Think Like A Trader Blog

Friday, 29 January 2016

6020 Finally Breaks

I have been waiting on 6020 to break all day. Finally!
Break even day today but great week and a lovely January. Have a great weekend everyone.

Thursday, 28 January 2016

The Market Does What The Market Does

Reading Time - 4 Minutes

If you trade the 5 minute timeframe you expect relatively quick trades, right? Well, for the most part, the trades are quick – they either stop you out or hit your target within 30 – 45 minutes. But not always!

The market does what the market does. There’s no way around that. Your analysis can be perfect, your entry at the best possible level, and the market can still zoom through and hit your stop. It can also pause and think about things, consider life and the Universe before making its move (well, it certainly feels like that’s what it’s doing as it hovers, not going anywhere at all.)

Initially I was looking to get long this morning, but sadly there were no clear setups for me so I missed the initial rally after the open. Such is trading. My next position was a blind sell from 6014. That triggered in relatively quickly after the open. I had a zone below, which was in the way of the trade, but I was confident the market would fall through it.

Two hours later? The market was pondering the meaning of life, not doing anything at all! Actually, it was trapped in between my entry point and the minor zone below that I mentioned. It rose to the 6014 levels, then it fell to the zone below. Again. A third time.

What did I do? Well initially I locked in profit at the minor zone, which is prudent since the zone may not have turned out to be minor (my analysis can be wrong, and if the market disagrees with me there’s no point trying to argue my point, as I’ll lose and my account will suffer.) But then I just waited. I didn’t panic. I didn’t change my mind. My initial analysis was done, the trade was set.

I managed the trade though. I didn’t want strong candle breaks of the 6014 level. If that had happened, I would have tightened my stop and expected a losing trade. But that was the only way I would have altered what I was doing. So I watched each time as the market pushed against me. There was a strong bullish bar off of the minor zone that was an engulfing candle. But I waited.

And what happened, after two hours and fifteen minutes? The zone broke, finally! Trade completed.

The market wont always move the way you want. I like quick trades, but the market will do what the market does. Just stick to your plan and don’t panic.

Do what I do. Get a coffee and every now and again throw your head back and sigh.

Ok I don’t sigh, but coffee is a must!

I hope you’ve all had a great trading week!

Monday, 25 January 2016

What Does Col. Chris Hadfield, The Astronaut, Have to Do With Trading?

Reading Time - 4 Minutes

Last week I went to see Col. Chris Hadfield give a talk at the Usher hall in Edinburgh. My girlfriend got us tickets for my birthday (including a meet and greet at the end) and I must admit, I didn’t know what to expect. To me, he was simply ‘that astronaut who played a Bowie song whilst he was in space.’

However, around 30 seconds into his talk, I must admit that I was completely hooked, and remained so for the next ninety minutes or so that he was on stage.

His talk was fantastic in that it was an insight into the role of an astronaut, but also because he skilfully worked his way around the subject of life itself, and gave some insightful pieces of advice.

Let me first also point out that if you want to feel like an underachiever, his life is certainly one to compare yourself to – He speaks fluent Russian, plays the guitar (his Bowie song from space now has over 13 million YouTube views), is a trained surgeon, a fighter pilot and also was commander of the International Space Station (he’s Canadian and they don’t even have a space programme!)
So anyway, a few titbits I picked up from the evening that I thought could relate to trading:

When asked what he recommended as the best path to success, his reply was fairly simple and to the point. He suggested making small, incremental improvements every day. Over the long run, that’s what makes the difference.

Talking about how astronauts think during a shuttle launch/whilst in space, he said that every action was pre-empted with a simple thought – ‘what can kill me next?’ He said this is how astronauts think, and rather than it being a gloomy mindset, it is undertaken in humour. Although for astronauts it can be taken literally – everything they do could potentially lead to death – I think it’s also a great way to approach trading. You should be thinking – what can kill me next? In terms of your trading account and ability to trade. For me, this means filtering out bad trades and maintaining your discipline.

Discussing his achievements and how he suggested other people can achieve their goals he pointed to the fact that he came from Canada, which does not have a space programme. Despite this, he knew that he wanted to become an astronaut. This for most people would seem ridiculous and unachievable – and yet that is exactly what he did, becoming Commander of the International Space Station. His suggestion is that it doesn’t matter how unlikely it might seem to you now, but as long as you work hard toward your goals, you truly can achieve anything you like.

I ordered his book ‘An Astronaut’s Guide To Life On Earth’ after the event. It’s the next book I intend to read and despite having not read it yet, I am recommending it as a great addition to your reading list.

I hope you all have a great trading week!

