How do you think about turning your forex trading failures into successes?

Jeff Bezos is the richest person in the world.  Can his lessons for business, work for you in your trading?

The allure of gold...

Gold's history dates back to at least 3100 BC and has probably been traded before then. Over the years Gold has continually increased in value. More recently, since the financial crisis of 2008, the price of Gold has rapidly increased.

This huge increase over the period made it one of the of the most profitable markets over the last decade. In a decade of uncertainty Gold was bid as a reliable safe haven. As paper currencies were viewed with suspicion the lure of Gold and it's proven long term value proved alluring to many.

It has served as a refuge for investors fearful of putting their money into less reliable markets. In the chart below you can see that the price of Gold increased from around $967 an ounce to $1900 an ounce at its peak in 2011.

However, despite the continued uncertainty we have seen lately with the US China trade war, the weakening of Turkey's Lira, the convoluted way NAFTA has been handled the price of Gold has been rather muted. In the chart below you can see the steady fall in Gold prices since June 2018. 

Tip #1 Watch the Federal Reserve and the Midterm elections for Gold's future price

Over this last year much of Gold's weakness is being attributed to US dollar strength. The strengthening US economy and the Federal Reserve's anticipated two rate hikes has led to the US dollar being viewed as a preferred safe haven to Gold.

In all of the US and China trade war talks it is thought that a strong US economy would be well placed to weather any storm. However, the strong US dollar has been compounded by other central banks like the European Central Bank, the Bank of England, and Japan being slower to increase their interest rates.

The strengthening US dollar against the Lira and the Yuan have only compounded the problem. So, the higher the US interest rates the less appealing Gold is since it has no yield value. It is also worth watching Mid-Term elections coming up in November and if the Democrats gain control of the House of Representatives the US dollar would likely lose ground against Gold on the lack of certainty going forwards.

Tip #2 Gold tends to appreciate in low interest environments

The world has been in a period of ultra-low interest rates since the financial crisis of 2008. The Swiss National Bank, for example, is still in a period of negative interest rates. During these times Gold has more attraction since if bonds and saving accounts only offer poor returns, why not place your money in the relative security of Gold.

However, as interest rates increase across the world Gold will likely continue to depreciate as investors place their money elsewhere. Gold has particular interest in a low interest and high crisis environment. As the crisis recedes and interest rates rise then Gold's price recedes. It is a cyclical market going through 'waves' of interest.

Tip #3 Think long term, Gold has been in a strong uptrend since 1971

Looking at the chart below you can see that Gold has appreciated considerably since 1971. If you had bought and held since 1971 you would be sitting in a very nice profit now. In this context the current prices might represent a good time to put in some long-term longs. 

An example where we might see Gold being bid would be in the situation of the dollar being sold off. So, by using the outlook for the dollar it may be a good indication of where to add some medium/longer term longs.

Tip #4 use moving averages to define and limit your risk

Timing of entries can be very difficult and the use of the key moving averages like the 100 and 200MA can provide key places to both enter and define your risk against. In the monthly chart above the 100 and 200 MA is plotted on the Monthly chart.

In recent months price has tested the 100 MA and tried to find support against it. If a strong US dollar environment continues then the 200 MA is below, just above the key 1000.00 level.

This will provide a key pivot point for Gold moving forward and should provide a medium-term line in the sand for the direction of Gold. Stay above is bullish and move below is bearish

Tip #5 Ignore the interest rate correlation when trading day to day

Of course, not everyone will want to hold their Gold positions for months and years. If you did, you may be best placed to average in by buying in small increments across a larger timescale. The benefit of this is that your price is 'averaged' out across a range of different values.

However, for trading Gold on an intraday basis the inverse correlation between falling interest rates and increasing Gold prices should not be your focus. Instead look at the use of key technical tools such as moving averages, pivot points and candle stick patterns as well as the market sentiment for that day in the market.

This article was submitted by UFX.com

Support and resistance explained

How to navigate a path through an upcoming risk event

A risk event is any market event that the market is anticipating. For example, this could be an anticipated rate statement, a speech from a central banker, or a long awaited trade deal announcement like Brexit or Nafta. There are two key ways to trade risk events and that is by trading into them and/or out of them. 

Trading into a risk event 

The first aspect to be aware of in trading risk events is to be aware of the calendar of events that is coming up for the next week. These are widely available and most brokers have their own calendar you can access. Every Friday each risk event for the coming week will have the expected readings published so you can know what the market is expecting for the up coming release. These expected readings are compiled from the opinions of experts as to what they are expecting from the up coming releases. Your next job is to interpret the expected upcoming data in line with the market context or central banks outlook. For example, consider the following hypothetical situation. If you have the jobs number coming out for Australia in the next week and it is expected to be a higher reading than previously and you also know that the Reserve Bank of Australia has stated that their focus is on an increasing jobs number in order to be sure of an interest rate rise, then you can be confident that the market will be buying AUD into that data announcement. The reason the market would be buying AUD into the risk event would be because it is expected to be a positive reading. The positive reading would confirm the RBA's criteria for raising interest rates and the AUD would be bid on these expectations alone. 

To take these kind of trade you need the expected positive figure to agree with the general positive outlook of the currency, as in the example above. You want to ensure there is a match with the 

expected reading that is in line with the general outlook for the currency. e.g. trade positively expected readings with positive outlooks for a country. You can also do the vice versa. So, in order to effectively trade into a risk event look at what the central bank is focusing on and the underlying fundamentals. Once you have this information you are ready to start considering trading into risk events. 

A final step in preparation 

Now that you think you have a risk event to trade you can start to read other analyst and financial commentators to get a feel for what the market is thinking. Try to read from a few different sources to get a good feel about what the market is thinking about the upcoming risk event and the different scenarios that may occur from the data release. You will now have a really good feel for the market anticipation of the event you have chosen. 

Entry 

Now simply enter the market at a logical place where you can define and limit your risk. The actual entry price is not the most important thing. However, you need to enter the market before the actual risk event is released and you want to make sure that your risk is sensible. 

Exit 

You can now exit the trade before the announcement or move your stop loss and try to play for more out of the risk event. 

Trading out of a risk event 

The way to trade out of a risk event is where there is a substantial deviation from what the market was expecting. A good example of this was found on the 17th of August on the USD/CAD chart when there was a significant deviation for Canada's CPI reading. It was expected to be 2.5% y/y and instead it was released as 3.0% y/y. This was a significant surprise for the markets, and at the time increased the probability of a Bank of Canada rate hike in their September meeting. Now that you have your surprise deviation you are in a good position to trade. You could have entered short on a retrace of the spike down. 

