important trading rules. Lachlan, simply visit: https://www.idta.com.au/events/
The past performance of this product is not and should not be Authorisation. The International Day Trading Academy (ACN 165
taken as an indication of future performance. Caution should be 005 550) is a Corporate Authorized Representative (CAR Number
exercised in assessing past performance. This product, like all other 001250922) of Beyond Capital Asset Management P/L (ACN 610
financial products, is subject to market forces and unpredictable 259 179) (AFSL 484045) for the purpose of FUTURES Trading
events that may adversely affect future performance. Education. The information in this article is General Information
It must be noted that there are two risks in trading, that being Only. Any advice given or implied is General Advice Only. Neither
the risk of making money and the risk of losing money, every time your personal objectives or financial situation or needs have not
you take a trade. Every one of the trades featured in Image 1 and been taken into consideration. Accordingly, you should consider
Image 2 could have lost money and made money equally. The art how appropriate the advice (if any) is to those objectives, financial
of trading well is understanding this and using risk control to your situation and needs, before acting on the advice. All content if
advantage. this article is the opinion of the individual writer and constitutes
We are finding that the volatility around the world is increasing as General Advice only. The past performance of this product is not
we get closer to potential trade wars between the US and China. I and should not be taken as an indication of future performance.
am excited that we already have a strategy in place that is allowing Caution should be exercised in assessing past performance. This
us to take advantage of such volatility and the volatility to come. product, like all other financial products, is subject to market
May I suggest that the next 18 months to 5 years, under Donald forces and unpredictable events that may adversely affect future
Trump, may in fact be some of the best trading we have ever seen. performance.

THE FUTURE OF FINANCIAL SERVICES IN AUSTRALIA: THE CONSUMER-LED REVOLUTION WE NEED TO HAVE

The future
of financial services
in Australia:
The consumer-led
revolution we need to have
By Pat Garrett
T
he Banking Royal Commission has thrown Commission will prove to be the catalyst for a similar revolution
Australia’s financial services industry into a here, led by consumers who are tired of their hard-earned
state of turmoil that will undoubtedly take years wealth being handcuffed to opaque and complex products that
to settle and repair. Consumers’ trust that require expensive management.
their best interests are being served has been Simplification of the complex is what the financial services
rattled to its core. As an expat American, this industry now needs - but what does ‘simplicity’ really look like
feels eerily familiar, and I’ve observed strong in an industry that is far from simple and what changes are we
parallels to the deeply unsettled atmosphere in the United likely to see in the demands of investors as we move into new
States in the wake of the Global Financial Crisis (GFC). territory post-Royal Commission?
The GFC resulted in a consumer-led revolution that redefined Here are some predictions:
the American banking industry. It opened consumers’ eyes to • Demand for conflict-free advice. It’s not comforting to
serious problems that are finally being similarly exposed here in know that your investment manager has incentives to
Australia – excessive fees, a lack of transparency and conflicts recommend products. No one wants to visit their doctor
of interest that cost them dearly. I believe the Banking Royal with an illness and know the doctor is paid to prescribe

one medicine but not another. Which one do you think

the doctor will prescribe? More and more investors will
begin to question how financial services providers make
their money. Moving forward, ethical options will be a key
priority for investors.
• Better value for money. People are fed up with overpaying
for underperformance with most actively managed funds;
data suggests that fees are too high with actively managed
funds given their investment performance. My colleague
Ted Richards recently wrote about the two questions every
investor should be asking right now: 1) What are the returns
you’re getting on your investments and 2) What are the fees
you’re paying for those returns? Investors will and should
be asking these questions.
• Consumers improving their financial literacy and
understanding of investments. As a result of the Royal
Commission, people are already working to become more
financially literate and are taking more control of their
financial wellbeing. This is a great trend to see emerging. As
knowledge levels and the thirst for more information grows,
I think we’ll see consumers take a more forensic approach
– they will be asking more questions, drilling down into the
finer detail of the services provided to them and reviewing
future investment options with a much more critical eye.
• Demand for greater transparency. No hidden fees,
commissions or kickbacks. Investors will be asking: Is my
money being looked after by experienced professionals who
are putting my interests first and do I have clear visibility
into how my money is being invested? Any service should
be able to answer these questions in a simple way that
instils trust with investors.
• A desire and need for expert human advice, but at the
appropriate time: the age of fee-for-no-service is over.
Still, most investors need assistance with certain aspects
of their wealth management and will naturally want to have
trustworthy, experienced, well trained experts assisting
them along their savings journey, at the right time and when
needed.
What changes might we see on the financial services
side? Well, the Royal Commission will produce a suite of
recommendations that will include greater regulation around
minimum educational standards and requirements, as well as
heightened transparency around fees and products. It’s also fair
to assume there will be greater scrutiny on the relationships
between advisers and the products they recommend.
Financial institutions are already scrambling to show that
they are acting before they are required to do so, but real and
meaningful structural change takes time and typically happens
when consumers vote with their feet or their wallets. If consumers
are tough, this will push the large institutions to innovate more
and the result will be very positive for the industry.
Access to quality financial advice and management should not

What’s on the rise post-Royal Commission?

The Royal Commission will surely change the way people invest and manage their money. Some specific changes in
investor habits that we will see in the coming 12 months include:
-C onsumers will become more engaged with their investment/savings management at an earlier stage in life: This could
be the most beneficial outcome of the Royal Commission in terms of investor habits. The ‘old’ way of handing your
hard-earned money to an advisor or investment manager and assuming that your best interests will be looked after has
been turned on its head. There will be a consumer-led demand for value-for-money services that fundamentally change
the wealth management industry.
- Increased use of exchange-traded funds (ETFs): ASX-listed ETFs from globally established companies such as Blackrock/
iShares, Vanguard and State Street enable investors to easily construct globally diversified investment portfolios at a
low cost. The ETF market in Australia has grown rapidly from $5bn to almost $40bn market cap over the past 6 years.
This growth has been fuelled largely by institutional investors and (increasingly) by high net worth and SMSF investors.
With increasing awareness of the benefits and accessibility of ETFs, we will see more ‘ordinary’ investors using ETFs.
- Less focus on picking stocks and timing the market, and more on asset allocation and investment diversification:
Picking stocks and timing the market is really hard. Most experts have a hard time outperforming the broad market
indexes. Data shows that for most investors, the most effective way to achieve optimal long-term returns is to focus
on asset allocation and keeping costs low. This is a strategy that has the added benefits of being easier and more cost-
effective to implement and manage, which frees up time for investors and reduces the stress involved with stock picking
or not knowing what a ‘traditional’ advisor is doing with your money.
- Increasing use of new, innovative investment management services: Investors are becoming more trustworthy of
technology (think Uber, Airbnb, mobile banking, online payments) and less so of humans as a result of the exposure
of market abuses. Innovative fintech companies are now helping investors with smarter, simpler, transparent and
unconflicted services at a very low cost. This trend has exploded overseas and is starting to emerge in Australia.
Investors have service options that they are only just becoming aware of, including accessible ways to achieve smarter
asset allocation, investment diversification and periodic rebalancing to get the most of their investments.
be limited to the wealthy; nor should the wealthy be forced to Pat Garrett is the CEO of automated investment service Six Park
pay exorbitant fees if their needs are relatively straightforward. (www.sixpark.com.au). He co-founded Six Park in 2014 after a
Even if investors’ needs are complicated (requiring more 25-year career in the financial services industry, including 15
time and, hence, more expense to manage) they should still years at JP Morgan in New York, San Francisco, and Melbourne.
understand clearly the fees they are paying and the expected
benefit of paying them. Six Park launched in April 2016. Six Park’s Investment Advisory
Investing is hard. But simplicity is possible, even in a Committee is made up of Six Park co-founder Brian Watson,
complicated world, and consumers have every right to expect it. formal Federal Finance Minister Lindsay Tanner and the founding
The Royal Commission is an important part of the revolution we General Manager of Australia’s Future Fund, Paul Costello. This
have to have in the financial services industry and if consumers advisory committee is active in overseeing Six Park’s investment
have the courage to make changes, ask questions, put pressure strategy.
on their service providers for clear answers and walk away if
their needs aren’t being met, we will see a huge change for the
better.

7 BAD TRADING HABITS AND HOW TO GET RID OF THEM
24
7
YOURTRADINGEDGE
Bad Trading Habits and
How to Get Rid of Them
By Ashley Jessen
JUL/AUG 2018
I
magine what it would be like to get rid of your bad trading So, let’s jump straight into the seven bad trading habits that can
habits. You know, those crazy things you do on a semi- bleed your account and how you might be able to fix them.
regular basis that cause havoc to your trading account?
It’s incredibly frustrating, especially when you look back 1. Your stop is too close (especially for those trading
and see how much they have cost you over time. Forex)
Not to add fuel to the fire, but Charles Duhigg’s book Ever experienced being right on a trade but being stopped out?
entitled The Power of Habit, cites, ‘One paper published by a On June 14, 2018, the European Central Bank (ECB) signalled
Duke University researcher in 2006 found that more than 40 percent it would end its QE program by the end of the year. This news
of the actions people performed each day weren’t actual decisions, was not expected and came right on the back of the US raising
but habits.’ interest rates.
Now imagine if, when you first started trading, you picked up In hindsight, this combination was a negative for the Euro, but
some bad habits. Could those habits still be lingering, allowing that didn’t stop the little ‘head-fake’ move, pushing the Euro above
the occasional bad stretch to creep into an otherwise excellent resistance at 1.1839. Only to then come crashing down over the
trading year? next 10 hours.
And the truth is, habits are hard to break. Ever tried brushing your Imagine getting stopped out due to too tight a stop, thereby
teeth with your other hand after 20+ years of using the same one? missing out on 280+ pips of handy gains.
It’s awkward. Small trading accounts fall victim to this every single day,
Trading habits are similar, but different in respect to real money especially Forex accounts.
being on the line. So instead of constantly operating on autopilot, The way to overcome this is to build a trading system with a
we must take action and change each habit one at a time. positive expectancy, with back-tested results you are confident in.

You then need to trust your numbers and know your system has psychologically tough to overcome.
historically done everything it can to keep you in a winning trade, If you have tendencies to close trades too early, then implement
without getting stopped out early. a systematic exit strategy. Do not rely on your discretion.
Backtest the exit that fits your ideal time frame to hold a position
2. Trading the recommendations of other traders without getting anxious about giving back profits and stick to it.
The fear of missing out (FOMO) is real. Not just with the latest
iPhone but the opportunity for profit. 6. Too much leverage
Back when I had a trading room with four of us trading full- Leverage along with greed are two of the main reasons traders
time, one day saw Fortescue Metals plummet. One of the traders, blow up accounts.
who only day traded CBA, was watching the short seller rack up Leverage is a double-edged sword. Sure, if you have the
impressive profits on the day. emotional discipline to use a little bit of leverage, then it would have
It wasn’t long before he was short too. You guessed it. Fortescue a positive element to it.
rebounded hard as the short-sellers covered and locked in profits. But the truth is, most traders cannot use leverage responsibly.
Our CBA day trader ended up wiping out two weeks worth of You must break the habit of too much leverage. Stay small.
steady gains. Create a daily checking system to monitor your leverage levels and
It was painful to watch. before the close of trading, take action to get smaller. Every. Day.
You need to build your trading system. And, in the off chance,
a friend tells you about a sure winner, be sure to ask yourself if 7. Going against the trend
it meets your trading criteria for a low risk, high-reward trading You’ve heard it a million times. You even cite this saying at BBQ’s
opportunity. with your friends.
Yet, you still find yourself trading against the trend.
3. Revenge trading Why?
We’ve all done it, and it makes sense when you look at it. What Sure, there is another saying in business that states: ‘Find what
happened as a kid when someone took your stuff? You wanted it everyone else is doing and do the opposite’.
back. And if you couldn’t get it, you plotted your revenge. But take a look at the mistakes you have made in your trades.
When it comes to trading, it is your hard-earned money. Real Have a look at the ‘unlucky’ trades in the past that ‘gapped widely
money. Not fake money. Ever felt the need to revenge trade on a against me without warning’.
demo account? Didn’t think so. Were you trading with the trend or against it?
Revenge trading is almost wired into us, and it will wreak havoc This is one of the easier trading habits to overcome. Put an entry
on your account. It is a mistake. method that confirms the trend before getting in.
To overcome this bad habit, you need to realise the cue, form Perhaps you could consider only trading long when the
a new routine and reward yourself. The cue, routine and reward 100-period moving average is rising. It’s a little primitive, but a good
model is based on the deep research of Charles Duhigg. way to knock out trades moving against the dominant trend.
So, there you have seven trading habits that are common
4. Looking for the one big win all the time account killers.
If I could just make enough money so I can finally tell my boss to To make the second half of 2018 an outstanding trading year, you
stick it. must get proactive and create new, more powerful trading habits.
Yep. We’ve all been there. Replace your bad habits, reduce the number of mistakes you
But trading is much more than banking huge wins. In fact, the make and simplify your trading life.
success factors that distinguish the best traders in the world is
capital preservation. Ashley Jessen is the author of CFDs Made Simple and
If you want to win at trading, learn to focus on protecting your runs LearnCFDs.com. Ashley is the CEO and Co-Founder of
capital. ProfileBooster.com.au, a company dedicated to helping finance
Don’t chase the dream of big wins. Instead, work a system that and professional services companies drive more leads, convert
fits your psychological profile and get excited when an outlier win more sales and boost their authority through intelligent PR, content
comes your way. Don’t seek them. and media distribution.
5. Closing winning trades too early

Opportunity cost on missed trades or trades you’ve closed too
early hurt more than taking losses.
Not only is there less money in your bank account, but they are

National Conference – It’s a Wrap
Thanks to everyone who came along to the ATAA National Conference in Melbourne, making it
such a huge success. The feedback has been overwhelmingly positive and we’re delighted that
everyone who attended was able to go away with plenty of actionable content to improve their
performance. A big thanks also to our roster of presenters who delivered excellent talks across
the board, plus special thanks go to our overseas speakers for making the long journey across
from USA. We look forward to seeing everyone again at the next conference.
Featured presenters:
Linda Raschke (USA) – Professional trader Kevin Saunders – Boutique fund manager
featured in New Market Wizards and system designer
Dan Gramza (USA) – Technical analysis Dr Bruce Vanstone – Computational
and trading psychology specialist finance specialist
Tony Sycamore – FX professional Kris Longmore – Prop trader and machine
Alan Oliver – Gann specialist learning developer
Brent Penfold – Author, trader and strategy Stephen Harvey – Risk professional
developer Andrew Swanscott – Private Trader and
Cam Mitchell – Professional futures trader Better System Trader host
www.ataa.asn.au
DOES CHINA TRUMP USA IN TRADE WAR?
Does China
Trump USA
in Trade War?
By Jodie Nolan
A
t the end of June 2018, China’s currency hit a war in theory, if it turns ugly, could spark a currency war, but
six-month low against the US dollar, spurring talk I don’t think that’s where any of the parties want to go at this
that the ‘trade war’ between US and China could point’.
materialise into a currency war too! He also went on to add that the ‘easing Chinese monetary
China has been known for manipulating its policy could have helped fuel the decline’, rather than a deliberate
currency in the past, however, many analysts intervention by China on their currency.
believe that whilst it wouldn’t intentionally devalue its currency With fears of a trade war weighing on the global stock markets,
this time, it may have stopped any preventative measures the US antagonism of its allies appears to be harming confidence
against its weakening. The idea that China may be deliberately too. Nobel Prize-winning Economist Robert Shiller of Yale
weakening its currency has fuelled further tensions between the University sees concerns ahead for stock markets and recently
countries and sparked more uncertainty around global trade. commented on CNBC, ‘people believe that he’s (POTUS) good
The palatable tensions between USA and China have some for the market. But not necessarily if we start antagonizing’. He
market analysts wondering if China really would knowingly allow also noted in a recent meeting of G-7 leaders that things ‘looked
the yuan to fall, with the devaluation resulting in Chinese goods grim’.
becoming cheaper on the world market, and ultimately more Since Trump introduced steel and aluminium tariffs at the
desirable. end of February, stocks in Shanghai have fallen 20% from their
At the end of June 2018, it appeared Trump administration peak in late January, a technical definition of a bear market. The
was backing off their most aggressive (25% tariffs on $46 billion Chinese mainland is also off some 13% at the time of writing.
of US tariffs) stance on policy discussions about trade, which In addition to share market concerns, if the duties are enforced
appeared to ease tensions. Originally the POTUS had asked US it could trigger a ‘trade diversion’ from other steel makers who
trade representative to identify the $200 billion worth of Chinese potentially could dump as much as 80 million tonnes of steel (or
imports for tariffs, so it seems like a show of good faith. Alan 17% of global exports) in India, which is considered an attractive
Ruskin of Deutsche Bank commented on the subject ‘I don’t destination as it’s one of the world’s fastest growing ‘major’
think it behoves anybody’s interest to open that front. A trade economies. India is also earmarked to overtake Japan as the

