august 2009 - your markets monthly

August 2009Volume 1, Edition 9

Don’t forget to join

www.toptraderthinking.com

as a FREE Member so you can access a whole lot of other great info for Top Traders!

CONTACT US FOR A FREE EVALUATION OF YOUR SHARE PORTFOLIO OR TRADING HISTORY

[email protected]

[email protected]

[email protected]

[email protected]

Or call us DIRECTLY (in Aust.)1300 73 66 11Outside Australia+617 5504 2222

•FUTURES•GLOBAL SHARES•CFDs•FX TRADING•PRECIOUS METALS•RECOMMENDATION PROGRAMS•ONLINE TRADIN G•FREE WEBINARS for members•P ERSONAL SERVICE•DAILY MARKET REPORTS

AND MUCH MORE…

In this edition:

• Forecasts from the PCD report - Analysis by Philip Dooley

• How To Apply Seasonal Analysis To Your Trading - Guest Contributor: Guy Bower

• Mind Games - Traders Psychology - Article by Matt Kirk

• Technical Indicator of the Month: Parabolic SAR - by Jason Achjian

• Recommendation Program update - Commodities Basket Recommendations - William Chien's CFDs - Seasonal Spread Trading - PCD Advisory

AVAILABLE NOW… FREE TRADING WEBINARS BY MATT KIRK FOR

WWW.TOPTRADERTHINKING.COM MEMBERS ONLY

IF YOU'RE NOT A MEMBER THEN CLICK HERE TO JOINhttp://www.toptraderthinking.com/toptrader/signup.asp

IF YOU ARE A MEMBER THEN CLICK HERETO VIEW THE WEBINARS

http://www.toptraderthinking.com/toptrader/news.asp?id=391

28-Aug-09

Our Affiliates & Partners include:

DOW

During August the Dow has continued on its rally, having reached a fresh high by August 5th as forecast and encounter some resistance around then as expected which it has overcome. It is positioned now to continue the rally to late September / early October. All of this and more has been outlined previously in the PCD Report, so contact me if you want to receive my reports.

AUSTRALIAN DOLLAR

I remain of the view that the Aussie dollar will be on a fresh yearly high by September 14th. The rally has met some resistance during mid August as expected however it continues to recover from any declines on an intra day or intra week basis and appears poised to rally to new highs. Those people familiar with my reports will know that I rarely bother with price analysis and that is very much the case here with the Aussie dollar. There is no shortage of commentary on price levels and what to look out for and so forth but if you want accurate and repeatedly proven time analysis then you will only get that from me.

Analysis By Philip DooleyTrader & Author of the PCD Report

GOLD

My forecast in March for the bigger picture on Gold as repeated in last months magazine has been for a broad rally to December. Not a lot has happened for Gold during August, there having been no real progress in either direction. In any event the forecast for a rally still stands. All of this has been covered in more detail in the PCD Report, including important contingencies.

To be added to Philip Dooley's mailing list and rec eive his reports please contact Philip on the following

Email: [email protected] Phine: 1300 73 66 11

How To Apply Seasonal Analysis To Your Trading

Seasonal analysis has long been the domain of professional traders, but over the last decade or so has slowly been picked up by the private investor. Good information on seasonal trading is still hard to come by, but that in itself in a good thing as it is still a niche that can be exploited. This article looks at:

What is Seasonality?

What Drives Seasonal Patterns?

Technical vs Fundamental analysis

The Opportunities in ‘Spread' Trading

The DOs and DON'Ts in Seasonal Trading

How to Learn More

Firstly, What Is Seasonality?

Seasonality refers to a pattern that depends on, or is controlled by, the time of the year. Seasonality appears in many places.

For example, sales of Christmas cards logically peak before Christmas. Accounting business peaks around end of financial year. Sales of red roses peak just before 14th February. Many businesses, products and statistics are subject to seasonal variations. For the trader, it can mean opportunity.

What Drives Seasonal Patterns In Markets?

