Archive for August, 2015

Marketing Real World VS Real Marketing Degree; Who Will Win the Market?

So many folks go to business school and just fall in love with marketing and I cannot blame them, as I have had a blast marketing for my companies although most of what I learned I learned the hard way, a different sort of school; yes you guessed: The School of Hard Knocks. Ah, so you too have had some of those ruthless classes and hardcore hits and lessons? Well, we share a common bond it appears? It would have been nice to learn it the easy way, but something tells me I might just have learned it slightly better.

Many real entrepreneurs will say that most MBA fresh out of school kids cannot market their way out of a paper bag and without taking anything away from our American Business Schools some of the best in the World, I must say I do somewhat agree with those comments, pretty funny, actually. And mind you I am not attempting to laugh at someone else’s expense, rather the absurdity and the ego of some of these out of school folks is a little troubling and definitely problematic.

In the market place when I was running the company, before I retired and do realize that’ it is my money on the line I only care about one thing; WINNING. And I must also say that there are issues with today’s Marketing MBA graduates so, I agree with such comments and I have given many speeches at so many colleges and the folks just have no clue about marketing ANYTHING.

But lets not just pick on the college grads as it takes a lot to get those degrees and those kids are not stupid people, many of them have the finest genetics around and have gotten the best education money can by. However the winner in free markets goes to those who truly understand the game and you can study it all you want, but until you are on the real battlefield and it is your real money, well all bets are off and that little piece of paper (diploma) is of little value unless it is a big fat check on the back. Consider this in 2006.

The Markets Are Not Consistent

The markets are volatile. Pretending that you will make a consistent annual return by investing into a few stocks is unrealistic. Because the markets are not tamed it may be hard to produce consistency just by holding onto a stock.

I have a friend who is 100% bullish. He believes his stocks are consistently heading up. He even believes this when the markets are crashing. This is the same idea most traders have about the stock market. They expect it to be like a savings account.

They think of the market like this, if the market goes up an average of 10% a year then if I put my money in the stocks for 6 months it I should make about 5%. This type of thought is something I have heard a lot by armature traders. I don’t understand that way of thinking.

The markets are volatile and unpredictable; you do not just put your money in a random stock and watch it make nice consistent interest. OK well maybe in a bulls market, but everyone is a winner in a bulls market.

The only way to make consistent returns in the market is by trading short term market movements, trading the ups and downs as they come. Learning how to make money in all different types of environments not just when the market is heading up is the easiest way to develop a consistency in the stock market.

But even that is never totally predictable. You can never foresee a losing streak, or a giant 50% overnight gap in your favor. The markets have always and will always be unpredictable. That is not saying you cannot make a good living by trading the stock market, because you can.

I’m just reminding you not to assume the market works perfectly consistent. Don’t assume that if you make $6,000 dollars one month it will occur every month. Working on being as consistent as possible is all you can do.

How to Trade the Market Using Daily Charts

Why trade the market using daily charts?

What’s so special about daily charts? Why should you trade the market on daily charts? What’s all the fuss about?

Daily charts mean that 1 new price action bar forms each day. It means that there is only 1 new piece on information each day for you to take into account. This makes your trading decisions less emotional as you aren’t rushing a mile a minute to keep up with the data as it loads onto your screen. In short, it allows you to become a lazy trader. You have time to make your trading decisions, trading the market on the daily timeframe really does allow you to fit trading into your lifestyle.

Higher timeframes V Lower timeframes.

Higher timeframe charts really do give you the opportunity to fit trading into your lifestyle. It also means that broker transaction costs are a very small percentage of the trade. If you’re stop loss is 100 pips and your spread (transaction cost) is 2 pips you have a 2% transaction charge. Whereas if you’re trading a smaller timeframe chart, with say a 10 pip stop, but still a 2 pip spread, you have a 20% transaction charge. That’s a huge difference and has a dramatic impact on your trading.

Lots of new traders start off their journey to trade the markets and begin on the smaller timeframes trying to make money as quickly as possible, fighting against market noise, and high impact news events, not to mention the significantly higher transaction charges. Ultimately it’s not hard to see how they end up losing money, become disillusioned and stop trading. A simple solution to this is to focus on the ‘less is more’ approach and trade the markets on the higher timeframes like the daily charts and avoid the issues of high impact news events, higher transaction charges and market noise. Focussing on these higher timeframes is a much more sensible approach to trading the forex markets. It is also much easier to make money on these higher timeframes.

If you were given the option of A or B, and you knew that option A was easier, why wouldn’t you choose it?

Trade the market in less than 30 minutes a day.

If you’re going to trade the market in less than 20-30 minutes a day, you really need to have a structure and a routine that you stick to on a day to day basis. You also need to make sure that you follow your routine day in day out. This way your trading habits become instinctual and it becomes almost like riding a bike, something that you don’t need to actually think about to do. You’re subconsciously doing all the work without having to consciously think about doing it. Of course, this takes time to get this level, but this should be your goal when starting out.

Go from being unconsciously incompetent, to becoming consciously incompetent, so you’re aware of the mistakes you’re making. Then moving on to consciously competent where you are profitable and making money, then progressing onto unconsciously competent, where you are a consistently profitable trader, not having to focus all your energy on what you’re doing.

It’s this step by step process that you want to progress through as you learn to trade the markets.

How to trade the market using daily charts.

First of all, strictly ensure that you’ve got your charts set up correctly with price action being the most important thing on the screen.

Secondly, restrict yourself to 10 or so currency pairs. Don’t look at 30 different currency pairs every day, as it’ll just be too much work.

Thirdly, ensure that you have your charts on the daily timeframe.

Now you can focus on the daily charts and trade the markets with strong price action signals and fit trading into your lifestyle.