When to Trade Sloppy and When to be Precise

Boris Schlossberg

When to trade sloppy and when to be precise?

Screenshot 2017-06-30 11.00.30

The answer, of course, is that you should always strive to be precise in your trading. But the real question I want to pose here is -- When should you trade with an ECN broker and when should you use the less accurate platform of a spread based broker.

Of course, it depends on the broker and your personal strategy, but the short answer is that if you are using a mean-reversion market making strategy than an ECN with raw spreads is a must. On the other hand, If you are trading trends then spread based broker should be just fine.

Let take a look at the two types of strategies I run in the BK chat room.

My bread and butter setup is a strategy called Boomer in which we are always trying to sell short-term overbought levels and buy short term oversold levels. Just like FX dealers we buy when everyone is selling and sell when everyone is buying. Needless to say, this requires a lot of b-lls and a very quick robot that can juggle inventory during fast markets.

But what it really demands is absolute precision. Just like an insurance company, the business model of any mean reversion strategy is based on making very few and far between mistakes. You won’t survive long in the insurance business if you sell a lot of cheap life policies to diabetics and heavy smokers. Same in FX trading. When you are fading all day long ( trading against the flow like dealers do) pricing is key because sometimes you have just seconds to resolve your trade before another wave of buying or selling overwhelms you. One missed execution could mean days of recovery because you are working on such a negative risk/reward structure.

That’s why despite the overhead of commissions the execution edge is far more important. Suppose you are trading with 5 pip target -35 pip stop (suspend your outrage for a moment and indulge me) If you win 19/20 trades you are doing very well and can basically print money every day. Even if you are winning 18/20 times you are ahead of the game. But suppose you miss just one more trade and the ratio turns to 17/20 and now the net P/L for the series in negative.

Guess what?

When you are trading for 10 pips or less, missing target by the spread can happen as often as 1 out of 10 times. In the example above even if you paid 20 pips in commission (1 pip per round turn) you would still be ahead by 15 pips because you would save at least one -35 pip loss.

So the rule of thumb in daytrading is -- the thinner the edge, the higher the breakeven percentage, the greater the need for an ECN account that will give you the best execution possible.

Another one of my setups in the chat room is called Trendy. This is a much more casual setup that requires only a single entry/single exit structure and has a far more forgiving risk and reward structure. With Trendy, the key to success is not sniper-like execution but a good, general sense of direction.

Trend trades should really be called The John Maynard Keynes, after one of the greatest economists in the world, who was also a very good trader. (He compounded returns at 12% per year for 2 decades at a time when the stock market index lost 15%.). Keynes once said, “I would rather be generally right than precisely wrong.” And that’s what trend trading is all about, because if you get the general direction right, the exact entry is far less important and you will still be able to bank money on the trade.

Trading trend based setups, you really don’t need to bother paying commission. As long as you can call direction right, trend based setups will easily absorb the cost of the spread.

As traders, almost always we focus on nothing else but the pip ahead. Sometimes it pays to step back and examine the subtle differences in our strategies and to determine which platform suits us best for what trade.

Screenshot 2017-06-30 11.00.30

Why We Should Trade Like Woody Allen Rather Than Warren Buffet

Boris Schlossberg

Regardless of what you think about him personally, you have to admire the artistic accomplishment of Woody Allen. The man has been making movies since the 1960’s and even now, in his 80’s the man continues to produce a film a year.

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What’s even more remarkable about Allen is that the subject of many of movies is neurotic, intellectual Jews -- hardly pop culture fare. I often wonder how people outside my zip code can even understand some of the references in his films. But like all great artists, he is able to make the particular universal and help us laugh at and appreciate our humanity. It is no surprise then, that such wildly different filmmakers like Spike Lee and Chris Rock are big Woody Allen fans.

Of course, when you look at his whole body of work, there is plenty of derivative, repetitive garbage, but there are also absolute gems of world cinema like Manhattan, Hannah and Her Sisters. Midnight in Paris and of course Annie Hall. What’s astounding about Allen is that he brings it. All. The. Time.

A long time ago Allen revealed in an interview, that early on in his career he realized that if he could stay on a modest budget he could make movies the way he wanted. Therefore, his scripts have always centered on the human-scale drama that can be filmed inexpensively in the interiors and exteriors of New York with A-list actors that were willing to work for scale because they all wanted to be part of the project. This has been his formula since he left Hollywood and he has never deviated from it. Even in his most recent work that has taken him to Europe he basically repeated the format making the city a principal character of the script (Midnight in Paris and the wonderful Vicky, Christina, Barcelona).