The answer is the same as that for the price of anything - supply and demand. Consider the demand for beef. In any economy, demand is greatest when the weather is the coolest. Logically more people eat roast dinners in the winter than they do in the summer. While demand for beef is high during BBQ season it tends to be less than good old home cooked dinner demand. On the supply side, during winter, weight gain in live cattle is low. So during the US winter, demand is high and supply is tight. This translates a seasonal variation in price. With a well timed trade, you can make money from this.

Source: eSignal - www.esignal.com



Larry Williams

Tom Scollon

Daryl Guppy

Another example is coffee. Coffee consumption is far heavier in the Northern than in the Southern Hemisphere and heavier during winter than summer. Thus, after March, consumption begins to slow. Furthermore, harvest in the Southern Hemisphere normally begins in June. Thus, producers tend to liquidate inventories before then, making less desirable deliveries against May futures - which begin April 20. This creates a short selling opportunity.

Guy Bower

Catherine Davey

Sari Mustonen-Kirk

Contributor information:Guy Bower is professional futures, options and spread trader. Guy is the author of two books:

Options: A Complete Guide and Hedging: Simple Strat egies

Seasonal Trading: Is This Fundamental or Technical?

Among many traders it seems important to define whether you follow technicals or fundamentals.

Technical analysis is the study of price trends and patterns. It is sometimes called charting - although strictly speaking charting is a subset of technical analysis. Fundamental analysis is more concerned with analysis of supply or demand factors than it is charts.

So what is seasonal analysis? Well there are two ways to look at it. On one hand, you can say seasonal analysis is fundamental since it looks at shifts in supply and demand at any time of the year. In the above examples we looked at seasonal factors from the point of view of fundamentals. The examples considered harvest and production cycles, weather and consumption demand. These are fundamental factors that analyse supply and demand.

You can also look at seasonal trading from a technical point of view since it is an analysis of price patterns in the market. These price patterns can be recurring and present trading opportunity. Identifying recurring patterns is the basis of technical analysis and you could therefore consider seasonal analysis to be a type of technical analysis.

There is no correct or incorrect way to look at this. All traders have their preferences.

The DO's and DON'Ts of Seasonal Trading

DO find a good information source. Unless you are a Quantitative Analyst and a super-wiz with Excel, you need to get the seasonal data from somewhere.

DON'T use seasonal data for trading outright futures contracts. Consider looking at spreads. The signals tend to be more reliable.

DO find a good broker - one that knows about how to place spread orders effectively.

DON'T use seasonal data in isolation. This is where a lot of people come unstuck. Seasonal data is just part of the trading equation.

DO keep some perspective. You can learn a lot from the right broker, but having the right information and following a plan is the best course of action.

DON'T get too caught up with the vernacular of seasonal spread trading. It's less important than getting the right info and placing trades accordingly.

Mind Games - By Matt Kirk

Working out your trading psychology can be difficult but, as Matt Kirk says, ignore it at your own peril.

Your chances of making consistent money are virtually zero without a good understanding and a healthy respect for your own psychological profile – not just as a new trader but throughout your whole trading career. I’ve had the good fortune to study and witness psychology in action of thousands of traders over the past fifteen years. And, trust me, it’s only ever been those traders who understand the necessity of a 110% commitment to their psychology who succeed at this game.

Most new traders in the market voraciously read a whole bunch of books searching for the Holy Grail and inevitably whenever the obligatory chapter on psychology arises, great enjoyment is derived by skipping the chapter to ‘save time’. The trader will say to him or herself, “I’ve already read about discipline, emotion and all that other stuff. I want to get to the guts of the book, the part that tells me how to make the big bucks.” Wrong, wrong, wrong!

The funny (but often painful) thing for the majority of up and coming traders is that most simple systems do work using appropriate risk management techniques (which depends on your account size – but that’s another article). Most traders, however, can’t stick to the rules implicitly and thereby completely invalidate their system as a ‘system’.