A similar way of trading out of a risk event is when the market is heavily expecting one outcome, but that outcome changes. A recent example of this can be seen below when the US was widely expected to impose tariffs on $200 bln worth of Chines imports into the US. The market was expecting these tariffs to take effect, but then there was a surprise announcement that the US would start negotiating with China again. The market responded very quickly and went from a risk off bias to a risk on bias instantly. AUD/JPY gained very quickly on the announcement as a good proxy for 'risk on' trading. For savvy traders who are tuned into the sentiment and , quite literally, into the news could have profited from the resulting move. These kind of statements that are squawked really need to be responded to within the first few minutes to be profitable for a trader on a very short term basis 

The key aspect of trading into and out of risk events is having a good grasp of what the market is expecting from a certain event. By aligning yourself with the market expectations you are going to have a decent grasp of future direction. A key aspect of executing these strategies is having a good technical grasp of how to limit your losses, while offering yourself decent gains.

The greater fool theory explains almost every bubble

Some things have an intrinsic value. The most-obvious example is a stock with a dividend. The absolute floor for an equity is its dividend and so long as their is a profitable business behind it, the value is a multiple of that dividend.

Other things don't have an intrinsic value. This includes virtually everything that doesn't produce a yield. Oftentimes, prices of those things rise and fall based on future expectations of what profits or yield might be. In other cases, there is an estimation of utility. Oil, for instance, can be refined into gasoline which can be used to move things or for dozens of other uses.

Oftentimes there is a dispute about utility or a dispute about future profitability, which can lead to a dispute about prices. One way to resolve this is a model but oftentimes that's so fraught with assumptions that it's useless.

So how do you establish prices? Obviously, via the market.

This is when storytelling, which is another way of saying a sales job, takes over.

Cryptocurrencies are an obvious example. A Bitcoin has no yield but it has some utility. To some, that utility is replacing the US dollar as a global transparent currency. To others, it's a way to facilitate transactions. And for others still, it's a handy tool for criminal transactions. How you price it then, depends on how you view the future utility.

Or does it?

Another way to price it is simply looking at how others view it. You might believe that all of those utilities are baseless but if you believe that others are buying it because they believe those things, then it's rational to buy.

That reasoning is why I argued more than a year ago that Bitcoin wasn't a real currency but that it was still going higher.

The only trade on BitCoin is the hype trade. The fundamentals don't matter. The only thing that matters is how enthusiastic the true believers are.

I also touched on that here:

This is all called the greater fool theory.

The idea is that something can always rise so long as there is another person who believes it will.

You can argue that Bitcoin was simply a great story. It was full of buzzwords about transparency, trust, tracking, efficiency plus it was just complicated enough that it wasn't accessible yet alluring in the way that all technical innovations are.

The price essentially tracked the rise in its exposure. As more people learned about it, a certain portion invested.

The problem is that eventually you run out of people.

For crypto, a month or so before the top, I remember talking to a distant relative who is an absolute blowhard. He had just bought some and I told my wife that had to be the beginning of the end. Other people were telling stories about their grandparents were asking them how to buy crypto.

In comments this week, Ethereum founder Vitalik Buterin touched on this:

Making buy/sell decisions based on what you hear from people on the street sounds ridiculous but some of the most famous traders are just that.

Joe Kennedy, John F Kennedy's father, famously said he sold his entire stock portfolio before the 1929 crash because a shoeshine boy gave him some stock tips. And he figured that when the shoeshine boys have tips, the market was too popular for its own good.

Here's how John Maynard Keynes explained the Greater Fool Theory:

Imagine a beauty pageant, where the judges knew that, because beauty was in the eye of the beholder, the contest would be decided on the judge's perception of beauty. Someone who wanted to predict the outcome would have to assess the judge's perceptions, not the contestant's beauty. As a result, your vote for the winner would not depend on who you thought was prettiest. Instead, your vote would depend on how you thought the judges would vote.

How do you trade a bubble?

In anything where there is no intrinsic value, utility or there is so much uncertainty that it's impossible to evaluate, there is no real analysis of the market.

Instead, you are simply evaluating what other people think.

The great bubble at the moment is in marijuana stocks. The story is that it will be legalized. That's already happened in Uruguay and in October it will happen in Canada.

That set off a bonanza of speculation about how companies will make a mint selling marijuana. Pot stocks have absolutely soared. It started last year in Canada with some producers rising 10x in a few months.

A second wave of the bubble has kicked off on the belief that marijuana will eventually be legalized globally. It ramped up with the Nasdaq listing of Tilray; it's the first US listing of a pot company and it's average a 15% gain per day since it's was launched.

Someone who bought on the IPO, or in early Aug, is up more than 500%.

Here's the problem. Marijuana is extremely easy to grow. It's called weed because you can grow it in a ditch. Sure, the quality might vary but if you could grow a lower-quality iPhone in your back yard, then Apple wouldn't be a trillion dollar company.

But in a bubble that doesn't matter. Marijuana legalization is a great story. People undoubtedly spend a lot of money on pot and companies could make money doing it. It's not a story I believe yet it's compelling enough that fools around the world are going to believe it.

ForexLiveHere's the Google search trends chart for 'weed stocks'.

The lesson is simple. When you're evaluating some assets, you don't necessarily need to be able to make sense of them. You are just evaluating the story. If it's compelling enough, the asset will continue to rise until the supply of fools is exhausted.

Simply: The price you should buy something isn't always its intrinsic value, or utility -- it's what you think someone else will pay for it.

Fail to plan, plan to fail

It's not that bad

I posted a part of this chart earlier but here's a longer version. It shows Canadian GDP for the past 50 years. It's similar in most of the world.

It's beautiful chart going from the lower left to the upper right with some tiny dips.

I feel like the perception of growth is something far different.

I don't know if it's the scars of the crisis or the experience of a few outliers like Italy and Spain but the reality is that recessions are bumps in the road. Yes, for some people who lose jobs/careers it's heartbreaking but as investors we see recessions as these mythical dragons to be feared but they're more mosquito than monster.    

As investors and traders, recessions are incredible opportunities to find mis-priced markets and if you have a longer view and a steady hand then your path -- like this chart -- will be higher.

Five patterns for new forex traders

Being new to trading forex can often feel like wading out into dark choppy waters. It's intimidating, unknown and overwhelming. Continuing the water metaphor, the internet is sea of information regarding trading, reading charts and extrapolating information from them.

Figuring out the best indicators for your strategy and trading goals can take years of trial and error, fine tuning and endless small adjustments. You only just started trading a few months ago, trading with actual assets for even less, so you probably don't know where to get started. Luckily this article will introduce you to 6 indicators which are popular amongst new traders.