DOES CHINA TRUMP USA IN TRADE WAR?
world’s second-largest steel producing nation. Canada is said China. They are all big players in the global markets, so it is a
to be considering measures to stop a flood of steel import if the delicate game in the war on trade.
tariffs go ahead too. China appears to be capitalising on US midterm elections in
China in retaliation appears to be positioning itself as the trade war by targeting products such as soybean, which
‘transitioning to more of a consumption-based economy’ rather come mostly from Trump supporting states in the Midwest and
than growth driven by extensive construction activity. To this end, whisky exports from Kentucky. Beijing proposed its own tariffs
Shanghai will host the world’s first International Import Expo in on the goods worth over $50 billion a year. China’s Commerce
November 2018. China believes that the scaling back of import Ministry announced that 106 US products including automobiles,
tariffs is a natural evolution in this process as their economy chemicals and cigars would be hit with a 25% tariff if the US
evolves, essentially bypassing the import tariffs imposed by USA led tariffs continued. The targeting of $50 billion in goods is the
of up to 60%. same amount as a list of 1,300 Chinese industrial and transport
China sells more to America than it buys in return, so you exports that USA said it would hit with 25% duties.
would assume USA would be in the position of power with a It’s not just China that the US is provoking with talk of trade
strong hand, however headline statistics appear to overstate tariffs; the European Union’s retaliatory tariffs have prompted
China’s economic vulnerability and underestimate the US. China companies like Harley-Davidson moving production for the
has more scope to mitigate any damage. Unlike the US Federal European market out of the US to avoid import duties.
Reserve, China’s central bank is not independent and can be Andy Rothman an Investment Strategist at Matthews Asia
ordered to cut rates to boost domestic demand, their state- warned ‘very few listed Chinese companies export stuff to
owned banks can be told to extend credit and as mentioned the United States, even if Trump disrupts US-China trade, the
impact should be negligible (to China)’. He went on to add that a
trade war ‘will hurt us more than them’.
The elephant in the room is the $1.2 trillion of US government
debt that China owns. If a trade war escalates, economists
and investors worry that China could sell its US debt holding.
A significant bond sell-off wouldn’t be good for either party,
but the US particularly would be hammered with fixed income
prices falling and yields rising. The equity market would suffer
too. A sell-off would make borrowing more expensive and trigger
the US economy to slow. China on the other hand would also
fair poorly with capital losses triggered and their export market
exposed if the USD falls. While a sell-off seems highly unlikely, it
is still floated as a possibility in China’s attempt to upset the US.
earlier, they can manipulate their currency to encourage So far it appears the trade war is nothing but political theatre,
competitive trade. an example of Trump’s protectionism and fondness for eccentric
In comparison, the USA would need more congressional deal making. However, if the US continue to overestimate their
approval for spending (which may not be forthcoming) if they leverage and underestimate China’s resolve, there is a danger
are facing a large and rising budget deficit amid a trade war that things will escalate. The very nature of how difficult it is to
environment. The US Stock market is often at the mercy of the predict trade negotiations can affect business confidence. The
POTUS’ decisions, reflected in the reaction of the Dow after uncertainty can push firms to cut back on capital investment
each tweet or public appearance, and given the single biggest and spending, and cause concern over potential higher material
constituent of the Dow is Boeing, it’s certainly interesting times. costs which will affect margins.
Boeing is America’s largest exporter and China accounts With US midterm elections looming, many analysts believe the
for 20% of Boeing’s order book and it faces being a pawn in POTUS won’t do anything to upset the status quo and given
the political showdown. If China were to cancel their existing trade is the overhanging concern, with the possibility that China
orders, including a huge 300 aircraft deal worth a monster $38 may be deliberately devaluating its currency, there is much
billion, together with other Chinese customer orders, it would uncertainty – and as we know, uncertainty can often lead to
represent a loss of one-fifth of Boeing business! The loss would more fear and volatility.
be devasting not only to Boeing and the US stock market, but
the ancillary aviation-related businesses too. Jodie Nolan MBA (Applied Finance) Economist, Investment
It’s not just Boeing at risk, General Motors sells more cars in Adviser & Author EQUIS Group Wealth Management jodie@
China than the USA, and Apple derives 20% of its revenue from equisgroup.com.au

THE ELASTICITY FACTOR FOR ENTRIES (EFE) – A ROAD LESS TRAVELED

The Elasticity
Factor for
Entries (EFE)
A road less traveled
by Ivan Krastins
E
LASTICITY: (Webster’s Revised Break of a Trend-line * – this approach has been
Unabridged Dictionary) the inherent around since people started drawing charts by hand
property in bodies by which they recover 100’s of years ago. Whilst it is still common today
their former figure after the removal of among many traders, there are many traps in its
an altering force; springiness; tendency application.
to rebound. Breakout of a Pattern * – another oldie (and
a goodie). The various patterns such as Head
USING THE ELASTICITY FACTOR TO ENTER & Shoulder, triangles, wedges and even double
THE MARKET (EF-E) or triple tops have been identified as significant
In my previous article I presented the concept of patterns in markets.
the Elasticity Factor, how to calculate it and how it Break of a bar’s High or Low * – known as
could be applied as a Stop Loss (EF-SL) ... and its breakout trading and often used in conjunction with
advantages. Additionally, I encouraged readers to indicators or chart patterns. This idea is also used
do their own due diligence to see whether it improved by exponents of Point & Figure charting, although in
the results of their own Rule-Based Trading (RBT) the post hand-drawn charts era, P&F charts seem to
approach. The EF-SL concept is not a standalone have disappeared from vogue.
RBT, at least from research so far. That certainly Break of a Spike High or Spike Low * – often seen
does not rule out the possibility of it becoming one as Swing Trading, for pretty obvious reasons. This
down the track. concept has been around for decades also and is
Let’s now look at another concept of elasticity and still applied by many, especially trend followers.
how you may be able to apply it to get a better entry On the Close when an Indicator breaks a certain
level than many of the other entry methods out there level – with the advent of handheld scientific
in the market-place. Without doubt using the EF calculators in the 1970’s, many approaches sprang
to establish your entry level will mean that you will up that massaged the actual OHLC data into
be entering a market at non-obvious levels … and another form referred to as Indicators. This led to
hence not competing with the crowd. When your traders acting when the indicator crossed a certain
order is competing with the crowd, slippage can level or the price crossed the indicator.
become an issue. More on that later. On the Close of an Indicator-based signal –
First of all I want to do a brief rundown of some Alternatively, action is called for when the indicator
of the more common Entry Techniques so you can gives a signal in its own right such as is the case
make a more valid comparison. with the original application of the famous RSI, as

well as the Stochastic Oscillator. STEPS INVOLVED IN ARRIVING AT THE ELASTICITY

*- One variable that exists with these Entry Techniques is FACTOR BASED ENTRY (EF-E)
whether to act intra-bar or on the completion of a bar. Let’s start by dealing with going short first.
One of the biggest enemies and costs for traders is ‘slippage’. 1. Locate the most recent bar that moved in the opposite
This refers to the difference between the price you want to trade direction. What you are looking for is the most recent bar
at (your order price) and the price you end up transacting at. that closed higher than the one before it and closed above
Commonly it is a negative figure. Whilst it has little impact if you its open,
are only doing a handful of trades a year, it can play a significant 2. Subtract the Low price from the Open price- This is the
role if you are doing a handful of trades each day. By handful, I actual Elasticity Factor
mean about 5 to 10. 3. Add 1 to that number
Slippage, of the negative variety, generally occurs because 4. Once the market opens on the next period, simply subtract
of competition by traders wanting to buy (or sell) at the same the number from the Open price
time and at the same price. The bunching of orders happens to arrive at the actual price you want to sell on Stop at (EF-E).
when people see the same ‘signal’, whether it is on their chart or
elsewhere. It can also occur when a figure, such as Non Farm
Payroll is released or a major event or an announcement of an
increase in interest rates etc. makes the news. The imbalance of,
say buying orders, all coming in at once to buy at the same price
level can lead to slippage of just a few pips or points or may be
serious enough to be measured in real dollars.
It is important ... nah make it vital ... to understand the meaning
of an order such as Buy on Stop at a certain level as well as how
it is executed. In fact a trader needs to understand the actual
meaning of any orders that they plan to use as part of their RBT.
With a Buy on Stop at, say, 1315 order, firstly the current Ask
Price must be below that specified price level … below 1315.
Secondly, the Ask Price needs to rally up to that level, which then
activates the Buy on Stop at 1315 order ... which morphs into a
Buy at Market order … Buy at the next available Asking Price …
Buy at any Price…
In other words, you have no control over what level the order
may be filled at. The rationale behind this concept is to discover how far
This may lead to the outcome where you are accurate with the sellers could push the prices down before the buyers
the direction and the timing, yet the cost of slippage, on the way overwhelmed their selling pressure. Naturally, the most recent
in and the way out, gobbles up all, or a significant proportion of occurrence of this will have greater bearing on current price
your profits. This is a real danger for short-term traders as they action than the same thing happening 30 bars ago. Hence,
generally are only trading for a small number of ticks or pips. you are looking for the most recent bar that conforms to the
Another point to note with slippage is that the vast majority requirement.
of traders buy a rising market and equally sell a falling market. By adding 1 to that number you have the probabilistic belief
Doing the same as the ‘vast majority’ virtually guarantees you that, should the sellers on the next period be able to drive the
negative slippage. prices down from the Opening by just 1 point or tick further than
Positive slippage (getting a better price than specified by your before, the buyers will capitulate and not be able to come back
order) can also happen. This occurs when you do the opposite in force to overwhelm the sellers and drive prices back up.
to the crowd. In other words, buying a falling market or selling a Figure 1 shows you what this would look like on a chart. It is
rising market will aid your chances of benefiting from slippage, important to come to grips with the ‘not knowing the outcome’
of the positive variety. This is a technique employed by veteran aspect of trading. All that can be known at the time is the
traders who refer to it as ‘fading the paper’. Paper in the olden amount at risk in (Dollars and Cents), which is best expressed
days referred to the orders written on paper that were given to as a percentage of your account balance. This is the %R value.
the floor traders (market makers) to execute on behalf of clients. To ensure longevity in a field where the majority do not win
Using the Elasticity Factor Entry (EF-E) concept will mean that over time, the value of R generally needs to be around 1%. If
your action levels (buy and sell prices) will definitely not be the the R value is 5% let’s say ... that would mean that 50% of your
same as the vast majority of traders most of the time. account is gone after 10 full losses in a row. Certainly an extreme
example, yet not beyond the realm of possibilities.

F I N A N CI A L A DV IC E
YOU LOVE TO TRADE, BUT HAVE

YOU GOT THE REST SORTED?
Back to the example. Logically you need a reason to want to two reasons for that. Firstly, I am presenting a generic version
go short in the first place – a setup in other words. This reason that can be applied to end of day as well as intraday trading.
should be based on your rules that have been backtested and It may well be that you can reference the current Close when
then back-applied (in sample and out of sample testing) when calculating your entry point for the next period. The second
you have proven to your own satisfaction that it is robust enough reason is perhaps more important. I have not done any due
to back with your own real money. (You can view a CyberTutorial diligence on using the Close as opposed to the next Open.
on using various setups by visiting https://www.youtube.com/ Intuitively I can see no valid reason why this should not be as
watch?v=gNW_JAglNQk) effective when applied to intraday trading.
For the case of this example let’s say your RBT had flagged My purpose in sharing this technique is to encourage
the last bar as a sell for the next bar. You would then just follow discussion and exploration of the use of the EF-based entry
the simple 3 steps outlined again to establish at what price the idea. It does need to be stressed that a valid and provable setup
Elasticity Factor- based sell order should go. needs to be present in the first place.
Step 1 - Locate the nearest bar that closed higher than the one Fast forward a few days and you can see on Figure 3 that each
before it and closed higher than its own Open.
You don’t have far to look ... the previous bar with the Blue
circle marking the Open and Low. FIGURE 1
Step 2 – Subtracting the Close from the Open gives you 5.
This is the actual EF.
Step 3 - Add 1 to give you the number to use for your order
tomorrow. The magic number for the EF-E is 6.
Going short on the break of the last bar’s Low, the traditional
selling point, would be doing the same as a whole bunch of
other traders. Negative slippage would be par for the course.
Additionally selling the break of the previous bar’s low may not
be backed up by the stats of the DNA of the market in question.
In this example the DJIA opened the next day at 10,105.
Hence, the order goes on to … Sell at 10,099 on Stop. This
means that the market needs to go down from the Opening level
to 10,099 where the order becomes a market order. (If these
terms are not clear to you, please read my Article – The Art of
Orders.)
This means that by using this Elasticity Factor based entry
technique you have beaten the herd by 15 points. In terms
of dollars and cents, at US$ 10 per point, that translates into
a savings of US$ 150 per contract. Of course that is not to
mention the negative slippage that would have been probably FIGURE 2
incurred as well. Over the course of a week or a month, doing
just 1 trade a day these add up quickly and can quite often mean
the difference between a positive and a negative bottom line.
From a practical perspective using the Elasticity Factor for
your entries, you do need to know the next period’s Open before
placing the order. If you are in front of a screen with live, real-
time data, then this does not present a challenge. If you are
trading daily charts, as per the example, then you have to ring
your broker or use your techno-gadget to get the data yourself.
The slight inconvenience could certainly reward you handsomely.
Those of you reading this who trade intraday sitting in front of
your screens for a few hours a day, or in some cases far more,
you should be able to employ this entry technique very easily.
Just wait for the following bar to start and presto … some quick
mental maths later the order is placed.
You will have noticed that I have not suggested referencing
the entry order to the Close of the current period. There are

High has been lower than the previous High as has each Low. buying level or to the EF based entry level. Forecasting, from
This means that the combination of a backtested reason (aka my side, is not a requirement for success in trading the various
setup) to look to go short and the EF-based or traditional entry markets around the world. Forecasting introduces a bias into
technique have served you well so far. Is the use or otherwise the equation and thus can make it harder to see what is to be
of the EF-based entry concept a deal-breaker? Certainly not. seen on a chart!
Could it add icing on your cake? Only you can establish that. Let’s look at this next example (Figure 5) of applying the EF
By now you may also be able to visualise where an EF-based based entry technique for a long position. Firstly, you must have
TSL would be for the existing short based on an earlier part of a valid reason for wanting to go long on the next bar … with the
this series of articles published by Your Trading Edge earlier in emphasis on ‘valid’ … and not based on an emotional factor
the year. You may even be thinking about combining the two such as not having gone long a couple of weeks or so ago!
Elasticity Factor ideas as part of your own ruleset. Next step is to find the most recent occurrence of a bar that
As always, it is up to you to establish the veracity of any new closed both lower than the one immediately before it and one
idea, regardless of the source. The fancy term is due diligence. that has its Close below its Open, hence having a black real
Let us now go through the steps for a buy using this version body.
of the Elasticity Factor. This means that the very first step is
to have a valid setup or reason to want to go long in a market.
Interestingly, the DJIA futures plays ball by providing a buy setup
that I featured in my first book, Listen to the Market way back in FIGURE 3
1991. Some of you may recognise this as a secondary bottom.
I share with my students the exact black and white rules
regarding this setup as well as the prerequisite Timing Tools.
There are 5 timing tools in the arsenal. These take out any
subjectivity in both the recognition and requirements of the
Retest setup.
Should your own rules establish that the last bar is a reason
to commence a long campaign on the next bar … and have you
entering on the break of the last bar’s high ... the EF-based entry
idea may provide a less obvious and potentially better level to
buy at.
Back to point, let’s have a look at the actual steps for a Long
campaign based on the EF concept.
Step 1 - Locate the most recent bar that moved in the opposite
direction. What you are looking for is the most recent bar that
closed lower than the one before it and closed below its open.
This means that the Real Body would be black, by definition.
Step 2 - Subtract the Open price from the High. This is the FIGURE 4
Elasticity Factor for the Buy order.
Step 3 - Add 1 to that number.
Once the market opens on the next period, the next day in this
example, simply add the number to arrive at the actual price you
want to Buy on Stop at. From my experience, once all the steps
are clearly defined and incorporated into a process, it becomes
much simpler and easier to replicate the steps every time. In
the example in Figure 3, the EF is 85 points. Therefore, you
want to be a buyer 86 points above the next open, whatever it
may be. In this case, the entry level is worse than the traditional
one of buying just above the high of the last bar and hence you
may choose not to use this method for a potential entry. Thus
your entry order would be at the same level as the multitude
who follow the traditional approach … thereby inviting negative
slippage.
From Figure 4 you can see that the market opened lower
than the previous close and did not rally to either the traditional

