Traders' Library Blog

The Debt Bomb Is Already Exploding

 

 

 

Everybody knows that federal debt has exploded. We are now at $18 trillion! Everybody bemoans the fact that it will be difficult to payback and that our kids have a massive burden.

 

 

I want to highlight a concern that is never mentioned.

 

 

For years, I pooh-poohed the debt gloom and doomers because the amount of debt was small compared to the size of the economy. 

 

 

Like a family, you can have a small amount of debt to help you buy a house or car if the amount of debt is small compared to your income or your assets. That was the situation with the US for decades.

 

 

But I fear that we have passed that point now.

 

 

 

 

Take a look at the second chart. This shows the interest payments that the Federal government pays. You can see that the Federal government is currently paying about $450 billion per year in interest payments. And this is with interest rates at their lowest level in history!

 

 

What happens if interest rates go back to normal levels? The average of short term interest rates over the last 20 years is about 5% and it is effectively zero right now. Long term interest rates are below 3% when the long term average is closer to 6%. So let’s assume that a return to normal would boost interest payments to $1 trillion per year!

 

 

That means that a full one quarter of all Federal government expenditures will be interest payments! That is money that could go to more productive uses!

 

 

But here is the real problem. We are now entering the stage where the interest payments are compounding. In other words, we are paying interest on the interest! 

 

 

This means that interest payments will become a larger and larger portion of the federal budget. It has reached a point that is truly disastrous. The compounding of interest will keep growing. It will start to grow at an exponential rate, with a sharp acceleration when interest rates start to rise.

 

 

The Fed has been buying all the debt of the US Treasury since the last recession thus enabling the massive increase in debt. The Fed has kept interest rates near zero, thus enabling the massive increase in debt. 

 

 

One good thing is that the budget deficit is decreasing though still massive.

 

 

But here is what is going to happen.

 

 

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Courtney Smith managed the number one growth mutual fund in the US. He wrote the number stock picking newsletter. He was voted the number one bond and gold market time in the country.

 

 

Wouldn't you love to learn the techniques he used to create this amazing track record?

 

 

On October 24-25, in Las Vegas, Courtney Smith will be teaching a live two day seminar that will reveal the four critical keys to outstanding stock investment profits. They include:

1. How to create a psychology that will allow you to accept massive profits
2. How to control risk so the risk doesn't control you
3. How to pick stocks poised for massive profits
4. How to time the buys and sells for maximum profits with the least risk

For a modest investment you can learn amazing techniques from a trading master. 

 

But you have to click here now to register!

 

Click here now for more information and to register!

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The debt will continue to grow by about a half trillion dollars a year. This means that interest payments will continue to rise with an accelerating pace. At the same time, interest rates will rise very slowly but every increase will increase the rate of increase of federal interest payments.

 

 

Soon, interest payments will be $1 trillion per year then $2 trillion and so on. 

 

 

It won’t be many years before interest payment will be 1/4, 1/2, and eventually all the federal budget. Of course, it can’t be the whole budget but it will be squeezing all other expenditures.

 

 

Clearly this is not sustainable.

 

 

So how will this all end?

 

 

I look for the Fed to keep interest rates lower longer than anyone else. They know what I’m talking about here and will not want to increase the interest burden on the federal government.

 

 

In addition, I look for the Fed to double down on an effort to boost inflation. The only way to really decrease the interest burden is to make sure that inflation is higher that interest rates. That is called negative interest rates and negative interest rates are great for borrowers because the value of the debt goes down.

 

 

So look for much higher inflation down the road.

 

 

Eventually, we will see lower bond prices and will actually see one of the greatest bear markets in history.

 

 

At first, this will boost the stock market but eventually cut the legs out from under it.

 

 

Good trading,

Stocata S&P 500 Analysis: August 29, 2015.

Last week I wrote: "We first got the further small up move towards the upper side of the BBS channel and the upper side of the downward pitchfork. Followed by the double zigzag down, and faster than expected in just one week, we now have a valid wave 3.2 down. Most probably the index confirmed the long term reversal the past week. If you are not out already, better start thinking of closing open long positions during the next up correction. The index reached the 261.8% Fibonacci down projection over the last wave 2 correction. The next down target for wave 3.3 (or 3.2) is around 1900".