1. SMA - Simple Moving Average

The Simple Moving Average indicator takes the sum of all the closing prices of a specific time period divided by the time intervals. That makes it sound a lot more complex than it actually is, in simple terms let's say you want the SMA of the last 10 days, you would add the closing prices of the last ten days and then divide them by 10.

Depending on the time frame that is used to calculate the SMA it can show price changes rapidly - if the SMA is calculated on a short timeline or slower to react (but better at revealing long term trends) when the timeline is longer. 

Short-Term

Longer-Term

As you can see the longer term SMA seems to "normalize" the price movement giving you a better gauge of emerging longer-term trends, where as the first shorter term SMA shows smaller fluctuations in the price, which is a better analytical tool for traders using shorter-term strategies such as intraday.

2..RSI - Relative Strength Index

As the name indicates RSI is a gauge of a trend's momentum that can indicate whether the asset being analyzed is in the overbought or oversold region.

The calculation of this indicator is relatively easy, please note that RS in the equation below is the Average gains during upswings/Averages Loss during downturns within the timeframe being looked at.

RSI = 100 - 100/(1+RS)

RSI oscillates between the range of 0-100 if the price moves below 30 that means it is in the oversold region, if the price moves above 70 that means it is in the overbought region. Why is this important though?

If an asset is oversold or overbought, there is high probability the current trend will undergo a reversal. Another way certain traders use RSI (cross-referencing it against other indicators to avoid false signals) is using a drop below 30 as a "buy" signal and a cross above the 70 level as a "sell" signal and anything in between a sign to hold the position.

3.Moving Average Convergence Divergence (MACD)

MACD is a slightly more complex in calculation and analyzing: it is the difference between an asset's 26-day and 12-day exponential moving averages and a 9-day EMA is plotted on the MACD also. These EMA's are a variation of moving averages that puts emphasis on more recent prices.

The MACD points towards a bullish trend when it moves above the 9-day EMA. As you can see in the image above, MACD indicator features a histogram, when the asset is in an uptrend it expands, whereas when its in a downtrend it contracts.

4.  Alligator

Easily the most colorfully named indicator the Williams Alligator Indicator is composed of three normalized moving averages, calculated each to 5, 8, 13 periods which smooths out the indicator's movement. 

This indicator uses a loose variation of the 80/20 principle, stipulating that the market moves - 15-30% of the time, the remaining time moving more or less sideways. The creator of this indicator believed that most traders (institutional or retail) exit positions at a higher frequency when markets are their most volatile.

The three parts of the alligator are similar to its terrifying real-world equivalent:

-Lips (the green) smoothed by the following three bars after a 5 bar SMMA

-Teeth (the red) smoothed by 5 bars following 8 bar SMMA

-Jaw (the blue) smoothed by 8 bars following 13 bar SMMA

As you might have extrapolated from the breakdown, the Lips move the quickest and the Jaw the slowest. If the Lips cross through the other lines downwards a short signal is given, if it moves inversely (from the bottom of the chart to the top) a long signal is given.

When the Lips are going down and cross the Teeth and Jaw the alligator's sleeping the opposite is the alligator waking up according again to the creator. When the three lines are spread apart moving up or down, this is the alligator eating with its mouth wide open. This gives the signal of a general continuing trend when position should be held - according again to Williams.

5. Bollinger Bands

One of the most popular indicators in recent years and is visually similar to William's alligator, but instead of using just moving averages with different timeframes, it also uses standard deviations to plot its lines. The reason many traders swear by the Bollinger Bands indicator is due to it giving more specific short and long signals (comparable to other indicators).

As you can see below where the high price crosses the upper band, a short signal is given and where the low price crosses the lower band, a long signal is given (highlighted by circles on the EUR/USD chart below).

Bollinger bands also occasionally act like support and resistance, like other indicator do (highlighted by squares below). 

Bollinger Bands also help traders identify periods of volatility, as the upper and lower bands will converge when volatility is lower as they diverge when volatility increases. You can see that many of the signals in the chart above are given during what is called a "squeeze", or high volatility/time when the bands converge.

Beware of the False Signal

The reason that makes trading so exciting is the same reason that makes it risky - its volatility. A fool-proof method to give accurate signals have yet to be invented. If there was you probably wouldn't be reading this article, you'd be on the markets!

This is why most traders, analysts and general market-watchers use a combination of indicators to extrapolate data. To further protect themselves against false signals and market volatility many use risk management trading tools offered by Forex brokers.

Planning for success is probably the easiest part of trading but protecting your investment and trading account is the most crucial. So, no matter which combination of indicators you use, make sure you also have robust risk management strategy in place. 

How focused are you on anticipating your forex trades?

How to trade TRY

#4 - Keep an eye on the EUR/USD pair

A far more liquid pair to trade than the USD/TRY is the EUR/USD. The EUR/USD pair is being affected by the Turkish Lira crisis due to the amount of financing that Europe's banks have given to Turkey.

The fear was that if the Lira became any weaker than the Turkish banks and institutions would default on their loans they had taken from Europe's banks. As a result, the Euro lost value with the Lira. So, a smart move, if the Turkish crisis re-emerges, and the Lira weakens again, might be to short EUR/USD.

The pair has a much higher liquidity that USD/TRY, being one of the world's most traded currency pair, and a much smaller spread. Risk is also easier to calculate on the EUR/USD pair than on the USD/TRY pair, so this is worth remembering.

#5 Keep an eye on the news

Turkey introduced a number of measures which have temporarily halted the tumble in the Lira. However, the next direction will be decided by the actions of the US and Turkey. Any improvement in politics between the US and Turkey will be supportive. Recently Qatar injected $15bln of support which helped further stem the bleed of the weakening Lira. 

The key event to look out for though, is a central bank rate hike to start addressing the twin problems of a weaker Lira and higher inflation which is affecting the country. This will cause the Lira to strengthen and is what markets are really wanting to see happen in order to give strength to the failing Lira. 

This post was submitted by LegacyFX

How to trade Germany's main stock index

The DAX is a blue-chip stock market index which comprises of thirty major German companies trading on the Frankfurt Stock Exchange (FSE). In this sense it is similar to the Dow Jones Industrial Average which also shows how 30 large publicly owned companies in the US have traded.

Some of the leading companies in the DAX index are Siemens, Allianz, Adidas, Deutsche Bank, ThyssenKrupp and Lufthansa. Germany is the largest economy in the European Union and in the top 7 largest economies in the world. The DAX is a capitalization-weighted index which means that the companies with a greater market capitalization will have the greatest influence on the price.

The DAX's history

The DAX actually started it's like known as the Börsen-Zeitung and it was started by a German financial newspaper. If you had bought and held the DAX from the 1960's you would be in a very healthy profit now.

