Home Blog Page 85

Ask Barry: “Is Oil Going Higher?”

3

The new “Ask Barry” service is going well. This free service allows anyone (you don’t have to be a student of mine) to ask me a question about the market, technical analysis, trading, money management, etc.

I answer all questions personally via email, and then I choose some questions as topics for this Blog (I won’t reveal the identity of the person asking the question of course).

Today’s “Ask Barry” question is:

“What do you think is happening with oil prices? Has the market reached its saturation?”

I decided to give everyone something extra and answer the question with a free video! You can access the video here:

OIL MARKET VIDEO

The video is in “Flash” format. You can get the latest free Flash Player for viewing videos at: Adobe Systems Inc.

PLEASE BE PATIENT Depending on the speed of your Internet connection, THE VIDEO MAY TAKE A COUPLE OF MINUTES BEFORE IT STARTS PLAYING.

Bruce Lee and Trading

2

A few years ago a friend (who had never placed a single trade) told me she was going to day trade during the Summer to make money instead of getting a regular Summer job.

Such words are insulting to a real trader. It’s like telling a physician that you’re going to do heart surgery as a Summer job.

Most people wouldn’t equate trading with something as difficult as surgery. Of course when they try to make a living at trading, they realize that it’s much harder than they thought it would be.

And for anyone who makes a living at trading, they know very well how many years of blood, sweat and tears they put into their business to develop the skills they now possess. They also know that a very, very, even minute percentage of people ever reach that status no matter how hard they try.

Still, the truth is, at the risk of sounding cliche:

Trading is simple, but not easy.

Of course that’s true of most things. The principles of Mastery are the same for any discipline.

The great martial artist, Bruce Lee said (I’m paraphrasing):

“Before you take Kung Fu, a punch is just a punch.
When you learn Kung Fu, a punch is no longer just a punch.
When you master Kung Fu, a punch is just a punch.”

That’s been true of anything I’ve learned. Every sport, every business and every art. And it’s true in trading as well.

Before we start trading, it looks so simple and easy:

  • Just follow the trend, and buy on dips.
  • Just buy the breakout
  • Just trade the double tops, double bottoms and head and shoulders
  • Just trade the trendline.
  • Just …

Simple.

Easy.

Then you learn about trading and find out it’s not as easy as it first looked.

So you try different moving averages and different indicators and different time frames and different charting platforms and different books and different trainers and …. then you realize that trading is not easy or simple.

But if you stick with it long enough, and go through all that “stuff,” and don’t quit, you get frustrated with it all and you realize that there is nothing that predicts what the market is going to do.

Nothing

At

All.

So you go back to basics.

And after seeing all the stuff that doesn’t work, you fall back on the simple basic things:

  • A basic trend indicator
  • A basic momentum indicator
  • A basic cycle indicator
  • Be more patient and take fewer, better trades.
  • Employ impeccible discipline and money management (the most well-known secret to trading).

And then trading becomes more simple, less exciting, but more profitable!

Chart Tube

2

I’ve been meaning to do it for a long time … and I finally did it!

Yes, I’ve joined the YouTube phenomena.

I have to say, it’s a cool community and a lot of fun.

I just posted my first video there, so it’s not much, but there will be more to come and they’ll get better and better as I become more comfortable with the technology.

The first video, which I just posted today, is about a mistake many people make with moving averages. A very, very common, simple, but deadly mistake.

Check it out at http://youtube.com/TopDogTrading

While you’re there, make sure you SUBSCRIBE, so you’ll receive notifications of when I post new videos.

“ME”

11

The first time I visited the CME (Chicago Mercantile Exchange) was very intimidating. I was reminded of the Guns N Roses song, “Welcome to the Jungle.”

Here were masses of people and everyone was moving at blitz speed like they had just downed a gallon of Starbucks’ finest.

Traders would crowd into the elevators like cattle. When the elevator was full, a few more people would push their way in until I experienced a feeling beyond claustrophobia.

When we stopped at a floor, someone (usually from the very back) would yell out “Me!”

Then they’d aggressively wiggle their way through their competitors and exit the elevator.

My first day there, after my first morning of trading, a bunch of us decided to break for lunch. So we, along with half of the planet, headed for the elevators. Again, our elevator was full, people pushing their way in miraculously finding space where no space existed.

At each floor, someone yelled, “Me!” And made their way out, aggressively pushing others aside in the process.

Next floor: “Me!”

Next floor: “Me!”

After lunch we corralled back into the infamous elevators once more and I got squished into intimate contact with at least 4 strangers.

I was waiting for the first “Me!” to be sounded, when the elevator came to a HALT!

Oh no!

Stuck!

The ultimate “STOP!”

It seemed strange to me that everyone remained calm and no one said a word.

I wanted to yell, “Hey, we’re stuck and I’m squished and claustrophobic and I’m going to panic big time if someone doesn’t get me out of here pronto!”

But instead I waited to see if anyone was going to say or do anything.

Silence.

I started to think about the whole experience of my first day. The trading floor was a jungle.

Dog eat dog.

Survival of the fittest.

Everyone was out for themselves, FIGHTING to make money for “Me.”

The floor was crowded and chaotic, people literally pushing others out of the way to make money.

Being there changed my trading forever. Being a screen trader, I had been focused on lines and colors and dots and curves and pretty stuff on a monitor. You almost start to think that’s the market.

But when you get on the trading floor, you “see” the market. It’s people. And those people are FIGHTING for their money. These people are serious. Dead Serious.

It’s you against me. And I’m only concerned about me.

Nice guys finish last.

Welcome to the jungle.

This is not “compassionate capitalism!”

It was a lot like the elevator.

I tried to distract myself with my thoughts as long as I could, but then my attention came back to where I was and the feeling of panic started to rise again.

Finally I blurted out, “Does anyone know how to get us out of here?”

Someone responded, “This happens all the time.”

I replied, “How long does it usually last?”

He said, “10 to 15 minutes.”

And sure enough, the elevator started again.

Yes, it changed my trading forever because though I remained a screen trader, I realized that trading is a “competitive sport,” and the competition is fierce. I knew I had to be as tough and as smart and as aggressive as these warriors, or I was doomed.

There was no room for the wall flower, and there was no allowance for laziness.

You had to always look out for the tigers because they are always there, hiding, waiting to pounce. And they feel no remorse in attacking you … in fact they enjoy it because you’re their dinner!

At the end of my first trading day, my sponsor asked me if I had any questions. I said, yeah, I have only one:

“Where’s the stairs?”

——————————————

— Please leave your comments/reactions below —