Market Dynamic Morning Trade

I've not had one of these trades in quite a while. Expected a return to the 5900 level this morning. The trade worked a treat!

Thursday, 21 January 2016

Today's Trade - 21st January

Finsihed for the day 30 seconds after the FTSE 100 opened today. These are my favourite sort of days :-)

Tuesday, 19 January 2016

Monday, 18 January 2016

Find Your 'Why' For Trading

Reading Time - 5 Minutes

We work to earn the money we need in order to live. In most instances, earning a higher wage equates to a more comfortable living standard. This is true, and it is an unavoidable part of life. However, you need to do it for something more than money.

I came to trading like everyone else did, with the mindset that all beginners have (no doubt just like some of you reading this). It was an opportunity to make millions and billions and live the life of yachts, sports cars and exotic holidays.

Let's get one thing straight before I go any further - that sort of lifestyle IS possible from trading. Your returns are uncapped and can be extraordinary!

However, it soon becomes very clear that this isn't going to be achieved in a matter of months or a couple of short years of trading. This can lead to frustration, anger, and lots of risk taking by people who have built up an unreasonable expectation of what they are going to achieve. And do you know what? That sort of mindset sucks the fun out of trading and turns it into a very high stress industry, one that will ultimately chew you up and spit you back out as a broken person.

You need to want to trade for more than just the potential returns. The reason can be just about anything - You may like being able to pick and choose when you work; you may enjoy sitting at your desk, working in your PJs; maybe you love watching films and reading books as you trade. Whatever it is, there needs to be something to sustain you when you realise that it takes hard work and, more than that, TIME to become successful and consistent.

For me there were a couple of reasons that kept me with trading once I realised it wasn't a 'quick fix toward riches'.

The first reason was that I love the process of trading itself. I enjoy analysing the charts and determining the likeliest places where the Bulls will lose power to the Bears, or vice versa. I also love the fact that I learn more about trading every day. Each trade teaches me something about how the market works, how candlesticks print out human emotion in real time on your screen and also how fear and uncertainty can have a huge influence on price.

The second reason is a more recent addition for me - I love helping other people learn how to trade and give them the best possible chance I can of moving into trading as a full time career. It started with a simple frustration at there not being enough good, clear information out there for beginners, but it has evolved into so much more. There's nothing more rewarding than receiving a message telling me that I have helped someone turn their trading around - it's more rewarding than winning trades (although I like those also!)

I would highly recommend that you find your reasons for trading out with the potential monetary gain. The people who come in hard and fast when contacting me, specific on the money they want to make and asking how quickly it can be done are, in my experience, the ones who find trading infuriating, who are stressed, and who ultimately fail.

Find your why and things will get easier for you. You may already know your why... If you're reading this in your PJs, a cup of tea in front of you and the charts open on the screen, then that's most likely it!

I hope you all have a great trading week!

Thursday, 14 January 2016

Why Do I Only Trade One Market?

Reading Time - 3 Minutes

Why don’t I trade multiple instruments? Why don’t I drop down to the 1 min timeframe and scalp a few pips? Why don’t a jump onto the 1 hour timeframe and let a few trades run whilst I’m in bed asleep?

I used to do them all, believe me. When I was a beginner I tried to be a ‘jack of all trades’. And as you know, the rest of that statement is – ‘master of none’.
Now I only trade the FTSE 100, on the 5 minute timeframe. Boring, right? I’m missing out on so many trades! But I don’t see it that way at all.

Let me clear something up before I go any further – the 5 minute timeframe is slightly different from say the 1 hour or the 4 hour, because on the 5 minute timeframe, I can almost guarantee that on 90% of trading days, you will have a trade setup in whatever market you’re trading. This is not the case on higher timeframes. So if I was trading the 4 hour timeframe, and only the FTSE 100, I may be waiting weeks or months between trades!

However, with the 5 minute timeframe, I don’t need to jump between multiple markets. And what’s more than that – and I don’t care what anyone says to the contrary here – markets have their own personality, and it stands out MUCH more on the lower timeframes. This means that you truly can learn how a market moves, and what is likely to happen in certain situations.

So I don’t try and dive between markets and timeframes. I’m not interested in other markets, because I have spent so long learning the FTSE 100. For me it’s the same as looking at an athlete. Let’s say a football player, who plays in defence. I wouldn’t say to him, yeah, you do great in defence, but why don’t you switch to attack every now and again, you’ll score more goals!

The defender doesn’t care about his attacking prowess. He is focused on his singular role, and how to perfect it as best he can. The same goes for any industry I can think of. I don’t want a neurosurgeon to wake up one day and say, ‘you know what, today I’m going to have a look at patients with mental disorders and see how I get on.’