The second last bar qualifies. By subtracting the Open

(10.125) from the High (10,135) you get 10 points which is FIGURE 6
the EF. Adding 1 to this number gives you 11 points. Hence,
tomorrow the buy level will go 11 points above the Open.
Naturally this will entail getting the actual price of the Open
tomorrow either from your broker as was the case not so long
ago or via your trading platform.
The rationale for using this level to buy at is that on the last
occasion when the market closed down, the buyers ran out
of puff after pushing the market 10 points above the open.
Should the buyers muster the where-with-all to push the
prices higher still this time, the sellers may run as they cover
their short positions.
From my side it is imperative that any trading idea should
be based on the way people act … or react to certain stimuli.
This is the one constant in all markets since the advent of
markets. Over the years I have seen so many seemingly valid
rulesets come unstuck because they were purely based on a
FIGURE 5 FIGURE 7
number crunching exercise. And let’s face it, a gifted number buying level of 10,081 (being at the High of the setup bar plus
cruncher, human or otherwise, can always come up with the 1 point) and you can see that you are 5 points ahead of the
perfect answer … curve-fitting in other words. crowd. This equates to US$ 50 per contract improvement
And so it came to pass (Figure 6). The market opens at (minus brokerage and fees). Trading the traditional break of
10,065, so you simply add 11 to create your entry order. the High again would have you competing with many more
Buy at 10,076 on Stop traders and probably incur negative slippage. A few days
It goes without saying that you should also place a Stop later the market continued its march up to new highs for the
Loss order at the same time, even if you intend to be a screen run.
jockey spending time in front of your screen. At what price The Elasticity Factor based entry concept got you in at a
level to place it is an entire topic for another time. Suffice better level in this example than the more common approach
it to say that an … If done Sell at (price) on Stop order… as well as reducing the number of points that you would have
is mandatory if you wish to buck the odds regarding the had at risk as a bonus.
profitability of a trader. Only you can answer the rather obvious question of whether
Contrast buying at 10,076 (Figure 7) versus the traditional this concept is of any real benefit or value to you. I cannot

stress enough that before you rush out and start to apply or a plus in terms of slippage as well as often reducing the size
use any new concept, you are very well served by investigating of the risk in a campaign. If these concepts seem like an idea
how well it works in the market or markets that you want to worthy of consideration, then the onus is on you to validate
trade. them for your own use … before you use them!
Figure 8 is the last example of using the EF for entry and it
illustrates a potential challenge or issue in actually applying it De omnibus dubitandum - Everything should be
in trading. questioned (Karl Marx)
Due to the reality of the markets, there can be times when
it is practically impossible to implement a strategy that is PS. For more insights into my Language of the Market
perfectly valid. approach please view these CyberTutorials: https://www.
The second last bar is the most recent bar that both closes youtube.com/watch?v=NAiVtbj_eIY&t=632s and https://
higher than the bar before it as well as closing above its Open. www.youtube.com/watch?v=gNW_JAglNQk
The Open and the Low are the same for this bar. This means
that the EF is zero. Adding 1 to the EF = 1 point … the EF-E Ivan Krastins Author of Listen to the Market (LttM), which
level. This means that tomorrow the level to sell short is just has been used as a prescribed text by Universities in Australia
1 point below the Open. and SE Asia. Since 1983, he has conducted workshops
You would have to be rather nimble to get your order into on Trading, Technical Analysis, Options, Systems Design
the market (Figure 9). The conventional selling level, 1 point extensively in the Asia-Pacific. In 1991 he was a founding
member of ATAA. Mr Krastins has lived in Vanuatu for close
to two decades and conducts a unique 1 on 1 mentoring
FIGURE 8 programme (L.I.V.E.T.M) to a handful of like-minded people
each year. Moreover, he has lectured at universities in WA and
Qld on TA and systematic trading. www.ProfitFromPatterns.
com / [email protected] / Twitter - @Patterns_
YKW
Lack of money is not an obstacle ...

Lack of an idea is the obstacle!
Ken Hakuta
below the previous low is 10,180. You can see that the EF
entry concept potentially provides you with an edge of 39
points … a saving of US$ 390 per contract!
The Elasticity Factor, whether used for your Stop Loss
placement (EF-SL) or for your Entry level (EF-E), has you not
going with the crowd in terms of price levels. This can only be

Clinical Trading Cases: Measure and Trade
W.D.Gann´s Geometric Angles
Lighting the Candles with Factfulness
Pip Fiction –
It’s not just the Size that Counts
Trading Approach of the Terminal
Impulsive Elliot Wave [W5] Part I
TECHNICAL
ANALYSIS
CLINICAL TRADING CASES: MEASURE AND TRADE ON VOLATILITY AND MOMENTUM
Clinical Trading Cases:

Measure and Trade
By Dr Mircea Dologa
I
n this new section, we are trying to emphasize a “The darkness of the unknown has always intrigued me!
simplified learning curve of trading basics for the While doing part of my residency at the New York Mount
novice trader. When a person decides to take up Sinai Hospital, I was always marvelled when our Emergency
trading, he or she will always be surprised by the Medicine professor did a ‘wizard-like’ examination on one of our
emptiness of the chart, having the same feelings comatose patients. He hardly spent a few minutes observing
as the medical student on his/her first day in the the physical signs and he quickly made the diagnosis. Then,
Emergency Room. we eagerly waited for the results of the laboratory tests, which
We will briefly present these foundational elements of the nuts will confirm or eventually infirm the diagnosis. However, most of
and bolts of the breakout techniques, viewed through the eyes the time, he was right. Only years later, I have understood the
of volatility (Bollinger Bands) and momentum (Keltner Bands). mechanism of his intuitive approach.
We will illustrate some simple trading techniques, which will The follow-up of this clinical analogical approach will
help a trader get one foot in the stirrup and incite them to guarantee a well-done apprenticeship that will shorten a
eagerly continue on the learning curve. Whatever the trader trader’s learning curve, especially if he/she will emphasize the
decides to do in life starting from scratch, he/she should always practical aspects. Why…? Well, in both cases there are two
be aware of the impact of the knowledge building blocks. Once events at stake: the life rescue by a physician and the capital
that is mastered, then and only then should the more complex preservation by the trader, both indispensable for continuing
topics be pursued. life!
In case you wonder why the title is “Clinical Trading Cases”, “In this manner, the trader will be on his/her way to apply
take a few moments and read the following text that appears in intuition into the approach. Even though it took him years of
one of the author’s books. training and learning, my Emergency Medicine professor finally

arrived at his proposed goal: the planned intuition level. He

could ‘smell’ a comatose junkie just by looking at him, or detect FIG. 2 - TRADING USING A 15-MIN DAX FUTURES CHART.
a potential suicidal comatose patient while inspecting his nails,
hair or clothes.
“It might seem strange to associate Emergency Medicine
and trading, but they both have the same strong impact on the
psyche of the uninitiated person”.
As always, the little basic things are the prelude to building
the big achievements! We will first present the impact of micro-
FIG. 1 - MICRO TRADING USING 3-MIN DAX FUTURES CHART.
Figure 1 (from left to right):

• Entry Short at 12307 key level: small narrow range,
downwards crossing of 5-ema(C)/21-sma(C) with break
down and favourable RSI (ema downwards crossing),
• Initial Stop Loss: 12313 key level - 5 pts above 21-sma(C)
• Aggressive Exit: lower BB with reversing candle (bearish
engulfing pattern).
• Entry Long at 12238 key level: upwards crossing of steep
5-ema(C)/21-sma(C) with break-up and favourable RSI
(parallels of the two emas with RSI snake-type up-pattern),
• Initial Stop Loss: 12233 key level - 5 pts below 21-sma(C),
• Aggressive Exit: failure to higher BB with reversing candle
trading on the elements of profitability. Everything is a question (doji & bearish harami pattern).
of “KNOW HOW”, which seems to be very difficult in the
beginning. Eventually, this uncomfortable effect will dissipate, 1.2 B
reakout Technique through Bollinger Bands
letting place to the every day knowledge of the consistently using 15-min Chart [OBV & RSI]
profitable trader. Simply put… Don’t try to run before you learn Figure 2 illustrates the classic trading in a 15-min chart using
how to walk! the Bollinger Bands (18, 2.618) combined with the 3-ema (C),
the OBV and RSI indicators. We will now list the main tactical
1.1 B
reakout Technique – Micro Trading using 3-min tools which are being used:
Chart [Bollinger Bands, OBV & RSI) • Reason for entry Long/Short: narrow range, crossing of
Figure 1 illustrates the micro trading in a 3-min chart using 3-ema(C)/18-sma(C) with confirmation of OBV and RSI
the Bollinger Bands combined with the 5-ema (C) and the RSI indicators,
indicator. We will list in this article the main tactical tools which • Initial Stop Loss: 5 pts above/below 18-sma (C),
are being used: • Aggressive Exit: intersection with lower/upper BB with
• Reason for entry Long/Short: narrow range, crossing of reversing candle,
5-ema(C)/21-sma(C) with breakout and RSI, • Conservative Exit: intersection with 18-sma(C).
• Initial Stop Loss: 5 pts above/below 21-sma (C), The following trades were performed in Figure 2 (from left to
• Aggressive Exit: intersection with lower/upper BB with right):
reversing candle, • Entry Short at 11953 key level: small narrow range,
• Conservative Exit: intersection with 21-sma(C). downwards crossing of 3-ema(C)/18-sma(C) with break
The following trades were performed in the chart shown in down and favourable OSC (down slope) and downwards

FIG. 3 FIG. 3.1
RSI,
• Initial Stop Loss: 11958 key level - 5 pts above 18-sma(C)
in the vicinity of the upper BB,
• Aggressive Exit: when the market flow crosses upwards the
lower band of BB (18, 2.618) at 11802 key level,
• Conservative Exit: when the market flow crosses upwards •E ntry Short at 11965 key level: medium sized narrow range,
the 18-sma(C) in vicinity of the crossing 3-ema(C)/18- downwards crossing of 3-ema(C)/18-sma(C) with break
sma(C). down and favourable OSC (snake-type down pattern) and
• Entry Long at 11841 key level: small narrow range, upwards RSI (downwards oriented with snake-type down pattern),
crossing of 3-ema(C)/18-sma(C) with break-up and • Initial Stop Loss: 11971.5 key level - 5 pts above 18-sma(C)
favourable OSC (snake-type up-pattern) and RSI (upwards in vicinity of the 18-sma(C),
oriented with snake-type up-pattern), • Conservative Exit: when the market flow crosses upwards
• Initial Stop Loss: 11833 key level - 5 pts above 18-sma(C), the 18-sma(C) at 11841 key level in vicinity of the upwards
• Aggressive Exit: when the market flow crosses downwards crossing of 3-ema(C) and 18-sma(C).
the 3-ema (C) at 11966 key level forming a reversal (bearish
engulfing pattern).

FIG. 4 FIG. 5
1.3 Breakout Technique through Double Bollinger the previous chart, but on the right portion of the chart.
Bands using 15-min Chart • Entry Short at 11818 key level: pullback with break-up
This simple breakout technique helps the apprentice trader try above the lower band of the BB (21, 1), average-sized
to break-through and start making money. The indispensable volume bars and favourable OBV indicator (snake-type
condition is to protect the trading capital by the practice of the upwards pattern),
stop losses. Please find below the knowledge based on the • Initial Stop Loss: 11813 key level - 5 pts below the lower
volatility measure of this type of trade: BB (21, 1),
• Plot the classic Bollinger Bands (BB) having the default • Conservative Exit at 11995 key level due to a reversing
settings (20, 2) to be optimized. It will be used for setting pattern (bearish engulfing pattern),
the trading scene from the volatility point of view. • Aggressive Exit at 11975 key level at the intersection point
• Plot a second set of BB having, this time, a restrained of the market flow with the upper BB (21, 1).
setting of (21, 1) which will be employed for:
o Long entry [break-up and close above the upper BB (21, IMPORTANT:
1) or at the end of a pullback within the BB (21, 1) zone]. There is an Add-On opportunity at 11889 key level for this
o Short entry [breakdown and close below the lower BB already initiated Long trade, just above the pullback leaning on
(21, 1) or at the end of a rally within the BB (21, 1) zone the upper BB (21, 1).
- refer to Fig. 3). The initial stop loss is 5 points below the lower BB (21, 1)
• Exiting may be executed as follows: and the exit conditions are identical with those of the already
o Aggressive Exit: when the market flow crosses upwards initiated trade.
the lower band of BB (21, 2.5) for a short trade; when the
market flow crosses downwards the upper band of BB 1.4 B
reakout Technique through Bollinger Bands and
(21, 2.5) for a long trade, Keltner Bands using 15-min Chart
o Conservative Exit: when the market flow crosses upwards This simple breakout technique is a parent of the double
the lower band of BB(21, 1) for a short trade; when the Bollinger Bands trade helping the apprentice trader to try and
market flow crosses downwards the upper band of BB break-through and start making money. The indispensable
(21, 1) for a short trade. condition is to protect the trading capital by the practice of the
• As we already mentioned, the presence of an initial stop loss stop losses. Here’s the main knowledge based on the volatility
having a magnitude of an ATR (14) value is indispensable. measure of such a trade:
Usually, for a long/short trade, the stop loss is snagged 2-3 • Plot the classic Bollinger Bands (BB) having the default
points below/above a topographic market landmark. settings (20, 2) to be optimized. It will be used for setting
• The Volume and OBV indicators will confirm the degree of the trading scene from the volatility point of view.
breakout. • Plot the Keltner Bands (KB) having a setting of (21), which
Check out the trades performed in Figure 3.0 and Figure 3.1. will be employed for the long entry [break-up of the upper
Fig. 3.0 - Trading using 15-min Dax Futures chart, the same band or at the end of a pullback within the KB (21) zone]
as the next chart in Fig. 4. and for its exit (re-entry of the market with breakdown and
Fig. 4 - Trading using 15-min Dax Futures chart, the same as close below the upper KB - refer to Fig. 4.

