Tag Archives: Trading

31 May

This weeks analysis

I have enjoyed a rare Monday off work. The UK had one its dozen or so bank holidays today, and the US markets were closed for Memorial Day.

It meant an opportunity to sleep a little longer and take a long walk along the beach and reflect on life in general.

I grabbed my phone and called as many UK friends as I could get hold of. The mission was simple. What are you going to vote on the 23rd June?

My phone reveals I called 17 friends (I thank them for letting me disturb them on their Bank Holiday Monday – a very sacred day in the British calendar – a day where you can with justifiable reason get pissed on a Sunday night without remorse).

Of the 17 people I called, who predominately are financial professionals, there were not a single one of them who would vote to stay in the EU. I was quite surprised, so when I pressed for a reason, I got the same answer over and over:

  1. Emigration Concerns
  2. Bureaucracy

Most of them felt there was something very disconcerting about the whole campaign. “It feels like scaremongering rather than a democratic debate”, one said.

Amen. I am not allowed to vote naturally, so I can stand aside and observe my poor friends attempting to sort shit from channel. AND there is a lot of the former.

Those two points above don’t actually have much to do with the original plan for a Common Union. The Union was intended to increase trade flow and thereby also competition and it did. The emigration concern is a another point altogether, one that reflects a growing concern of democratic impotence, as a super power beyond reach decides from afar what is right and what is wrong.

The Brits are individuals. They always have been. Someone should remind them in what dire straits they were in during the 1970’s despite their membership of the union, and how they sorted themselves out in the 1980’s under a certain Iron Lady. That had nothing to do with the EU, and everything to do with the spirit of a United Kingdom.

In the Financial Times I found a quote from Nifco’s Mr Matthews: why would Britain even contemplate leaving the EU. You have enough challenges in business as it is. Why would you put yourself in a more difficult position?

Yes, indeed. Why would you? May I offer an answer? Because life is more than just business, and the EU has moved from being just about business, to being about what you can and can’t buy, what you have to wear and what you can’t wear:

http://www.dailymail.co.uk/health/article-186684/EU-outlaw-popular-vitamins.html

https://fullfact.org/europe/eu-banning-high-heels-hairdressers/

and then there was the one about the bent bananas:

http://www.telegraph.co.uk/news/worldnews/europe/2453204/Bent-banana-and-curved-cucumber-rules-dropped-by-EU.html

I was asked what I would vote. I said I had not made up my mind. However, for those Brits who are reading this blog (the reason I write it in English is so both the super intelligent Danes with their amazing language abilities (!) and the “why would I need to learn another language – you all speak English” Brits – can read it) I would like to take this opportunity to remind you of a few things:

  1. You were great before the EU. You joined in 1973 with Denmark and Ireland. If you vote to stay, you may just risk that you will slowly and surely be stripped of your ability to self-regulate. Did you see this one: http://www.dailysquib.co.uk/business/19041-eu-wide-tax-id-numbers-planned-keeping-track-of-every-citizen-in-europe.html
  2. Do you ever wonder how Norway and Switzerland have managed to stay so wealthy? Norway is the 6th richest country in the world (oil), and Switzerland is number 10. Denmark is number 21 while Britain is number 27.Norway and the Swiss refuse to be part of the EU. They are doing fine!

Enough said. It is not that I don’t see the argument for a union. It is the argument that I am unable to decide what I do in my own house, because I have signed up for a union which is SO MUCH MORE than just a trade union. It is a union on how to live my life.

This week will be explosive. We have the end of the month coming up. We have a banking sector which is beginning to move in anticipation of a rate hiking cycle in the US. Deutsche Bank has rallied 20% in the last week!!!

We have a Non-Farm Payroll release on Friday; one of the most eagerly anticipated numbers all year, now that the rhetoric from the central bankers of the US is heating up, agitating for a rate hike.

You also have the ECB talking on Wednesday.

How do I stand? After the strong rally off the lows in the DAX index, I think we will see higher prices going into June. I think the market is ready to begin a protracted rally into September, as long as the fundamentals (Friday!) can substantiate it.

13 Apr

My thoughts to the current market

I was unable to post my thoughts earlier today. I had a 4am start.

I would like to give my thoughts to the current market and the forecast that I have made.