You had to be patient the past week if you wanted to close open long positions. Monday and Tuesday the index first made another large move down reaching a one reference point Fibonacci projection (yellow lines). Next retracing the complete down move the rest of the week. I mentioned the previous week: "start thinking of closing open long positions during the next up correction". The good time to do this was near the closing time on Thursday and Friday. We are close to a 50% retracement of the down move now. There is some more room for the up correction to the upper side of the BBS channel. But we should expect a continuation of the down move. We better keep in mind that we most probably have started a longer term down correction.

Sylvain Vervoort  http://stocata.org/

Why You Should Care What A Company Does

Generally speaking, I don’t care what a company does for a living. I don’t care if they are in healthcare, utilities, or technology.

I really like to find companies that are making massive money and have weak competition. I like companies that are growing rapidly. I like companies that are basically in their own universe because they have a monopoly or near monopoly. 

Which means that I don’t care what the company does but how well they do it.

I teach a course called Stock Success School where I teach how to find what I call Best of the Best Stocks. I teach my special criteria to find these stocks.

But I never actually have my students see what the company does. I want them to not get emotionally involved in the stock because that can cloud their opinion.

But there is one time that I recommend you look at the company’s business.

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Learn To Trade Stocks The Courtney Smith Way! For Only $97!!!!

 

Courtney Smith managed the number one growth mutual fund in the US. He wrote the number stock picking newsletter. He was voted the number one bond and gold market time in the country.

 

Wouldn't you love to learn the techniques he used to create this amazing track record?

 

On October 24-25th, in Las Vegas, Courtney Smith will be teaching a live two day seminar that will reveal the four critical keys to outstanding stock investment profits. They include:

1. How to create a psychology that will allow you to accept massive profits
2. How to control risk so the risk doesn't control you
3. How to pick stocks poised for massive profits
4. How to time the buys and sells for maximum profits with the least risk

For a modest investment you can learn amazing techniques from a trading master. 

 

But you have to click here now to register!

 

Click here now for more information and to register!

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I believe in socially responsible investing. This means that I want to make sure that the company isn’t in a business that I find immoral.

 

I recommend you do the same.

 

Here are some common concerns that you may share:

1. Polluters
2. Selling cigarettes
3. Selling guns

 

You may have some religious objections against some companies. 

 

I believe it is important to vote our conscience with our dollars. We should take our money away from those companies that are evil and invest in companies that are promoting a better world.

 

Yes, it is probably just a few dollars but collectively it can be a large amount of money. But, even if it is a small amount of money, it is important for us to take a stand for our morality. It sends a message to the company and to the market. More importantly, it aligns our financial decisions with our internal conscience. We need to always keep ourselves in integrity with our beliefs.

Thanks!

Good trading,

Courtney

Why Natural Gas Prices Will Stay Low For Years

by Courtney Smith

 

It seems like every trader I know points to natural gas and wants to buy it. After all, it is super cheap compared to just a few years ago!

 

 

 

 

The chart shows a high of almost $18 compared to the current $3. This massive bear market occurred because of the dramatic explosion of new natgas supplies. We got a rally back up to $6.50 in early 2014 but the price was smacked back down to under $3.

 

I’m not interested in trading natgas at all. It’s boring and there is almost no likelihood of a major bull or  bear market. Here’s why.

 

Let me let ace energy analyst Kent Moors (http://oilandenergyinvestor.com) explain:

 

"Natural gas inventory at the end of July came in 23% higher year-on-year (after two months of declines). That figure is estimated to reach 3.867 trillion cubic feet (tcf) by the end of October (and the end of the summer refill season) – 69 billion cubic feet (bcf) above the five-year average and the second highest on record.

 

2015 demand should end up at 76.5 bcf per day (bcf/d), or 27.9 tcf for the entire year. This is up 4.08% from 2014.

 

Gas marketed production is expected to grow by an annual rate of 5.4% in 2015, to 78.72 bcf/d, and to rise 2.3% in 2016, to 80.52 bcf/d. That puts it at an estimated total of 28.7 tcf for 2015."

 

OK, that’s a lot of numbers. Let me refine it for you.

 

We’re going to produce way more natgas that we will consume for years.

 

Down the road, the increased demand for natgas for things like power generation will finally cause a major bull market. But we are years away from that. 