Woody Allen’s longevity and productivity can be attributed to his consistent work ethic. He is famous for saying that 90% of success in life is just showing up. And he practices what he preaches. The moment he wraps up a movie he starts working on a new script.

It’s a deceptively simple motto, but it can be of enormous value to us traders because it is essentially a recipe for success in the markets.

Many traders like to look to Warren Buffet as their shining example of success. But Buffet’s “aw-shucks”, folksy wisdom belies a very complex investment structure of an arbitrageur and is never possible to replicate for a simple retail trader. For a much better deconstruction of why you can never trade like Warren Buffett, I recommend this article here.

But back to the Woodman and his simple take on doing one thing over and over again. I thought about it this week when I came across yet another great interview on Chat with Traders with Victor Haghani who, a very long time ago, was one of the principals in Long-Term Management. Presently he is running an active index fund and has started doing a variety of trading experiments. One of those experiments was discussed on the show and it is very apropos to our topic.

Haghani created an experiment with a virtual coin that was 60-40 biased towards heads. In other words for every 10 flips, the expectancy of the coin was 6 heads and 4 tails. He then proceeded to do an experiment with 61 participants -- all then trained in quantitative finance -- by asking them to flip the coin repeatedly and make bets with a $25 bank for a period of 30 minutes. He TOLD the participants ahead of time that they had a 60-40 edge on heads. He told them that the virtual coin was biased. Had they simply bet on heads every single time they would have had a better than 95% chance of winning $250. (Haghani capped the payout -- otherwise, his exposure would have been enormous).

Instead, 30% of the traders went bust. Why? Because they couldn’t resist betting on tails, uselessly trying to capture mean reversion even though they KNEW that they had 60% edge with heads. The experiment is fascinating because it confirms something that I see in myself and in many other traders in my chat room. Even if we have a winning trade strategy we do everything in our power to sabotage it. We exit early. We pull the trade signals. We -- and this was the most common takeaway from Haghani’s experiment -- refuse to do execute the “correct” strategy all the time because it’s “boring”.

It is amazing to me how I manage to sabotage my trades even on my own accounts as I second and triple guess my structures instead of letting them just trade and bank pips.

The Haghani experiment offers true resonance to Woody Allen’s words.

90% of success in life is just showing up. As traders, there are a few simple things we need to do.
We need to trade with the proper size.
We need to always honor our stops.
We need to trust our setups.

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That’s it. It seems so simple. But as Woody Allen shows only a few can do it.

How to Trade the UK Election on the JFK AirTrain on Your Way To Madrid

Boris Schlossberg

1. Go with the Flow. When the news is shocking there is always continuation

2. Trade Small. This is important for two reasons -- one you will not freak when the trade moves against you by 50 pips in 5 seconds. Two you will almost certainly need to do multi-entry in order to get a good average price for a high probability profit. How small? My usual size is 1X equity ( i.e. no leverage) Today I started with 1/4 of my usual size.

3. Don’t worry about spreads. It doesn’t matter if they are 15 wide. They will narrow and prices will move 100 pips in 5 minutes.

4. Don’t worry about mistakes. (Hitting Buy instead of Sell, setting Stop rather than Limit, etc). You will make it back in the next 5 minutes

5. Don’t use stops. I know this is sacrilege but you will almost always get stopped out in such markets unless your stop is -200 pips or more. Your trade size is your stop. That’s why you trade small.

6. Use limit exits only. You will NOT get done if you try to exit market. The prices are too fast and you will be rejected 10 times in 10 seconds as coming off-market. It’s futile. Move your limits if you want to exit earlier.

7. Take a breath. Prices will come back to your direction even if you miss your first exit.

8. Once things settle down rinse and repeat. The news -- unless it changes -- will have ripple effects for hours.

9. Get a double espresso in the airport lounge and pre-set your levels while you are in flight.

10. Peace out to all my FX junkies.

Screenshot 2017-06-09 17.50.40

Day Trade Like Warren Buffett

Boris Schlossberg

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OK. Guilty of click bait as charged. Buffett would never day trade in his life. His holding time is years rather minutes, but that doesn’t mean that we can’t learn valuable lessons from him about trading. There are a few core principles that Buffett holds which we as day traders can adopt for our own purposes.