The DAX has made strong growth since its inception and it went through 2000 points in 1993, 5000 points in 1998 and during the financial crisis of 2008 the DAX had made it above 7500. The Dax reached its record high this year peaking at 13,596.89 in January. Its current price is 12,346 and the chart below shows how it's value has increased since 1959 when it was priced at only around 300.

The exchange for DAX futures is the Eurex which has a market opening time from 0700-2100 BST time. Trading the DAX can be done day to day as there are many moves to be had. Trading the DAX with SimpleFX is very easy. Here are some top tips for trading the DAX.

1. Be aware of key fundamental drivers

At the moment there is a crisis going on with the Turkish Lira. The reason this affects the DAX is because the nation of Turkey runs on a currency account deficit the worry is that they will end up defaulting on the loans that European banks have made to Turkey.

As a consequence, the DAX has been being sold off on the fear of contagion from Turkey extending into Europe. On top of this crisis the US China Trade war has been weighing on global sentiment and the DAX has felt the weight of that recently too.

So, since the start of August the DAX was sold off and tested recent daily support levels at 12200. It is now looking at testing that level once again with the Turkish situation far from resolved (the Lira is still really weak) and the US China trade war shows a risk of heating up with Trump wanting to announce a further $200 billion in tariffs. 

2. Use key technical tools to define and limit risks

Support and Resistance

Arguably the most widely followed aspect of technical analysis is support and resistant levels. Support and resistance levels are key market levels where price has shown reaction in the past. As price moves towards those levels, which price has reacted at previously, they become significant as points in the market dividing buyers and sellers.

For example, price is now approaching the key daily support level on the DAX which is a previous double bottom at 12200. If risk sentiment returns into the market, the US China trade war recedes, and the Turkish Lira crisis is controlled the DAX will likely rally on the fundamental shift. Traders could place their stops on the other side of the support level in the 12000 region for a play back to the 12900 region.

What does it take to be a trader

Platform review

The MassInsights™ Technology will also help you see a quick change in buy and sell orders. You can even set alerts to be sent to you in order that you can be notified as soon as trend reversal is occurring.

Another key feature is the volatility spotter which, as the name suggests, spots the volatility of certain moves on specific assets. Linked to this is the notification that you get when there is a growth in the number of traders opening positions on a specific asset.

It also depicts large spikes in volume letting you know when more positions are being opened than normal. This could be an excellent feature to use when a fundamental shift has occurred in the market and any substantial increase in volume could be used as a confirming indicator to join the move.

Attractiveness

The layout of the charts is simple and user friendly. Trades can be executed with just one click and then managed from the bar that appears on the bottom of your screen. Furthermore, just one click on the chart aspect of the asset or currency being traded calls up a separate page. 

This page contains information about the asset or currency being traded, information on that market's trading hours, the current price and Daily Volatility. This same page also contains a price chart which has a full range of charting tools and indicators. All with the convenience of a web trading platform. Below is a screenshot of the overview for Gold:

Climbing the path of improvement

All of us want to keep improving in our trading, so how can we keep continuously developing? We achieve this by building on our strengths and working on or around our weaknesses.  

The first thing to do is to be brutally honest with yourself and review these key areas:

• Your Profit and Loss balance
• How do you trade? (Entries, risk, and exits)
• What are your strengths?
• What are your limitations?
• What do you need to improve

Be honest in your evaluation. What kind of trader are you? Intraday or more positional. In the same way that some athletes are sprinters and others are long distance runners work out and decide which trading style suits you.  Once you have evaluated yourself soberly, now look at how to take your trading to the next level.

1. Imagine what the trader that you want to be looks like. What behaviour would you have? How would you trade? Now imagine that trader is given a score of 100.
2. Now evaluate what score you would give yourself out of 100?
3. Then ask yourself, how did you get to point 2? How did you become the trader you are?
4. Now say to yourself, how do I improve my score by just 5 points.

We can then focus on our strengths and work around your weaknesses. Now, your temptation will be to purely focus on your weakness, don't. The key to your trading greatness will probably rely on your strengths being used more. Now, as a child I played soccer in the UK and I was right footed. I worked on my left foot over and over again until I could kick with both feet. I worked on my weakness and I was a good footballer. However, for me , my strength is my ability to speak. I have always been a good speaker,  it is just something that came naturally to me. So, over the years I have focused on my strength of public speaking and as a result I often end up speaking in public, because I have worked on that natural strength. I know now that you should pursue your strengths more than you should try and correct weaknesses, at least after a point (some weaknesses will destroy you if left unchecked, like over leveraging).  If necessary, work around them. We are a tennis family with everyone, apart from me, being very good at tennis. So, if you look at Rafa Nadal when he plays he used to run around his backhand a lot to try and hit as many forehand shots as he can. Why? Because he has a wicked forehand that puts so much topspin on the ball it rips up and high and into his opponent. He plays to his strength unashamedly, you should too. So, yes improve or work around your weakness but your number one goal is to play to your strength. What's your niche? Where are you killing it in your trading? Work it out and do it more.

Play to your strengths

Are you having lots of winning trades by focusing on the squawk during the day? Well, do it more.

 Perhaps, you notice that you are a brilliant positional trader and when you hold trades for a week/months or more you tend to have a higher percentage of winners well pursue that.

 So ask yourself, 'what went well today/this week/this month?' Well, do it again next day/week or month.

Don't ignore your weakness

Have you lost money from poor risk management? Well, address it. Have you been trading in a too emotional state, well think how to manage those emotions.

Write down your new approach 

Finally, jot down a new approach that you are going to take going forward.

Five patterns to look for

Japanese candlesticks are the building bricks of the market. It's necessary to train your eyes to distinguish their patterns so that you can look beyond the piles of price blocks and be able to read and foresee the movements of the price.

Traders often focus on reversal candlestick patterns, although continuation ones are also worth considering. Here are some tips you may find useful.

Who needs continuation patterns?

Trend traders do. Once you have embarked upon a trend, you want to stay in it, the longer the better, but walk away when the market starts smelling of a reversal. Continuation patterns reflect the natural periods of correction and consolidation which take place during a trend. If you locate such pattern, you will be able to join the trend. The important thing is to make sure that you have the young trend that still has potential and not the aging one.

Continuation patterns you can track

There are many various continuation patterns with more or less subtle features. We'll focus on those that are easier to make out and explain.

1)Marubozu

2) Windows

Notice that a "gap" is called a "window" in the language of Japanese candlesticks. Japanese approach involves trading in the direction of the window. Thus, a window during an uptrend implies a further price rise. Windows also become support and resistance areas. A retracement back to the window during a rally allows to consider entering a buy trade.