Curtis Arnold, one of the famous US traders and proponents of using statistically successful price patterns, runs analysis on 27 of the top trading systems. He finds that the “Donchian” approach to trading – which is basically using the crossover of two simple moving averages to give buy and sell signals – comes in at Number One. It beats all of the other whiz-bang systems and, again incorporating money management stops, profits where others lose.

If it’s that ridiculously easy to profit then why do so many traders lose? Psychology (or lack of) I hear you say. Exactly. Without knowledge and a focus on this crucial element of trading, you’re history.

Okay, so you’re ready to make the commitment to this area of education, to give yourself a better shot, and reduce the chance of becoming a statistic of the market. By the way I’m sure you’ve heard the statistics? Over 80% of traders lose money trading! So, now what? Let’s run through some very simple yet highly effective strategies for you to begin to employ immediately.

Not just run of the mill ‘bank statement’ documentation for you though. Construct a spreadsheet with columns to display ‘where and when you ‘bought or sold’, ‘how much you made or lost’, ‘the brokerage you paid’ then a ‘net and cumulative profit and loss’ column. Additional columns should include the ‘time of day you traded’, ‘the name of the broker’, who you placed the order with and then, the most important one of all ‘WHY you bought or sold at this price’. Was it a technical system trade; did your five and ten-period moving averages cross to go long in conjunction with your ADX advancing through 20 or, was it another technically-generated signal?

Different Tones

Make up your own index of how you felt when you placed the trade. Did you feel great, good, rotten, tired or energised? Try and stick to three different ‘tones’ for yourself.

The final column is a section for comments such as: Did you follow your system? Did you guess? Were you trading because you were bored? (Or anything else worthy of note including, of course, if you performed well).

Funnily enough, whether you made money or not is beside the point here. If you followed your plan but lost – that’s still a good trade. Putting it in the reverse, if you didn’t follow your plan and made money, that’s actually not a good trade – you’ve been financially rewarded for flying in the face of your plan. (Now you really think I’m crazy!) Just run with me, this really does work.

Once you’ve got a few trades under your belt, and the more in the sample size the better, you’ll see a pattern begin to emerge that will indicate what works for you and in what emotional state you tend to perform best in. Analyse the results and finesse your plan so that you only execute an order in a trading and emotional environment that you’ve statistically proven is conducive to you making profits. Don’t trade where your immediate set-up suggests the chance of losing is greater than that of winning.

You can see how personal an exercise this is. If you’re fortunate to have a partner or someone you can trust to run through this spreadsheet with from time to time, do so. It will keep you honest and reinforce the information in your ‘traders brain’. Do this for every single trade until you are so in touch with your exact profitable state that it is second nature.

Every trader’s time frame is different with respect to this. For some it may take months and/or 100 trades, or years and/or 1000 trades. Whatever it takes, do not stop until you are master of knowing what your own personal set-up is. If you run into a losing patch in your career at any time resume the process until you’re back on track.

This process is lucky to be performed by 10% of traders and guess which ten percent they are? Many traders are actually destined to lose because they’re just plain lazy.

This simple but incredibly powerful exercise, if you do it honestly, is imperative. If you can’t afford the 60 seconds it takes to do each trade then maybe you’re really not ready to be trading yet.

Perfect Trading Triggers

One of the best traders in the world, Paul Tudor-Jones, uses the following technique and it’s obviously a beauty.

When things are going well for him in a trade (he does several thousand-lot orders in the T-Bonds, by the way) or when he’s being hung out to dry in a shocker of a trade, he dons a pair of John McEnroe’s tennis shoes that he bought in a charity auction. Why? Because he has programmed his trader’s brain to use the shoes as a psychological trigger. This flicks a switch in his brain so that he becomes all-consumed and totally focussed in periods of excessive stress.

An actual chemical reaction triggering a learned response is deployed to get him through. Every trader should do this for every trade.