‘Jack of all trades, master of none.’


‘Master of your trade.’

That, in simple terms, is why I focus on the FTSE 100, 5 minute timeframe.

I hope you’ve all had a great trading week!

Monday, 11 January 2016

The Chinese Panic and a Simple Trade to Benefit From It and Other Panic Situations

Reading Time - 5 Minutes

We had some panic selling in the markets last week. Chinese markets closed two days in a row 'limit down', meaning trading was automatically halted after the market fell over 7%. On the second day this happened after less than 30 minutes of trading!

The Chinese market is very unusual in comparison to western markets. For one thing, a huge portion
of the market is made up of individual investors, and they hold sway over the direction the market moves. This is much less of an issue in western markets, where banks and large funds rule the roost. Retail traders in western markets make up a very small portion of overall investment. Why is this important? Because individual investors - think mum and dad with their life savings on the line - are much more prone to panic, and emotional decision making. This can lead to huge swings, for no apparent reason at all. This is what we see in the Chinese markets all the time. A 'regular' day can see the market down 4% before closing up 5%.

Another unusual aspect of the current Chinese market is that the Chinese government have banned large investors from selling into the market. This means the market is artificial and not free flowing. This goes against the whole concept of the stock market, which is to allow the market to determine price. It also creates a type of bubble just waiting to pop - what happens when the government removes the restrictions and suddenly huge investors, loaded up on bad investments and not wanting to lose further capital, suddenly flood the market with selling pressure?

A third thing to consider in the Chinese market is that there are whisperings that the Chinese government is propping the market up. After the market locked limit down two days in a row, the government lifted the safety net (meaning the market could theoretically fall as far as it wanted the next day). And what happened the next day? The market fell 2%, recovered and ended the day up. With such panic in the Chinese markets (and weak economic data being released) this seemed unusual and had a lot of media outlets questioning what was really going on.

Now let's clear something up - the western world has propped their markets up for some time now with Quantitative Easing. But the key difference is the clarity in their actions. This allows them to 'prep' the market as and when they reduce their capital injections and the market can prepare accordingly, pricing in the changes as they happen. If the Chinese government are trying to instil their cloak and dagger governance methods onto the market, it could prove disastrous. Because one day, suddenly, volume will drop drastically as the government stops propping the market. This could lead to renewed panic.

On a positive note, such panic can set you up with a very nice trading opportunity, and one I'm going
to give to you right here (a reward for reaching the end of the blog post!). When there is large uncertainty in the market like this, on the Friday there is very regularly an easy trade. The last 5 - 10 minutes of trading will likely see a large sell off as money is removed, investors not willing to risk a huge gap down over the weekend. I took advantage of this during the Scottish Independence Referendum, and also on Friday past, after the Chinese panic. Very simple - I just look for selling to enter the market as the market is closing - Ftse 100 closes at 4:30pm, Dow Jones 9pm (GMT). Have a look on your charts. It is rare, but it is also a very low risk trading opportunity.

I hope you all have a great trading week!

Friday, 8 January 2016

Today's Trade - Fri 8th Jan

Lovely long position today, entered before the open. Good way to finish up for the weekend - screenshot below (click to enlarge). There will be review videos again from next week. I hope you've all had a great trading week!

Wednesday, 6 January 2016

Wednesdays Trade

Done by 8:13am today. Lovely sell from the open, signal at 7:45am at a key level. Happy Trading everyone! (click to enlarge)

Tuesday, 5 January 2016

Lovely Long Position 5th January

There wont be a review video this week guys. I'm practicing the morning videos for when the Live Room launches, so that will be my focus this week. Very nice double long position from key level today though and all finished by 1p. Below is the screencapture of the trade (Click to enlarge)  :-)

Monday, 4 January 2016

And So Begins 2016 Trading

Hello everyone, and welcome to the 2016 trading year!

I hope you all had a great holiday period and like me, ate too much, drank too much and got some well deserved rest.

The Chinese markets locked limit down overnight, meaning that trading was halted. These sort of days are very rare, but they do make for some easy FTSE trading. Investors panic, not knowing what the Chinese market is going to do when it reopens, and so longs get covered and or exited, creating an initial slump - as we seen this morning.

So, trading is done for the day, and I've sent out all of the emails regarding the Live Room to those who have registered at the training website. Please do take the time to read through the PDF file attached, it contains lots of invaluable information not only on the live room as I will launch it, but also on live rooms in general and what you should consider before committing to one.

Just a short post today to welcome you all back to trading(I'm still in holiday mode, after all). I hope you've all got your goals set and are determined to show the discipline required to reach them.

I hope you all have a great trading week!

James Orr