  1. I woke up early this morning to find the market significantly higher in Asia. As a result of it I started buying European indices and shorting Euro Dollar and Sterling Dollar. I am still in some of these trades. (Here is stupid story: I sold short FTSE because I thought it had gotten too expensive. I am losing on that trade, and I deserve to lose. There is no such thing as “cheap” or “expensive”, and I have no idea why I succumbed to this idea this morning. Maybe I was not concentrating.)
  2. I am still position short Dow Jones index where I am currently losing several hundred points. I am in with 10% of my proposed stake size, and I am watching the situation closely.
  3. In the meantime I am trading the markets intra-day.
    Tom Hougaard thoughts to the current market and the forecast. Analysis, Dow index, Forecast

I have seen nothing yet which negates the forecast. On the contrary this is what I have seen many times before. For example at the 2009 low I knew I was looking for a low, and the sentiment got more and more negative. It took the market 3-4 more days than I had expected before it turned. When it did turn, it turned with a vengeance.

I agree it would have been better to forecast a big move up. I will have to be open to possibility that the markets have turned a corner and will continue to move higher. There is only one thing more stupid about being wrong: to continue to argue you are right, when you are clearly wrong.

Tom Hougaard

Tom Hougaard

12 Apr

12 April 2016 – thoughts ahead of the day

In my weekend analysis I wrote that I was bearish stock indices. I based that opinion on a method I have developed over the years. I have used it to forecast many tops and lows over the last 15 years. The forecast is based on weekly charts, so I am not too concerned what happens intra-day. This method is used to trade the big moves.

So going into the trading day Monday (yesterday) I knew that this week could be the beginning of a very substantial move down. I immediately started shorting indices yesterday morning, and I thought I was going to get rewarded for my boldness. That was not to be. Someone somewhere said something. Who know what they said, but the effect was obvious. The market reversed on a dime, and the DAX was strong all day.

The Dow took its cue from the DAX and it too rallied most of the afternoon. It is during times like that you begin to question your forecast. It is also during times like that – that you have to remind yourself that the forecast is based on weekly charts, so it should not matter what happens from minute to minute intra-day.

This leads me to the point of this story: who is buying? Who is it that is buying? How many times over the last week of trading have I seen a very strong open in the Dow, and then it all just fizzles. The Dow probably should be stronger. The dollar is strong, albeit a little weaker over the last 10 days. Oil is recovering well. Yet whoever it is that is pushing the Dow up during the first hour hasn’t got the ability to keep it there.

Monday’s trading session was bad news for the optimists. There are no buyers above 17,700. Now we are 150 points lower again, and my forecast is looking better. I digress. Let us trade the market, and not the forecast. Anyone can forecast, even me, by flipping a coin, and calling heads bullish and tails bearish.

There is no traction in the Dow above 17,700.

There is no traction in the Dow above 17,700.

Instead let us understand what is going on underneath “the bonnet of the car”, so to speak. Stocks got what they want, didn’t they?

  1. Central banks are behind them – supporting them
  2. Oil is recovering well – another $10 and it has doubled since the low of $25
  3. There is so much worry about earnings, yet the Dow is sat just a few hundred points from an all-time high.

And yet we keep failing at the most critical times, like today. AND why is Gold so strong? WHY is YEN so popular (safe heaven).

11 April 2016 Dax index 30 min chart

The DAX index is displaying perfect harmonic moves, which suggest we are headed back down to the lows.

Conversely, we keep “failing” – or not failing, as it is – just as the markets look like they are about to free-fall. Something is still supporting the market. It is turning out to be quite the tug-of-war, and I think the earnings season will force a solution.

Here is my position: I have put on long-term short positions in stock indices. I have a sell signal, and I have executed the plan. In between I will trade in and out of the market day trading style, like a good student of the markets.

I will talk to you again tomorrow.

Tom Hougaard

Tom Hougaard

11 Apr

1-day course on trading techniques in London

Dear traders
It is a rare event when you can place two trading personalities at the same place at the same time. On the 28th May 2016 the legendary US trader Larry Pesavento and the Danish day trader expert Tom Hougaard will give a 1-day course on trading techniques in London.
It will be a long day, but not boring. The two have decided to split their time between them over a full day of education.

1-day course on trading techniques in London includes:

  • You get a course handout with the techniques Tom used to generate 38% in just 5 sessions.
  • It is the same techniques he used to generate 137% in one year.
  • You will get Larry’s book as well as being taught by the legend himself.
  • You will be on his alert email list for 30 days after.

Take a look at the complete day and book here

1-day course on trading techniques in London

 

1-day course on trading techniques in London

07 Apr

When Everything Goes Wrong

The next time you go through a tough period in your trading, and you are thinking about taking a break, do me a favour: please read this brief post.