It will occur for a short entry, a breakdown of the lower KK or Articles published by the author:
at the end of a rally within the KB (21) zone. For its exit, it will [2016]. “The Nuts-and-Bolts of Practising Elliott Wave Trading-
execute a re-entry with break-up and close above the lower KB Part I: Judicious & Mistaken Elliott Wave Labelling – Rules &
(21) - refer to Fig. 4. Guides”, Nov/Dec, Your Trading Edge, Melbourne, Australia
• As we mentioned, the presence of an initial stop loss [2017]. “Elliott Waves – How High is High?”, Part I, Technical
having a magnitude of an ATR (14) value is indispensable. Analysis of Stocks & Commodities, November
Usually, for a long trade, it is snagged 2-3 points below a [2017]. “Elliott Waves – How High is High?”, Part II, Technical
topographic market landmark. Analysis of Stocks & Commodities, December
• The Volume and OBV indicators will confirm the degree of [2017]. “Trading Approach of the Most Profitable Elliott Wave
breakout. [W3]-Part I”, Nov./Dec., Your Trading Edge, Melbourne, Australia
Fig. 5 - Trading using 15-min Dax Futures chart using Bollinger [2017]. “Trading Approach of the Deepest Corrective Elliott Wave
and Keltner Bands. [W2]”, Sept./Oct., Your Trading Edge, Melbourne, Australia
o Entry Short at 11896 key level: rally with break-down below [2017]. “Trading Approach of the Enigmatic Elliott Wave [W1]”,
the lower band of the KB (21), increasing descending (red) July/Aug., Your Trading Edge, Melbourne, Australia
volume bars and favourable OBV indicator (snake-type [2017]. “Elliott Waves In Trading the Opening of Index Futures”,
upwards pattern), May/June, Your Trading Edge, Melbourne, Australia
• Initial Stop Loss: 11902 key level - 5 pts above the lower [2017]. “Elliott Wave Intra-Day Trading: A Combination of Elliott
BB (21, 2.5), Waves, Pitchforks, Gann & Jenkins Tools”, March/April, Your Trading
• Conservative Exit at 11818 key level at the break-up of Edge, Melbourne, Australia
the lower Keltner Band, [2017]. “Trading Elliott Waves Using a Top-Down Approach”,
• Aggressive Exit at 11775 key level at the intersection with Technical Analysis of Stocks & Commodities, Volume 35:13 (36-42),
the lower BB (21, 2.5) of the big reversing candle having Bonus Issue-February
a huge downwards tail. [2017]. “The Nuts-and-Bolts of Practising Elliott Wave Trading-Part
• Entry Long at 11889 key level (refer Fig 5), pullback with II: Channelling with Trade Entry/Stops/Exits & Risk Management”,
break-up above the higher band of the KB (21), increasing Jan/Feb, Your Trading Edge, Melbourne, Australia
ascending (green) volume bars and favourable OBV [2016]. “The Nuts-and-Bolts of Practising Elliott Wave Trading-
indicator (continuous upwards movement). Part I: Judicious & Mistaken Elliott Wave Labelling – Rules &
• Initial Stop Loss: 11882 key level - 5 pts below the upper Guides”, Nov/Dec, Your Trading Edge, Melbourne, Australia
KB (21), [2017]. “Trading Elliott Waves Using a Top-Down Approach”,
• Aggressive Exit at 11995 key level due to a reversing Technical Analysis of STOCKS &COMMODITIES, V. 35:13 (36-42),
pattern (bearish engulfing pattern). Bonus Issue, February 2017
We conclude by saying that volatility and momentum go hand- [2018]. “Trading Approach of the Most Profitable Elliott Wave
in-hand. Their understanding constitutes the first brick and [W3]-Part II”, Jan./Feb., Your Trading Edge, Melbourne, Australia
mortar of building the foundation of market flow fluctuations.
The remaining part, the support and resistance couple is as
important, especially when they form clusters which are capable
of temporary halting or completely reversing the market flow.
Mircea Dologa, MD, CTA, began his investment and trading

career in 1987 as a Commodity Trading Advisor and a Registered
General Securities Representative. He subsequently moved
into teaching practical aspects of trading using techniques he
developed. He is a contributor to several magazines around the
world; the author of seven books published in several languages,
and the publisher of the monthly World Charting Report, which
covers international indexes, commodities and forex charts.
He is a member of several technical analysis associations
(ATAA & STA) and an MTA associate member. He may be
contacted at [email protected] or via his website at www.
pitchforktrader.com. The following two videos describe his work
over a period of 25 years of experience: https://www.youtube.
com/watch?v=6NE3JIk8mzE and https://www.youtube.com/
watch?v=dpjyuw1Lylo&t=190s

W.D.GANN’S GEOMETRIC ANGLES
W.D.GANN´S
GEOMETRIC
ANGLES
By D.K.Burton

W
.D. Gann thought that indicator”. Gann states that it locates a
Geometric Angles were TRUE TREND LINE and a RELATIVELY
very important as a TIME TRUE TREND LINE.
and PRICE indicator. A The enclosed chart, Gann’s Weekly
lot of people call them November Soybeans, up to 1955, shows
Gann angles. However, Gann never named the RELATIVELY TRUE TREND LINE.
them after himself. You will find that 99% of You should be able to locate this trend
the softwares using Gann angles (let’s call line and understand why he’s drawn it
them ‘Gann Angles’ for the purpose of this where he has, and what it means. This
article) are wrong because the angles move. applies especially to the so-called Gann
They shouldn’t move, they should be fixed experts in the world. No one has ever written
and square to TIME and PRICE. In other about this before except me, and there’s a
words, a 1 x 1 Gann angle goes 1 box up reason for that. It’s because these so-called
and 1 box across on the computer chart or Gann experts don’t conduct their research
chart paper. What changes is the scale of thoroughly.
the chart, not the angles. I have presented Figure 1 shows Gann angles up to
before in previous articles the square of and including 1 x 4s. Be careful using
144 overlay that I discovered coded on the computers that don’t have the correct
cover of Gann’s book- The Tunnel Through settings and angles because the angles will
The Air (TTTTA). The square of 144 also has not display correctly and you will never be
all the Gann angles on it. able to take advantage of the signals they
There are two things that Gann talks about can provide. If data is missing or if there
in his booklet called “MATHEMATICAL are gaps in the data, then the chart needs
FORMULA FOR MARKET PREDICTIONS”, to show continuous time even though there
when he writes about “The Master is no data for a given period of time. The
Mathematical Price, Time and Trend angles are based on TIME and PRICE.
FIGURE 1

IMPORTANT GEOMETRICAL ANGLES The 45º Angle from Top Down to ‘0’ and and measures 63¾º. This can be drawn
Up Again from zero or any other low price because
First Important Geometrical Angle of Draw a 45º angle starting down from any it’s the next strongest and most important
1x1 or 45º important top on a monthly or weekly chart angle. As long as a stock or commodity
The first and most important angles to draw down until it reaches the zero line. Then holds above this angle, it is in a stronger
are the 45º angles, or a moving trendline that draw the 45 º angle back up again so it position than when it is resting on a 45º
moves up 1 cent per day, week, or month. makes a square of 90º. After many years angle because it is a more acute angle.
This is a 45º angle because it divides the between important tops and bottoms, this When a stock or commodity breaks under
space and time periods into two equal angle coming down and going up again is this angle of 1x2, or 1 time-period across
parts. This is drawn from a low or high
price. Go to the bottom of the chart at zero
and line it up with a major low or high price. FIGURE 2
From zero, you draw the 1x1 or 45º angle.
This will give you two 1x1 or 45º angles
from a high, one going up and one down.
You can have two 1x1 or 45º angles, one
going up or down from the low. The final
two 1x1 angles are drawn from the zero low
and high mentioned above, and complete a
total of six 1x1 angles. As long as a stock
or commodity stays above the 45º angle, it
is in a strong position and indicates higher
prices. When prices fall and rest on the 45º
angle, you can buy with a stop-loss order
under the 45º angle. Reverse this rule when
a stock or commodity is in a weak position.
Always use a stop-loss order 1% under
the 45º angle if stocks or commodities are
in a bull market and use a stop-loss order
1% above the 45º angle if in a bear market.
When this angle is broken, prices will move
to the 2x1 or 1x2 angle.
For example, if we travel across in time
60 days, weeks, or months from zero, the
45º angle of zero for a low or high would
cross at 60 in price.
This shows time and price to be equal
or squared. You can beat the market by
trading against the 45º angle alone, as
long as you buy a stock or commodity on
the 45º angle or wait to sell it against the very important. Also draw a 45º angle down for every 2 points of space or price up, it
45º angle. from an important bottom on a weekly or indicates that it will go lower and reach
Apart from drawing 45º angles from the monthly chart until it reaches the zero line. the 45º angle. The rule of all angles tells
major low, high, and zero, you can also Then draw the 45º angle going back up us that no matter what angle the stock or
draw the other angles explained in this again. This will show the squaring of price commodity breaks under, it indicates a
book from the same points. Also draw the with time from either top or bottom. decline to the next angle below it.
angles from the important first, second, and The second angle you draw when in a
third higher bottoms and lower tops. These Second Important Geometrical Angle bear market of the square is 2x1, or 2 time
angles are most important when drawn on of 1x2 and 2x1 periods across for every 1 point of space or
the weekly and monthly charts. The longer The angle of 1x2, or the moving-average price up. This angle moves at the rate of ½
the duration of the time period since the trend line, moves up from a low at the cent per day, week, or month and measures
angle has been broken, the greater the rate of 2 cents per day, week, or month. It 26¼º. This is the first support angle the
importance and the bigger the move will be. divides the space between the 45º angle stock or commodity should reach after it
and the vertical angle into 2 equal parts breaks under the 45º angle. As a general

rule, when the price reaches this angle, it will lower and reach the 63¾º angle. world with indicators that are ‘Gann only’.
receive support and rally. Sometimes it will The rule of all angles tells us that no matter The Gann angles don’t move as they are
rest on it for a long period of time, holding what angle the stock or commodity breaks perfectly scaled to the chart. Virtually
on this angle and making higher bottoms. under, it indicates a decline to the next angle no programs do this correctly and that’s
When this angle 2x1, or moving trendline, of below it. why I developed my own software. It will
½ cent per day, week, or month is broken, The next angle you draw when in a bear be the cheapest software in the world so
you must draw the next angle of 4x1. market of the square is the 4x1, or 4 time people can learn true Gann without paying
periods across for every 1 point of space outrageous prices from companies that
1x2 and 2x1 Angle from Top or price up. This angle moves at the rate have never studied Gann in any great detail,
When in a bull market with prices crossing of ¼ cents per day, week, or month and and consequently cannot implement Gann
the 45º line from a recent top, you must draw measures 14º. This is the first support in a software program.
the 2x1 angle by moving 2 time periods angle the stock or commodity should reach The cost for Stage One is only $180 US
per annum, plus the cost of CSI data. More
functionality and features will be added to
Stage One, Stage Two, Three and Four as
they are released.
I also intend to provide functionality around
Horse Racing and Weather Forecasting.
Gann was keenly interested in these
matters.
I have written many articles on ‘The
Tunnel Thru The Air’ and ‘Looking Back
From 1940’ in this magazine. I have
shown you that the cover was coded with
the overlay of the square of 144. This I
discovered 20 years ago.
If you look at what Gann said in TTTTA,
across for every 1 point of space or price after it breaks under the 26¼º angle. As Looking Back From 1940, we have the
down. After this angle is broken, it is likely a general rule, when the price reaches conjunction of Jupiter and Saturn, which
to move towards the next angle of 4x1. In a this angle, it will receive support and rally. as far as TTTTA is concerned occurred on
bear market, you draw the 1x2 angle coming Sometimes it will rest on it for a long period 8th August 1940 at 14 degrees Taurus. This
down from a top, and while it is below this of time, holding on this angle and making also gives you some dates in TTTTA. The
angle it is in a very weak position and is likely higher bottoms. When this angle of 4x1, previous conjunction of Jupiter and Saturn
to go lower. Draw all 1x2 and 2x1 angles or moving trend line, of ¼ cents per day, was on 10th September, 1921. Add half
from lows, highs, and the zero line, and week, or month is broken, you must draw the square of 144, which is 72 months and
apply the same rules as the 1x1 angle. the next angle of 8x1. we have 10th September 1927, very close
to the date Gann predicted for the high in
Third Important Geometrical Angle of 1x4 and 4x1 Angle from Top cotton in his book. The Sun on that date in
1x4 and 4x1 When in a bull market with prices crossing 1921 was at 17 degrees Virgo, both Mercury
The angle of 1x4, or the moving-average the 26¼º line from a recent top, you must and Venus conjunct this degree at the top of
trend line, moves up from a low at the draw the 4x1 angle by moving 4 time periods the cotton market. Gann bought cotton on
rate of 4 cents per day, week, or month. It across for every 1 point of space or price 24th January, 1924 when Mars made a trine
divides the space between the 63¾º angle down. After this angle is broken, it is likely to this point.
and the vertical angle into 2 equal parts and to head towards the next angle of 8x1. In a Because Gann used 1/8th and 1/3rds, you
measures 76º. This can be drawn from zero bear market, you draw the 1x4 angle coming would break up the cycles into these parts,
or any other low price because it’s the next down from a top, and while it is below this which are measured in the square of 144
strongest and most important angle. As angle, it is in a very weak position and is overlay. Therefore, you need to break up the
long as a stock or commodity holds above likely to go lower. Draw all 1x4 and 4x1 Jupiter - Saturn cycle into these parts to find
this angle, it is in a stronger position than angles from lows, highs, and the zero line, other degrees of interest.
when it is resting on a 63¾º angle because and apply the same rules as the 1x1 angle. The Jupiter - Saturn cycles from
it is a more acute angle. When a stock or At www.wdganntrader.com you can 1901,1921 and 1940 (charts) cover the
commodity breaks under this angle of 1x4, find the Gann angles from a software that whole story within TTTTA. When Robert
or 1 time period across for every 4 points of I have developed and recently released. Gordon was born on 9th June, 1906, both
space or price up, it indicates that it will go This is the only pure Gann software in the Mercury and Sun were conjunct the 1901

Pluto position, and when Marie Stanton

was born on 6th October, 1908- her Sun
was opposite the 1901 Jupiter - Saturn
conjunction. When Robert Gordon bought
cotton on 24th January, 1927, we see
transiting Saturn to the natal Sun of 1901.
When TTTTA was written on 9th May 1927,
Mars was conjunct the 1901 Natal Moon. If
you go through these charts, you will find a
lot of clues. No one has even looked at these
charts, there wouldn’t be many people who
even thought of studying these charts.
Marie disappeared on 5th June 1917
when transiting Venus squared the Jupiter
- Saturn conjunction of 1921. There are
enough secrets here for one article; you can
find the rest by diligent study.
David has been studying the methods of

W.D. Gann since 1983. He has also studied
weather methods of Inigo Jones. W.D. Gann
also studied sunspots cycles and their effects
on commodity markets. W.D. Gann also went
to India with Sepharial, so he clearly knows a
lot about Hindu astrology. He has been using
the Hindu methods for weather, markets and
horse racing as written about in previous
articles.
GANN SOFTWARE IS READY.

W.D. Gann Trader Software is now available.
This is the purest and cheapest Gann
software in the world at $180 US per annum.
Additional functionality will be added to
Stage One, then to a further three or four
stages.
Most people will never have to go past
Stage One as a charting tool, as it covers
virtually all you need.
In the next year or so I will include
functionality around Gann’s horse racing
and weather work.
Website: www.wdganntrader.com
Facebook
www.facebook.com/wdgann360/
www.facebook.com/inigo360/
www.facebook/hedge360/

LIGHTING THE CANDLES WITH FACTFULNESS
Lighting the Candles

with Factfulness
FACTFULNESS: the stress-reducing habit of only carrying opinions for which you have strong supporting facts”
Doug Dew asks the question “Do the academic experts support the notion that Candlestick pattern trading is profitable?”.
By Doug Dew
I
understand that the phrase their own pockets too. If they found a way skills to do it.
“Academic Expert” is an oxymoron to make money from Candlesticks, they Let’s recap on what Candlestick pattern
when it comes to trading. What would be on the phone to their brokers trading is about. It all started in Japan in
would they know? In the real trading before you could say “Jack Robinson”, or the rice trade. Traders developed it in the
world, chaos is the norm. The perhaps “Jesse Lauriston Livermore”, in 1600’s to trade rice contracts. A general,
reality of trading is the daily grind in the this case. called Tokugawa Leyasu, made all his
light of the cruel screen, with that sinking Advocates of the Candlestick pattern lords live in the city of Edo to safeguard
feeling of anticipated disappointment trading believe that various patterns of his power, and forced them to use rice to
each time you turn it on; far removed from past price movement can predict future pay tax. This gave rise to a futures market
academia. Yet my guess is that when the patterns of price movement. I want to in rice.
academics sat down to carry out their explore the notion that this belief can be A trader called Homma Munehisa
research, they must have been thinking of tested and that academics might have the soon realised that the price of rice was

TECHNIQUES DOJI
influenced not only by supply and demand,

but also by the emotions of traders,
(sound familiar?). He set up a network of
men to communicate prices in a 600 km
network so he could write daily charts on
rice paper showing the open, close, high
and low. He used these charts to identify
the emotions running in the market and
to take advantage of differences between
price and value. He is described as the
most successful trader in history, having
generated $100bn in profits.
Candlestick pattern trading, based on
Homma’s techniques, was introduced to
the West in 1989 by Steve Nison in his
book “Japanese Candlestick Charting Doji indicate a rejection of further rises in price
Techniques”. The Doji pattern is taken to indicate there during an uptrend. It predicts a reversal
He translated the Japanese texts and is now balance in the market. Buyers and of the up trend.
gave English names to the patterns sellers agree. It predicts either a pause
said to have predicative powers. The or an end of the current trend. There are Three White Soldiers
assumption is that these patterns are variants of the Doji, each with their own Three White Soldiers predicts a strong
created by the emotional state of the implications. reversal from a downtrend.
traders who are buying and selling the I have set out a very simplistic
instrument. However, as Louise Bedford Hammer explanation of Candlestick pattern
says in her excellent book, “The Secret The Hammer pattern is taken to indicate trading. In practice, these patterns serve
of Candlestick Charting”, emotions can a rejection of further falls in price during a as triggers to conduct further analysis
be fickle and the impact of any pattern is down trend. It predicts a reversal of the of price and volume history and to seek
likely to be short-term: between one and down trend. confirmation before making any decision
ten periods. to buy, hold or sell. You need to devote
Many such patterns have been identified. Shooting Star time to study these techniques before you
Let’s look at some of these in detail. The Shooting Star pattern is taken to start putting your money on the table.