 

In the meantime, stand aside. I’ll keep you posted when the time comes to play the natural gas market.

 

 

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The course is designed by master trader Courtney Smith and taught by ace trader Jade Goodhue. This exciting live seminar is coming up on September 12-13 in Wealthbuilder's classroom in Las Vegas.

 

Click here now for more information and to register!

 

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Thanks!

 

 

Good trading,

 

 

Courtney

Should You Stink Bid It?

I read a lot of newsletters. Probably too many.

One tactic used by some of them is called a lowball or stink bid.

Should you use stink bids?

I’ve put together a short video about what they are, how to use them, and whether or not you should use them.

Click here to view now!

Thanks!

Good trading,

Courtney

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Want To Learn To Crush the Forex Market?

The forex market is the hottest market around. Big leverage means you have the opportunity to make a lot of money quickly. But that same leverage can cost you a bundle if you don't learn to trade forex correctly. Futures and Forex Intensive is the key course to teach you techniques that will help you profit from this explosive market place.

The course is designed by master trader Courtney Smith and taught by ace trader Jade Goodhue. This exciting live seminar is coming up on September 12-13 in Wealthbuilder's classroom in Las Vegas.

Click here now for more information and to register!

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Was Today The Bottom of the Stock Market Crash?

Yesterday, I did a live webinar on the current stock market crash (click here to watch the free replay). I predicted that the market would rally today. But is this the bottom?

No. We have more to go on the downside.

Today’s price action was great at the beginning of the day but faded very badly later in the day.

I bought more puts on SDS which is a double inverse ETF on the S&P 500. I’ll look again closely on the open and may take profits then.

China lowered interest rates and dropped their reserve requirements and that caused a strong rebound in the US stock market on the open.

As a trading principle, the news is not important. What is important is the market’s reaction to the news.

The initial reaction was bullish, but the late reaction was bearish. In other words, the market ended up acting bearishly to bullish news.

That is very bearish.

So I look for the bear market to continue.

I’ll continue to update you daily as we go through this situation.

But I suggest that you subscribe to my new Market Forecast Video Newsletter to keep up with all the ways to profit from this market. You can subscribe and get more info by clicking here!

You owe it to yourself to subscribe right now!

Thanks!

Good trading,

Courtney

P.S. The weekly Market Forecast video newsletter is on special right now if you subscribe for a full year! Click here now!

Stocata S&P 500 Analysis: August 22, 2015.

Last week I wrote: "On Wednesday, the index went down as expected to break the 200 day average and down to the level of the S1 pivot support, close to the expected 2050. That creates a valid wave 3 downwards. However not yet a wave 3.2 down. From that point the index corrected upwards now finding resistance at the level of the PP pivot of the month and the 50 and 100 average. There may be some further up move, up to the upper side of the BBS channel and the upper side of the downward pitchfork. However I rather expect a double zigzag down move creating the wave 3.2 down in a couple of weeks".

We first got the further small up move towards the upper side of the BBS channel and the upper side of the downward pitchfork. Followed by the double zigzag down, and faster than expected in just one week, we now have a valid wave 3.2 down. Most probably the index confirmed the long term reversal the past week. If you are not out already, better start thinking of closing open long positions during the next up correction. The index reached the 261.8% fibonacci down projection over the last wave 2 correction. The next down target for wave 3.3 (or 3.2) is around 1900.

Sylvain Vervoort   http://stocata.org/

Is This The Beginning of the Stock Market Crash?

The Dow dropped over 2% today. Is this the beginning of the big crash that so many are predicting? Is this the beginning of a major bear market? 

 

 

 

I don’t think so.

First, there is no new news that would cause it.

 

Second, the market is overvalued but not by much.

 

Third, there has never been a bear market that wasn’t preceded by the yield curve going negative first.

 

Fourth, Seasonally, we don’t get bear markets starting in August.

 

Fifth, the Nasdaq is still making higher highs and higher lows.

 

Having said all that, I am looking for a small correction this year to start in September/October and cause the market to drop 3-9%. 

 

I gave an exhaustive explanation in a paid for webinar I did a month ago. You can buy the webinar to get a complete analysis of the next year by clicking here!)

 

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Learn To Trade Stocks The Courtney Smith Way! For Only $97!!!!

