Your 1 Pip Fortune

Boris Schlossberg

There are only a few things that I fairly confident about and the idea that the next 20 years will be terrible for long term investors is one of them. Over the past three decades investors have enjoyed unparalleled good luck as declining bond rates, rapidly improving technology and a massive fresh, new pool of savings from one billion Chinese consumers made investing in equities a very lucrative proposition.

Stocks have compounded by almost 8% annually for the past 30 years and all you had to do was drop money every single year into an index fund and you were guaranteed to be rich (or at least much wealthier than when you started). We are now living in the golden age of the index investing with more than 3 Trillion dollars allocated to that instrument. But I have news for you, whenever 3 Trillion dollars is allocated to anything in the financial markets it’s almost certainly a sucker bet, because contrary to the Wall Street propaganda markets are much more like a zero sum game than you think. Here is paper from McKinsey that provides the intellectual foundation for my skepticism about the future of investing but you don’t even have to read it. Just look at the table below that shows 70 plus years during the last century when equities produced “bupkas” as we say in New York.

screenshot-2016-12-02-14-32-05

So don’t bet on buy and hold, because it most likely will not work.

Which bring me to active trading. Now I am first to admit that I am talking my book here. I love daytrading and would probably do it even if I could make more money as an investor. Guilty as charged. I believe that day trading is a superior way to make money not only because it is far less volatile, but also because it is an absolute return game and does not depend on the upward drift of the market in order to make you money.

But it is, by no means easy.

I remember a few years ago I horrified a member of my chat room when I told him that the only way to make 100 pips by day trading is to do 100 trades. He was aghast that it would take so much work to achieve such a paltry profit.

The other day, I suddenly remembered that conversation during our daily webinar and decided to look at my personal trading account which I have banged around for more than 1600 trades over the past year. True enough the average NET profit was 1.1 pips. Feel free to check it out here (just make sure to run the data up to November 7th, because my massive winning trade in USD/MXN wildly skews the average to the upside from the election onward).

When you think about it, my day trading results are not at all surprising when you put them into the contest of the real world. After all, consider toothpaste, gasoline, even running a restaurant. When the business person accounts for all the costs of the business what drops to the bottom line is just 3 cents on every dollar of revenue.

When you start thinking about day trading as a business rather than as lottery based amusement that’s when you get a much more accurate idea of not only how to succeed, but what to expect.

And that’s another reason to be grateful for day trading. When done right it provides us with a much more accurate view of the financial world.

Economic Data Calls for July 1, 2016

Weekly Calendar Calls

Here’s what we are looking for in tomorrow’s economic reports (July 1 2016) — Good Luck Trading!

1. AU PMI Manufacturing (19:30 NY Time) -- No Trade -- Australian PMI is hard to predict

2. Chinese PMI Manufacturing (21:00 NY Time) -- No Trade -- Chinese data is very market moving but hard to predict

3. EZ PMI Revisions (03:55 NY Time) -- No Trade -- Revisions to PMI can be very market moving but difficult to predict

4. UK PMI Manufacturing (04:30 NY Time) -- Bullish CAD -- Potential upside surprise give strong rise in CBI Index

5. US ISM Manufacturing (10:00 NY Time) -- Bullish USD -- Potential upside surprise give rise in Empire State, Chicago Fed and Philadelphia Fed survey

EUR/USD Should Fall to 1 Month Lows

EUR/USD Should Fall to 1 Month Lows

Chart Of The Day

EUR/USD Should Fall to 1 Month Lows

With the way things are going in Greece, the EUR/USD should not only fall to 1 month lows but even reach 1.08. By now it should surprise no one that at the time of publication we are STILL waiting on Greece. The deadline for the Greek Parliament’s vote on the reform proposals was supposed to be midnight and now there’s talk that it may not happen until tomorrow. We have long said that the risk of a no vote is a realistic one and even if they accept the proposals, it only allows new debt negotiations to begin. The debt negotiations could still turn sour especially after the IMF indicated that they cannot participate in a new bailout without debt relief for Greece – a point that the Germans have resisted aggressively. So the talks could break down again and for this reason we remain bearish euros. Tomorrow’s Eurozone trade and consumer price reports will take a backseat to the ECB meeting and Greek Parliament vote. If the Parliament votes yes, we expect EUR/USD to rally at which point we will sell into the rally looking for a pullback as the debt negotiations resume. With Europe still struggling to contain the Greek crisis, we expect cautious and dovish comments from the ECB.

