Items Tagged With august 2006

I've been asked how I'm doing lately, since my trading posts have been non-existent as of late.  Well, I haven't traded since August 3rd mainly because I'm trying to get a handle on a bunch of things going on right now that are non-trading related.  Since I cannot focus all of my attention on trading, I don't want to force anything and trade just for the sake of trading.  

Believe me, this is not my way of saying that I'm quitting.  My motivation is being channeled elsewhere and unfortunately I just don't have a choice.  In an effort to keep some focus on trading, I picked up a copy of Market Wizards:Interviews with Top Traders by Jack Schwager since it comes highly recommended by many people.  It can only be good for the mind to read about highly successful traders who managed to turn $1000 into billions.   

Here is some brain food.  I thought this was interesting.  Supposedly, this IQ test is given during interviews in Japan:

http://www.robmathiowetz.com/  

For those of you that are news trading or just interested in keeping up to the minute on any news developments, you know how hard it is to obtain it in real-time.   It isn't so hard if you have the money to subscribe to Bloomberg which will run you in the thousands per month. (http://about.bloomberg.com/contact/sales.html) 

Most of us don't have the luxury of doing so therefore the alternative is newsstrike.  Newsstrike uses TeamSpeak software to call out news in real-time though I've heard it lags by a couple of seconds.  TeamSpeak became popular in the Gaming world with games such as Medal of Honor where teams could speak to each other while they blew each other up.  The software requires you to configure a connection to Newsstrike with a username and password.  You can get these by subscribing to the service which is FREE at http://newsstrike.com/subscribe.shtml

Some of us again don't have the luxury of listening live to news while we are slaving away at our full-time jobs so another alternative is to go to the government website responsible for the news release and find the URL of the latest news release.  This requires you to constantly hit REFRESH on your browser until the newest release is actually posted.  I've found that sometimes it's within seconds and sometimes within minutes.  For instance, the US Census bureau handles the release of the Durable Goods report so you can go to the URL http://www.census.gov/indicator/www/m3/adv/index.htm and keep refreshing until you see this month's report was updated.

Yet another way of getting the news which is my preferred method when I'm not looking for real-time but looking for it quick, is to get it from Briefing.com.  I find that the news comes through in the same minute that it is released and if there are multiple reports released at a particular time, you can see them all on 1 page.  The calendar can be found at http://www.briefing.com/Investor/Public/MarketAnalysis/Calendars/EconomicCalendar.htm

These are the best ways I've found over the last year of getting economic report data as quick as possible.  If you know of any additional ways, please share.  

I've been hearing a lot of the phrase, "Buy the rumor, sell the news." This Wall Street Proverb sounds intelligent and is freely thrown around forum posts everywhere but what is the real meaning of it all.

Often a rumor will circulate about some future news release.  Rumors can quickly start from anywhere such as news articles, forums, and just about any other communication media available. Let's take as an example the New Home Sales report released last week.  The consensus was for New Home Sales to come in at 1105K.

Here are a couple of headlines that could have affected your thoughts on the New Home Sales report:

"Horizon Gloomier for US Economy"

"Analysts Expect Home Sales to Drop by 10% This Year"

"New Home Sales Report Could Put Nail in Dollar Coffin" 

Before the report is released, you're being bombarded with speculative information that only deteriorates your view of the consensus which in this case was 1105K.  Traders acting on rumor start to fill their minds with random numbers typically less than the consensus.  

What Trader's May Be Thinking

"I see tons of for sale signs around my house but nothing under contract.  There's no way the number will come in at 1105K"

"1000K" 

"A real estate broker I talked to said houses are taking 5 months to sell now where last year it only took 4 weeks.  New Home Sales won't be 1105K.  I'm thinking it will be 900K"

"850K"

Before the news is actually released, traders are bidding against the USD based on these wild assumptions.  These rumors alone can beat down the USD.  But once the announcement is released, the facts rarely end up being as bad as the rumors.  Since all of the greatest possibilities have already been priced into the currency pair, the news actually causes the currency pair to "re-price itself" to the facts.  Last week, the actual New Home Sales was 1072K and the USD gained against most of the majors.  It gained because the worst possible news had already been priced in.

I have not been posting regularly because I just haven't had the time.  I've said this many times before but this is only temporary and I have not lost my dedication to trading. 

Last week, I only made 1 trade and profited 17 pips.  It's not much but I've been using a new system that has been in the works for a year that pretty much kept me out of the market.  I really don't want to get into much detail about it because I don't know how it will turn out and I'm still trying to see what works and what doesn't.  It's really nothing new; it incorporates moving averages, MACD, RSI, the Ichimoku Cloud, and 3 time frames (60-minute, 240-minute, Daily)  I don't use the Ichimoku as it was designed.  I just use the Cloud.  This is not a system that generates automated signals for me.  It is a lot more discretionary.

So I'll continue to use this going forward and see if I can develop some sense of consistency.  I'll try to come around my blog more regularly as I feel bad when it's neglected.  I hope everyone is doing well.