1. Don’t Lose Money.

How important is this rule? Buffett once quipped that this was his rule #1. When asked what his rules #2 was he said, “See rule #1”. Everybody talks about not losing money, but I think it’s important to understand just why this is the single most important factor in trading success. Losing money is not just psychologically unpleasant, but more importantly, it is mathematically very challenging. It’s the two-steps-back-one-step-forward problem. If you take two steps back, making one step forward isn’t going to cut it. Even two steps forward won’t help you much. You need to make three consecutive steps forward to move beyond the two-steps-back losses.
That’s why the single most underappreciated move in trading is the scratch.

A few days ago I listened to a great interview with Virtu President Doug XX. Virtu is one of the leading high-frequency trading firms in the world, and almost everyone thinks that they make all their money by front running orders -- yet if that were true they would be gone long ago as other faster competitors would beat them to the punch. Virtu’s actual skill is in market marking, and specifically in scratching out trades. They only win about 51-53% of their trades, but unlike amateur traders, they don’t lose on the rest, they simply scratch out at even on most of them. That’s the great secret to winning at the day trading game.

Buffett for his part also knows the value of keeping your drawdown to the minimum. During the 2000 -- 2002 cycle when the S&P was down -11% and -21% respectively Buffett was down just a few percentage points making the recovery in 2003 much easier for him.

2. Let it Come to You.

Buffett is well known for not overpaying for assets. In fact, his favorite dictum is -- Be Fearful When Others Are Greedy and Greedy When Others Are Fearful. The underlying philosophy of this approach is that risk on balance is always lowest when markets dislocate to the downside and always highest when they ramp to the upside. Now there are plenty of individual examples of when this strategy fails. Momentum moves could decimate even the stingiest bid and leave even the most aggressive offer biting the dust. But this is an actuarial argument. Just because some smokers live to 100 years of age and some marathon runners die of heart attacks at 45 does not mean you change your premiums to accommodate the exceptions. If anything exceptions in insurance as well as in investing prove the rule -- don’t f-ing chase price! You may succeed once but you will fail ten times and end up losing in the end.

3. Stick to what you know

Are you good at making 10 pip trades? Do you excel at reactive rather than predictive trading? Do you feel much more comfortable trading with trend than against it? Each trader has personal strengths and weaknesses. Unlike real life where we are taught to constantly “improve” ourselves trading will actually only make you much worse if you go against your natural strengths. Buffett has been adamant about not investing in technology because he did not understand it -- and when he broke his own rules by buying IBM -- he demonstrated just how bad of a tech investor he is. Now he may have missed Google and Microsoft and Amazon, but his performance still remains much better than the vast majority of active managers (though not much better than the S&P). The point being is that by sticking to his formula of buying “old business” companies he still managed to perform very well and found plenty of profit opportunities away from tech. The greatest thing about the market is that it is not a monolithic entity -- there are literally thousands of niche strategies that can be profitable. The key is to find the ones that work best with your personality.

The Hidden Trade that is the Key To Long Term Success

Boris Schlossberg

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Ask most traders what are the possible outcomes of a trade and they will inevitably give you a binary answer.

You either win or lose.

But if we think about it for a second, there is actually a third choice. You can neither win nor lose. In short, you can basically not lose and close the trade out for even. If we go over our many trades, there are countless examples of trades that may have started out badly only to rally to breakeven and then ultimately fall apart.

The art of NOT losing is perhaps the most underappreciated skill in day trading. It is, in fact, the foundational strategy of high probability businesses like insurance and casinos. Insurance companies are of course notorious for eliminating any possibility of large payouts. They are in the business of collecting premiums but the moment a client presents any type of collectible risk they move swiftly to cancel the policy. The insurance companies much like casinos will make sure to rig the rules so that customer has virtually no chance at collecting a payout.

So in Las Vegas, they will stop you from counting cards in blackjack and in Hartford they will make sure to exclude all coverage of any malady you may already have. Indeed, the current debate on pre-existing conditions in Trump-care is simply an attempt by insurance companies to collect as much premium as possible while providing the absolute minimum coverage necessary to satisfy the contract. Indeed, as my wife just pointed out to me under Trump-care pregnancy will be considered a pre-existing condition and could cost insurance buyers as much as $17,000 in out of pocket expenses even if the woman has full coverage.