HAMMER SHOOTING STAR THREE WHITE SOLDIERS
There is no doubt that many successful some “strong supporting facts”.

traders swear by Candlestick pattern When you ask Dr Google for evidence
trading and attribute their trading success that Candlestick pattern trading works,
to it. Equally, many commentators declare many commonly held misconceptions the answer you see is “It works because
it to be of no value. Both sides of the about the world. The general implication it works” as this were a self-evident truth.
argument are expressed with passion: is that the world is not as badly off as Here are a few quotes:
“Candlesticks are a powerful trading most people think. For example: “Patterns can help you tip the odds in
concept… have high predictive value… “In the last twenty years, the proportion your favour”
produce positive returns” of the world population living in extreme “Trading is a game of war where
“Using candle charts has made me be a poverty has… Candlestick charts tell us who is winning”
more profitable trader” 1. Almost doubled? “The patterns are even more powerful
“How to unleash the awesome power of 2. Remained the same? because the sharp change in direction
Japanese Candlestick” 3. Almost halved?” helps propel the price in the new direction”
“At the end of the day, candlestick The correct answer is “almost halved”. For me, these are assertions rather
patterns don’t work” Polls around the world indicate that only than proof. So, I wondered if there was
“We think it necessary to snuff out 7% of the population choose this answer. any academic work that proved or
strategies based on candlesticks…” Rosler’s point is that we hold many disapproved the case for Candlestick
“Testing of Steve Nison’s patterns opinions that are completely wrong pattern trading.
reveal nothing predictive” and unsupported by facts. Hence his I trundled down to the library and
Reading this stuff led me to ask the wonderful quote “FACTFULNESS: the searched academia for “Candlestick
question: stress-reducing habit of only carrying Trading”.
“Can we find hard evidence to settle the opinions for which you have strong How did they carry out their research?
argument whether Candlestick patterns supporting facts”. This kind of thinking They created trading plans using candles,
really work?” has universal application. In the case in developed success criteria, ran the
This is where Factfulness comes into point, it suggests that if you are going methodology against sets of historical
play. “Factfulness” is a recently published to risk your hard-earned cash by using data, and analysed the results. Naturally,
book by Hans Rosling, which debunks Candlestick patterns, you should have the math at the ends of the papers was

THERE’S LITTLE DOUBT THAT THE TRUMP TAX CUTS

ACCELERATED THE MARKET’S RISE, WHICH MEANS
THE HIGH OCCURRED ABOVE A LEVEL THAT COULD
NOT BE SUSTAINED...
beyond the ken of common man. bullish harami, engulfing and piercing found that while these systems had
This is what I found: patterns were profitable when applied some predicative powers on intraday
•
Tsung-Haung Lu, et al, found that to highly liquid, small company returns on large U.S. caps, they
two-day candlestick patterns were stocks. were outperformed by the buy-and-
profitable, buying on bullish patterns • Tsung Hsun Lu, et al, found that some hold strategy used for comparison
and holding until bearish patterns patterns consistently outperformed purposes.
appeared. They also found that the others in the Taiwan 50 Index This is a representative sample of many
Harami pattern was successful in the components, and were profitable. such research papers. All these results
Taiwan market in the period 1998 – They also identified four patterns have been subjected to peer review, but
2007. that were successful in the Taiwan it is tempting to think of the ways that
•
Yeong-Ja Goo, et al, found that stock market when combined with these results might be invalid, especially
candlestick patterns had value for moving averages. They further if are you one of the doubters. I have to
investors, especially when combined compared various holding strategies admit that I was a doubter before I did
with stop-loss strategies. which strengthened their evidence this research.
•
B.R Marshall, et al, found that of the efficacy of candlestick trading Nonetheless, the evidence is clear;
candlestick trading strategies do not strategies. In another study they most academic research supports the
have value for DJIA stocks. They also found three patterns which were view that Candlestick pattern trading is
found that it was not profitable in the effective in the major European stock effective. This is an incontrovertible fact.
period 1975-2004, either in bull or markets. Factfulness triumphs!
bear markets. They found the same • S Barak, et al, found that some patterns
was true for the U.S. equity market. were effective in the Brazilian market Doug Dew is a private trader and has
•
Min Zhu, et al, examined five and some were not, as compared with a special interest in trading psychology.
different candlestick reversal their performance in the U.S. market, He holds a Master’s degree in Mindful
patterns predicting short-term stock suggesting that methodologies need Leadership. You can contact Doug at
movements. They found that bearish to be adapted to the market in which [email protected].
harami and cross signals perform they are to be used.
well in predicting head reversals • M Duvinage, et al, created automated
for stocks of low liquidity, whereas systems based on Candlesticks. They
Facebook.com/Your Trading Edge Magazine

Pip Fiction –
It’s not just the
Size that Counts
By Karen Wong
F
orex traders often translate a
higher number of pips for higher
FIGURE 1 - USDJPY DAILY CHART
profits. This is not always the
case. Of course, it is always
more impressive and a boost to
the ego if we were able to tell someone
“Oh, I made 500 pips on a trade this week!”
Recently I attended a webinar where an
attendee’s reaction to the demonstrated
trade was ‘…..but that’s only 20 pips’. A
trade with a high probability of capturing
20 pips is better than a 250-pip trade if
the probability of price reaching this latter
target is low. Using a recent Forex trade as
an example, I will illustrate the potential of
‘only 20 pips’.
As an intraday FX trader, one of the
Forex trading methods I use is based on

a Price Action and Price Pattern Strategy

FIGURE 2 - USDJPY 4 HOUR CHART
which doesn’t require any other technical
indicators to be placed on the chart.
Using a top down multiple time frame
analysis, my starting point is to look at
the Daily Chart for anything of interest
that would suggest the overall direction
of the trend. On the left side of the chart
at Figure 1, we can see the USDJPY Daily
Chart was trending sideways and then
down before a reversal to an uptrend
occurred. A Head and Shoulders pattern
is forming on the far right side of the chart
as marked by the 3 blue lines which could
signal the end of that short-term uptrend.
The direction is highly likely changing to
the downside.
On analysing the next timeframe down, I
turn to the USDJPY 4 Hour Chart at Figure
2, where we can see the 3 blue lines of
the Head and Shoulders pattern originally
seen on the right side of the USDJPY Daily FIGURE 3 - USDJPY 1 HOUR CHART
Chart at Figure 1. Focusing on the right
shoulder of this pattern, another micro
Head and Shoulders pattern has formed.
This is marked out by 3 more smaller blue
lines. The general direction of price on
the USDJPY 4 Hour Chart is also heading
towards the downside.
The next timeframe I usually look to
is the 1 Hour Chart. It is the chart which
usually sets the main trend direction for
my trade as it is more relevant to the timing
of my intraday trades. The Daily and the
4 Hour Charts are still a good place to
start for added confirmation as to where
the trend is going so they always remain
a part of my analysis process. On the
USDJPY 1 Hour Chart at Figure 3, we can
still see the micro Head and Shoulders
from the USDJPY 4 Hour Chart at Figure
2. It becomes more obvious on this 1 Hour started on the USDJPY 1 Hour Chart. On Minute Chart. Price has a high probability
Chart that a rising wedge has formed and the far right side of the chart a purple inner of continuing to the downside given the
that a price breakout to the downside will trendline is drawn which has been hit by price action confirmation of the previous
confirm its bearish side. As you can see, price a number of times. My strategy is to Daily and 4 Hour charts. I look for a short
price has done exactly that by breaking look for a break, back and retest of price trade using the next timeframe down.
through the second lower black trendline. to this purple line. More will be explained A 5 Minute Chart is where I look for
A downward movement in price has when we look at the actual trade on the 5 an entry to open a trade. Figure 4 is my

larger purple inner trendline. Patience was

FIGURE 4 - USDJPY 5 MINUTE CHART
rewarded as I waited for a break, back and
retest of price to this second line. Price did
break through, retraced back and retested
the second inner trendline. On the retest,
I opened a short trade on USDJPY at an
Entry of 109.67. My Stop Loss was placed
at 109.79, just above the last high and the
larger purple inner trendline. My target
profit of 109.46 was based on the Support
and Resistance levels of the 1 Hour Chart-
a risk reward ratio of 1:2. As you can see,
price moved down to meet my target profit
and the trade was closed at an exit of
109.46- a profit of 21 pips.
Only 21 pips? The table at Figure 5
compares different position sizing and
how it affects profitability based on a take
profit size of 21 pips.
The profit amounts change depending
on the calculated unit size and the
FIGURE 5 predetermined leverage selected. If we
base this table on a risk/reward ratio of
1:1, the take profit amounts (from Figure 5)
are also potential loss amounts from your
trading capital.
So, next time think about what 21 pips
has the potential to be. It could be $25.20,
but it could also be $2528.82. Knowing the
price per pip is key. When calculating your
capital risk amount, adjust the position
size accordingly. The potential in a high
probability, lower pip trade will become
obvious. Don’t fall for the fallacy of ‘pip
fiction’. It’s more than just the number.
Karen Wong CPA, CFTe trades FX and

equities with a focus on price action.
She is the Sydney Chapter Council
Secretary for the Australian Technical
Entry Chart. The break, back and retest Unfortunately, I wasn’t at the computer Analysts Association. Karen is a regular
of the larger purple trendline seen on at the time to open that trade. Seeing the contributor to the Tutorials in Applied
the USDJPY 1 Hour Chart has already micro Head and Shoulders pattern on this Technical Analysis newsletter published by
occurred. Price broke through the 1 Hour chart as marked by the 3 blue lines added Guppytraders.com
Chart inner trendline, then came back to the high probability that price would
to retest that line. The ideal opportunity continue down even further. I looked for
was to enter into a short trade at the first another entry and found another purple
retest of the larger purple line at 109.72. micro inner trendline just underneath the

TRADING
TRADING APPROACH
APPROACH OF
OF THE MOST PROFITABLE
THE TERMINAL ELLIOT
IMPULSIVE WAVE
ELLIOT WAVE [W5] PART I
Trading Approach
of the Terminal
Impulsive Elliot
Wave [W5] Part I
By Dr Mircea Dologa MD CTA

TRADING
TRADING APPROACH APPROACH
OF THE OFIMPULSIVE
TERMINAL THE MOST ELLIOT
PROFITABLE
WAVEELLIOT WAVEI
[W5] PART
T
rading the impulsive entities 1.2 Advanced Market Indicator: 1.3 Origin of W5:
pertaining to impulsive or Conception of W5 may begin when: - Be aware of the time-of-the-day
corrective patterns requires -
The GET OSC(5, 35) indicator and its rhythm, and also of the most
well-developed skills and shows, in an uptrend, a drop under recent low on 2-4 base line without
also a tight monitoring of the the zero line impersonating the any breakout,
market flow. Everything begins wave W4. Its reversing move is - W5 could be the breakout of a W4
with the creation of a trading plan followed obvious once the W4 reversal-bar horizontal triangle pattern; do not
by trading this plan. Without a strict follow- takes place. The OSC indicator neglect to draw its apex and trend
up of this process, the odds will be against must drop to a minimum of 90%, line extensions, which will certainly
the trader. but no more than 140% of the help the trader after the termination
We will start this two-part article with height of wave W3 before it starts of wave W5.
a brief basic systematized presentation the implementation of W5. Most - Use the 21-ema: the first counter-
followed by a practical trading approach of the time, there is a divergence trend witnesses the trend inception,
of W5. announcing the W5 termination. then the following counter-trends
The trading concept of this terminal The most performing one is the establish the trend,
wave is based on its relations with hidden divergence usually located - Parabolic indicator gives a “change
the precedent wave W3 and the entire at the terminal 2-6 bar portion, of trend” signal earlier than the ema
impulsive W1-5 pattern. The trader should usually pertaining to the subwave could give a signal. Ride it, all the
remember that wave W1 is the DNA of the w5: W5. way down to the Parabolic, even if
impulsive W1-5 pattern. Thus, we may -
The GET False Stochastics one could take a trade on a lower
say that wave W5 not only terminates this (14,3,3) indicator crosses above/ time frame (very efficient for money
impulsive pattern, but also opens the road below 80/20 limits. The beginning management).
for trading the next pattern, which is the of a “to be prolonged horizontal
A-B-C corrective pattern. black line” above the indicator’s 1.4 Dynamics of W5 Inception:
curvilinear lines will start to witness -C heck the following objectives:
1. Brief Description of the Impulsive the W5 trend inception. • 1st Objective: 50% of W1,
Wave W5 Be on the watch for a final impulsive • 2nd Objective: 100% of W1,
1.1 Description: Classified as an impulsive pattern divergence, which will signal the • 3rd Objective 62% of W0-W3,
wave, W5 has 5 subwave count (3 W5 termination. • 4th Objective 100% of W3.
impulsive & 2 corrective subwaves), - At the inception of W5 development,

TRADING
TRADING APPROACH
APPROACH OF
THE TERMINAL ELLIOT
IMPULSIVE WAVE
make sure that you analyse the

length of the W3 in relation to W1: FIGURE 1
• In case that W1 is longer than
W3, expect the W5 to be shorter
than wave W3,
• In case that W1 is shorter than
W3, expect the W5 to be equal
to W1,
- Most of the time, the W5 will exceed
the W3 termination key level. If it
doesn’t, it means that we have a W5
failure, which is characterized by a
strong reversal movement towards
the beginning of the W4.
1.5 Wave 5 Characteristics:

- Find the longest, shortest and/or
equal size of the three waves. This
is based on the Elliott rule that the
wave W3 can’t be the shortest out
of the 3 impulsive waves
• If the middle wave is longer in
price, then W3 is legitimate,
• If the middle wave is the shortest,
this move is corrective,
• If all three waves are similar in
price, this move is a possible Chart Figure 1 illustrates a set of five rectangles of the 60-min German Dax 30 Futures.
zigzag, It shows the up-sloping impulsive pattern containing the price/time Cartesian space of
• The slope illustrated by the emas the five Elliott waves: three impulsive waves (W1, W3 & W5) and two corrective waves
and the trend lines define the (W2 & W4). The trader can easily observe that the impulsive waves are progressing in the
inception and the degree of the direction of the up-sloping trend and that the corrective waves counter the main trend.
trend.
- W5 Extension Absent: consuming, and possibly of greater C-wave of a correction,
- If W3 is more than 1.62xW1 complexity than W2, then W5 -
Gaps: a good indication of an
(Extended W3): will probably extend. The W4 will extended W5, in progress,
- Then W5 could be: retrace a greater percentage of W3 -
Beginning of wave: Breakaway
• 1.0 x length of W1, than W2 does in regard to W1, Gap announces a high-powered
• 1.62 x length of W1, - If W3 is less than 1.62 x W1 (W3 momentum,
• 2.62 x length of W1, non-extended): -
End of wave: Exhaustion Gap
- Non-extended W5 should be - Then W5 could be: announces the end of trend.
retraced close to 100% or more, at • 0.62 x length of 0 to W3, very
the level of next corrective pattern, frequent Fibonacci key level, 1.6 W5 Failures:
- If W1 is extended in the sequence • 1.00 x length of 0 to W3, - The W5 failure is very probable
and the sequence concludes W1 or • 1.62 x length of 0 to W3, when W3 is an extended wave,
wave-A of a larger degree, then the • A maximum length of 261.8% of -W 4 should:
correction after W5 should drop into 0 to W3, • Be more complex than W2,
the W2 price zone. - W1 should progress at the steepest •Retrace more of W3 than W2
- If the sequence completes W3 of a angle with W3 following closely retraces in relation to W1,
larger degree, then the correction behind. The W5 will have the - W5 will probably fail if the W4
after W5 will probably stop in the slowest rate of acceleration, complex pattern retraces more than
W4 zone, - A W5 extension cannot be 38.2% (61.8% retracement value is
- W5 Extension Present: completely retraced unless it is the allowed),
- If W4 is more complex, more time end of a larger W5 extension or the - Almost always, W1 is equal to W5,