 

Courtney Smith managed the number one growth mutual fund in the US. He wrote the number stock picking newsletter. He was voted the number one bond and gold market time in the country.

 

Wouldn't you love to learn the techniques he used to create this amazing track record?

 

On October 24-25, in Las Vegas, Courtney Smith will be teaching a live two day seminar that will reveal the four critical keys to outstanding stock investment profits. They include:

1. How to create a psychology that will allow you to accept massive profits
2. How to control risk so the risk doesn't control you
3. How to pick stocks poised for massive profits
4. How to time the buys and sells for maximum profits with the least risk

For a modest investment you can learn amazing techniques from a trading master. 

 

But you have to click here now to register!

 

Click here now for more information and to register!

 

**********************************************

 

So what should we do now to profit from this drop?

 

I’m no fool. I always think I could be wrong so I’m going to buy some protection tomorrow morning for my account. I’m going to buy the DOG $25 calls for hopefully under 50 cents. I’ll hedge half my portfolio.

 

But I’m also going to be buying a bunch of stocks.

 

I’m not going to buy the dip like most people do. I’ll wait until the market has bottomed and then buy when the stocks start to rally.

 

Thanks!

 

 

Good trading,

 

Courtney

 

 

P.S. One technique I’ll be using a lot over the next week is our famous Boing Boing. I’ll be teaching it at the Stock Success School mentioned in the ad above. You should look into attending!

The Fed Is On Hold and How You Can Profit From It

The Fed released their minutes from their last meeting and the consensus of commentators is that there is still a chance they will raise rates in September but that now December is a more likely time for them to raise it.

I have been saying for over a year that they would not raise rates this year. Here’s why:

1. Inflation is low and going lower. The Fed has a target of 2.0% and the core rate that they watch is only 1.2% and declining.
2. The big argument for raising interest rates is that the unemployment rate is in the 5’s and declining slowly. Jobs are being created at about a 200,000 job monthly rate. But Fed head Yellen knows that there are fewer people working than at any time in the last 30 years. So she views that as a massive overlay of under utilized labor and will want to get those people back in the economy.
3. She sees that the economy is only bumping along but that the growth is concentrated in the business sector not the employee part of the economy. She is a left leaning labor economist by training and inclination so will want to get more money in the hands of the public not businesses.
4. Finally, we have an election coming up next year and Fed will often do the Administration’s bidding and keep interest rates low.

Even if the Fed raises interest rates, it will only be by a smidgeon.

Now, how can we make money from it?

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The forex market is the hottest market around. Big leverage means you have the opportunity to make a lot of money quickly. But that same leverage can cost you a bundle if you don’t learn to trade forex correctly. Futures and Forex Intensive is the key course to teach you techniques that will help you profit from this explosive market place.

The course is designed by master trader Courtney Smith and taught by ace trader Jade Goodhue. This exciting live seminar is coming up on September 12-13 in Wealthbuilder’s classroom in Las Vegas.

Click here now for more information and to register!

*************************************************

Here are some of the effects of keeping interest rates lower than expected:

1. The stock market will rocket in December if the Fed doesn’t raise rates before then.
2. The US dollar will stay in a sideways pattern. The underlying fundamentals are generally bullish on the USD but keeping rates low will knock out one of the major bullish features of the dollar.
3. Gold will be strengthened on the back of the weaker dollar.
4. Emerging markets will do better because money will not be sucked out of their economy and into the US.

Thanks!

Good trading,

Courtney

Stocata S&P 500 Analysis: August 15, 2015.

Last week I wrote: "My assumption last week: "Because the last top is an extended wave 2 correction for top wave 3.23, we can consider the down move that followed a new wave 1. In that case, the up correction of the past week is possibly a new wave 2 correction and we should expect a wave down creating a new wave 3.2". We got a nice move down most probably on the way creating a wave 3.2 down. Or at least a further correction down for the extended wave E2. There is some support from previous price levels and the 200 day average. Next support is at the low side of the volatility channel and the S1 pivot support of the month around 2050".

On Wednesday, the index went down as expected to break the 200 day average and down to the level of the S1 pivot support, close to the expected 2050. That creates a valid wave 3 downwards. However not yet a wave 3.2 down. From that point the index corrected upwards now finding resistance at the level of the PP pivot of the month and the 50 and 100 average. There may be some further up move, up to the upper side of the BBS channel and the upper side of the downward pitchfork. However I rather expect a double zigzag down move creating the wave 3.2 down in a couple of weeks.

