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Jumat, 22 November 2013

Boris's Weekly Email - Why Google Cars are the Future of Retail Trading

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Why Google Cars are the Future of Retail Trading  

  

 

This week the New Yorker has a long essay on the the history and development of driverless cars. The writer spent months with Google engineers and various auto industry executives and the piece makes for a fascinating read. Although you walk away amazed at the power of the technology, the central thesis of the story is not that driverless cars are simply the next innovation in luxury, but rather that they are the next quantum leap in safety.

 

 

 

 

 

 

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Contrary to our intuition and grandiose sense of self worth, the computer is actually a much better driver than 99.99% of the general public. It doesn't veer, it doesn't fall asleep, it doesn't drink, it doesn't get bored and it doesn't spill coffee all over its pants. In fact if public safety was the only factor, it would behoove us to legislate that all driving must be driverless by the next decade.

 

The driverless car is simply the next step in the integration of machines into our daily life. It is only jarring to our sense of self worth because it replaces a key activity that most of us perform every day. Yet if you think about it machines already correct our actions on daily basis in many spheres of life.

 

 

For example I am 50 years old and I still to this day cannot accurately spell the word "tomorrow". Indeed I can barely spell every third word I type, but with google autocorrect no one is the wiser and instead of looking like the writings of a 10 year old with ADD, my research is quoted daily across the globe..

 

Certainly you can make the case that but ignoring the spelling conventions of the English language I am a lazy good for nothing slacker that should spend a semester in a high school remedial grammar class. But the truth of the matter is that few us can attain a Spartan sense of discipline, but many of us can achieve near Platonic levels of wisdom with the aid of technology.

  

 Which brings me to trading. The world of retail trading is changing rapidly as algorithms continue to dominate flows in almost every market. When it comes to FX, the MT4 platform is the overwhelming choice for automated trading for the vast majority of retail clients. And there is a good reason for that. The MT4 allows you to program many repetitive, tiresome tasks that are often the difference between winning and losing.

  

Indeed according to some industry literature MT4 traders have a lifespan that is 5 times as long as point and click manual traders and they tend to perform up to 6 times better than screen based traders. None of this should be a surprise. The two main reasons why algo accounts do so much better is because computers don't pull stops and they don't add to losing trades. Indeed ever since I've moved all my trading to algorithms I haven't blow up a single account. That certainly doesn't mean I haven't had losses, but in each every case the losses have been contained to the parameters of my trading plan -- and isn't that progress enough?

  

 

 

 

 

    

 

 

 

   

  

 

  

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Boris Schlossberg and Kathy Lien
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Past performance is not indicative of future results. Trading forex carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade any such leveraged products you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading on margin, and seek advice from an independent financial advisor if you have any doubts.

 

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Jumat, 15 November 2013

Boris's Weekly Email - Back of the Envelope Trading Adivce

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Back of the Envelope Trading Advice  

  

 

What follows is strictly my own opinion and by no means should be taken as gospel by anyone, but it may help to serve a guideline for those contemplating trading FX.

 

 

 

 

 

 

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For the sake of argument assume that 1 pip = 1 basis point (1/100th of 1%)

 

1. How much should I risk on each trade?

 

 

If you are trading frequently ( 3 or more times each day) you should never risk more than 1% on each trade. What does that mean in real trading? If you are trading with 25 pip stops your leverage should not exceed 4X (25X4=100 pips =~1%) Why? Because the more you trade the more you lose. Just like a soldier who spends all of his time on the front line will likely get strafed by a stray bullet, so too if you expose your capital to the market on a day to day basis you will get hit by volatility.

 

Most traders focus on consecutive losers and then simply adjust their risk control from there, but that is a very deceiving metric. Losing in trading rarely happens by you making 10 stop outs in a row, but rather like this - win, loss, loss, win, loss, win, loss, loss, loss, win, win, loss, loss and so on until you've died a death of a thousand cuts. That is why keeping risk control at 1% is very important. The idea is to try to contain your drawdowns to no more than 25%-35% so that you can have a realistic chance of recovery. Remember, if you draw down 50% you need to make 100% just to get even..

  

 If you are trading once a week or less you can risk up to 2.5% on a trade -- so a 100 pip stop would mean that leverage should be no more than 2.5X

  

2. Are there ever any exemptions to these rules?

  

Generally no. But if you are trading a very. very high accuracy setup that is not too frequent and has tight stops then you can raise your lever factor to 10. For example I trade a strategy that is supposed to be 80% accurate using 25 pip stops. In this case I lever up 10X and risk 2.5% on a trade. That is MOST risk I will ever assume. (Note that is NOT the most risk I will suffer in real trading as gaps in pricing could turn a 25 pip loss into a 100 or 150 pip loss resulting in 10% or 15% loss on a trade. That is why you have to use such modest leverage in the first place. On any given day you can have your head blown off by unexpected volatility)   

 

3. I hedge -- can I ignore all your advice?

 

If you are non-US trader you can hedge your account by going both long and short the same pair which provides many traders with a dangerously false sense of security. Hedging is essentially volatility selling. You are basically betting on the currency pair bouncing up and down around some equilibrium level. So when it falls you cover your short position and when it rises you sell your longs. The problem happens when chop stops and trend begins. Once you've covered one leg of the trade you are essentially trading without a stop. So if the pair falls and you covered your shorts you are now long with no stop. Hello margin call.