TRADING
TRADING APPROACH APPROACH
OF THE OFIMPULSIVE
TERMINAL THE MOST ELLIOT
PROFITABLE
WAVEELLIOT WAVEI
[W5] PART
in price and time! 1.8.2 Channelling Tools: to w1:W5 & w4 with regard to
Less frequently the price and time will - 2-4 base line, W1-parallel & W3- w3:W5,
relate by 61.8% Fibonacci ratio. parallel trend lines, • Severity – check Fibonacci price
- 0-1 trend line, which could halt the retrace, w2 with regard to w1:W5
1.7
Diagonal Triangle (Terminal progression of an elongated W5. & w4 with regard to w3:W5,
Impulse Pattern) • Intricacy – number of sub-
- The diagonal triangle or an ascending 1.8.3 Dr Andrews’ Pitchfork & divisions of waves,
wedge is a chart pattern that often Median Lines: • Construction (wave structure):
might terminate an impulsive - There is at least one choice of degree of complexity (abc versus
pattern, thus impersonating the W5. constructing this ascending abcde pattern). Write down the
- Don’t forget its main characteristics, pitchfork: characteristics and get ready
which is the five ABC wave pattern. • The P0 anchor pivot labelled at to apply the alternation rules
It is the only allowed impulsive the start of W3 level and the P1 principle (w2 against w4) when
pattern containing the ABC waves. and P2 at the W3’s termination the time is ripe.
and W4’s end levels, respectively. - Be on the watch for the temporary
1.8 Pinpoint the End of W5 by using: This choice might involve less counter-trend moves (pullback/
1.8.1 Global Tools: warning lines. thrusts), on light volume, right after
- Be aware of the time-of-the-day - The best pitchfork choice will be the move has started. It will confirm
and its rhythm, the one that optimally describes the the current impulsive pattern.
- Fib extensions/corrections local market flow. - The use of the 21-ema will better
in relation to W5’s projected - Be on the watch for constructing visualize the counter-trend moves
termination, applied to: a second pitchfork, called a minor (use current volume with regard
•W 1 and W0-3, pitchfork, which is characterized by to average volume, compared to
•The first trend-wise bar and if a mini-median line. This will have the other trend periods). The strict
possible, the merit to closely follow-up the watch of the pullbacks, especially
•T he last pre-close swing, progression of the W5 at the lesser those leaning on the 21-ema is
•The height of the pre- degree wave levels. It will reside highly recommended due to their
close trading range, within the first built pitchfork, called abilities to divulge not only the
(1.382, 1.618, 2.236, 2.618, the major pitchfork. continuation of the trend, but also
4.236) - Confluence zone: The median lines its termination.
- The use of the 21-ema: a multitude & its acolytes of these two pitchforks
of counter-trends is the anti- will create confluence zones which
chamber of the termination of the are capable of identifying the W5’s 7.10 Relationships with Other Chart
trend. sub-waves, the progression and the Formations and Key Levels:
- The prior pattern correction using W5 termination. -Pivot range: very small or very
the Fibonacci ratios: 38.2%, 50%, - W5 end is usually at/above the large they dictate the current day’s
61.8%, 78.6%, 88.6% or the whole upper median line level of the major volatility,
correction (100% level). The best pitchfork. -C orrective waves,
level signal will be given by the - In case of an average to extended -Other impulse waves (previous &
existence or absence of the W5 W5 length termination, the market next):
failure. price might climb even farther to the w1: W3’s slope is steeper than W1’s,
- The coincidental cross-over of 21- warning line (WL-1 to WL-3). • W3 volume is less than that of
ema alone or together with 50-ema, W5’s, culminating with 3rd of 3rd
with Gann levels, trend lines or Fib 7.9 C
orrective Sub-Wave volume,
levels signals a key reversal level. Characteristics of w2 and w4 of • When W3 is extended, then W5
- Daily pivots alone, or together with W5 poly-wave: measures 0.618% or more of W1.
weekly or/and monthly pivots, form - Alternation principle rules:
a very strong key reversal level. subwaves w2 and w4 are noticeably 7.11 Differential Diagnosis
- Parabolic indicator gives a “change different! - Corrective waves:
of trend” earlier than the ema. - Enable, at least one of them: • Non-extended W5 should be
(can be used for money management) • Price – distance covered, retraced close to 100% or more
•Time – time covered – check of the next corrective pattern,
Fib time ratio, w2 with regard • If W1 is extended in the sequence

TRADING
TRADING APPROACH
APPROACH OF
THE TERMINAL ELLIOT
IMPULSIVE WAVE
and the sequence concludes W1 http://pitchforktrader.com/EXCERPTS/ Representative. He subsequently moved

or wave-A of a larger degree, the Elliott_Wave_Volume_1.pdf into teaching practical aspects of trading
correction after W5 should drop http://pitchforktrader.com/EXCERPTS/ using techniques he developed. He is a
into W2 price zone. Elliott_Wave_Volume_2.pdf contributor to several magazines around the
•If the sequence completes W3 http://pitchforktrader.com/EXCERPTS/ world; the author of seven books published
of a larger degree, the correction Elliott_Wave_Volume_3.pdf in several languages, and the publisher of
after W5 will probably stop in the http://pitchforktrader.com/EXCERPTS/ the monthly World Charting Report, which
W4 zone. Elliott_Wave_Volume_4.pdf covers international indexes, commodities
If we describe the wave W5 in a few words, Everything begins with the hard work and forex charts. He is a member of several
we can mention: a less strong magnitude of learning and assimilating the basics technical analysis associations (ATAA & STA)
wave compared with wave W5 with a classic followed by a progressive assimilation of and an MTA associate member. He may be
price value of 0.50-0.618% with regard to different advanced trading modules. This contacted at [email protected] or via
wave W0-3, short duration with a classic will certainly bring the trader’s learning curve his website at www.pitchforktrader.com. The
0.50-0.618% alternate time projection with to high limits. Once this is implemented, following two videos describe his work over
regard to wave W0-3 duration, a frequent continue with conceiving a trading plan a period of 25 years of experience: https://
non-overlapping wave pattern having a 5-3- which includes the risk and money www.youtube.com/watch?v=6NE3JIk8mzE
5-3-5 internal pattern, a less steep angle management, then follow it scrupulously and https://www.youtube.com/
frequently occurring below the 45° angle in the process of trading this plan. Without watch?v=dpjyuw1Lylo&t=190s
and a frequent standard of profitability with a strict follow-up of this process, it is like
regard to all impulsive waves, except that of trying to find your way in a labyrinth without
wave W3. the Ariane’s thread.
The purpose of this article is purely
educational. If interested in professional Mircea Dologa, MD, CTA, began
aspects of trading Elliott waves please go his investment and trading career in
to the link below illustrating author’s four 1987 as a Commodity Trading Advisor
manuals (2200 pages): and a Registered General Securities
BIBLIOGRAPHY:
Articles published by the author:

[2016]. “The Nuts-and-Bolts of Practising Elliott Wave Trading- Part I: Judicious & Mistaken Elliott Wave Labelling – Rules & Guides”,
Nov/Dec, Your Trading Edge, Melbourne, Australia
[2017]. “Elliott Waves – How High is High?”, Part I, Technical Analysis of Stocks & Commodities, November
[2017]. “Elliott Waves – How High is High?”, Part II, Technical Analysis of Stocks & Commodities, December
[2017]. “Trading Approach of the Most Profitable Elliott Wave [W3]-Part I”, Nov./Dec., Your Trading Edge, Melbourne, Australia
[2017]. “Trading Approach of the Deepest Corrective Elliott Wave [W2]”, Sept./Oct., Your Trading Edge, Melbourne, Australia
[2017]. “Trading Approach of the Enigmatic Elliott Wave [W1]”, July/Aug., Your Trading Edge, Melbourne, Australia
[2017]. “Elliott Waves In Trading the Opening of Index Futures”, May/June, Your Trading Edge, Melbourne, Australia
[2017]. “Elliott Wave Intra-Day Trading: A Combination of Elliott Waves, Pitchforks, Gann & Jenkins Tools”, March/April, Your Trading
Edge, Melbourne, Australia
[2017]. “Trading Elliott Waves Using a Top-Down Approach”, Technical Analysis of Stocks & Commodities, Volume 35:13 (36-42),
Bonus Issue-February
[2017]. “The Nuts-and-Bolts of Practising Elliott Wave Trading-Part II: Channelling with Trade Entry/Stops/Exits & Risk Management”,
Jan/Feb, Your Trading Edge, Melbourne, Australia
[2016]. “The Nuts-and-Bolts of Practising Elliott Wave Trading- Part I: Judicious & Mistaken Elliott Wave Labelling – Rules & Guides”,
Nov/Dec, Your Trading Edge, Melbourne, Australia
[2017]. “Trading Elliott Waves Using a Top-Down Approach”, Technical Analysis of STOCKS & COMMODITIES, V. 35:13 (36-42),
Bonus Issue, February 2017
[2018]. “Trading Approach of the Most Profitable Elliott Wave [W3]-Part II”, Jan./Feb., Your Trading Edge, Melbourne, Australia

And... in a flash... my babies have grown up
Trader’s Story - Emma Murtagh
Trading Life - Alan Clement
The “Real” Secret to Discipline and Patience
Digital Trading or Paper Trading?
TRADER'S
61
MINDSET
YOURTRADINGEDGE JUL/AUG 2018
AND... IN A FLASH...
MY BABIES HAVE GROWN UP
Louise Bedford
A
ll of a sudden – my babies are spreading their I watch them, like a mother, as they stumble, rise again, and
wings of independence. continue to trade – making the markets their home, nimbly changing
Tall, handsome, witty, contemplative Ryan. At 15 direction when required, but staying true to their trading plans.
years old, Ryan stands taller than me. He laughs My heart swells with pride as I watch their accomplishments.
maniacally as he tosses me over his shoulder and I see the changes they’re making in their lives. My little ones are
carries me squealing around the house. suddenly big – and it has happened fast. Just like that. The past
Talented, enthusiastic, athletic Ashley. At 11 22-years have flashed by... in a blink. That’s how long I’ve been
years old, she sits at the piano, singing with adult- training traders to turn their lives around.
like clarity. A promise of the woman within. Unaware of her ability I don’t take this role as ‘Trading Mentor’ lightly. I treat it with
to enchant everyone with her charm. the intensity it deserves. Running the Mentor Program with my
Oh my god, I think, suddenly aware of my thumping heartbeat. business partner, Chris Tate, has been the biggest passion project
They’re not little anymore! of my life. Heck, I’ve been writing for YTE for over 15 years.
When did that happen? I can’t place it. It seems like I looked I’m feeling the passing of the years more keenly than ever. Are
away for a moment, and my babies were gone – just like that. you?
Replaced by ‘big kids’. It’s hit me out of nowhere. Isn’t it about time you stopped letting the years flash past
The essence of their baby-hood is only evident now on their without learning how to trade properly? Isn’t it finally time you got
faces when they sleep... or when they’re lost in a laugh... or when this trading game nailed, once and for all?
they need a hug and feel vulnerable. I want you to know in your gut whether you’ll make it as a
The soft preciousness of their early childhood was so fleeting. trader. (Actually… I’ve just put together a quick, fun quiz called
Their silky soft skin and wispy hair. The way their bodies would ‘Will You Make it as a Trader’. Go to www.tradinggame.com.au/
collapse into me as they fell asleep. Boneless. Totally relaxed. quiz now. You won’t believe how accurate the results are.)
The smell of fresh talcum powder and baby shampoo. So many I want to watch YOU spread your trading wings.
‘firsts’ between then and now. Because I know that corporate life can suck you dry. I remember
As they have grown, I have become smaller in their world. I’m when I was working the long, thankless hours.
not their entire world any more. I feel the wrench of letting them
go as they move with lightning speed towards becoming adults. Corporate Life Can Suck You Dry
They’ve only ever known a Mum and Dad who have both been “I’ll be back late tonight” I called through my car window to my
full-time parents... all because of the decision I made years ago husband.
to learn how to trade. “Later than last night?” he barbed back at me.
Wasn’t it just yesterday when they were climbing onto my lap “I get the feeling you’re saving your best ‘you’ for the office”.
with a sippy cup? Ooooh... that stung.
Nothing can prepare you for this. But he was right.
The days are long, but the years are short. Painful truths can land with a thud.
My other ‘children’ are about to spread their wings too. You Back then… 23 years ago… I was spending 80 hours a week
see, next month marks the end of our 18th year of running our trying to impress people I didn’t respect to get the next promotion.
repeat-for-free Mentor Program. Leaving home when it was dark, and getting back again after dark.
I’m feeling a bit wistful... thinking of the ‘firsts’ these new What in the hell was I doing?
traders will go through. Corporate life can suck you dry.
Their first complete trading plan. Know the feeling?
First trade. Thank goodness I learned how to trade. Now my family gets
First little loss. the best of me. As the breadwinner, I call the shots and determine
First major win. how many hours I work.
Plus, down the track.... the first time they realise they’ve I get to be a full time Mum. My husband is a full time Dad.
changed the complete trajectory of their family’s lives because of Love it.
the decision they made to do our Mentor Program. Plus, the personal meaning I derive through helping others live
I’ve seen so many of my traders begin in the markets over the life on their own terms… well, it’s just sublime.
years... wary... nervous... wondering if they’ve got what it takes. I see so many traders marching to a steady drumbeat of
I’ve seen them develop their skills and their confidence – drinking burnout. There’s something about the A-Type personality that
in the support I’ve been able to provide. piles activity on activity as if the various aspects of their lives

AND... IN A FLASH... MY BABIES HAVE GROWN UP
Ask Louise
I received an email from Yvonne, a beautiful member of our You see, you’ll only receive what you’ve continued to
Mentor Program. She said: “My new ‘chap’ has just told me tolerate. The stronger you are, the more the people around you
that he thinks trading is ONLY A HOBBY! Doesn’t he realise will fall into line. If you waver and falter in your commitment to
this is my life… my future… where I want to be?” your future, the jackals will sense your weakness and go for
your jugular.
Louise says: If you’ve tried to explain to no avail and you’re still copping
I hear you Yvonne. It’s so hard when we are misjudged by negativity, you’re within your rights to say “I’ve heard what you
those we love. It’s good you have the support of other traders, have to say, and I’m not prepared to listen any more – so if you
or this sort of issue can really drain you. I thought you might can’t support me, please keep your views to yourself”. (You
like some ‘comebacks’ you can use if this topic comes up in may need to say this a few times, but eventually, you’ll have
the future: to put your foot down).
• What makes you say that? If you’re the one with the vision for your family… don’t you
• You realise that trading is more than ‘just a hobby’ to me dare give up. Find people who believe in you. Continue to
don’t you? I’d like your support but I’m going to do this strive, or your future will be mediocre and unfulfilling.
with or without you. Stay loyal to your goals Yvonne.
• We’ll see if you feel that way when the money rolls in (then I believe in you.
turn on your heel and walk enigmatically out of the room).
• I used to think that as well until I met lots of people who If you have any questions for Louise, they may feature in future
have replaced their income through trading. newsletters. Send them to: [email protected]
were like pasta sheets in a lasagne. So many of us aren’t taking that fed the child’s creative soul. You wouldn’t let that toddler eat
time to stop, look, listen and live. too much sugar, or watch too much TV. You’d protect that child’s
I don’t have a problem with the standard-issue workaholic body, as well as their mind.
where occasional overwhelm and over-scheduling has flattened For today... why don’t you do that for you? If you’re
them. What I’m talking about is the habitual busy person, burning uncomfortable, change into something that is soft, comfortable,
the midnight oil for weeks/months/years, missing children’s and allows you to move. Honour your sleep. Eat things that
football matches, and not having a decent day off in.... well... they restore your energy. Hang out with people who make you laugh.
can’t quite remember. Honour your toddler within. Nurture yourself.
I understand – you’re trying to juggle trading, with running a Do that at least once a month, and you’ll get your mojo back,
business, a job, a life... and that will play havoc with anyone’s your energy will swell, and your creativity will surprise you.
schedule – occasionally. Oh yeah... plus... I guarantee there will be a hidden side benefit.
Occasionally. You’ll see patterns, and connections in the markets, learn trading
However, usually I don’t see the traders who are ‘moderate’. principles with remarkable ease and develop new ways of thinking
Often, by the time they turn to me, they’re basket cases of the about trading. Worthwhile, don’t you think?
most flammable variety – desperate and at the end of their tether,
crisis after crisis building up with ferocious regularity. Louise Bedford (www.tradinggame.com.au) is a full-time private
And that’s the irony. All that relentless martyrdom doesn’t trader and author of The Secret of Writing Options, The Secret
necessarily get rewarded in the real world. Your brain gets of Candlestick Charting, Charting Secrets and Trading Secrets.
thrashed, your energy supply destroyed, your creativity dries up, Download her free trading plan template from her website now
and your mojo jumps out the window. and you’ll get her bonus 5-part audio course called ‘Trading Made
All because you lost sight about what matters most in your life. Simple’.
Treat Yourself Like a Toddler Do you know that Louise also has her own free weekly ‘Talking
I have a challenge for you. For today... just today... think of Trading’ podcast? Visit www.talkingtrading.com.au and revel in
yourself as a toddler. If you had a 3-year old you were responsible this free training to fuel your profits, squash your fears and drive
for, you’d play nice, fun music for that child. You’d make sure that you towards exceptional trading habits.
kid had a little nap and got to bed on time, and that they had a
play with some friends who made them laugh. You’d pull out the
paints, and finger paint with that toddler, or do something else