I have a question you need to consider. Which one of these two scenarios do you closest fall into?

quote true adventure begins-when everything goes wrong

Scenario 1:

You have been trading like a man on fire, and you have very quickly built up your trading account. Maybe you even doubled the account or quadrupled it – maybe more. The market environment suited you, and you were able to capitalise well on the market movements. Yes, you did have losing trades, but it didn’t bother you. You were in control of your trading. You took the losses and you did your best to let your winners ride.

Then from one day to the next day things changed. It started off slowly. The peak of your account was behind you, and you seemed to struggle to read the market well. At first it was just a normal drawdown, but then it turned ugly. You had a really bad day or bad week, and it only stopped, when the day ended, or the week ended. You lost a significant portion of your gains. You were still up, but you were far away from that equity peak you were so fund of and proud of.

The next day or the next week you were back in the saddle, and you felt ok about yourself. You realised that losses are a part of the trading profession. Yet somehow you could feel yourself placing trades that were bigger and more desperate than previously. It was more of the “hope” kind of trades than trades based on sound technical or other considerations.

It wasn’t long before you continued where you left the previous day or previous week. Now you are very unhappy with yourself. You have realised that you need to stop right now.

Is this where you are?

 

Scenario 2:

You have been trading with some success but you also had your fair share of big losses. You have perhaps traded well all day only to lose it all on some final trade of the day. It may be that you have traded well all week, but on that Friday afternoon, you gave it all away.

Your account is below where you started, and you jump from one market to the next, without really knowing what you are doing. You feel ill equipped, and you don’t really know what to do next.

Is this where you are?

 

Moving forward

I have losing periods too. I go through these periods with a sense of “regret”. I know intellectually that they are part and parcel of my trading life. Nevertheless it always seems to catch me by surprise when it happens.

It shouldn’t surprise me. There will be times when I am trading like a demon, and there will be times when I am trading like Blind Freddie.

However, the two scenarios above require a different approach. I accept you may not fall in either category perfectly. So I recommend that you read the solutions to both situations, and you see what you can take away from the suggestions?

 

Remedy for Scenario 1

You need to step away from screen for a day. I recommend this because staying in front of the screen can tempt you into trading.

You need to ask yourself: Is there anything you could have done differently?

If there is, then you need to do something about that. If there is nothing you could have done differently, and you have a good methodology, then take a break. The market will be there tomorrow. Right now your body is chemically not in balance, and you are going to experience some very powerful thoughts about getting back to “the peak”. You will get there, but right now, you need to step away until you feel like you are in balance again.

If there is something you could have done differently, it is most likely one or more of the following reasons:

  1. You overtraded and you chased the market.
  2. You were so desperate to catch the next move that you got whipped on the long side and the short side, or you were overtly bullish even though the market kept stopping you out.
  3. You traded too big to make up for the losses you made previously.

What I recommend you do is as follows:

Get the data from the period where it went wrong. Print out the day charts for the markets you traded, and plot the trades on the chart. This will give you a visual representation of what you are feeling: the loss. You will see the loss for what it is.

So what is the loss? Your particular loss could have been just like any of the other small losses you have had, and that you gave no thought to. Yet somehow this loss or these losses cost you a lot more. You either traded too big or you gave the trade way too much leeway.

Whatever the reason, make sure something good comes of it. There is nothing like a little book of “big mistakes” to remind us of the ever-lasting truth in the markets: We are on our own in the markets, and either we learn from our mistakes or we don’t. If you don’t create a little memory of this “un-memorable” moment, then you risk the lesson will be forgotten.

 

Scenario 2:

I was once in Scenario 2. I moved away from this when I got some trading techniques that worked well. I recommend you spend some time working on two matters:

Develop some solid entry techniques by doing your own studying or pay someone to teach you some solid techniques. I teach solid techniques, but this is not a marketing pitch. This is a suggestion to the path you need to take from here. There are plenty of avenues to take when it comes to education.

Whatever you do, please make sure they suit you. You need to work with techniques that fit your style of trading. Mechanical entries are great like that because they tend to be “time scalable” to suit a time frame that fits you.

The second thing you need to consider is to work on yourself. I have written a trading psychology manual on this subject. The point to take away from this (irrespectively of you are reading my manual or say the book by Mark Douglas about trading psychology) is that we often make the best trades when we are in perfect balance, and we have a clear idea of what we are trying to achieve.

When I am in my most balanced self, I trade well because I am patient, and I am flexible. If I lose one of those two traits, I tend to not trade well.

I hope this will help you. If I can help you any further, then please drop me an email using the form on the contact page.

Kind regards

Tom

Tom Hougaard