Tag Archives: signals

Article: “With the presence of Algorithms the markets have changed. How do you cope?” – May 5, 2014

Hey, FibStalker here.

As you may know I am not a big fan of traditional technical analysis. Why? You cannot win in the markets and make returns that can turn relatively small trading accounts into important amounts in a reasonable time (2-3 years).

No Paradise
Let’s face it, this is what all of us want. Isn’t it?

But you cannot do it with average cross-overs, indicators, pivots, trend lines or even the “modern” technical tools and indicators, all of which largely lag price, do not provide a trading plan, need to reconciled, etc. etc. But still the majority of traders rely on traditional TA alone, rather than studying and understanding price market structure, which is still considered very sophisticated, if considered at all. Today you have more tools, but still 95% of traders are loss-making.

Wonder why? In short, the simple ways of the past and modern TA tools and indicators are not capable of consistently identifying low-risk setups. Plus the available reward/risk ratios are relatively low. There is no “promised paradise” in such conditions.

Markets have changed
Now if you add on top of this that the presence of automated Algorithms (Algos) has changed the markets in the last 20-30 years, traditional TA looks less useful than ever.

The markets have changed, what does it means for you and your trading? This means that high-volume financial instruments (futures, forex, stocks, bonds) now expose price behavior and a structure that can be leveraged to improve trading decisions;

So it is all bad news? No, not at all. It is good news instead. Yes because you can use that price structure to help you not only identifying reversal areas well in advance and with precision. You can do much more…

What can you Do by Knowing Price Structure?
You can identify level where participation from Algos is expected and then test those areas. These are areas of low-risk setups that can be timed in the smaller timeframe in a totally procedural fashion. I call this technique the FibStalking Timing and I have authored it.

Sounds complex or impossible? Not at all. When you master price structure analysis based on the effects of algorithms (Algos), your trading gets pushed to the top…to the level of the Elite 5% of professional traders, who make money consistently.

You Can Become a Consistent Trader
Becoming expert in recognizing effects of Algos on price and taking advantage of it is not difficult. Anyone can do it. There’s just a specific process a set of tasks or “formula”, if you like it, that you have to follow.

A formula that most people are clueless about, as they are of the overwhelming presence and power of Algos and Program Trading (a peculiar family of algorithms) that can be leveraged for consistent gains and to create and maintain a prolonged trading success…

The playing field is completely level on this matter. People I work with come to me telling they have never witnessed my method. Trading based on effects of Algos on price is little known, if know at all by retail traders.

A lot of unique, effective and proprietary research has gone into this field to which I have dedicated over 10,000 hours since 2006, almost half of my total market exposure of 18,000 hours. I am an IFTA associate with 3 published papers and a 4th one to be published in July.

But isn’t trading difficult?
Trading is difficult only if you try to trade according to non-grounded market behaviors. TA has nothing to do with market behavior and price structure. An indicator or signal derived by one or more indicators are only representation of statistical tables of failure and success with a random probability.

Add mistakes, discording signals not reconciled consistently, mistakes, costs of trading, lack of discipline, lack of risk and money management and you should not be surprised that 95% of traders lose money in the markets (yes, confirmed, that is the number — I demonstrated it in my free webinar: “How to get and stay into the Elite 5%” , see below)

I suggest the full series of webinars on FXStreet.com.

See when you stop trading the non-sense you can be successful without having years of experience in the markets. And actually the lesser the experience, the easier is to grasp the counter-intuitive concepts in the FibStalker Methods Coaching Program.

Can You Really Make it?
My honest and helpful suggestion for you, if you want to start or re-start in trading, is to have a look at the benefits of the 7 months Program, and what it means for your trading. You can learn how to identify levels of potential participation from Algos and then how to time the reversal setups procedurally, with no initial money at risk and only after confirmation.

It does not get better than this. It is the market action itself “sucking you into” a valid position, aligned with the Psychology of the Markets. Plus you will learn to use proprietary tools and advanced techniques like the FibStalking Timing.

If you want to learn a complete approach to professional trading, including Advanced timing, analyzing and finally understanding price structure and what you can expect and anticipate on all timeframes, performing price discovery to know what is likely to happen consider joining my May 2015 session starting on Saturday May 30, 2015.

Learn to identify and validate solid, low-risk trading plans, write your own trading system based on the proven components that I will provide you with. In the program I will also help you finally installing a mental model to become a consistent trader.

You just have to know what the formula is and then follow it. I am making this formula available to a growing number of satisfied traders and at a price and with value that you will never seen again.

In fact, not only I am offering a discount but a new intraday trading system and value for $2,000 on top of the Coaching Program. Check my offer here. It all ends on May 29, 2015:

–> May 2015 Offer for the FibStalker Methods Coaching Program – DONT’ MISS IT! <–

As usual, let me know what you think by leaving an email at: fibstalker at gmail.com or a post on my blog.

