Rock star traders are made, not born. Nobody emerged from their mother’s womb and three years later started generating massive profits in the futures or forex market. It takes time – trading is a difficult pursuit and the learning curve can be steep. One might argue that, because markets are always changing, continued success requires lifelong learning.
To say that last week was a busy session for forex would certainly be an understatement. The "will they, won't they" saga of Brexit continues to go nowhere—and consequently, the Pound Sterling has been getting absolutely hammered since the beginning of May. Oh, and did we mention that British Prime Minister Theresa May announced her impending resignation on Friday?
Currency markets are extremely volatile right now, which means there are some great entry points for traders who know how to manage their risk. With this in mind, we'd like to give a quick shout out to three of our Funded Traders who stayed smart and made some great trades last week off the Brexit madness.
President Trump’s Twitter feed, which has become perhaps the best leading indicator for equities lately, sent a strong sell signal last Friday morning after the President suggested that, “there was absolutely no need to rush” trade negotiations with China. This comes after a week of saber rattling that sent markets into a volatile tailspin.
This bearish setup was confirmed when the President revealed that the administration was still in the process of implementing 25% tariffs on an additional $325-billion-worth of Chinese goods.
The stock market initially took this breaking trade news… not well.
Twice this week, I’ve been noticeably “scared” to enter a trade.
The first time was Monday, when I noticed an opportunity while watching the Market Forecast with TopstepTrader’s Senior Performance Coach John Hoagland. As he does every day at 8:15 AM CT live on TopstepTrader's Facebook page, John brought up the Crude Oil chart. It showed Crude was selling off hard to $51.26, slightly below a double swing low at $51.33 from January 17 and January 28. It was a clear opportunity.
But I missed it.
As the chart above shows, the price even came back to test that level two hours later. You’d think that this would be a great opportunity, but instead it just confirmed my thoughts that the market was “heavy.” The market looked heavy. It looked like the support was going to give.
It didn’t, and with the benefit of hindsight, we see that prices rallied that day $1.50 and have been rallying ever since. Opportunity missed again.
There were some big moves in equity markets this week. The run higher that started right before the New Year finally hit a snag. And now the chart looks like it might be creating a lower high — at least that's what our Market Analyst Mark Meadows has to say. That's not good for equity bulls.
But not so fast, says Senior Performance Coach John Hoagland. He thinks that there are some areas of repair lower in the charts, but that the path of least resistance is higher. Here's the debate.
The Federal Reserve meeting proved to be the event of the week. By not only reiterating their cautious approach, but also walking back quantitative tightening, the Fed put a bid under markets. Whether this is enough juice to get equity markets moving to new all-time highs is an issue for debate.
In this week's Weekly Review, Mark takes issue with the idea that the Fed has to support equity markets, while Dan continues to drink the Kool-Aid and call for more accommodation. Check out their reactions to how futures markets moved this week.
2019 has seen a couple new funded traders get off to red-hot starts. We talked a couple weeks ago about how Gabriel F. in Spain added $26,000 in profits in 33 trading days.
But it's not just Gabriel that has been able to add big profits to his trading account recently. Bill M. in Illinois gained nearly $27,000 in profits in his Funded Account® over 46 trading days. And their two trading styles could not be less alike, proving that you can make money in a multitude of different ways.
Whereas Gabriel sticks with Crude Oil and equity futures, Bill trades anything and everything. He's held positions in currencies (Australian Dollar, British Pound), metals (Copper, Gold), energies (Crude Oil, Natural Gas), agriculture products (Live Cattle), financials (Ultra Bond) and equities (Dow, Nasdaq, S&P 500, Nikkei).
Also different: their reward-to-risk ratios. Gabriel had a perfect 2:1 reward-to-risk ratio; Bill's average winning trade is actually less than his average losing trade (+$471.82 vs -$571.65). To stay profitable, Bill has nearly 70% winning trades and 57% winning days. And, critically, he never loses too much on any one day — his largest winning day is $4,776 vs. a largest losing day of $1,550.
Here's a closer look at Bill's equity curve, which is a beautiful lower left to upper right pattern.
This is going to be an action-packed week in futures and forex markets thanks to some major macroeconomic events: Wednesday's Federal Reserve announcement and Friday's Non-Farms Payrolls and Unemployment Reports.
Mark, who believes that the bottom in equity futures and the risk-off trade is not yet in, debates with Dan, who believes it is, about how these events might drive the next big move in markets. Here's how they're approaching the week.
In 2018, TopstepTrader funded more than 1,020 futures trading accounts with our capital. Behind all of those accounts was one risk manager: Mick Ieronimo. Mick saw the behaviors and trades that powered successful traders, as well as those behaviors that were common among unsuccessful traders.
In this must listen-to episode of Limit Up!, Mick discusses all of these things and what he has learned as a trader, both independently and with 'Market Wizard' Linda Raschke, and risk manager with TopstepTrader.
This is an incredible trading environment. Yesterday's moves in U.S. equity, interest rate and forex markets offered tremendous opportunities. This is a time when traders have to adjust their strategy, says Peter Davies of Jigsaw Trading.
Peter recently sat down with Topstep's Eddie Horn to talk about how to trade volatility — from someone who has been involved in markets from before the 1999 tech boom and bust. Peter offers tactical advice for traders, including what the absolute worst adjustment you can make in heightened volatility is and how you can improve your performance each and every day.