Edition 743 - September 7, 2018
by Master Trader Joe Ross
Author, Trader, Trading Mentor, and Founder of Trading Educators, Inc.
Developer of Instant Income Guaranteed
Chart Scan with Commentary: Lesson from the Past
"A chart is a chart, is a chart." If I kept count, I would guess this is the ten thousandth time I have spoken or written those words.
The chart I am showing you today presents a comparison between euro fx (the euro as traded in the futures market) and EUR/USD (the euro as traded in the forex markets). Notice the plural, "markets." There is no set single price for the euro among all of the banks that trade it. This is one of the differences between futures and forex. It is called transparency. In futures everyone sees the same price at the same time, give or take a millisecond. In forex, you see the price at the bank or banks where your broker places your order. Some brokers have a single-bank feed, and some have a blended feed. In any event, what you see is what you get, and it is what you have to trade. "Trade what you see" has been my motto for all of my trading life. After all, what else is there?
I have captured 3 screens simultaneously, so that you can see what I mean by a chart being a chart, and at the same time show you that there is no real transparency in forex prices.
The screen at the top is euro fx in the futures. The next screen down represents EUR/USD as presented by the GTIS data feed. Notice the price, 1.5003. The bottom inset screen is EUR/USD as presented by the FXCM data feed. There we see the price as 1.50024. To get an idea of what the price is on the GTIS data feed, we will have to add a digit. I will make a guess at 1.50030, but that is only a guess. For all I know, it could be 1.50039, or 1.50034, or something else.
So a trader using the GTIS data feed is seeing a different price from that of the trader viewing the FXCM data feed, whereas everyone viewing the futures chart sees 1.50010, no matter where on Earth they happen to be.
If you look closely at the charts, you will see that they look like triplets. There is very little difference in the way they look.
Both forex and futures represent a ratio spread, i.e., the euro divided by the dollar. At the time these charts were created – it took approximately 1.5 U.S. dollars to buy one euro. That made it expensive for U.S. citizens to travel to Europe, but easy for Europeans to travel to the U.S.
Here is another difference. Let's say I wanted to be long the yen and short the euro. Using forex, I would simply sell EUR/JPY – a ratio spread.
However, if I wanted to do that in the futures, I would have to buy the yen futures and sell the euro futures – two separate trades. Since all of the futures are denominated in U.S. dollars, the price I would see for the spread would be in dollars – a fixed value in terms of dollars, or $12.50/tick (the minimum fluctuation that prices can move). However, in forex the minimum fluctuation prices can move is called a pip, and the value of a pip can vary. Unlike a futures tick, a pip is not fixed in dollars.
There is one other item I will point out. When I chart the spread long yen, short euro, I can subtract the euro from the yen and see a differential spread, or I can divide the yen by the euro and see a ratio spread. So I can view the spread either way I choose, while still being long yen and short euro. The ratio spread yen/euro would approximate the spread EUR/JPY. The differential spread yen-eur would give me a different, but similar looking view.
All of the charts below are 60-minute. Have fun:
© by Joe Ross. Re-transmission or reproduction of any part of this material is strictly prohibited without the prior written consent of Trading Educators, Inc.
by Master Trader Joe Ross
Author, Trader, Trading Mentor, and Founder of Trading Educators, Inc.
Developer of Instant Income Guaranteed
Trading Article: Stay Calm
Charles is on edge. He isn't extremely uptight but he isn't completely calm either. He is just a little fidgety and it's getting to him. He is having a little trouble concentrating. He's reading charts incorrectly and he is having trouble outlining a trading plan. He can't figure out where to place his stops, where to enter or where to exit. Can you relate to Charles’ plight? There are times when you just can't calm down. Your physiology is elevated and you are restless and on edge. It's natural and understandable, though. When your money is on the line and you are fighting for your livelihood, you can't help but feel a little uneasy. There's a lot you can do to calm down in the midst of a storm of chaos.
Sometimes we get flustered and upset without our conscious awareness. It seems to have come out of the blue. There was probably something that started it, however. Maybe we remembered a set of past losing trades earlier in the day, or saw a media report on a stock we traded last year and lost. However, it happens, we end up on edge. How it happens may not matter in the end. All you know is that your physiology is elevated and you are ready to overreact to even a minor setback. What do you do at this point? You don't have to mull over the reasons why you are agitated. You can take decisive action to calm down.
Your mind and body are closely linked. When your body is energized, you look at your physiology and try to interpret it. Sometimes you feel hyped up, and rather than interpret your physiology as excitement, you may label it as fear, uncertainty and anxiety. The way you think about dictates how you feel about your physiology. If you feel fearful, it is because you are looking at your physiology and thinking that something bad is going to happen and you are not sure what you will do. To change your physiology, you have to change your thinking. When you are worked up, you can use it to your advantage. Rather than feel in a state of panic, you can reinterpret your high agitated energy level as excitement and start feeling enthusiastic about what you might want to do next as a trader. It may also be useful to cultivate a carefree attitude. You might think, "It doesn't matter what happens. I'm going to just do my best and pat myself on the back for whatever I accomplish.
It's easy to get a little uptight while trading, but it's all a matter of perspective. If you feel on edge, tell yourself encouraging thoughts to turn things around. By cultivating a winning attitude, you can feel calm during the storm and take home huge profits.
© by Joe Ross. Re-transmission or reproduction of any part of this material is strictly prohibited without the prior written consent of Trading Educators, Inc.
by Philippe Guartier: Administration and
New Developments of Instant Income Guaranteed
Trading Example: Instant Income Guaranteed
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© by Joe Ross and Philippe Gautier. Re-transmission or reproduction of any part of this material is strictly prohibited without the prior written consent of Trading Educators, Inc.
by Professional Trader Andy Jordan
Educator for Spreads, Options, Swing, Day Trading, and
Editor of Traders Notebook Complete
Trading Article: Sometimes Others Get to Play and You Don’t
Sometimes in softball games, as a kid, they handed out the bats, balls and gloves, and there weren't enough to go around – so you had to sit it out. You had to sit on the bench and watch.
The same thing happens in trading. Sometimes you don't get to participate.
You must get used to the idea that sometimes you will sit in front of your charts for days or weeks, and nothing at all will happen. Others will have all the fun. There won't be enough bats and balls to go around. You will simply be warming the bench – watching.
In trading, you must be comfortable with this – welcome it. Make peace with this idea. Cross your arms and sit back. Wait for YOUR trades and setups, and don't get irritated by other traders. You cannot be in every trade. If you don't get your entry signal, there is nothing to feel sorry about if you miss a profitable trade. Sometimes it is just not your trade; others get to play and you do not!
Andy Jordan is the editor for Traders Notebook which shows you Futures Trading Strategies in Spreads, Options, and Swing Trades. Learn step-by-step how to trade successfully.
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© by Andy Jordan. Re-transmission or reproduction of any part of this material is strictly prohibited without the prior written consent of Trading Educators, Inc.
by Professional Trader Marco Mayer
Educator for Forex, Futures and Systematic Trader
Creator of Ambush Trading Method, Ambush Signals, and Head of AlgoStrats.com
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© by Marco Mayer. Re-transmission or reproduction of any part of this material is strictly prohibited without the prior written consent of Trading Educators, Inc.
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Note: Unless otherwise noted, all charts used in Chart Scan commentary were created
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