Below the link to my newsletter if you want to learn more about my methods and my edge in the markets.

Have a great day.

The FibStalker Giuseppe, ~the FibStalker

 

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Article: “Never forget the Market can do Anything” – November 19, 2014

20131205_market can do anything

Dear all,
I often find myself and other traders and students I work with to never forget that the Market can do Anything.
Indeed, most of the things and concepts of trading that I have learned or unlearned in the years had to do with the two following concepts:
1) designing my strategy so that I could  cope with anything the market could throw at me — yes, because the “Market can do Anything” (and I would not end up ‘holding the bag’ because price would move and remain below my entry point)

2) incorporate proper and enhanced risk management so that the possibility of 1) happening is low or non-existent — a level of risk management that the majority would not be ready to accept, like exiting half of the position once the gain on the position reaches a level where it equals the trading risk.

Thus I believe the majority of retail traders do not understand or realize that you *MUST* cope with the master principle that “Market can do Anything”, while I often hear words like “expect”, “assume” and even “know” that the price can do this or that.
Words are powerful, and you should be very careful because you need to *think* something before you say it. And if you think you can expect, assume and even know what price is going to do next, well…. you will be lost — statistically and practically becoming part of the 95% group of retail traders who do not make money in the markets, but rather lose consistently.

The market is “Always Right”, if you address it with a “fixed number of pip risk”, or any other type of assumption of expectations, you will fail. Full stop.
Let the market pick the pip risk, the trading plan and all the rest: you must understand how the market is moving (normally, extended, are algos holding their anchors, etc.)
On the risk side of things, the majority of traders also do not understand that this is a game that you win in defense. You must consistently take small risks and increase the reliability and expectancy of your method. Risk management is a constant and there are ways to improve it. The problem is that you cannot just avoid optimizing risk because you only have access to a method that — being based on traditional technical analysis — can only offer R/R<=3 trades with low probability of hitting the targets.
When you start with such a disadvantage and do not get involved at the beginning of a move (the best way to manage risk too) you will think that the only way to make good return in trading is to increase risk and, maybe, even use leverage (I am *AGAINST* the use of leverage in trading, and it is not needed)…

A smart follower wrote the following to me today in relation to a level I mentioned a few days ago in the EUR/USD before it materialized: “Have a question… you had predicted EUR/USD to 1.21ish and before that to 1.26. We technically touched 1.26 today, but not over 1.26. Do you think now down to 1.21 before any uptrend ?

This question offers me the opportunity — before I offer the answer — for some speculation on the way I think about trading. For me price analysis is a balances of forces. Typically when a level or area of participation by Algos is reached I wait for a confirmation. Basically the Algorithms on the smaller timeframe, driving the counter-trend move into the important level of participation, have to show me that they give the way to the larger timeframe. The larger timeframe wins often, but not all the time. And those time when it does not win, summed to the resulting highest reliability and expectancy that can be obtained by trading right at the FibStalker levels, adds up a lot! Both in the area of winners percentage and R/R values.

So here below is my answer:

“The way my method works is that when I get price into the level of interest, where I anticipate participation for algos on the larger timeframe, I look at what happens on the smaller timeframes.

Imagine 1.26 like a potential barrier where sellers on the larger timeframe can come back into the market again. But nothing is guaranteed int the market. So at these levels I become more vigilant and switch to the smaller timeframe.
To know whether shorts will be successful they need to be strong enough to win the buyers that have pushed the market higher in the last few days.
There are two set of sequences of moves higher that matter at the moment: one on the 4-hour and the other on the 15min.

What I do then is checking if and when these counter-trend sequences fail, as an effect of new shorts that can potentially come in into the markets at the 1.26.

We all know all the information in advance and I use the FibStalking Timing Technique to verify where the 4-hour and 15min sequences fail, if they fail.

So generally there are two scenarios: 1) the sequences fail and the FibStalking timing tells you the exact confirmation level (is a well-defined price level) that tells you when the counter-trend move is not valid any more. That’s the time you must get involved in a short.

Using the confirmation level you get involved in very good spots with high R/R and only after confirmation. This is why trading with the Algos is so convenient and traditional TA is not capable of offering such high R/R trades.

On the other hand it can happen that the counter-trend sequences on the 4-hour and 15min remain intact and no-one shows up at 1.26. In this case you don’t have money at risk and the market can do whatever it wants. I will just wait.

I only get involved in the markets at my own conditions (because after you are in the market can do anything).

Now the good point is that when the counter-trend move fails below or above a FibStalker level, price momentum in the direction of the trade is strong enough to generate a free-risk trade.

If you understand trading and risk management, you know that generating a free-risk trade from a low risk retrace is your job #1 as a trader.

And that’s what I attempt to do. Once I have a free-risk trade I also have a free mind and I can go to think to something else. Because either the market hits my swing profit target or closes me at breakeven minus costs and slippage.