TRADER'S STORY
Get to know your fellow traders. YTE speaks to trader Emma Murtagh
Emma Murtagh is a 29-year-old trader who works part time in the and had no plan to get out. Needless to say, I held on to the stock
tourism industry. With a background in mechanical engineering, and watched it fall, firstly back to my buy price and then way below
Emma chose to pursue her career as a trader whilst working part until I was finally too uncomfortable to keep holding. So, I sold at a
time in order to spend more time with her friends, husband and 32% loss. The stock continued to fall to 65% below my buy price,
beagle. Currently residing in Queensland, she has lived and worked so that was an interesting lesson. ILU still hasn’t reached the price
overseas for 18 months and has been trading for the last 5 years. I bought it in 2011.
My other trade was purely on a tip. It was one of those penny
How and when did you first become interested in the dreadful stocks, trading under $1. It had low liquidity and when I
markets? finally decided to sell it, after it had fallen in price, there were no
I first became interested in the markets when I started working as buyers to purchase my stock. I sold at a 21% loss. I learn with
a mechanical engineer on a mine site. I met a fellow engineer who every trade I make. Most importantly, I have learnt the importance
was interested in trading investments and we started to discuss this of being able to sell and the risks involved in continuing to hold.
at length. Working in mining and being quite young, I had excess
capital to invest, I wanted to do it wisely and start early. Would you define yourself as a discretionary trader, a
mechanical trader or a combination of both?
And then what happened? I would say that I’m 80% mechanical and 20% discretionary. I
The very first ‘money book’ I read was Rich Dad Poor Dad by define mechanical trading as entering and exiting on set rules that
Robert Kiyosaki, where in his cash flow quadrant the investor struck work best for the stock, after having simulated these trading rules
a chord with me. I opened a trading account and signed up to an through back testing the historical data over a period. A mechanical
ASX game to work out technically how to enter and exit a trade. I trader would enter and exit the stock as these rules trigger. A
started doing some minor trades, but these were unsuccessful – I discretionary trader will look at other factors such as price, pattern
really had no idea what I was doing or why! I didn´t want to stick to and time, and weigh up the risk to reward. I like to trade having a
a hit and miss approach – it stressed me out too much! set of back tested rules as my baseline and then see where it is in
the big picture.
How have you been able to learn and educate yourself about
the markets? Who have been some of your mentors and role models?
I wanted to learn how to trade properly, so I started listening to What impact have these people made on you personally as
some ASX podcasts where Dale Gilham from Wealth Within was well as on your trading style?
a guest. His straight-forward methodical approach made sense Both Dale and Janine from Wealth Within have been fantastic
to me, so afterwards I got a copy of his book “How to Beat the mentors. Kay from Wealth Within has also worked closely with
Managed Funds by 20%”. After reading the book, I decided that me from the beginning of my studies. I have worked more closely
I wanted control over my financial freedom. But first I needed a with Janine on my trading through the mentoring program. They all
quality education. I started the Diploma of Share Trading and genuinely want to see me achieve my goals and challenge me to be
Investment with Wealth Within in September 2013. After relocating the best trader.
to Chile for work, I finished the My friend Ryan also joined up to the course around the same time
Diploma in 2015. Learning Spanish on the run, a new job and as me and has been key in keeping me focused on my goal. Having
culture postponed the studies a bit. After that I took a break, before someone that can speak the same language, be the unreasonable
doing the Course in Contracts for Difference (CFDs). After a decent friend when I require a bit of a push and support my journey is
break, which let everything consolidate, I started the Advanced extremely valuable.
Trading Strategies Course with Wealth Within in January 2018.
The learning hasn’t stopped just at the education. The hours I’ve Can you give us a brief overview of your trading style?
put in (and will continue to put in) to develop technical skills and my I have a methodical approach for how I analyze a stock and a
process, is very important to me. selection of rules that I test to come up with the best strategy. I
like to look at a stock over the last 5-10 years and simulate each
Did you make mistakes when first starting out? strategy iteration to come up with the approach that will give me
Of course, I didn’t know what I didn´t know. The trades I took before the best reliability, highest win loss ratio and highest overall profit.
my studies were both small positions under $1,000 – this is what I Stocks do go through phases, so I may come up with a strategy
was willing to lose at the time. that is successful 70% of the time, but then find the next trade is
The first one was ILU in October 2011. Initially, it started to trend the losing trade. I then have more information and can better refine
up into a nice profit. However, I had no idea how far it would go my strategy. I have developed strategies that proved to be the best

TRADER'S STORY
approach. I have learnt that losses are a natural part of trading and trading plans. I was certain I had them for every position. I searched
I look at them as a business expense. my computer and could only find half. Not surprisingly, the trades
On most stocks, when preparing to trade, I combine this back where I couldn’t find my trading plans were the poorest performing
tested strategy with where the stock is in terms of price, pattern in the portfolio. Such a lost opportunity!
and time. Taking in the overall position, I can see whether it’s a I have learnt to get back to basics and make life simple for myself.
higher risk trade now compared to previous trades. Sometimes, I It’s easier to refer to a printed page in a folder and it’s also a mental
decide not to take the entry because of what the overall analysis is commitment to follow the trading plan once I hit that print button.
telling me and I wait patiently for further confirmation on a higher
timeframe. Can you tell us about your best and worst trades?
My trading plan is a template where I fill out all of these details, The best and worst trades are more than just the financial outcomes.
including my full analysis and commentary on the stock, where Some of my best trades include those that generated small gains,
I think it will meet resistance, where it will find support and my say 5-10% because I followed my trading plan. Some of my worst
general thoughts and feelings at the time. All of these comments trades are where I didn´t follow my trading plan and ended up with
are worth their weight in gold when I review a stock again following a loss. I am trained to use stop losses, so my losses are always
my exit. How else do you remember what you were thinking at the cut short. My worst trades were those two I mentioned previously,
time of buying? nothing has come close since.
I bought AWE for $0.57 and sold at $0.87 two months later for a
Is there any one trade (win or loss) that had a profound 53% gain. I bought CSL for $117 about 2 years ago and it is has
effect on your development as a trader? If so, what did you recently closed at $189. I’m currently just waiting for it to trigger
learn from the trade? my sell rules.
I can’t say that there was one trade in particular. About a year back, I
wanted to review all of my positions to see if there were any patterns Would you classify yourself as a short-term or a long-term
in my trading style that I could improve on. To do this, I needed my trader? What advice would you offer to people getting

TRADER’S STORY
started as traders on the relative merits or otherwise of can work great on one stock and not so well on another. Instead,
each? I have a variety of base line rules that I use including Dow Theory,
Currently, I´m more of a long-term trader, but generally that’s up to Gann Theory and Trend lines. I then see which works best and add
the stock and my strategy. I don’t open and close positions within a or combine rules to improve the results.
day, and my past trades have ranged from one month to two years.
I will start trading CFDs in the next year with a small portion of my Ed Seykota says, “Everybody gets what they want from the
total capital for cash flow. markets.” What do you ‘get’ from the markets?
My advice is- be honest with yourself and work out how much Unlimited opportunity.
time you can dedicate to trading each week. You put most of your
capital in your long-term portfolio as this will give you the highest How has trading affected your lifestyle?
return in dollars over time, so this is first priority. Once you can trade Currently, I’m working on increasing my trading capital, so I’m not
your long-term portfolio well, then look at trading short term. Break withdrawing any of my returns from my portfolio as income. I’ve
it down into stages and keep it simple. worked out how much money I would need in trading income to
eventually replace full time traditional ‘work’. The number was lower
What markets do you trade and which markets do you than expected. So, this has taken off the pressure of having to put
prefer? Do you have a favourite, and why? work as #1 priority.
I currently trade the ASX stocks, with the foundation of my portfolio I’m on a mission at the moment, so I’m putting in many hours –
in Top 100. I also take positions out to the Top 200 to Top 300, I’m fortunate to have a supportive husband, family and friends.
but these are limited to a certain number of positions within the
portfolio. What books, seminars and courses have you read or
For me, there is plenty of opportunity within the Australian market attended and which would you recommend?
without having to look elsewhere. Global markets are in different I was fortunate to find Wealth Within early on in my search, so my
phases and therefore require additional analysis. I like to keep it only trading education (courses and seminars) have been with
simple and I don’t need to worry about currency risk. them. The team generally run annual workshops and I’ve attended
about 5 over the years and have had the pleasure of meeting so
FOR ME, THERE IS PLENTY OF OPPORTUNITY WITHIN

THE AUSTRALIAN MARKET WITHOUT HAVING TO LOOK
ELSEWHERE. GLOBAL MARKETS ARE IN DIFFERENT
PHASES AND THEREFORE REQUIRE ADDITIONAL
ANALYSIS. I LIKE TO KEEP IT SIMPLE AND I DON’T NEED
TO WORRY ABOUT CURRENCY RISK.
What makes your trading style different from others? What many wonderful fellow traders.
sets you apart from other traders? I really enjoy reading and find that audiobooks in the car are great.
I am a very organized and process driven person. I like to refine and I generally have at least one audiobook and one printed book going
improve both my trading process and strategy for the stock as I go. at the same time. These books really have been important to my
My trading plans and their content have continually developed and journey and some I have read multiple times.
improved.
I focus on what I can do today to move me closer to my goal. I like What does the future hold for you?
to do something towards trading every day, be that reading, learning I´ll keep increasing my trading capital in the next few years to enable
something new, reviewing old skills, back testing, actually trading, me to eventually cut back on my traditional ‘work’ and take income
developing my process, and working on my trading psychology. from my trading profits. I plan to do this progressively and I see this
starting in the next 3 to 4 years. That will mean I have time for my
Do you have a favourite trading rule? family and friends and the resources to travel more. After all, you
I don’t operate from a “go to” trading rule that can be applied to any can trade from anywhere!
stock, as doing hours of back testing has shown me that one rule

TRADING LIFE
Alan Clement discusses his career trajectory as a trader.
A
lan Clement, CFTe, is a trading strategy
designer and independent trader with 25 years’
experience in the financial industry. Following a
successful professional career in both investment
management and investment banking as a
software developer and project manager, he now
manages his own independent trading business.
How did you get into trading?

My professional background was as a software developer in the
financial industry, working in both the investment management
and investment banking spheres. When I left the corporate world
in 2002, I had the desire to run my own business and looked
into a number of options before someone gave me Alexander
Elder’s book, Come Into My Trading Room. After reading that I
became hooked on to the idea of becoming a full-time trader. I
then opened an account with a broker and set off on the path of
learning technical analysis.
What do you trade: for example, shares, indexes or

currencies, and why?
My aim is to trade markets that are volatile enough to produce
adequate returns, but not so volatile that the risks outweigh the
rewards. I also seek a level of diversity by trading strategies
and markets that are uncorrelated to some degree. For those
reasons, my exposure is split between Australian stocks, US
stocks, a diverse basket of US ETFs, and index futures.
test ideas, and then to compare them with each other before
Do you think that an everyday person on the street deploying them in the market, turned me into a much more
has a chance? consistent trader. Using a quantitative approach also takes a
Trading successfully is certainly a skill that can be learned. large degree of the emotion out of trading. If it’s the machine
Unfortunately, most lay people don’t have the patience or telling me what to do, then I don’t have my ego invested in the
tenacity to wade through the inevitable losses and mistakes that buy or sell decision, therefore, I am much less likely to interfere
you must endure in the early stages of the learning process. One with the progress of any particular trade. Being able to work
major impediment is that most people think their risk tolerance with other traders I’ve met through the ATAA has also helped me
is far greater than it actually is. As soon as a drawdown goes develop much better strategies over time.
beyond 10 or 15 percent, most people will start to panic and cut
the trade or strategy off, often right at the point where it would What were some of the mistakes you made when
have started to recover if left alone. This then leads them to you started out?
believe it’s all far too risky an endeavour and give up. In the early days- you name it and I did it. Trading on other
peoples’ tips, trading too big, jumping out of trades too early,
How have you been able to learn and educate constantly switching strategies, even the all-time classic of
yourself about the market? blowing up an account. Again, it was migrating to the systematic
Meeting other independent traders after joining the Australian approach that eradicated many of those errors for me. If you
Technical Analysts Association (ATAA) led me to a major already know from the strategy metrics what the probability of
acceleration point in my learning when I discovered the success for any particular trade is, and how much profit you can
systematic approach. I read Quantitative Trading Systems by expect to net for a given amount of risk, you are much less likely
Howard Bandy and then learned to use Amibroker to design and to want to trip yourself up, and instead just let the trades play
test various trading ideas. Being able to backtest and forward out as the signals dictate.