Sylvain Vervoort  http://stocata.org/

Stocata S&P 500 Analysis: August 8, 2015.

Last week I wrote: "The correction down was completed on Monday, exactly at the level of the 200 day simple moving average. Because the last top is an extended wave 2 correction for top wave 3.23, we can consider the down move that followed a new wave 1. In that case, the up correction of the past week is possibly a new wave 2 correction and we should expect a wave down creating a new wave 3.2. We are in the holiday; season reason why I do not expect great changes the coming week(s). I assume there will be a down correction the coming week, to complete a double zigzag correction in a couple of weeks".

My assumption last week: "Because the last top is an extended wave 2 correction for top wave 3.23, we can consider the down move that followed a new wave 1. In that case, the up correction of the past week is possibly a new wave 2 correction and we should expect a wave down creating a new wave 3.2". We got a nice move down most probably on the way creating a wave 3.2 down. Or at least a further correction down for the extended wave E2. There is some support from previous price levels and the 200 day average. Next support is at the low side of the volatility channel and the S1 pivot support of the month around 2050.

You may like this: "Video -  "One of the Most Useful Reports About Markets You Will Ever Read".

 

Sylvain Vervoort   http://stocata.org/

A Proven Path To Profits

I once heard it said that people spend far more time trying to figure out which $700 refrigerator to buy than researching their next stock buy worth far more.

I hate to say but I think they are right.

I'll write more about this in other articles but, in this one, I want talk about one of my favorite techniques for making more money every year without learning any new techniques!

I'm talking about back testing.

Back testing is taking a technique and go back in history to see if the technique would have made or lost money.

I'm putting together a free video for you on how to do back testing. I'll probably send it out this week. So let me talk about back testing and its importance here.

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Want To Learn To Crush the Forex Market?

The forex market is the hottest market around. Big leverage means you have the opportunity to make a lot of money quickly. But that same leverage can cost you a bundle if you don't learn to trade forex correctly. Futures and Forex Intensive is the key course to teach you techniques that will help you profit from this explosive market place.

 

The course is designed by master trader Courtney Smith and taught by ace trader Jade Goodhue. This exciting live seminar is coming up on September 12-13 in Wealthbuilder's classroom in Las Vegas.

Click here now for more information and to register!

*************************************************************************************

Most people learn something about the market then simply start trading. They believe what they have heard and assume that it must be true.

They start trading, the results disappoint, and they stop trading as a loser.

There are really two problems here:

1. Often, the seller of the technique doesn't give clear rules. As a result, the novice trader does their best to replicate the master's superb trading but can never match the cherry picked results. More importantly, there is no objective criteria for finding out if the technique works. You can't test it!
2. The novice gets a technique but then never back tests it first before trading it. They blindly start trading the technique without knowing if it is profitable! You can imagine where that goes.

I recommend never trading a technique where you do not get the actual rules of the technique or get a rigorous testing of it. That will eliminate problem #1.

The second problem is solved by always back testing the technique before trading it.

How can you do this? Where do you get the back data? What is the procedure?

I'll send you out a video that goes into more detail about this later.

But here is a quick way to back test something.

1. Write down the rules. This will make sure you understand them and that they are clear.
2. Use a chart service and go back one year and then walk forward writing down every trade you would have done if you knew the technique a year ago. We use prorealtime.com and stockcharts.com to test with but you can really use any chart service. Later, you can use computerized testing programs to test even longer periods of time. Write down each trade so you can see the price/date you entered and exited so you can calculate your profitability.
3. Test the technique over multiple instruments to make sure the test is valid. In stocks, use about 20 stocks that are the type of stocks you will trade in the real world. In futures, use a diversified portfolio of futures. In fx, try to diversify but you will find it hard to.

How long will this take? Some techniques can be tested in just an hour if the technique doesn't trade too often. Other techniques, which have a lot of trades, can take much longer.

You can also use computer programs that will do the testing for you. I'll tell you more in a future letter to you.

Back testing is a great way to see if your techniques worked in the past. Of course that doesn't mean that it will work in the future but the odds are that it will. The longer back you back test, the more confidence you should have that it works in the future.