 

The truly dangerous aspect of hedge trading is that it is like a disease that kills slowly. You can trade that way very successfully for a long time, but like all volatility selling strategies it only takes one market event to totally blow you up and I've never anyone who was smart enough to walk away from the table before their chips were lost.


 

 

    

 

 

 

   

  

 

  

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Boris Schlossberg and Kathy Lien
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Past performance is not indicative of future results. Trading forex carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade any such leveraged products you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading on margin, and seek advice from an independent financial advisor if you have any doubts.

 

This email was sent to forexhudi.euro@blogger.com by contact@bkforex.com |  
BKForex Advisor | The Desks of Boris Schlossberg and Kathy Lien | NY | NY | 10280

Jumat, 08 November 2013

48 Hours Left to Sign Up for our Crash Course on Trading Forex Fundamentals and News

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Dear
Forex brown,

 

 

48 Hours Left to Sign Up  

Classes Begin Tuesday! 

 

Join Us for an

8 Week Crash Course in Forex Fundamentals and Trading News

 

8 Online Learning Sessions          4 Weeks of Trading News Live

November 12th - December 10th     December 12th - January 22nd

 

Fundamentals · Technicals · Money Management

 

ALL the Ingredients You Need for Trading in

One Short, Simple Battle Tested Trading Course,

Followed by LIVE Trading with OUR MONEY

 



We Start with the Basics then Move into Trading.

Here's What You Will Learn:

 

Lesson #1 - An Easy Guide to Understanding the Global Economy - Macroeconomics for Traders

  • What is Economics and Why Should You Care?
  • What are the 3 Ms of the Forex market that Drive Most Currency Movements?
  • How to Filter Daily Economic News into Key Powerful Facts to Help Guide Your Trades

 

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors.

 

Lesson #2 - The Fundamentals that REALLY Move Markets - Everything from Central Bank Intervention to Fixings to Fair Value of Currencies

  • Everything you Need to Know about High Beta (Risk) vs. Safe Haven Currencies
  • Learn How to take Advantage of Central Bank Interventions
  • Learn why Daily Fixings can Affect Your trades and What You Can Do About it

Lesson #3 - How to Predict Economic Data Like a Wall Street Pro

  • Top 10 Most Important Monthly Reports Every Currency Trader Should Know
  • Learn to Forecast Data just Like a Wall Street Economist
  • Learn which Economic Reports may predict Employment, GDP and Retail Sales reports for all the Major Currency Pairs
  • Acquire the Trading Edge you Need to Anticipate News    

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors.

 

Lesson #4 - Peek Over Our Shoulders - A Private Tour of Our Trading Screens

  • Shortcut to all the Key Resources every Currency Trader Needs at His / Her Fingertips
  • Find out How to get Real Time Economic Data for FREE
  • The Best Charting Software Packages to Track the Market

Lesson #5 How to Trade the EUR, USD, GBP, JPY

  • Why is EUR/USD different from all other pairs?
  • How can you profit from GBP/USD volatility?
  • 2 Powerful Driver of USD/JPY Flows

Join US! Seating is Limited.

Classes Begin November 12th

 



Lesson #6 - How to Trade the AUD, NZD, CAD, CHF

  • What are the best hours to trade AUD/USD?
  • Why is the Canadian dollar no longer an oil play?
  • What single event could force the Swiss franc to break its peg?

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors.

 

Lesson #7- Turn Economic Data into Currency Trades.

Trading forex carries risk.

  • Learn how to position for big moves by trading news proactively
  • Learn how look for small, steady setups by trading news reactively
  • Learn a step by step news day trading system that tries to achieve 4 out of 5 winning trades.

Past performance is not indicative of future results.

 

Lesson #8 - Proper Money Management Rules To Protect Your Account

  • Learn the single biggest mistake all forex traders make and how you can try to avoid it
  • What are the hidden risks of trading Forex and what can you do to protect yourself
  • How to make risk control an automatic part of every trade you place

Putting It All Together

  • How to develop a Professional Trading Plan with a Top Down Approach
  • How to fuse Fundamentals, Technicals and Sentiment to time the trade.
  • How to manage the trade for maximum profit potential.

Trading forex carries a high level of risk and may not be suitable for all investors.