Now we can all lament the evils of the insurance business, but it has a lot to teach us about trading. The more I trade the more I realize that there are really only two viable models of making money. The low frequency, high-profit model where your wins are very few but are massively larger than your losses and the high-frequency high probability model where the losses are very rare.

We are all familiar with the fact that throughout the whole history of the stock market all of the gains have come from only 20% of all publicly traded companies. Fully 80% of stocks are long term losers. And even amongst the 20% of winners, it is only a handful of equities that are responsible for almost all the stock market returns.

That’s why index investing is so hard to beat. When you buy the index you are essentially buying the whole lottery pot and betting that you will capture the few jackpots that will pay for all the losing tickets. Little wonder then that the hedge funds have been getting killed looking for the diamonds in the ruff amidst a pile of garbage.

But there are other actors in the market that actually play a very different game. HFT (High-Frequency Trading) funds have gotten a bad rap for being nothing more that digital “front runners”, but in reality, they employ a wide array of strategies almost all of them focused on mitigating risk. In fact, HFTs are the kings of the “not lose” trade as they break even on as much as 50% of their positions per day and yet make money almost every single day. Big firms like Virtu have lost money only on one day in six years.

If we are day-trading, the insurance model is the way to go and the “not lose” trade should be studied much more seriously. It is the hidden key to long-term trading success.

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What We are Trading Today (April 24, 2017) – USDCHF Trade


*Good morning/afternoon everyone!*

While the euro remains bid and risk is still on, we have not seen the continuation that we had hoped for after the French election last night. With that in mind, the euro hasn’t pulled back materially yet so the outlook is still positive. We still like AUD, NZD and USDCAD could be a fade again at 1.35

*The MAIN THEMES I see today are*

USDJPY trying to hold 110

EURUSD trying to hold onto gains

GBP weaker

CAD weaker but nearing resistance

AUD and NZD strength

*Currencies we plan on day trading and the direction*

*These could change during the day, but for now

We will be trading around these themes --


*Trading Biases*

These will change after US data



neutral GBP, EUR

rally up to and looking to fade 1.35 USDCAD

*Starting Trades*

Pending Order

USDCHF Sell-limit 0.99600
STOP 1.01100

Wanna Day Trade? Be Like Donald Trump

Boris Schlossberg

Last night as US tomahawk missiles rained on a Syrian airbase while my four-year old kept dancing around me an hour past her bedtime, and CNBC producer screamed in my ear over a poor phone connection, I felt completely calm and in control. That was particularly ironic because whole day prior I was miserable and ill at ease. The markets yesterday were flatter than a Florida landscape and I spent the entire day sulking making exactly one trade in the BK chat room.

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But now, with USDJPY dropping like a stone, I knew exactly what to do. I waited for the small, but inevitable bounce, eyeballing the levels because I didn’t have my Trendy algo turned on and fired off some sell orders across a couple of levels covering everything back for profit a few minutes later. No parent of the year awards for me, as the four-year old continued to dance happily around my office, but I had my mojo back.

What makes good day trading?


What’s this?


Good day trading is reactive by its very essence. That’s why it defies classification. It defies “methodology” and it most certainly defies consistency. You can’t “make” $1000/day day trading. Some days you can make $3000. Some days you make nothing. Good day trading is all about synthesizing the news of the moment and then adjusting your trading approach to exploit the short-term flows in supply and demand.

If you are a positional trader you are by definition -- prognosticating. It doesn’t matter if your reasons are fundamental (Non-Farm Payrolls will be weak because ISM employment index sank 5 points) or technical (USDJPY broke 200 SMA, it’s in Elliott Wave III of abc correction, it’s bouncing off Fib resistance -- blah, blah, blah). You are trying to forecast the distant future. That is the implicit bet you are making each time you trade. Trading forces you to have an opinion on the market whether you realize it or not, and the longer your time frame, the stronger your opinion must be. That’s why it’s so hard to be a great swing trader.