Technically, there is near term support for EUR/USD at the July low of 1.0915 but the more significant support level is the May low of 1.0820. As long as the currency pair holds below the 50-da7 SMA at 1.1160 or 1.12, the downtrend remains intact.

Day Trading Signals May 1 – Daily Tally +75 pips

News

BK NEWS TRADES with our Economic Data Projections   

Videos on How to Trade our 3 BK News Strategies 

How To Trade AJAX

How To Trade Crowd Fighter

How To Trade C -- Trade 

BK Day Trading Chat Room Results  4/30

BK Trading Room Results

EUR/USD +15

EUR/JPY+15 

AUD/CAD +15

AUD/USD +10

NZD/JPY +10

AUD/JPY +10

   

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Just Email [email protected] with subject line “Slack”

   

****NOTE we are going to trade C-Trade and Crowdfighter on 15 Minute rather than 5 minute delay on all pairs today***

  

Date Currency
Event
GMT Strategy

 

  

Last 24 hours Results
Crowd Fighter 
No Trade
 

 
C-Trade
No Trade

 

  

CALENDAR CALLS

Here’s what we are looking for in tomorrow’s economic reports (May 1, 2015) -- Good Luck Trading!

1. Chinese PMI Manufacturing (9PM ET) No Trade — Chinese data is difficult to predict

2. AU Producer Prices (9:30PM ET) Bullish AUD — Potential upside surprise given rise in Australian consumer prices

3. UK PMI Manufacturing (4:30AM ET) Bullish GBP — Potential upside surprise given small increase in CBI Total Trends index and rise in house prices

4. US ISM Manufacturing Index (10AM ET) Bullish USD — Potential upside surprise given rise in Chicago PMI and Philly Fed index 

Our Economic Data Projections for April 1, 2015

Weekly Calendar Calls

Here’s what we are looking for in tomorrow’s economic reports (April 1, 2015) — Good Luck Trading!

1. Australian PMI Manufacturing (6:30PM ET) Bearish AUD -- Potential downside surprise given slowdown in Chinese manufacturing activity and lower iron ore prices

2. Chinese PMI Manufacturing (9AM ET) No Trade -- Chinese data is notoriously difficult to predict but can be very market moving.

3. German & EZ PMI Manufacturing Revisions (3:55AM ET) No Trade -- Prone to revisions but the changes are difficult to predict

4. UK PMI Manufacturing (4:30AM ET) Bearish GBP -- Potential downside surprise given big drop in CBI Total Trends survey

5. US ADP Employment (8:15AM ET) No Trade -- ADP is hard to predict but can be essential in setting expectations for Non-Farm Payrolls

6. US IS Manufacturing (10AM ET) Bearish USD -- Potential downside surprise given sharp drop in Philadelphia Fed and Empire State surveys with only small improvement in Chicago PMI

USD/CAD Headed for Fresh 1 Month Lows

USD/CAD Headed for Fresh 1 Month Lows

Chart Of The Day

USD/CAD Headed for Fresh 1 Month Lows

After today’s Bank of Canada monetary policy announcement, USD/CAD is headed for fresh 1 month lows. Investors bought Canadian dollars aggressively after the Bank of Canada left interest rates unchanged. While back-to-back rate cuts was unlikely, most investors expected the BoC to maintain a dovish bias and leave the door open to additional easing. However, the central bank described inflation risks as more balance, called the current degree of stimulus appropriate and said that crude prices and Q4 growth are close to expectations. These comments indicate that the central bank has shifted to neutral and is no longer looking to lower interest rates. It is for this reason and not just their decision to keep rates steady today that has driven the Canadian dollar sharply higher. The rebound in oil prices also helped lift the currency. While USD/CAD has yet to break out of its 1.2350 to 1.2700 range, we believe that it should only be a matter time before support gives way.

Taking a look at the daily chart of USD/CAD, there is a clear descending triangle. A break below 1.2350 support would open the door for a move down to 1.2120, the 23.6% Fibonacci retracement of the 2007 to 2009 rally. If 1.2350 holds, the resistance is near 1.26.