3) Three black crows/Tree white soldiers

A bearish version of the pattern consists of 3 solid candlestick (black or red - whatever your color scheme), more or less equal in size, each opening within the previous candle's body and closing below the closing price of the previous candle. The pattern signals a healthy bearish market which has strength to carry on.

4) Falling three method/Rising three method

The bearish continuation pattern involves a long bearish candlestick, then 2-3 small bullish or bearish candlesticks inside the range of the first candlestick and the final bearish candlestick that makes a new low.

The logic is that this structure is like a "flag" chart formation. The candlesticks allow to have a close-up view of the price and act at a "micro" level. No confirmation is needed upon the formation of this pattern.

5) A series of 2-candlestick continuation patterns

Such bearish patterns include on-neck, in-neck and thrusting. The key is that after a bearish candlestick in a downtrend, there's a gap (window) down. The bullish candlestick that tries to close this gap, fails to close above the middle of the first candlestick. The lower it closes, the stronger is the downtrend continuation signal. For the uptrend, the similar situation is with separating line pattern.

Additional tips

-Reversal as continuation

The absence of reversal patterns is itself a sign of a trend's continuation. At the same time, if some reversal patterns appear at the end of correction, they may mean a resumption of the main trend.

-The size of candlesticks is an invaluable source of information

Candlesticks usually become smaller as the market is getting ready for a breakthrough. In a strong trend, corrections and consolidations are small and the break will be in the direction of a trend. If candlesticks which appear in a trend are extremely big, a correction is very likely. Candlesticks of medium size signal continuation of a trend. In an uptrend, the middle of a long bullish candlestick will act as support.

-The trend is the king

If you see a continuation pattern formed during a correction, be cautious about it. Use the continuation patterns which form within the main trend.

Remember that there are no certain solutions in the market. The observation of candlesticks helps to increase the probability of a good trade but doesn't guarantee it.

This article was submitted by FBS

Respond to your trading environment, don't just react

Anyone can react, but only a wise man responds.  A desire to react, in the moment,  to our trading environment can be compelling, unexpected and catch us by surprise. As traders we face a constant battle with our self control and a great deal of trading is about controlling strong urges that we have to trade. Often times we need to prevent the strong urges that we have to trade from influencing us. The reaction part of us happens almost instinctively. So, in order to evaluate our desire to trade we need to pause. By inserting a delay into our instant reactive desire we can grow in self-control and discipline. You might recognise this. Have you ever put on a trade, and then removed it only to put it back on 10 minutes later? You are  possibly oscillating between reacting and responding in that moment. We don't want to just be reacting to the markets, we want to be responding. The central pillar of responding well is paying attention.  

Pay attention and be self-aware

Top performers pay attention. It is very difficult to perform well at anything if you are not paying attention. If you are both attentive and self aware you will be better able to manage your habits, your awareness and your ability to be self controlled. It will also give you the ability to empathise.  What has that got to do with trading, you ask? Well, this is a crucial skill in the markets as you start to see what likely moves the market will make next. If situation X occurs then country Y will likely do Z.  Adam demonstrated this in his recent interview posted here with BNN on the Canadian. It can simply be getting a 'feel' for the market. Think of other countries, how will they respond to their situation. At the moment think of China - what will happen next for them. Think about eventualities and empathise with their situations. It will help you be a better trader.

Attention and self-awareness will also help you be aware of your environment. Every day we receive a wall of information. The feeds tick away, the squawk is squawking and analysts are responding. You need to receive this information mentally and then you need to be able to understand it. The problem we have is that when stress gets too much, we lose out ability to make proper sense of our trading environment. We either freeze or just react. In either freezing or reacting we will have stress. Uncertainty and fear will go hand in hand with reacting. The state we want as traders is that we don't want to react we want to respond. A reaction is non-conscious. A response is considered, deliberate and managed. The good news is that we can improve our attention and awareness.

So, this week I have posted a number of posts on our mental state of mind. Why not go through them over the weekend and, if you are not already doing them, use them to stimulate your thoughts on practices you could implement to improve your trading. Have a great weekend and thank you for all the great contributions individuals have made on this thread over the last week.

Developing the right frame of mind for trading.

Thinking straight: Deal with negativity?

Born to win?

Developing a strong trading mindset

Enjoy your homework ;-)

A strong frame of mind

We have already established that trading is stressful (as if we needed persuading), so now let's look at some strategies for helping us to deal with stress. We all need stress to motivate us, so we don't want to avoid all stress. We just want to be able to cope well with stress. 

When we have a losing run or a heavy loss the first reaction we have is a combination of disbelief and anger. It is an emotional response. Now, we don't want to just repress these emotions. They drive our behaviour and can cause us to react. Sometimes we might want to jump straight back into the market to 'get back our losses'. We look for the first half set-up we see, price is at a weekly support so we put in a buy, or price has spiked 40 points on the EUR/USD we jump in. This is almost entirely an emotional response. As we have seen this is the fight or flight part of our brain in operation as we are in a panic mode. We are angry, emotional and in this state we are highly vulnerable to making poor decisions. Perhaps, we could lose months of hard earned profit in a 'moment of madness'. Except, it is not madness, it is just an emotional reaction and it is understandable. So, the first step in dealing with this is to recognise when you are in this state. Virtually all traders will recognise this state and be able to share stories of how this has affected them. You need to move out of the emotional state of mind into the acceptance mindset. Let the loss sink in, accept it, and now you are ready to move on. Here are 5  tips to help you develop  a better frame of mind.

 Tip 1

Record your thoughts and feelings at the end of each day. What are you thinking and how you are feeling? Perhaps you had a heavy losing or winning trade? Write down how you are feeling. This action itself is a helpful mental exercise to help deal with some of these emotions.

Tip 2

Accept that a losing trade or a losing run is temporary. Furthermore, realise that you can change it. Even If you have never been profitable as a trader, you can change that. Trading is teachable, like any skill. Like riding a bike, at first you fell off, but then you got it licked. 

Tip 3

When you are in a very negative state of mind, which you will tend towards during a losing streak, try to look at some of the things that are positive for you. What are your strengths? Your positives? What things can you control?

Tip 4

Get some rest. If you don't rest, you will burn out. Are you getting enough recovery time? Make sure that you factor recovery into your day. This is recovery for the nervous system, so a gym session is not the answer here. You want to have a definite rest : Sleep, or a time of quiet. Perhaps try some breathing techniques. Allow yourself a break. Why not break in between trading sessions? Don't just hammer at it for 12-15 hours straight. Your performance will suffer and your energy will flag. Get a decent night's sleep too. Rest will help your performance. Make sure you take holidays.