TRADING LIFE
When it comes to being a successful trader, how a far better way to diversify than just by holding some bank
important is mindset? stocks and some mining stocks. Finally, I also quite like Warren
I’d say you need a combination of a variety of mindsets in order Buffet’s saying, “buy when there’s blood in the streets”- there’s
to succeed. You certainly need a winning mindset, but you also definitely something to that.
need a growth mindset as well as persistence, tenacity and belief
in yourself. But with that said, you can have the best mindset What’s the number one thing that traders can do to
in the world, but without a solid strategy behind you, you will improve their performance?
still struggle to succeed. In other words, it’s the combination of Get themselves out of the way of the strategy. Buying or
strategy, mindset and risk management that will ultimately make selling when you don’t have a clear signal from your strategy is
you successful. a key factor that will hold you back. It can also lead to emotional
turmoil when you see a trade take off that you should have been
How have you changed your mindset from the time on board with but are not. Conversely, holding on to losing trades
you started trading? past the exit signal hoping they will recover is the quickest way
Understanding that this game is a marathon, not a sprint. Your to the poor house.
success or failure doesn’t hang on each individual trade, but
rather each trade is just a single data point and it’s the totality 10.Finally, what is core to a trader’s success?
of all the trades you make that will get you to where you want For me, it’s having properly tested and validated strategies, the
to be. metrics of which then give me some expectations about what
they are capable of producing. Having expectations about win
What are some of your golden rules? rate, return, drawdown, trade frequency etc. ahead of time gives
Don’t believe any trading idea until you test it for yourself, me confidence when executing the trades. And like any career,
and diversification is best achieved through trading different it’s having confidence that will ultimately make you a consistent
strategy approaches rather than by simply holding different and fruitful performer.
asset classes. For example, trading momentum and mean
reversion based approaches over the same basket of stocks is
Twitter.com/YTEmag

TRADING APPROACH
THE “REAL”OFSECRET
THE MOST PROFITABLEAND
TO DISCIPLINE ELLIOT WAVE
PATIENCE
The “REAL”
Secret to
Discipline
and Patience
By Mandi Rafsendjani
L
et me share with you the story most people choose to attend the lecture well beyond 10,000 hours in front of the
about people who die and go rather than take the steps up to heaven. screen and still hasn’t performed.
to heaven. When they arrive I see this with traders all the time. The question for me is, does it really
at the pearly gates, they see They stay safe in what’s comfortable and take 10,000 hours? If we look at Tim Ferris
two doors. One door has a familiar, they read another book, watch and his famous concept on achieving a
sign that reads- ‘Staircase to another video, but they are not willing to result with the minimum input by finding
Heaven’. The second door leads to a take a risk and face their inner demons. out what the key performance modules
seminar called- ‘learn more about how to Recently, I had a conversation with are, you can achieve your goal much
get into heaven’. According to the story, this trader who told me that he has spent faster. For example, in order to speak a

language fluently, he found out we only

need to know 2,000 words.
What if the same principles applied to
proficiency in trading?
One of the most powerful concepts I
learned is the importance of taking 100%
responsibility for my own life.
This is really one of my favorites, as
it is an extremely important ingredient to
success.
I worked with a trader who had once
lost a considerable amount of money
back in the day. Now, of course he
doubts whether he has what it takes to
ever succeed in trading.
He said to me: “Mandi, I have come
to that fork in the road and I know I
can’t keep doing things the same way,
something has to change for my future
to change”.
I said to him: “You can change your
trading results if you are willing to grow
up and learn how to be a responsbile
adult and stop hoping that someone will
come and rescue you with a magical new
trading strategy”.
He responded: “Yeah, I get what you
are saying, but how on earth do I do that?
I have heard of the concept of taking full
responsibility and to accept my losses,
but what does it mean? How does one
take responsibility?”
Traders come to me and they typically
want help in becoming disciplined and
patient. When I ask them to give me
some specific examples on when they
lacked discipline and patience, they
respond with:
“I have a fear of missing out, so I jump
into trades impulsively”. mindset challenges. When it comes to taking responsibility,
“I know how to read the market and So, these traders are lacking patience I found there are 2 camps- one is filled
know how to trade, but I just can’t and discipline. Consider that patience and with the 90% losing traders who say
control my emotions”. discipline are the result of something that “wow, this is a lot to deal with”. They tell
“I do well the first part of the day, and you must deal with first. Ask yourself, what me that it is intimidating, they fear they
then I give it all back during the 2nd half is missing that would help you become don’t have what it takes, and that it’s all
of the day”. more disciplined and patient? The more too hard.
“I feel so helpless”. I speak and work with some phenomenal They live a life where they feel a little
“I always think the worst will happen- traders, I realise that the real solution to disempowered; they feel like a victim
and then it does happen”. improving your ability to be disciplined of the markets and get defensive at the
This is just a small selection of common and patient is this: Responsibility. idea of taking responsibility.

CONSIDER THAT PATIENCE AND DISCIPLINE ARE THE

RESULT OF SOMETHING THAT YOU MUST DEAL WITH FIRST.
ASK YOURSELF, WHAT IS MISSING THAT WOULD HELP YOU
BECOME MORE DISCIPLINED AND PATIENT?
With that comes victimhood energy, it’s this vicious cycle. Carol Dweck’s growth mindset- they
the rejection of the whole idea, because The other camp consists of powerful don’t ask, “what if it doesn’t work”?
it doesn’t feel good, it’s confronting. No traders who see how freeing this is. They They act as if it were true, and they ask
one said it would be easy. It feels better do what’s uncomfortable, they lean in, how can I make it work? How would my
and it’s definitely safer to read another hungry to grow, seeking out challenges trading change? How would my results
book about how to be disciplined and that help them grow as traders. They change?
patient. However, unless you choose to don’t do what feels good, they do Jim Rohn said, it is not the direction
think differently, you will remain stuck in whatever it takes, they have the famous or the strength of the wind, it is how you
set your sails.
We can’t control the wind, the waves
will come up, the wind will blow. But
we can utilize it by setting the sails and
flying with the wind.
Imagine the markets as the storm, and
you setting the sails.
So, 100% responsibility does not
mean that we are to blame, which is
sometimes how it is inferred. Stuff is
going to happen. Bad stuff will happen,
it’s called life. People come and go,
people die, people are born, they get
jobs, they lose jobs, they make money,
lose money; and what for one trader is a
life crisis, for another trader it is merely
an obstacle to overcome.
There are many moments in our life
where we feel destitute and empty.
These are the moments that require us to
become our own hero.
Unfortunately, most traders go through
the pettiness of focusing on the bad
times whilst gazing at themselves with
contempt. They waste valuable years
doing so.
Therefore, you must stop listening to
your ego, swallow your pride and draw
that line in the sand. Only then will
you discover how much you really are
capable of accomplishing.
If you start accepting 100%

THE MOMENT YOU MAKE THE DECISION TO DRAW THAT

LINE IN THE SAND AND START CENSORING YOURSELF, YOU
TAKE THE FIRST STEP INTO EMPOWERMENT.
responsibility, what can you now stop

tolerating?
What can you now choose differently?
What can you now decide to do
differently? What is now in the realm of
your potential?
This is especially important to the
traders, who say “I understand it could
be different, but I have no clue what
different means, because this is so
beyond what I have ever known.”
Let’s start with giving you some is in that self-censorship that you will you can take a step towards a healthier
clarity around what it means to take realize how much you had been focusing lifestyle by adding a grapefruit and an
responsibility: on what was not working, and who was extra glass of water to your diet.
The funny thing about human behavior to blame. Eventually you will come to learn that
is, the more we justify and explain our The moment you make the decision you can ask more of yourself, because
poor results, the less energy we put into to draw that line in the sand and start there is more potential to tap into.
changing it. Because there is a level of censoring yourself, you take the first All you have to do is ask.
comfort, we can drug ourselves mentally step into empowerment. Thus, you start
into the ‘okayness’ of how it is. taking charge of the words that come Mandi Rafsendjani has been an active
What if you were to think the opposite, out of your mouth, which is the first thing trader in the financial markets for over a
such as: “so what if this concept is true, you can take control over. decade. She has been trading a variety of
what is the one thing that I can do to be So, when you can’t tell your old story instruments such as Australian equities,
responsible today”? line anymore, it is a stark reminder that options on equities, Futures and CFD’s
For example, if you got rid of just one you can’t expect much of yourself and (SNP500, Dow Jones [Emini], XJO, DAX,
of the excuses, what would you be left the world. Commodities and Forex). Today she is not
with? Eliminating negative self-talk is a only a successful professional trader, she
Though it takes a lot of mental strength, major part of the growth because you is also recognized as one of Australia’s
what if you decided to stop judging then start filling in the awkward silence premiere authorities in “The Psychology
everything and everyone, including with acceptance and neutral or positive Behind Peak Trading Performance”.
yourself- thus letting the goodness words.
unfold? You realise that you must take your
The thing is, most traders don’t have losses. However, you also ponder
a language for potential, possibility, self- about how you can improve by 1% the
belief, confidence and self-worth. What following day.
they lack is love, trust and commitment. For example, say you have an
If you decide to no longer speak of the uncontrollable temptation for pizza,
negative, you will realise that to begin chocolates, soda and other junk food.
with, there isn’t much to say for you. It Instead of obsessing about stopping,

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DIGITAL TRADING
OR PAPER TRADING?
Sinan Koray
D
o you prefer paper or digital? Doesn’t a stack of old love letters evoke more feelings than a few
The relevance of this question to trading is neither emails stored on a disk?
simple nor straightforward. Photographs are another area where emotions are evoked to a
Let’s start with a simple example: news. If your greater extent when paper is used. Most of us now have thousands
choices were narrowed down to buying and reading of photos stored in smart phones, digital cameras, hard disks and
a newspaper or going online to browse through the clouds. If you had a professional take photos of you and your family,
news, what would you do? Here is a slight twist. If you have written whether it is a wedding, a graduation or the opening of your new
an article that appeared in the newspaper, would digital browsing office, would you be happy to have it all on digital format? Or would
be enough for you or would you like to buy a copy of the paper? you prefer to select a few and have them printed in large format and
Multiple copies? frame it to mark the special occasion?
Once upon a time, and before my trading life began, trading was How about books? Reading is very pleasurable for me when the
conducted in the pits. Brokers took orders by phone, wrote slips of book is a paperback or a hardcover. I read electronic books too, but
paper which runners then took to the traders in the pit who were it is not the same. Underlining, highlighting, dog earing pages cannot
shouting and screaming bids and offers. Thank goodness all of that easily be done in the kindle version!
was replaced by computer based trading quite a while ago. Digital In these days of high tech society, we are somewhat disconnected
trumps paper in this arena. from nature. We do not grow our own vegetables, pick our own fruits,
A few years ago, I had the pleasure of looking at, close up, hand farm our own animals, get water from a stream or cut our own wood.
charts that W.D. Gann kept for stocks that were trading during his Thank goodness for that you might say! There is however a feeling
time. These days most of us wouldn’t dream of hand charting any that one experiences when one walks barefoot on the sand, swims
market. Why bother? But wait, one of my teachers spoke very strongly in the sea, picks a fruit from a tree, stands under a waterfall, has a
about hand charting the markets one specialised in. I followed this bird feed from your hand. This connection is primal; it is coded in our
advice for a very long time maintaining four separate hand drawn DNA. When you hold a paper in your hand, you are connecting with
charts for Swiss Franc Futures Contracts. This gave me a very the tree it came from. Holding a tablet or smartphone in your hand
different experience than software drawn charts. I got intimate with may give you more functionality, but not the same feeling.
that market in a way that no charting software or website could even A very powerful technique for Emotional Control, clearing up your
come close. It was like the difference between watching someone mind, processing a loss is journaling. When I recommend journaling
eat a pizza on television compared to actually eating pizza yourself. to a client or a group of workshop attendees, a question always
“Big deal, you hand charted a market. So what?” you might say. comes up: “Can I do it on my tablet?” I answer: “Paper journaling is
Paper charting not only allowed me to get to know that market very three times more effective than digital versions. You choose”.
well, it allowed me to make good money from it. I stopped when As a regular contributor to this magazine, I get the complimentary
Swiss National Bank pegged the Franc to the Euro. I was heartbroken digital version. In this PDF file, I can easily find and read my articles
(they unpegged it a few years later). and all other columnists. Yet I still enjoy the paper copies, two copies
Let’s look at buying or selling real estate; your home, an investment each month. It gives me so much more pleasure to look at these
property, an apartment block or an office building. Would this be magazines on my bookshelf. Magazines that I had a contribution to.
possible without using any paperwork? Can it be done all digitally? A bunch of PDF files stored on my hard drive just does not evoke the
No way. Yes, the papers you sign can be scanned, sent, received same feeling.
and stored digitally, but you still have to sign papers. Does that mean Carl Jung said: “One does not become enlightened by imagining
paper is more important than digital? figures of light, but by making the darkness conscious.” Are you
If you run a business, certain records have to be kept for five or conscious of your preferences? Paper or digital? Would you rather
seven years depending on the nature of the documents. Does that switch if you could?
mean paper is more important than digital?
Let’s look at money. Would you prefer a world where all money Sinan Koray is an internationally acclaimed speaker, author and
was digital? Is that where we are heading with cryptocurrencies? trading coach who is reshaping trading psychology and transforming
Maybe. But right now, there is nothing more assuring than cold hard the lives of tens of thousands around the world. As a professional
cash. If you buy something or get work done by trades people, you trader and trading coach, he is considered a leading expert on
sometimes get a better price by paying cash. These days money is emotional control and mind mastery. He actively trades Foreign
made of plastic, but once upon a time notes were printed on paper. Exchange, Equity Index Futures and Metals since 2003. Sinan has
Paper or digital? addressed audiences in Australia, New Zealand, Philippines, Middle
If you were starting a romantic relationship with someone, would East, India, Singapore, Hong Kong and USA. He is the founder of
you feel more special receiving a love note on a card or a letter, TradingStressFree.com
or would a text message or email touch your heart just as much?

MARKETPLACE
MARKETPLACE
DATA VENDORS REAL-TIME (LIVE) & END OF DAY (E0D)
DORS REAL-TIME (LIVE) & END OF DAY (E0D)
W.D.GANN HOME STUDY COURSE
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a (EOD & LIVE)
eSignal (EOD & LIVE) www.boursedata.com.au
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OD) Market Analyst (LIVE & EOD)
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lyst (LIVE & EOD)
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Gecko Software www.geckosoftware.com The foundation of learning is to get the base of knowledge correct.
GFT - CFDs & FX Trading
com Limited (LIVE) www.gft.com.au
www.mdsnews.com
Market Analyst www.market-analyst.com The study of Gann to his highest level has steps of knowledge that is
OptionGear www.optiongear.com
E VENDORS ProfitSource www.profitsource.com learnt over years or even decades. Too many people are trying to
Seismo Australia Pty Ltd www.seismo.net.au learn astrology. Gann wasn’t doing astrology the way people teach
Sharewealth Systems www.sharewealthsystems.com
a ValueGain www.valuegain.com www.boursedata.com.au today; therefore you can waste a lot of time studying rubbish, which
Vector Vest www.vectorvest.com
Pty Ltd. www.easy-forex.com.au won’t help you. You must start off slow and get the basics right. The
BROKERS / DEALERS “HOME STUDY COURSE” does this. You should have all of Gann's
Alert Trader www.eSignal.com
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Bell Commodities Limited www.bellcommodities.com.au books with the home study course and you will be on the right track
ware Bell Direct www.geckosoftware.com
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to the future. You can’t get knowledgeable quickly; humans are very
City Index www.cityindex.com.au
s & FX TradingCMC Markets www.gft.com.au
www.cmcmarkets.com.au slow learners and it takes time for methods to be memorized.
Commodity Broking Services www.commoditybroking.com.au
lyst Easy Forex Pty Ltd. www.market-analyst.com
www.easy-forex.com.au
E*Trade Australia www.etrade.com.au
First Prudential Markets www.fpmarkets.com.au
r FXCM www.forextrading.com.au
www.optiongear.com
GFT - CFDs & FX Trading www.gft.com.au
e Halifax www.halifax.com.au www.profitsource.com
IBFX www.ibfx.com
stralia Pty LtdI-Deal www.i-deal.com.au www.seismo.net.au
IG Markets www.igmarkets.com.au
h Systems Interactive Brokers LLC www.sharewealthsystems.com
www.interactivebrokers.com.au
Macquarie Prime www.macquarie.com.au/prime
Marketech www.valuegain.com
www.marketech.com.au
NAB www.nab.com.au You can order the Home Study Course through David Burton
State One Stockbroking www.vectorvest.com
www.stateone.com.au
On 0419 917443 or www.schoolofgann.com
StoneBridge Group www.stonebridgegroup.com.au
/ DEALERS Titan Futures www.titansecurities.com.au
www.alerttrader.com.au
odities Limited www.bellcommodities.com.au
www.belldirect.com.au
www.cityindex.com.au
ets www.cmcmarkets.com.au
Broking Services www.commoditybroking.com.au
Pty Ltd. www.easy-forex.com.au
stralia www.etrade.com.au
ntial Markets www.fpmarkets.com.au
www.forextrading.com.au
s & FX Trading www.gft.com.au
www.halifax.com.au
www.ibfx.com
www.i-deal.com.au
www.igmarkets.com.au
Brokers LLC www.interactivebrokers.com.au
Prime www.macquarie.com.au/prime
www.marketech.com.au
www.nab.com.au
75 YOURTRADINGEDGE
Stockbroking www.stateone.com.au JUL/AUG 2018

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PIP FICTION – IT’S NOT JUST THE SIZE THAT COUNTS DIGITAL TRADING OR PAPER TRADING?

TRADING IN THE BIG LEAGUES NO BULL

7 BAD TRADING HABITS &

44. W.D.Gann´s Geometric Angles

49. Lighting the Candles with

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PIP FICTION – IT’S NOT JUST THE SIZE THAT COUNTS

BREAKDOWN EOS Publications PTY LTD

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Hemal Pandya: EUR/USD: The calm before the storm.

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Plug Into A Multi- Build A 6-Figure

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one medicine but not another. Which one do you think

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well as the Stochastic Oscillator. STEPS INVOLVED IN ARRIVING AT THE ELASTICITY

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The second last bar qualifies. By subtracting the Open

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44. W.D.Gann´s Geometric Angles

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