An Example of FTM's Breakout Method

Early this morning, there were many opportunities available in my major 12. However, the better one will be using FTM's Breakout Method. The following is a snapshot of EUR/USD hourly chart which demonstrated a probable set-up using FTM's breakout method. A long trade can be initiated at 14609 with a stop loss of 1.4577 (i.e. 31 pips risk)



The trade is still ongoing and currently, using the breakout method, it is a risk-free trade. Let's see how it goes.

Another Example on FTM's Breakout Method

This is a bearish set-up on EUR/USD hourly chart based on Forex Time Machine's Breakout Method.

Based on the entry set-up rule, a short position was placed at 9:00am SG time and within an hour, TP1 and TP2 were hit. I applied a different methodology here because I like the 3x multiple lots systems which I learnt from Ross Beck and Jimmy Young in the FXTE program. At this point of time, there is a gravy train on the last lot that is being operating. The trade yielded 62 pips after hitting TP1 and TP2, and this means that it is $620 per standard lot.

Fundamentally, I am bullish in US$ and bearish in EUR. So, the fundamental understanding I have helped me to identify this trading opportunity.

Does it look familiar?

Talking to my trading buddy, Conrad can be quite fun sometimes because this fellow has very strong insight in reading the market. Each time when I talk to him, he will put some money in my pocket. He has directed me to read some mind-blowing books which I told him I would do it in the following days. In the meantime, let me put up a chart showing what I have learnt from the Ultimate Gann Course so far from Safety In the Market

Here is the daily chart of DJ-SpotV. It was about 227 days from 14 July 2006 to 20 Feb 2007 (i.e. Points A and B). Using simple ABC set-up analysis and the Balance Time Tool in SITM Module in Profitsource, the projection of another top would be around 11 Oct 2007, and that was the day when INDU reached the all time high. It's amazing and blowing my mind when I was doing these projections myself.

From the Ultimate Gann Course, I also learnt to draw Fibo using calendar days and using this technique, it helps to identify whether there are possible signs that there would be a change in trend. Again, it's mind blowing stuff.


Now, here is my projection and firstly, I am not providing any advice here. I am doing what the tools are telling me to do, and plot my lines accordingly based on the rules and guidelines. So, if the market chooses to prove me wrong, I am wrong and it is ok to be wrong.

At this moment, INDU continues to show an uptrend, and it will remain intact if the Fibo calendar days support this view (and so far, this guideline has yet to be violated). Using ABC set-up, there is a reasonable time around 9-10 Oct 2009 where INDU will finish up to 10400-10500. Keep in mind that this day is the 2nd anniversary day (approximately of course) of INDU's all time high. So, will history repeat itself?


It's just amazing that the more I learn Gann stuff, the more I discover on the history. Gann believes that history repeats and the tools are helping me to discover the history.

Let's see what happens when the 2 yr anniversary is approaching.

Forex Time Machine (Review)

http://www.theforextimemachine.com/home_200909.php

Someone in my discussion board asked whether it is worth paying a few thousand dollars for getting the proper investment education. I was happily explaining to this person that when it comes to investing in myself, I need not think hard because I know before and now, and even after that investing in myself will generate a huge return in the long run. So, what happened was that I grabbed a copy of Forex Time Machine and studied the methods in about two days.

As a professional trader, grabbing the methodology of the three methods in FTM is quite easy. Like Bill nicely put in his Q&A upon the launch of FTM, experienced traders will still benefit from the course because it is perfectly fine to add on additional tools and trading methods to their toolboxes, and this means that these experienced traders are armed with more weapons and are flexible to trade the ever-changing market.

FTM discusses three trading methods - Breakout, Momentum and Spring. Spring method is also part of the previous course "Forex Income Engine 2.0". The interesting part to me is therefore the breakout and momentum.
Momentum method


Imagine that this is the set-up of the momentum method as discussed in FTM. There are just a few technical indicators in the chart. For me, I prefer to trade currency using hourly chart although FTM methodology is fractal in nature which means that you can use it for longer and shorter time frames.

Although it is not part of the requirement to understand the fundamental, by combining what I learnt from Jimmy Young of FXTE pertaining to how to read the market from a top-down approach, picking up a bearish trading opportunity in GBP/USD is no brainer, to be frank with you.