 

BONUS****

 

4 LIVE NEWS TRADING SESSIONS!

 

SEE US PUT THEORY INTO PRACTICE WITH 4 WEEKS OF LIVE TRADING USING OUR OWN REAL MONEY ACCOUNT  

 

2 SESSIONS TO ACCOMMODATE ALL TRADERS

 

(Attend one or both! EVERYTHING will be recorded for On-Demand viewing)

 

MORNING SESSIONS FROM 8AM-9AM NY TIME / 12-13 GMT

 

EVENING SESSIONS 8PM-9PM NY TIME / 20-21 GMT

 

Tuesday Nov 12 - Easy Guide to Understanding the Global Economy

Thursday Nov 14 - The Fundamentals that Really Move the Markets

Tuesday Nov 19 - How to Predict Economic Data Like a Wall Street Pro

Thursday Nov 21 - Private Tour of Our Trading Screens

Tuesday Nov 26 - How to Trade the EUR,USD, GBP and JPY

Tuesday Dec 3 - How to Trade the AUD, NZD, CAD and CHF

Thursday Dec 5 - Turn Economic Data into Currency Trades

Tuesday Dec 10 - Proper Money Management Rules to Protect Your Account

 

LIVE TRADING SESSIONS will be held on Dec 12th and then in January after the holidays. Schedule will depend on data

 

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Classes Begin November 12th

 

 



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Kathy and Boris

Past performance is not indicative of future results. Trading forex carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade any such leveraged products you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading on margin, and seek advice from an independent financial advisor if you have any doubts.
 
This email was sent to forexhudi.euro@blogger.com by contact@bkforex.com |  
BKForex Advisor | The Desks of Boris Schlossberg and Kathy Lien | NY | NY | 10280

Boris's Weekly Email - Life is NOT a Porn Movie



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Get a Taste of the Action Explore the Benefits of Being a BK Member 
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Life is NOT a Porn Movie  
  

There is a very funny video on the web called the difference between porn sex and real sex that makes clever use of vegetables and a female narrator with a proper British accent to blow up most of the porn myths about sex. For example did you know most men are closer to 5 inches rather than 9, most women have NOT had a lesbian "vacation" and that the average sex act lasts a whopping 3 minutes long?






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The video is as subversive as it is entertaining because it shines the light of truth on our very common human fantasies.

When it comes to trading we of course have our version of investment porn that usually takes the form of a post such as this one that I saw on Elite Trader a few days ago,


You hear it over and over: never risk more than 1 percent of your account on any trade.
Others say 2% or 5% and I've heard of some risking no more than 0.5%.
But I've been aware lately of the risk I face of trading too small.
If I went my trading career only ever risking 0.5% and executed 100 trades per year, assuming a risk:reward of 1:2 and win rate of 0.5 I'd grow my account by 25% annually. If on the other hand I risked 2% using the same strategy I'd grow my account by about 250%.
Over 5 years, assuming I efficiently compounded, at 0.5% risk I'd have a return of 300%. But at 2% risk the return would be more like 10,000%.
By trading too small I'd risk missing out on a significant amount of profit.
According the maths (British spelling) over that 5 year run I'd be likely to experience a losing streak of 9 losses in a row. At 0.5% risk that would be a 4.5% drawdown and at 2% risk an 18% drawdown. The 18% drawdown wouldn't be fun but it wouldn't matter in the long run, the return is still 10,000%.


There is just so much wrong with that type of thinking that I don't even know where to begin. But let's start with the idea of a losing streak. First and foremost you would be lucky to have a losing streak of only 9 negative trades in a row if you were daytrading the market. It is not uncommon during tough market conditions to experience losing streaks of 20 negative trades. But more importantly drawdowns in trading have nothing to do with losing streaks. The toughest, most insidious drawdowns go like this -- win one, lose two, win two, lose three, win two, lose one win one, lose two and so on and so on and so on.

Unless you are an idiot who trades with no stops, drawdowns in speculative markets are not the result of one or two badly placed trades, but rather a death by a thousand small cuts. Indeed even the most successful day trading systems spend the majority of their time basically breaking even and make most of their gains in equity over only 10%-20% of the trading days. So your chances of consistently making 0.5% every day and compounding that to some astounding 100 fold gain in equity are virtually nil.
  
 Yet like an everlasting erection, the fantasy of 0% to 10,000% gains in a matter of several years is the investment porn that is sold to traders on a daily basis. As we get older we all become better at distinguishing between fantasy and reality and most of us understand quite well that life is not a porn movie. But when it comes to trading, too many of us still fall for the dream of making millions from nothing.  
    



   

  

  
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Does The Buck Stop Here Weekly Forex Technicals 11 11 11 15 13
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Each With a Game Plan and
Specific Stop and Exit Directions

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Sincerely,


BSignature

Boris Schlossberg and Kathy Lien
BKForex.com

Past performance is not indicative of future results. Trading forex carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade any such leveraged products you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading on margin, and seek advice from an independent financial advisor if you have any doubts.


This email was sent to  by contact@bkforex.com |  
BKForex Advisor | The Desks of Boris Schlossberg and Kathy Lien | NY | NY | 10280