Perhaps you have a favourite jacket, pair of socks, baseball cap or, any other item that makes you feel confident and comfortable. From now on, when you sit down to analyse the markets and place your trades you will wear with pride your Trader’s Jacket, Trader’s Socks or Trader’s Cap.

Look at any successful and prominent person and they generally have an anchor or psychological hook that they use. Agassi has his ‘groovy’ tennis clothes, Rafter has his little ‘Sumo wrestler hair-thing’ and Rene Rivkin, of course, has his famous worry beads.

Get the picture? Now you will have the same type of trigger to help you. Find it and use it to put yourself in a peak psychological and emotional state for the trading task at hand. You too are a professional.

http://www.toptraderthinking.com/toptrader/shop.asp ?id=42

HAVEN’T GOT A COPY OF ‘BULLSEYE – TOP TRADER THINKING’ YET…?

GRAB IT NOW & GET YOUR TRADERS BRAIN ON TRACK FOR THE REST OF 2009!

Click the link below for info about ‘Bullseye – Top Trader Thinking’ and to buy your copy.

I could write a book on many other ‘tricks’ to stack the odds in your favour however I’ll run through just one more for you now. Again very easy, very simple and very effective.

As you know it tends to be the simple things in life that work the best, yet are discounted with the greatest of ease.

Write or type out in big bold letters on a sheet of A4 paper or cardboard things like:

» I am the Chief Trader of the Most Important Fund in the World – My Own. » I have a Trading Plan that I Implicitly Follow. » I Document Every Trade I Do. » I make Money as a Trader because I am Highly Disciplined. » My Emotional State remains on an Even-keel – Always.

Invent ten of your own and add them to the list. Then place the piece of paper on your trading desk in a frame or hang it on your wall in a place where you either consciously or sub-consciously will see it every day.

You may think this is a little ‘uncool’ but my answer to that is: do you want to look cool or do you want to make money? When you make the money I can assure you, you’ll feel very ‘cool’. As I said there are many more techniques you could use. The best thing and the only thing is to just do it – in fact, it’s my favourite motto at the moment, and yes I borrowed it from a major advertising campaign.

And remember; ignore the psychological aspects of trading at your own peril.

Technical Indicator of the MonthBy: Jason Achjian

Parabolic SARIndicator NameParabolic SAR

WhatThe parabolic SAR is a technical indicator that is used by many traders to determine the direction of an asset's momentum and the point in time when this momentum has a higher-than-normal probability of switching directions. Sometimes known as the "stop and reversal system", the parabolic SAR was developed by the famous technician Welles Wilder, creator of the relative strength index, and it is shown as a series of dots placed either above or below an asset's price on a chart.

HowSAR(i) = SAR(i-1)+Acceleration*(EP(i-1)-SAR(i-1)) Where:SAR(i-1) — is the value of the indicator on the previous bar;Acceleration — is the acceleration factor, usually 0.02 but not greater than 0.20;EP(i-1) — is the highest (lowest) price for the previous period (EP=High for long positions and EP=Low for short positions).The indicator value increases if the price of the current bar is higher than previous bullish and vice versa. The acceleration factor (Acceleration) will double at the same time, which would cause Parabolic SAR and the price to come together. In other words, the faster the price grows or sinks, the faster the indicator approaches the price.

WhenOne of the most important aspects to keep in mind is that the positioning of the "dots" is used by traders to generate transaction signals depending on where the dot is placed relative to the asset's price. A dot placed below the price is deemed to be a bullish signal, causing traders to expect the momentum to remain in the upward direction. Conversely, a dot placed above the prices is used to illustrate that the bears are in control and that the momentum is likely to remain downward. The first entry point on the buy side occurs when the most recent high price of an issue has been broken; it is at this time that the SAR is placed at the most recent low price. As the price of the stock rises, the dots will rise as well, first slowly and then picking up speed and accelerating with the trend. This accelerating system allows the investor to watch the trend develop and establish itself. The SAR starts to move a little faster as the trend develops and the dots soon catch up to the price action of the issue. The indicator works extremely well when a stock is trending, but it can lead to many false signals when the price moves sideways or is trading in a choppy market.