So, based on the momentum method, we will enter a short GBP/USD position at around 16192, and within two hours, we should be able to close this position around 1.6000. That's like 192 pips more or less, and just one trade using standard lot, the course fee has been recouped.

Breakout Method

How about the breakout method? Here is just another example of the breakout method set-up.

As you can see from the chart on the left, there are just a few technical indicators to be used. However, while it is not discussed in the course, I believe it is important to understand the fundamental. So, Jimmy's insight in reading the market helps me to determine that when the market is weak, USD is up because of a strong correlation over the last two weeks, and an inverse correlation with the commodities such as gold and oil, shorting AUD/USD is again a no-brainer job.

See we don't need to follow 100% what the course discusses. The key point as a trader is to understand our own trading preference and psychology, and copy & paste what seems to work for us, and that's is. This is why it is so hard for a newbie to make money immediately because he has yet to develop the craft. It does not mean the course does not work. It works, and yet it works because we understand how to trade the methods and apply what suits us.

For this trade, we should be able to make around 30 pips within an hour or US$300 using one standard lot.

Unfortunately, I understand that the launch has come to an end. For those who procrastinated or were skeptical about paying a few thousand dollars, sorry to hear that. It's normal for human beings to be skeptical. You may need to wait for the next launch then.

I mentioned to this person that there is actually nothing to lose because the course provides MBG (Money Back Guarantee). So, if we are not happy with the course, we can return it to Bill and incur at most administrative fees on shipment. At least we give ourselves an experience to find out if the product works for us. Again, human psychology tells us that most of us will not even dare to make this move - hence explaining why for every thing the mankind do, only 5% of the people will eventually be the Elite Club.

Will I be able to make tons of $ after attending a $6k course?

Is it the follow-thru impact after my InvestFair 09 talk two weeks ago? I got frequent questions from a number of people who are asking for my opinion on options courses that are being run in Singapore.

If you are in a rush to pay $6k to attend a 2-day or 3-day options trading course, and your objective is to make quick bucks in the shortest time frame possible, I would urge you to donate the same sum to charitable organizations in Singapore because you can get 2.5 times of deduction against your income in 2009, and you will help other folks.

The market is cruel. However, what makes us think that trading is as easy as writing "ABC"? What makes us think that by putting $6k with someone, we can make quick bucks in the short period of time. Is this guy selling us a dream?

Options trading is a tough game, and yet it is possible to make money when one is committed to learn in the manner in which professional options traders are trading. For every hour of actual trading experience one can clock, he/she would have to put in at least 10 times of the effort.

In some of these advertisements in the Straits' Times, it was alleged that one can spend only 15 to 20 minutes a day to do trading. While I don't deny the correctness of this statement, it must be read in the right context. It is true if we are referring to people who have been in trading business day in day out. In other words, we are talking about seasoned traders. It cannot be applied in my opinion to newbies.

If you think by putting $6k with a trader who is teaching you how to trade options successfully and allow you to make lots of money from options trading in a short period of time, please do your due diligence by asking this person a couple of things. You are doing yourself a favour by asking these questions so that you know this "teacher" is not selling you a dream which is not real in the real world (perhaps it is true in lala-land).

I have nothing against anyone who is committed to learn and master options trading. However, I continue to stress that one should learn the stuff from someone who is ex-floor trader or at least has been trained by ex-floor trader. if whoever taught you cannot explain the things I wrote in my blog, and is however telling you that you must believe in those myths, please re-consider.

Whoever told you that you need not study delta, gamma, theta and vega, and you don't need to pay attention to the volatility, and whoever told you not to buy out-of-the money option without explaining in maths why this is the case, you know what to do.

Whoever told you that you must be options sellers because 80% of the options expire worthless, and whoever is teaching you to do high risk high probability trade without explaining profitability versus probability, you know what to do.

Finally, if whoever is telling you to do short-term trading (like intraday trading), and if he fails to explain to you the PDT rule, you know what to do.

Trading is not as easy as what the public might think, I reiterate. Trading consists of hard work, and is an art. If we are willing to spend time and treat this as a business (I have discussed this in my Optionetics February 09 monthly online forum), then it is possible to survive in long run. If we are not prepared to spend that kind of hours, I would recommend that you forget about trading, and you pass me the money instead and I will spend it for you.

Good luck for those who have read the ST and are about to pay $6k for an options course thinking that they can attack the market immediately. We love you!