August 16, 2017
Inside Trading
TradeWins Publishing

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Have You Ever Wondered...?

Have you ever wondered how the world's top traders pinpoint reversals – BEFORE other traders know what’s happening?

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Steve is an expert at showing how to combine candles with technical indicators for spotting reversals BEFORE your competitors.

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Kathy Lien




Kathy Lien is the Chief Currency Strategist at Forex Capital Markets LLC (FXCM). She is responsible for providing research and analysis for DailyFX, including technical and fundamental research reports, market commentaries and trading strategies. Prior to joining FXCM, Kathy was an associate at JPMorgan Chase, where she worked in cross-markets and foreign exchange trading.

She has vast experience within the interbank market using both technical and fundamental analysis to trade FX spot and options. She also has experience trading a number of products outside of FX, including interest rate derivatives, bonds, equities and futures.

Kathy has written for MarketWatch from Dow Jones, Active Trader, Futures and SFO magazines. She has taught currency trading seminars across the country, has appeared on CNBC and is frequently quoted on Bloomberg and Reuters.


Day Trading the Currency Market

Technical and Fundamental Strategies to Profit from Market Swings




This book is broken down into chapters ranging from a beginner's guide to terminology and the history of FX markets through to trading strategies, all of which briskly moves forward into more advanced and comprehensively fleshed out sub-sections. Filled with in-depth yet accessible information, thanks wholly to the author's no-nonsense writing style, Day Trading the Currency Market can show you how to enter this highly competitive arena with confidence and exit with profits.

Included with this book are two bonus items:

  • The Beginner's Guide to Success in Today's FX Currency Markets

  • Secret Forex Trading Techniques

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Day Trading the Currency Market



 

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There’s still a considerable amount of fear that North Korea could potentially strike Guam this month, which would bring about a monstrous U.S. response.

That’s part of the reason the Dow Jones has now sunk 200 points in days. That’s also why the VIX is now spiking above 13.

For the markets, the worst part of the situation is the uncertainty of military conflict. If we look at the history of previous conflicts, we can see that markets typically dip prior, and run shortly after. In this week's article, we look at how you can capitalize on this opportunity.

Then, Lee Gettess provides his perspective on both the S&P and the bond market for the coming week.

Next, Kathy Lien tells us how risk reversals can be a useful indicator tool in your trading.

Last, Andy Chambers brings us his Weekly Market Line in the Sand Newsletter.

Enjoy!

Adrienne LaVigne
TradeWins Publishing



 

How Warren Buffett Trades the Fear of War

by TradeWins Publishing

There’s still a considerable amount of fear that North Korea could potentially strike Guam this month, which would bring about a monstrous U.S. response.

That’s part of the reason the Dow Jones has now sunk 200 points in days. That’s also why the VIX is now spiking above 13.

In my personal opinion, though, I don’t think North Korea will act.

Instead, I strongly believe this will all cool off, near-term, presenting us with another opportunity at market upside. For the markets, the worst part of the situation is the uncertainty of military conflict. If we look at the history of previous conflicts, we can see that markets typically dip prior, and run shortly after.

In the months leading up to the Gulf War for example, the S&P 500 fell about 12%. However, once the war began, the S&P 500 gained 32 points, and then 28% over the following year. Plus, if we look back at 14 major events dating back to Pearl Harbor in 1941, the median one-day decline was 2.4%. Dates such as September 11, 2001 and the 1962 Cuban missile crisis (which resulted in declines of 7.4%) saw a recovery within two weeks, as pointed out by Smedley Financial.

We’ve seen similar action during the Iraq war in 2003 and the Syrian issue in 2011.

Even famed investors like Warren Buffett have used the fear of war as an opportunity. As he once noted:

If you tell me all of that's going to happen, I will still be buying the stock. You're going to invest your money in something over time. The one thing you can be quite sure of is, if we went into some very major war, the value of money would go down -- that's happened in virtually every war that I'm aware of. The last thing you'd want to do is hold money during a war. So if you don't want to hold cash, what do you want to own?

How Warren Buffett
Trades the Fear of War

 
 

Lee Gettess' Market Sense

by Lee Gettess

Lee Gettess is a top trader who is excited to bring you his video newsletter. Each week, Lee will share his predictions on what he anticipates from the bond and S&P markets.


Watch Video

 
 

Risk Reversals

by Kathy Lien

The following is an excerpt from Kathy Lien's Day Trading the Currency Market

Risk reversals are a useful fundamentals-based tool to add to your mix of indicators for trading. One of the weaknesses of currency trading is the lack of volume data and accurate indicators for gauging sentiment. The only publicly available report on positioning is the “Commitments of Traders” report published by the Commodity Futures Trading Commission, and even that is released with a three-day delay. A useful alternative is to use risk reversals, which are provided on a real-time basis on the Forex Capital Markets (FXCM) plug-in, under Options.

A risk reversal consists of a pair of options for the same currency (a call and a put). Based on put/call parity, far out-of-the-money options (25 delta) with the same expiration and strike price should also have the same implied volatility. However, in reality this not true. Sentiment is embedded in volatilities, which makes risk reversals a good tool to gauge market sentiment. A number strongly in favor of calls over puts indicates that there is more demand for calls than puts. The opposite is also true: a number strongly in favor of puts over calls indicates that there is a premium built in put options as a result of the higher demand. If risk reversals are near zero, this indicates that there is indecision among bulls and bears and that there is no strong bias in the markets.

For easier graphing and tracking purposes, we use positive and negative integers for call and put premiums. Therefore, a positive number indicates that calls are preferred over puts and that the market as a whole is expecting an upward movement in the underlying currency. Likewise, a negative number indicates that puts are preferred over calls and that the market is expecting a downward move in the underlying currency. Used prudently, risk reversals can be a valuable tool in judging market positioning.

Risk Reversals

 
 

Weekly Market Line in the Sand

by Andy Chambers

The following is an excerpt from Andy Chambers' Weekly Market Line in the Sand

Every week Andy publishes his “Weekly Market Line in the Sand” newsletter. The following are trade updates from his most recent issue.

It looks like things are starting to percolate. Our bias is to the downside for the next few months. There are new orders for DIA, SPY, QQQ, IWM, XLV, BX, BMY and BAC and there’s a new fill in VIAB.

Mini DOW Futures Weekly: The trend is up. A close over this week’s high of 22,132 could result in a further advance. If that happens, the next target is 22,500. The initial hurdle for the bears is seen at 20,311. As we said above, our bias is to the downside for the next few months.

DIA Weekly: The trend is up. A close over this week’s high of 221.68 could result in a further advance. The next target is 225. The initial hurdle for the bears is seen at 203.64. We want to buy the DIA January 19, 2018 220 Put at the market. The current bid/ask is 7.75/8.25.

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PLEASE READ. Past results are not necessarily indicative of future results. There is a substantial risk of loss trading commodities, stocks, bonds and options with or without this or any other advertised product, service or system. Also hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Since the trades have not actually been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.