Correctly done, back testing will likely direct you to techniques that make money and away from those that don't. This should put you in the category of being a winner right away.

Back testing is a way to being science to your trading and to put a massive edge in your favor.

P.S. Would you like to have my stock market forecast sent you to your free every week? Just click here to sign up! Did I mention it is free?

The High Cost of Zero Interest Rates

The US Federal Reserve Bank has kept short term interest rates at zero for nine years.

The idea behind it was that super low interest rates would boost housing construction, capital investment, and boost bank profits.

Instead, it has done none of the above and instead has led to massive dislocations around the world.

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Want To Learn To Crush the Forex Market?

 

The forex market is the hottest market around. Big leverage means you have the opportunity to make a lot of money quickly. But that same leverage can cost you a bundle if you don't learn to trade forex correctly. Futures and Forex Intensive is the key course to teach you techniques that will help you profit from this explosive market place.

 

The course is designed by master trader Courtney Smith and taught by ace trader Jade Goodhue. This exciting live seminar is coming up on September 12-13 in Wealthbuilder's classroom in Las Vegas.

 

Click here now for more information and to register!

*************************************************************************************

Here's how ace analyst Doug Kass puts it:

"But in maintaining monetary indulgence for such a long time, our central bank has now distorted – and screwed up – our economy and markets, perhaps for some time to come. I believe the Fed has:

• Borrowing from the future. The “Zero Interest Rate Policy” (ZIRP) has borrowed past and present sales from the future, underscoring the challenge of future economic growth.
• Created unknown policy consequences. No one knows the consequence of an extended period of ZIRP “punch bowls,” which could result in aberrant behavior and hangovers.
• Made no sense. If there were no consequences to ZIRP, interest rates could have been held at zero forever in the past, as well as in the future.

Importantly, ZIRP is actually losing its effectiveness (at least in America). As I’ve written previously, low rates are hurting groups like the growing savings class – and they’ve been hoarding cash and reducing personal expenditures as a result, weakening growth.

The seeds of malinvestment have also begun to sprout from ZIRP. Low rates increase the supply of “stuff” (e.g., the mushrooming growth of shale oil), sustaining those companies and countries that shouldn’t be sustained and elevating asset prices against limited progress in the real economy."

I would add that it has created huge financial bubbles that will cause massive pain in the future.

We had a financial crisis in 2008 caused by too much risk and debt. The Fed's solution to that problem is to promote more risk and debt.

Totally insane!

Are You In Control Of Your Trading?

One of the key points I make in my seminars is that we never control the outcome of any trade. Yet people are obsessed with whether or not they make money every second of every day. Yet they don’t control the outcome at all!

 

Trading is all about controlling what you can control totally: your behavior. You have 100% control over it. So you should be obsessing about making sure that you are executing your plan flawlessly.

 

Seth Godin recently discussed this:

“It’s modern and very widespread. It motivates us, frightens us and drives our consumer mania: The idea that we are in control. That our work is so leveraged and important that through force of will, we can ensure that things will turn out as we choose. 

We extend this to our sports and hobbies and adventures, as well. The compelling belief that we’re almost in control, that we’re right at the edge, that this ski run or this play or this experience will be the one we earned through our extensive planning and investment and skill.

Financial advisors and travel businesses and everyone in between peddles us the story that if we just team up with them, we’ll get exactly what we expect, that it will all be as we dreamed it to be.

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Want To Learn To Crush the Forex Market?

 

The forex market is the hottest market around. Big leverage means you have the opportunity to make a lot of money quickly. But that same leverage can cost you a bundle if you don’t learn to trade forex correctly. Futures and Forex Intensive is the key course to teach you techniques that will help you profit from this explosive market place. 

 

The course is designed by master trader Courtney Smith and taught by ace trader Jade Goodhue. This exciting live seminar is coming up on September 12-13 in Wealthbuilder’s classroom in Las Vegas.

 

Click here now for more information and to register!

*************************************************************************************

You can see where the disappointment lies. We’re never in control, not of anything but the monologue in our head and the actions we choose to take. Everything else, if we’re lucky, is a matter of influence. If we do our work and invest our energy, perhaps we can influence events, perhaps we can contribute to things turning out in a way we’re pleased with.”