Matt Kirk

Jason Achjian

Click OK once you’re satisfied with the settings. You will now see the Parabolic SAR added to your chart.

You can later adjust settings by clicking the ‘PSAR’ at the top left of chart and then clicking on ‘Properties’, you can also delete the indicator from this menu

If there is any feature of eBridge Trader that you’d like covered in next months newsletter please email your request to: [email protected]

How to add this to your Chart s in eBridge Trader

Whilst in your workspace viewing a chart, click this symbol at the top of the chart, then >>> Trends >>> Parabolic SAR...:

The default fields that appear can be adjusted at this point for this indicator; you can also adjust them later if you wish. You can also adjust colour and the weight of the line:

To open a eBridge Trader account or get further information on adding technical indicators to charts using eBridge Trader please contact Jason Achjian by Email: [email protected] Phone: 1300-73-66-11.

http://www.toptraderthinking.com/toptrader/shop.asp?id=42












http://www.toptraderthinking.com/toptrader/shop.asp?id=42http://www.toptraderthinking.com/toptrader/shop.asp?id=42

William Chien

Philip Dooley

[email protected]

Recommendation Perfomance

Conditions

William Chien: [email protected]

If you receive but do not take advantage of 3 cons ecutive trades you will be removed from the email l ist. A minimum starting balance of $20,000 is required for this service.

To register your interest, open an account or reque st further information about this service please contact us: 1300-73-66-11

Please refer to toptraderthinking recommendation discalimer:

http://www.toptraderthinking.com/toptrader/marketnews.asp?id=288&action=viewarticle

Trading Objectives Trader Profile

This program focuses on trading CFDs on ASX shares with a short term view (less than 8 weeks in most cases). William Chien uses technical analysis to zoom in on potentially profitable opportunities and then forwards email recommendations to his distribution list. William is very conservative and will generally do no more than 4 trades in any given month. When conditions are not right William will not trade at all.

Traders with a relatively high risk tolerance and who also want a degree of involvement in their trading decisions would be best suited to this approach. No positions will be entered or exited without prior confirmation from each individual client. If you disagree with Williams view on any particular trade you are under no obligation to enter or exit the position.

William Chien: CFD Recommendation Service

*Balance is in AUD based on minimum quantities and is net of all commissions. Results are unaudited.Updated COB 31-08-09

Jason Achjian: [email protected]

To register your interest, open an account or reque st further information about this service please contact us: 1300-73-66-11

Please refer to toptraderthinking recommendation discalimer:

http://www.toptraderthinking.com/toptrader/marketnews.asp?id=288&action=viewarticle

Recommendation Perfomance

*Last updated COB 31-07-09. Balance is net of commissionsPast performance is no guarantee of future results

The brokerage rate charged is US $15.00 per side of each trade (+GST). If you receive and do not take advantage of 3 consecutive trades you will no longe r receive fully detailed email recommendations. Min imum starting balance of $15,000 is required.

Commissions / Conditions

In Brief Trader Profile

Pro-Trader is a recommendation program designed to take advantage of historically high probability seasonal opportunities in a wide range of markets using futures and options spreads. On average, one trade per week is generated and the length of time in each trade is approx. 2-3 weeks. Stop losses are based on closing prices i.e. exits are made the following day if the market closes outside of the stop level.

This program suits those who want to take advantage of opportunities in stock indices, interest rates, currencies and commodities markets. Traders with a relatively high risk tolerance and who also want a degree of involvement in their trading decisions are best suited to this approach. No positions will be entered or exited without prior confirmation from each individual client.