Tip 5

One of the worst things I find about trading is that it is a lonely pursuit. `I love people, teamwork and banter.  Sat at the terminal, little people contact and it can become a sealed little world. 99% of the people in your life can't relate to trading and either think you are a hero or a villain and then a lot of the correspondence you have is one way. So, get a support network if you don't have one. Could you pair up with someone else in a performance activity and compare notes? Is there a top-level sports person you could meet with and talk about your performance and state of mind with. What about meeting up with some of your online trading acquaintances?  Is there a local meet-up you could arrange in your city?

What to look for when markets turn

We are undoubtedly in the bull-iest of bull runs, which has made market watchers declare: Bully! The problem is that this bull seems to be running through a tech stock china shop. In the past few months we have Facebook take a significant dive after the Cambridge Analytica controversy and in the past few days we have seen Tesla stock flutter around like a drunken butterfly.

Although we shouldn't be all doom and gloom, there is a fair number of respectable market analysts (including Hungarian prosecuted Hungarian-American investor, George Soros) that believe this bull economy is headed at a flat out run towards the peak of a bubble.

Most investors seek safe havens when volatility increases - and even if you trade indices, there is a certain index for those rainy days (or when the bubble bursts).

Hedging vs. Safe Haven

There are two distinct ways to deal with increased risk of volatility or rapidly fluctuating market conditions - but these two risk management methods are distinctly different.

Safe Havens - safe havens are generally considered indices that would likely not be affected by market volatility or even rise in value during market distress. This is usually due to an abrupt increase in demand when markets become "choppy" and investors become skittish.

Hedges - these are assets that are usually inversely (or negatively) correlated with the positions an investor already holds or intends on opening. 

Example of Correlated Indices

Using a hedge lowers your risk but also your potential return, since in a healthy trading strategy risk/reward is a ratio. You need only a very simple understanding of mathematics to understand that when one number in a ratio increases the other decreases as it is divided by the first.

Safe Haven Indices

First and foremost, avoid anything tech, (we're looking at you NASDAQ), because these indices tend to be volatile even when markets are relatively calm.

And here's the twist to this worrisome story - look at the two charts above, the S&P 500 (SP/USD) upon first glance looks more volatile than the actual US Volatility Index (VXX/USD). Christopher Stanton (Sunrise Capital's Chief Investment Officer) seems to agree that perplexingly enough - the US volatility index has become a safe haven, he believes people should go long on.

Only with slight extrapolation, we can assume that volatility may continue - the trade conflict isn't going to go away overnight, inflammatory tweets aren't going to stop until 2020 (fingers crossed) and politically driven sanctions aren't going to be raised anytime soon. On the other hand, compared to its global counterparts the S&P500 seems to be holding up decently:

CNX/USD

ASX/AUD

SP/USD

The Classic Safe Havens

When talking about safe havens you could easily replace the word with Swiss franc, if you conveniently forget the removal of the currency's peg to the euro - which caught many a banker with their pants down. But again, let's selectively ignore that due to the franc's relatively solid track record.

Gold in recent months has performed surprisingly lackluster - going from low to low. Is this haven of haven's being dethroned? In previous periods gold was tightly inversely correlated with volatility. Unfortunately for gold traders, this relationship seems to be becoming looser and looser.

These old markets seem to have undergone a radical "face-lift". Relationships which were assumed to be stable are now dynamic and assets such as certain cryptocurrencies have emerged at points as safe-havens. Oh, and a reality show star is now the incumbent leader of the "free" world. In these kinds of market conditions risk management should be pretty high on your "to do" list.

Partnering with a broker that not only offers you access to multiple diverse indices but also provides you with transparent pricing and fair trading tools can only help.

This article was submitted by easyMarkets

ForexLive

Winning and Losing in the Markets

How do you handle the stress of trading? Have you ever felt like throwing your computer out of the window with a losing trade? Or have you ever felt the elation of a winning trade that's run and run? Woohoo , Warren Buffet watch out, here I come. And then you come down to earth next week with a thump. If you have traded, you would recognise the stresses of winning and losing.  Winning and losing is stressful and emotional. It can also be very lonely, especially as a retail trader or private investor. Think about the effects of trading on your body. The uncertainty of the markets is a constant strain. Taking risk is also a burden on us. So, stress and trading go hand in hand. How do we manage this stress?

Fight or Flight

The 'fight or flight' phenomena is widely recognised and we all understand that stress feeling. Adrenalin surges through the system,  we might feel sick and have a dry mouth  as our body prepares for a response. The problem for us as traders is that 'fight or flight' response is not always helpful for us as traders. Literally a different part of our brain is in use when we are in our 'fight or flight' mode. This area  is our Brain Stem and governs our survival instincts. However, as trader we want to be using our Neocortex part of our brain as this is where the majority of our more developed thinking takes place: planning, thinking, and rationalisation.

The impact of winning and losing

You know the saying, 'when you smile, the world smiles with you?'. Well, when you win you feel different. There is a book called The hour between Dog and Wolf written by a former Goldman Sachs trader and neuroscientist, John Coates. He wrote about the different effects of the winning and losing cycles. You will recognises them: 

Winning streak

• Excited, embracing risk, feeling extremely confident, higher testosterone

Losing streak 

• Risk avoidance, fearful, deeply pessimistic, losing confidence

Both winning and losing streaks create dangers for traders. So, we need to work at managing our emotions in order to avoid extremes of thoughts and response to both winning and losing.

Managing stress from trading 

Below are some tips to help us avoid making trading overly stressful.

Define and limit risk

Certain things we can't change about trading, like risk. We must take risk in order to trade. However, we need to always manage it. You know Greg has this down when he constantly reminds traders to 'define and limit' risk. 

Trade from competence

One key aspect of trading is to be competent. In other words, just trade when you know 100% what's going on. Sometimes the market is weird and complex. Not all fundamental narratives are clear. So, avoid trading when you don't understand what's going on. Stay out. It is ok to say, 'I don't understand what's going on in the market'. No-one has complete mastery 

Never over-leverage

If you are taking too much risk, you are are going to put your body under enormous stress and your brain will flick into survival mode and take unwise decisions. My advice to you is to stop using leverage. Your thinking will improve as you do this.

Prepare

Develop a plan that you start to follow. Write it down, do it each day and develop a daily competence through daily discipline.

Change your perspective and try to find an opportunity

Ok, you have had a tough trading spell. It's tough. You will probably be feeling down, worry about how this will affect your job or position with the firm, but what can you take from it. Maybe you have become more selective in your trading, or managed risk better. Don't add to the losing trade by feeding negative thoughts to yourself.