 

So we need to give up and simply ride the wave of the market not try to control it.

 

He goes on to say:

“When the illusion of control collides with the reality of influence, it highlights the fable the entire illusion is based on.”

 

You’re responsible for what you do, but you don’t have authority and control over the outcome. We can hide from that, or we can embrace it.”

 

This is the point where many, and perhaps most, traders get disappointed and stop trading. They have the gut idea that they are in control but they are not.

How To Make More Money Doing Less

My student sat in front of me depressed.

 

"Courtney, I've tried a bunch of your techniques and they don't work."

 

Naturally, I was dumbfounded. I use these techniques every day and they make money for me!

 

"Let me look at your trades that you have been doing and let me see if there is a problem."

 

He handed over the spreadsheet and I looked over it. It didn't take long. There weren't many trades on the sheet.

 

I saw that he did only two of my Inside Day trades. There were three Reversal Bar trades. Only one of another technique. In other words there were very few trades but on lots of techniques.

 

Then something jumped out at me. The last trade for every technique was a loser! What he had done is to trade the technique until there was a loser then stop trading that technique.

 

What he was doing is chasing the shiny new penny without really trading any technique adequately. 

 

I then asked him to tell me which technique did he resonate with the most. He said Boing Boing. So I forbade him to trade any technique but Boing Boing for the next week.

 

We got back together again in a week. It was hard for him but he was disciplined enough to go one full week only trading one technique. But he had made money!

 

But I could see that trading only one technique was causing a lot of stress. He wanted to be a trading butterfly and go from technique to technique. But I told him he was still not allowed to trade another technique.

 

He wasn't happy but agreed. 

 

We met in a couple of weeks and he was making money consistently! Sure, he had losing trades but he was starting to make consistent money.

 

I suggested that he add another technique now but he refused! He was so happy that he was making money that he didn't want to change anything in his trading! 

 

He went for months trading just Boing Boing. He was making money. 

 

Finally he agreed to add another technique. 

 

He became profitable when he did less trading!

 

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Many traders make the mistake of trying to trade every technique right from the very beginning. They take one of my courses and want to try every technique that they learned at the course.

 

But here is what often happens.

 

First, they are overwhelmed and don't do any trading at all! They think they have to do everything all at once. They don't have to! They can take their time to implement the techniques. 

 

I have designed the courses so that the techniques are synergistic with each other but that doesn't mean that you have to do all of them at the same time. 

 

Instead, I am a big fan of people simply starting with one technique and completely dominating it. Understand it fully. Backtest it. Trade it real time for weeks. Get comfortable with it. 

 

People ask me when should they add another technique.

 

When you get bored!

 

If you are bored with trading the first technique then you are probably totally dominating that technique and should now add another technique.

 

The bottom line is that you should start small. Do less until you are ready to do more.

 

There is no rush in doing all techniques. Of course you will eventually make more money by doing all the techniques but sometimes trying to do too much will actually cause you do make less money.

 

Sometimes less is more and that is often true in trading. Just concentrate on doing one thing really really well.

 

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Stocata S&P 500 Analysis: August 1, 2015.

Last week I wrote: "Last week I mentioned: "Is this up move an exaggerated reaction as a result of the Greek agreement and will this remain a wave 2 correction, or should we await a new higher top? The index is still within the limits, but at the top of the ongoing distribution. There my be a small new top coming up, but you should be careful taking any new long position. Make sure a possible up move is large enough. Personally I do rather expect a move down the coming week". And yes, as expected, we had 4 days in a row a move down, retracing the move up of the week before, falling back to a support and resistance level of previous price levels, the median line of a downward pitchfork and the PP pivot level of the month. There may be some correction but we should expect a further move down creating a down wave 3.2.".

The correction down was completed on Monday, exactly at the level of the 200 day simple moving average. Because the last top is an extended wave 2 correction for top wave 3.23, we can consider the down move that followed a new wave 1. In that case, the up correction of the past week is possibly a new wave 2 correction and we should expect a wave down creating a new wave 3.2. We are in the holiday; season reason why I do not expect great changes the coming week(s). I assume there will be a down correction the coming week, to complete a double zigzag correction in a couple of weeks.

Sylvain Vervoort   http://stocata.org/