Pro-Trader - Seasonal Spreads in Futures & Options

Please contact the Futures dealing desk for further information on recommendation programsPhone: 1300 73 66 11 Email: [email protected]

UP 76.65% NET OF COMMISSIONS

NOTE: RESULTS ARE UNAUDITED – PLEASE CALL OR EMAIL TO REQUEST SUPPORTING DOCUMENTATION IF YOU ARE CONSIDERING PARTICIPATING IN ANY OF OUR RECOMMENDATION PROGRAMS


COMMODITY BASKET RECOMMENDATIONS (CBR)

MINIMUM ENTRY LEVEL $A15,000 UP 11.44% NET OF COMMISSIONS

WILLIAM CHIENS CFD RECOMMENDATIONS


JULY 2008 TO JULY 2009

JUNE 2008 TO JULY 2009

JUNE 2006 TO AUGUST 2009

MINIMUM ENTRY LEVEL $A200,000

PCD FUTURES ADVISORY


RECOMMENDATION PROGRAMS – UPDATE

PRO-TRADER (SEASONAL SPREAD TRADING)


OCTOBER 2007 TO JULY 2009

�

�

�

�

�

�

About Us – www.toptraderthinking.com

To receive recommendations on an ongoing basis you must be a client of StoneBridge Group Gold Coast Derivatives desk. To open an account email [email protected] or contact the dealing desk on 1300 73 66 11. Please see our Recommendations & Information disclaimer on www.toptraderthinking.com Click on 'Market News' to read thoroughly prior to entering into any of our trades. There is always a risk of loss in derivatives trading. Past performance is no indication of future results. Do not trade with funds you cannot afford to lose. Seek independent financial consultation before entering any trade recommendation program. All information and recommendations are general advice only and we have not taken your personal financial position into consideration

WANT TO RECEIVE OUR RECOMMENDATIONS?

Toptraderthinking.com is THE trusted source of information to assist traders to ‘know more, stress less and trade better’. Acting as a filter to sift the wheat from the chaff so to speak, we bring our members analysis, opinions, products and services provided by credible, professional and industry-committed players.

toptraderthinking.com is non-prescriptive; recognising that each trader must find his/her own ‘fit’ to achieve sustainable trading success. To this end we endeavor to represent all products, opinions, commentary, analysis and methodologies in a fair and objective manner. Our site is categorised by not only product type according to the Traders Wheel but also by experience levels and areas of interest. Our inventories provide insightful tools to assist traders in further defining fit and enjoying success in trading.

We recognise that our members and contributing alliance partners are critical to the ongoing success of toptraderthinking.com and we seek to build an e-community where all participants can grow and prosper.

Look out for it late September 2009!

Psychology versus Emotion

Your Markets Monthly…In edition #10 of Top Trader Thinking

(From Bullseye - Top Trader Thinking)

Email us at:

[email protected]

If you have any suggestions or ideas for future editions

uROk 33 DAY CHALLENGE - BRILLIANT FOR TRADERS

A complete DIY life management and goal achievement tool the uROk 33 Day Challenge is great for traders as well. We all know that to t rade successfully and consistently we need a plan but we also need a balanced life. The uROk 33 Day Challenge will help you reach new h eights in all areas including: Health, Wealth, Self, Love, Work, Create and Y (per sonal purpose and who you really are).

The Challenge is ideal for both new and seasoned tr aders and will help you cement what you've learned and take action to realise the goals you truly desire in the markets and in life in general.

Includes:

1. uROk 33 DAY CHALLENGE Dream Your Life, Live Your Dream PERSONAL PLANNING WORKBOOK

2. GUIDED VISUALISATION CD by SARI

Dream Your Life, Live Your Dream for Contribution & Achievement Compact Disc.

3. uROk.tv MEMBERSHIP

It's easy, it's enjoyable and it actually works. If you're ready to have more, be more, give more, do more, and get more out of life (and tradin g the markets) then order this revolutionary programme today.

PAY ONLINE WITH Mastercard and Visa http://www.toptraderthinking.com/toptrader/shop.asp ?id=82

(Aust Only) Call Matt on 0409 208 658 for AMEX orde rs or email: [email protected]

august 2009 - your markets monthly

Documents