Breathe

Sounds silly, but deep breathing is extremely helpful for your body. It is being more widely reported these days and genuinely reduces stress. Practise taking deep, belly breaths by  pushing your diaphragm out as you breathe in. (You can google the technique if you are unsure of how to do this). As you breathe in and out you will notice that your out breath is your longest breath. It is also your 'relaxing' breath. You heart rate will drop and you will optimise your brain's thinking. One technique is the 4, 4, 4, 4, technique. It as follows: 

Breathe in for 4 seconds

Hold in for 4 seconds

Breathe out for 4 seconds

Hold for 4 seconds.

Doing this will help 're-set' a stressed system.

How do you make trading decisions?

Scenario 1 

Imagine you have £10000. You can keep it or take a chance. The chance is to flip a coin and if you choose the right side of the coin you win double; £20000. Choose the wrong side of the coin and you lose the £10000. What would you do? Take the money or take a chance?   

Scenario 2

Now think of the scenario where you have to pay £10000 or take a chance. The chance is to throw a coin and if you lose you end up paying £20000. What would you do? Pay £10000 or take a chance.

A similar experiment to this one outlined above was actually done amongst people in the general population and it was found that in scenario 1 most people took the gain. In scenario 2 the majority of people were willing to take a risk. This experiment showed that people in the general population will tend to risk aversion and cutting profits early when they have them, while in a risky situation people are more likely to take chances. e.g. move stop losses etc. So, our impulses, for the majority of us are not set up to let profits run and cut losses short. Instead, we are primed to do the opposite - take profits early and let losses run! Not helpful for trading.

The intuitive vs the deliberate part of the mind

We have two aspects of thinking in our brains; the intuitive and the deliberate. The intuitive part of the brain is fast, automatic and effortless. In contrast, the deliberate part of our brain is slower, more logical and requires greater mental effort. In trading we want to be able to strengthen the relationship between our intuitive part of our mind and the deliberate part of our mind. The market can reveal many errors in our thinking. The sort of problems we might have are : 

• Cutting winning trades short
• Not taking a perfectly good setup
• Adding to a losing position 
• Taking unplanned trades
• Become angry and more aggressive after a losing trade
• Consistently make small money but unable to raise your game.

Helpfully for us there are certain scenarios where we are most likely to make these mistakes. We are all susceptible to mental blindspots and making thinking errors. We might like to pretend otherwise, or even deny them, but they affect us all. We all have some biases and we are all liable to them 

• Confirmation bias - only factoring in evidence that supports your disposition
• Gambling fallacy - eventually my risk will pay off
• Loss aversion - fear of losing affecting trading
• Recency effect - my last three trades were losers and this has affected me
• Over optimistic - being unduly positive 

There are lots more, but these are some of the key biases we have. We are more likely to act according to our bias if we are tired or stressed or really emotional. One way we can reduce our exposure to biases is by managing our risk, so that it is easier to keep track of our emotional state. Over-Leverage and we will take profits early and cut trades short more quickly as it is just too emotional to risk losing lots of money.

How to help ourselves

1. Develop an awareness of your own decision making. How do you make decisions? Do you have a set pattern? Or do you just react?

2.  Keep a journal of your decisions and why you traded that way. Record any changes you make in the journal, so you can have a 'real time' log of your trading decsions. Did you move stops? Reduce or extend targets? Cut the position sooner? 

3. Keep a checklist - Adam did a post a few months back reviewing a book titled  the checklist manifesto by Atul Gwande

4. Have a record of your best trade scenarios

5. Do a pre-mortem. Imagine that the trade you are about to take is a future loss. This will give you a great perspective on your trade from the outset.

Be systematic in your decision making 

Focus on the process of trading, not the results. This will focus the deliberate mind which is more logical. Build yourself a template. Something that is good for you. By doing this you can help marry the intuitive and the deliberate part of your mind together.

So , how do you make decisions? Do you have a process? Use your deliberate mind to focus on your trading process. Take care of the process and the process way of thinking will take care of you.

Technical techniques for following the trend

If you have been trading for any amount of time, you have likely read about trend following - which can be used as a forex trading strategy. Is it truly the allegorical Holy Grail of trading? Let's dive deeper into Trend Following and see if it lives up to the reputation that it has amongst both novice and experienced Forex traders.

If you are unfamiliar with Trend Following, it is a system to help predict the direction. This information is said to assist traders open and close trades more strategically.

Indicators

Arguably the most popular way to interpret charts is using Indicators. In very simple terms indicators are a variety of mathematical price calculations that can potentially help highlight trends - for example simple moving average (SMA), plots the past prices' arithmetic mean on a line as seen below in the EUR/USD Forex chart. 

As you can see averaging out the prices give a much clearer image of the general movement of the rate. Small temporary reversals average out and become plotted on a line that is in a downtrend or uptrend. The calculation can be made across various timeframes 200, 100 and 50 days.

Extending the timeframe  smooths SMA line whereas contracting sharpens SMA line.

Another interesting effect is when the SMA acts as support or resistance - where the price goes under or approaches the level delineated by the SMA and then returns above. Here is an example indicated by the circles on the chart below. 

Of course, there are more variations of the Moving Average that involve more sophisticated calculations that emphasize different moments of the market cycle.

RSI (Relative Strength Index)

RSI is known as an oscillator that is indexed between 0 and 100. When the indicator is above 70, the asset is considered in the overbought region where as if it is under 30 it is the oversold region. When the instrument is overbought it is consider it will undergo correction and if it oversold that it will recover.

RSI is probably not the best indicator to use alone - unlike SMA - because frequently the RSI will remain above 70 or below 30 for extended periods of time. So, using it in conjunction with other indicators can serve as another piece of the technical analysis puzzle.

Bollinger Bands

One of the few registered trademark indicators, Bollinger Bands have been garnering interest recently. Bollinger Bands, literally bands (as the name indicates) an asset's 21-day simple moving average between standard deviations above and below the SMA. It helps the analysts see volatility more clearly - when volatility is low, the bands narrow when volatility increases the bands widen. 

Another way Bollinger Bands contextualize trends is as the price moves towards the upper band it is considered in the overbought region, as the price approaches the lower band the opposite is true, i.e. the asset is undersold. Unlike other indicators but similar to RSI, Bollinger Bands do not give specific signals, but instead an overall look of the markets and volatility.

Also, like RSI, Bollinger Bands are not design or conceptualized to used alone. According to the person that created them John, Bollinger, they should be used with other non-related indicators.

If you have been trading for long enough then you are well aware that multiple variables contribute to a successful trading strategy.

Not only should you use a combination of technical and fundamental analysis but also partner with a broker that offers the best trading conditions and protections, for your style of trading.