Good day-traders on the other hand generally have no opinions. They look at what is happening NOW. Five minutes ago may as well be five years ago, as their focus is on the next 10 pips of profit regardless of the intellectual foundation of their views. In short, good day traders are exactly like Donald Trump -- willing to change their position on a dime and completely abandon their previous views. The very things that drive both the right wing and the left wing absolutely insane about our current President are actually qualities that we must embrace to daytrade successfully in the market.

Today, for example, I was able to avoid the massive short squeeze is USDJPY despite the fact that “job numbers were horrible and yields were low!” because I saw the pair hold the 110.20 level in post news trade and realized that shorts were in danger of getting squeezed. Did my fundamental skills honed by four years of economics at Columbia help me? Did my knowledge of pivot points, or fib lines or moving averages help me? No. It was pure price action. It was watching what was happening rather than what I thought would happen that helped me make the right decision. It was the Trumpian ability to read the “mood in the room” that kept my P/L positive today. Now that certainly may not be the right way to run a country, but it is definitely the right way to day trade.

React, don’t prognosticate.

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When to Trade Raw

Boris Schlossberg

With the exit of FXCM out of the US FX market, it looked like the last of the US raw price dealers was gone. Fortunately, Oanda stepped up to the plate and this week revealed that it will be rolling out raw pricing first for its FXtrade platform and then eventually for MT4. So I thought this is a perfect time to examine when traders should choose one or the other type of brokering service.

80% of the Time Markets Do Nothing -- Learn to Pull Pips from Quiet Markets

What is raw price dealing? That is simply the wholesale price feed from the Interbank market. In a dealing desk model, all retail FX brokers markup, the wholesale price feed the get from the big banks before they display it to their customers. So in the Interbank market, the EURUSD typically trades 0.1 pips wide -- a normal quote would be 1.06801 by 1.06802. Most retail dealing desk firms would quote that out as 1.06795 by 1.06809. Some might even quote 1.0679 by 1.0681.

The raw spread comes with obvious advantages. When the spread is only 0.1 pips wide versus 1.5 pips wide, it is a lot easier to get trades done. Limits get hit faster and more frequently. Stops are given more room and can sometimes even be avoided. But the raw spread trade comes with a catch. Every time you trade you have to pay commission. Typically the commission is about 1 pip round trip (half a pip to buy and half a pip to sell).

80% of the Time Markets Do Nothing -- Learn to Pull Pips from Quiet Markets

That may not sound like much, but it can quickly add up. When I traded with FXCM my monthly commissions were often larger than my profit. That’s ok when you are making money, but it can add up quickly to your costs of you are not. So we go back to the original question -- when should traders trade raw and when should they accept paying the full spread.

The answer as is the case with so many of these things is complicated and not necessarily intuitive. Generally, you would think that if you have a high-frequency strategy that requires exact execution and quick in and out tactics then trading on raw spreads would be the way to go. Not necessarily so. A high-frequency strategy is basically a massive commission generator. If you can make money on a high-frequency strategy with full spreads or even if you can break even -- the full spread broker may be a better way to go.

Let me explain why. When you pay full spread, you not only pay nothing in commissions, but you can actually -- in fact, you should by all means -- collect rebates from your broker. There are several very good IBs who will set up a rebate program for you. I work with the best in the business -- feel free to email me for info. In any case, a typical rebate is about 0.2 pip per trade. If you do 25 trades per day on NO LEVERAGE. In other words, if you have $10,000 account you trade 10,000 units per trade, then in 20 trading days, you will have earned 100 pips in rebate. That’s 1% per month or 12% per year on your account even if you fail to make one single pip.

80% of the Time Markets Do Nothing -- Learn to Pull Pips from Quiet Markets

On the other hand, if you have a strategy that trades 2-5 times per day with 10 to 20 pip targets, you are probably much better off with a raw spread strategy. That type of “in between” trading can really benefit from the raw spread difference. Let’s say you have a strategy that has a stop of -20 and a target of +15. If just one out of 20 trades flips from a loser to a winner (i.e. you avoid getting stopped on raw pricing and eventually make target or you make target on raw pricing and bank profit, but miss doing so on markup spreads then you essentially have a +35 point swing in your P/L (you make +15 and avoid losing -20) that more than makes up for the 20 pips of commission you would pay on your volume.

80% of the Time Markets Do Nothing -- Learn to Pull Pips from Quiet Markets

So trading raw versus markup is really a question of style as much as cost and every trader should consider his individual condition before making the move. Fortunately, it doesn’t have to be a binary decision. Most brokers let you have both accounts and that’s probably the best way to go.