PS: I teach the mechanical and totally procedural way to time FibStalker levels like the 1.26 in the EUR/USD in my multi-month Coaching Program. Drop me an email at fibstalker at gmail.com and ask for information.

As usual, let me know what you think by leaving an email at: fibstalker at gmail.com or a post on my blog.

Below the link to my newsletter if you want to learn more about my methods and my edge in the markets.

Have a great day.

The FibStalker Giuseppe, ~the FibStalker

 

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Article: Why you should never buy trading signals (unless you understand the method’s rationale)

signal_serviceWhen you start trading, earlier or later, you come across websites or ‘experts’ who offer to provide you with signals you can trade. That happens mostly in Forex, but also in Stocks and Futures. The service provider often promises to use “proprietary algorithms” which generate “highly correct and detailed” entry and exit points. Some of these services, like a robots working on the forex market, promise staggering returns, up to $50.000 /month! And, of course, such high returns justify, very often, also high charges for the signal service. Mostly these services charge a monthly/annual fee between 39 $ to 500 $ (!) or more dollars!

Of course, the proposition looks tempting. Technical analysis is something that must be learned anyway, so why not leave this to computers and their algorithms and just grab the money those signals promise you? If that were true then everyone with an interest in trading would be a successful trader. The reality is very different and statistics in the trading business say that 3% to 5% of participant make money consistently, i.e. have regular lunch on the savings of the remaining 95%.  I believe there are some very good reasons why you should never buy any signal services, unless you understand the method’s rationale and have all the tools made available to be able to execute the trades regularly, properly and consistently.

Hereunder is a non-exhaustive list of reasons you should carefully consider:

a) you will always be late and lagging behind the original trade. Even if the signal providers sent out a message to you via email or flashed it on your browser in real time when the setup is actually triggered, you would always need some time to react and be able to duplicate the trade. Since the markets can move very quickly, you often will have no chance to take the trade or, at least, not with the initial risk parameters. Only a small move into one direction (be it a stock, futures or forex pair) can change the risk/reward ratio dramatically, especially if significant leverage is used. So try to focus on methods and systems that are based on the study of price structure. These methods will often provide and explain trading plans well in advance (sometimes hours or even days) and uncover healthy market price structure – that can lead to continuation of trends – only if price actually triggers the trading plan, i.e. reaches the entry price and gets a fill.

b) the provider normally does not disclose the system behind the signals. Of course not, isn’t this his business secret? So you are not able to understand the rationale behind the proposed trade. But convince yourself that this is a definitive MUST to succeed as a trader! You must know the basics of support and resistance, of trend, some basic chart patterns or the typical behavior of those players who deeply influence price like, for instance, Program Trading. Only then can you check whether the signal makes sense or not. And if you are able to check that, it means that you are experienced and so you are already able to trade your own system. Some services – probably the best ones –  provide some sort of educational content and psychological support to help you not only take the trades, but especially to help you stick to the related trading plans once you are involved in the markets, until the target price or stop is reached. Some services are indeed so innovative because they don’t use traditional TA but other working concepts that allow to quickly discover price structure. In such cases, understanding the basics of the system is paramount.

c) common people do not trust anyone in the street with their money. For instance would you trust someone you don’t know with $250, asking to take the money and invest it so tomorrow $500 would be returned back? Of course people would never do something like that. It is important to understand – and that’s the rationale behind learning to trade – that the only one who is responsible for his/her own money its “YOU”. Responsibility is not something traders can delegate (and luckily so!). You alone decide under which circumstances you take a trade or leave it. Never blame someone else for your losses! Take responsibility for your actions! That’s the only way to become a successful trader. Which translates into another statement: it takes hard work to become a successful trader and only if you really desire it you have a chance to make it into the elite five percent! The good news is that anybody can do it, depends on how much he or she badly wants it! Of course, not all people have time to learn trading and there are still people who want to be able to generate income from trading or what to “earn while learning”. Make sure you find a signal provider taking the time and showing the willingness to explain why the signals work and then offering the additional psychological and risk management support to really allow proper execution by subscribers.

d) finally, think of all the money spent for a signal service. Let’s assume there is a service charging 50 $/month. This makes 600 $ per year. If as a beginner a trading account probably is no higher than 10,000$, only to earn back the fees for the signal provider a trader would have to make an annual return of 6%! Believe me many professional fund managers would be happy to realize such a gain on a permanent basis. And this only to cover the cost of the service fee, not to mention additional costs for slippage, data feeds, transaction costs, taxation and so on. To really make money you would need a annual return of, at least, 10% or even 20%. Of course there is always the other side of the coin. Should a $10,000 initial capital be considered proper capitalization? I think good capitalization starts at $50,000, which would bring the costs of a $50 signal down to about 1%, a reasonable cost.

So my advice is: save the money for signal services. Unless the signals provider does explain the rational of those signals, gives tools for proper execution of related trades – including psychological support and money/risk management, use that money to learn to trade by yourself!

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