This article was submitted by easyMarkets

How to navigate volatile markets

'It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness...' and so a Tale of Two Cities begins. In a way, these are not only words to introduce the French Revolution within which Charles Dickens set his novel around, but they could also be words to describe trading volatile markets.

They make some people, while they break others. So, the question is, what are the opportunities and dangers of trading volatile markets. This article will discuss two opportunities and two risks of trading volatile markets.

Opportunity #1 - Large returns

Volatility presents opportunities for very large returns. A very good example of this of late has been the USD/TRY. The Turkish Lira has lost around 35% of its value this year and around 20% of its value in just one day of trading. That is a huge move. Now, if you had been following the unfolding crisis out of Turkey you could have netted a very handsome profit. Furthermore, it would have been during the quieter summer trading months too.

Risk #1 - Wide spreads

One of the areas you must watch during volatile markets is wide spreads. A spread is the difference between the bid and ask price that you are quoted before you want to take a trade. Since times of high volatility are also times of heightened risk the broker has to charge a premium price to mitigate against the risks with entering volatile markets.

The problem for you, is that if you enter during a volatile market, say just a few seconds before a major data release then you will be entering when the spread may be very large. The cost of spreads quickly adds up when you are trading, so, make sure you always check your spread carefully before entering a stormy market. Never enter blindly, as you may be shocked by the spread you end up with without immediate remedy apart from closing your trade.

Opportunity #2 - A fast moving market

In order to make profit price needs to be moving. In a volatile market you will get price movements that are quick, prolonged and therefore offer good times to make money. A good recent example of a volatile market was when the RBNZ released its August rate statement and explained to the market that it's rate going forward would be 'lower for longer'. 

This was a surprise and the market became volatile as positions were closed and initiated in response to the central bank's forward guidance. The NZD was sold, and the resulting move was strong and prolonged over the next 12 hours or so. Savvy traders would have ridden this volatility for a healthy profit. In these circumstances the volatility produces a tail wind currency and can result not only in quick moves, but all quick profits.

Dealing with negative trading thoughts

Trading is an emotional pursuit. You can lose a few trades and become depressed. Or have a winning streak and think you are the world's best trader. When we are engaged in the markets we have hundreds of different thoughts and beliefs. If we are feeling down that emotion is with us when we trade. We might remember the shadow of a last losing trade. Or perhaps we have a strong belief in our trading edge. Both positively or negatively thoughts affect us. Market events are filtered through our thoughts, rules and beliefs. These then affect our decisions. So, how do we deal with our negative thoughts that are ? We have so many thoughts, we need to master our feelings in order to master our trading. So, here are three tips to help us manage our thoughts and their influence on our trading: 

• Be aware
• Evaluate the usefulness of our thoughts
• Change your thinking process

Be self-aware

Close your eyes and be still. With your eyes closed focus upon on what you are thinking for a minute. Go on, do it now...it's just a minute. 

 What did you think about? Where are your thoughts located? What did you notice? 

Now the part of you that notices what you are thinking is the 'observer part of your mind'. Your mind can actually have an the ability to fulfil the role of an 'impartial observer'. So, we have the mental capacity to weigh our own thoughts.  We can be self-aware. Tap into this 'self-awareness' each morning, How are you feeling? Observe yourself and your thoughts using the observing part of your mind. You can develop your self-awareness technique by tuning into the sounds around you. What sounds can you hear? To become aware you need to be aware of your thoughts.

Evaluate the usefulness of your thoughts

Once you have become aware of your thoughts then ask yourself this question, 'how useful are these thoughts for me?'. Evaluate your thinking patterns and the validity of your thoughts. It may be that some of your thoughts you are holding onto are really detrimental to your trading: 'Why do I always lose money?'. 'How will I get out of this losing streak?' "If only I had let that last trade run to it's TP'. Thoughts are invasive, pervasive and managing them can be extremely hard. The reality is that you need to control your thinking before your thinking controls you.

You know if someone said to you, 'don't think about a black dog' for 2 minutes. You know what you would do - think about a black dog. If someone then said to you, try to not think about a black dog for 5 minutes - you would find it even harder to not think about a black dog!  Suppression is not a great technique for altering your thinking. If you are having to try and suppress your thoughts you will struggle. Just saying, don't think about that last losing trade or just get over your losing streak will not be effective in managing your thoughts. They will re-appear. In the same way that just trying to not think about a black dog you will find it popping into your head all the time. So, let's look at an alternative approach...

Change your thinking process.

Some thoughts we have seem to be factual.  They hit us instantly and become all dominant in our thinking. e.g. price is spiking through a key level and we think the market is breaking out, I must join it now. The thoughts like 'I can make back all my losses with this trade' or 'i can't afford another losing trade'. These thoughts are largely automatic and reflect the situation that you are in. They just arrive. However, we don't want to become 'married to these thoughts'. The mind can become shameless in this way!

So, we don't want to just suppress our thoughts. Instead we want to practice observing our thoughts and then 'un-marry' them. Recognise that thoughts are mental events which may or may not be true. They are not commands for us to follow. They are just thoughts, not facts.They can be allowed to come and go. We are not married to our thoughts. Change the way you think.

Conclusion

So analyse your thoughts - 

Observe them - be aware of them

Label your thoughts

Change your language by saying 'I am having a thought that....'

Voice your thought coming from a different person 'imagine your worst school teacher saying 'you'll never make it as a trader'. This will help you to see it for what it is, just a thought and not a fact.

Lets take an example, imagine that you are at your desk and you say: 

 'The USD/JPY is impossible to trade.

Then realise that 'my mind is thinking that the markets are impossible to trade'

Then say that 'I am noticing my mind is thinking the markets are impossible to trade'

You see, this will help you see that you are just having a thought. What you will find is that you will be able to handle your thoughts much better. You will be able to see around those thoughts and they will not dominate your mind in the same way. It will give you space to not let your negative thoughts overwhelm you.

The Old Lady of Threadneedle Street

The Bank of England has been at the same location in the hear of the City of London since 1734. The stone complex fills an entire block with its entrance on Threadneedle St.

It's nickname came from this 1797 James Gillray cartoon that shows the Prime Minister -- William Pitt the Younger -- trying to get the central bank's gold as part of the protest against paper money.

The BOE is not the world's oldest central bank, that title is held by Sweden's Riksbank, which was established in 1668.

The Bank of England also holds the world's second-largest gold vault after the New York Fed holding about 400,000 bars worth more than GBP100 billion.

The UK central bank has a rich history and Mark Carney is the 121st governor as part of one of the great banking legacies. However, despite the nickname, no woman has ever led the Old Lady.

Bloomberg has more on the history and if you're ever in London -- like for the 2018 Finance Magnates London Summit --  the BOE has a free museum that's worth a quick trip.