Trade Like General Patton

Boris Schlossberg

One of my all time favorite wartime movies is “The Guns of Navarone” which tells a quasi-biographical story of an attempt to sabotage a seemingly impregnable German fortress in Greece that threatens Allied naval ships in the Aegean Sea, and prevents the rescue of 2,000 stranded British troops.

It starts a motley crew of British and American actors, including Gregory Peck, but by far my most favorite actor in that movie is Anthony Quinn who plays Colonel Andrea Stavrou from the defeated Greek army. There is a scene in the movie where the whole team is captured by the Nazis and Quinn begins to grovel obsequiously in front of the German officer. The imperious officer lets down his guard as he pushes away Quinn with disgust, but he lets Quinn get a little too close to him and is instantly stabbed to death.

It’s one of the greatest fight scenes in the movies precisely because it is not heroic. Quinn essentially lets go of his ego and as a result, he saves the whole team and the mission. It shows that in life you win by wile rather than force.

That same idea is also present in another great war movie -- Patton. The film starts with George C Scott playing the famed US general, staring directly into the camera as makes a devastatingly simple proclamation, “No bastard ever won a war by dying for his country. He won it by making some other poor dumb bastard die for his country.”

What does this have to do with trading?

Just about everything.

Both movies are about winning. And their message is that winning is the exact opposite of our romantic view of heroism. Heroes don’t win because they get slaughtered running straight into a stream of bullets. Heroes may be noble, they don’t achieve their goals.

How many times have we played “the hero” with the market? How many times have we tried to sell rallies or buy dips and kept on doing it to the bitter end? How many times have we played Tony Montana taking on bullets (or in our case losses) until we bleed out in the end?

Has that “hero” fantasy ever worked? Maybe once or twice, but in the end you go down bigger and harder than ever. The market always wins because we are never willing to grovel.

Lately, however, I’ve started to let go of the hero mentality. Not only have I started to trade much more with the flow rather than against it, but I have been willing to walk away from bad trades rather that try to “repair” them. The net result is -- yes I do have more stop losses -- but they are basically harmless scratches now rather than life threatening wounds.

To paraphrase General Patton, “No bastard even made money in the market by blowing up his account. He won by making some other dumb bastard blow up his.”

Warren Buffett Does Not Trade Trend

Boris Schlossberg

The other day I came across an article about Warren Buffett’s office. The writer catalogued in full detail all of the knick knacks that Buffett has in what was described as “the domain of a mid-level executive in a generic corporation.” I knew that Buffett was frugal, but the fact that one of the world’s richest men still watches television on cathode ray TV really surprised me.

Yet what really caught my eye about the article was that Buffett had a picture of Ted Williams in his office. I wrote about trading like Ted Williams several years ago and it appears that Buffett is a fan of the baseball great for the very same reason that I am. As Buffett tells the writer the picture of Williams is there to remind him to “wait for the right pitch”.

If you really think about what Buffett is saying, it means that you must let price come to you. It means effectively that Buffett never trades trend. As a value investor he is always buying when everyone is selling and selling when everyone is buying. He, of course, is not alone. Almost all great investors do this including Seth Klarman whose book sits on Buffett’s desk.

Yet think about the idiotic cult of trend that pervades all retail trading. From the moment you are newbie to the very last penny that you lose from your account you are told by every paper trading guru that you “must trade with trend”. Now there is no doubt that some -- few -- traders can trade with trend successfully, but the vast majority of traders lose all their money following that useless advice.


Because trading trend puts you at a disadvantage from the moment go. You are chasing price, you are following the crowd and that strategy only works if the wave continues to swell. But hurricanes are rare and most of the time the wave crests and you just crash into the rocky bottom of unforgiving ocean wondering what you did wrong.

Currency markets -- and for that matter all capital markets -- are just like the ocean. On a day to day basis prices crest and fall and rise again. That’s why in my day trading room we trade counter-trend almost all the time. Trading counter trend by no means guarantees success. In fact, if you do what most retail traders do, which is -- add to the position and trade without a stop -- you will most certainly go bankrupt. But counter trend trading with a robust entry model and an intelligent trade management system is a much better way to day trade. It puts odds in your favor.

Just ask Warren Buffett.

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