No Time to Kill

If you’ve read my articles and follow this blog, you’ve often seen/heard me say the time to get engaged in your trading future is NOW! Time is passing us by and we can never get it back.

I have a favorite song I play in the Live Sessions that emphasizes this point and thought I would share the lyrics with you.

It is written and sung by one of my favorite Country Artists Clint Black.

No Time to Kill

There’s no time to kill between the cradle and the grave
Father Time still takes a toll on every minute that you save
Legal tender’s never gonna change the number on your days
The highest cost of livin’s dyin’, that’s one everybody pays
So have it spent before you get the bill, there’s no time to kill

If we’d known ten years ago today would be ten years from now
Would we spend tomorrow’s yesterdays and make it last somehow
Or lead the cheers in someone else’s game and never learn to play
And see the rules of thumb are all the same that measure every day
The grass is green on both sides of the hill, there’s no time to kill

No time to kill, even I’ve said it, and probably always will
But I can look ahead and see that time ain’t standin’ still
No time to kill but time to change the kind of hurry I’ve been in
And quit this work and worry lookin’ back at where I’ve been
If you don’t look ahead nobody will, there’s no time to kill

If we had an hour glass to watch each one go by
Or a bell to mark each one to pass, we’d see just how they fly
Would we escalate the value to be worth its weight in gold
Or would we never know the fortunes that we had ’til we grow old
And do we just keep killin’ time until there’s no time to kill

No time to kill, even I’ve said it and probably always will
But I can look ahead and see that time ain’t standin’ still
No time to kill but time to change the kind of hurry I’ve been in
And quit this work and worry lookin’ back at where I’ve been
If you don’t look ahead nobody will, there’s no time to kill

No time to kill.

The point is simply to get serious, do the work and make the commitment toward your trading success.

There is no time to waste.


Total Disconnect

I wanted to re-share a string of emails I received and responded to a few years ago. I shared these with the traders in the first PTN Excel Course Live Session as well. These emails are really not that unique. What is unusual is that they are all from the same trader. My goal in sharing is to make you further aware of the state of the trading product industry and the general mindset of the majority of traders – the 90-95%. Those of you that know me are keenly aware that I first try to empathize as I have had many similar let downs and break downs early in my trading journey. However, I was much more humble and did not try to telegraph my impatience as is quite common in many of the emails I receive. I think this trader is somewhat askew in his/her perceptions and expectations, but I’ll let you be the judge. See if you can identify with this trader’s situation/apprehension and my impatience. This is not to criticize or disparage anyone, but more to emphasize that I make this information readily available for FREE for those willing to take a few minutes to explore the website and review the workshop and course preview material. Maybe I am unclear with this person and I take seriously any feedback as I am always looking for areas where I can improve. Rick

My responses are in Bold, my commentary in Italics.

Rick – Can I please get straight to the point?
– do you tell me your entry, stop and profit rules?
– do you discuss your technical analysis?

Your impatience tells me you are not interested in learning the skill of trading. I don’t give away rules. That won’t help you trade. I also do not provide trading signals like that of a signal service.

I’m certainly not impatient however nothing in the videos is new to me. This information is not new to me. I’m more interested in understanding your set up etc.
What exactly is in the excel course?

(The material in the videos is not new to him/her? Then why are they not trading successfully? Furthermore, clearly this trader has not listened much to what I have said or presented. This question comes after he/she has watched the Trading Workshop Videos and has not figured out that there is an entire course preview and trade system preview.)

Watch the preview. There is a link at the bottom of the Workshop videos.

Thanks Rick. This will be my last email. I promise.
Please specify whether you discuss trading strategies such as entry, stop and taking profit?
After listening to your videos, I feel it’s more of background information about fx trading which is great but I’m not looking for this.
Please correct me if I’m wrong.

The course includes two trading systems where you must still perform the back testing. They have entry signals and stops, but you have determine profits. It also includes advanced pattern trading.

Ok thank you very much.

( . . . a few days later . . . )

What is the best price you can sell the excel course for?

I have priced this course ridiculously affordably and the content is worth 100 times the cost, so the best price is the current price.

Sorry to keep asking these questions. Please understand that I have spent a lot of money on systems in the past.
Can I please confirm that once I study these strategies that I would be able to start making money? What is the win/loss ratio, rate of return?
Will there be any other systems after that which I would need to purchase?
Again sorry to be repetitive and I’m not trying to be disrespectful. I just sick if paying for systems that don’t perform.

(I can totally empathize with this.)

I cannot guarantee anything. You want certainty and that does not exist.
You have seen my blog, you have seen my workshop and you have gotten a preview of the course.
If that’s not enough for you to make a decision, let me help you – don’t get the course.
I have hundreds of traders emailing me every week telling me how much my blog and course materials have transformed their trading.
What I do is open their eyes to what it takes to be successful; they are the ones doing the hard work and getting the results.
It’s about your commitment and willingness to make the necessary changes to be successful.
My course can help, but it will not make you a winner if you are looking for someone else to be responsible for your success,.
It’s all up to you.
Good Luck.

Thanks Rick. I am willing to put all effort and back testing. I have been doing this for the past 10 years. But what I won’t be able to do is create my own system.
Will you be giving this to us? That is the set up entry and what to look out for?

(This said it all to me – doing this for over ten years and displaying this state of mind? This was not a good sign.)


Also, will there be unlimited use to the excel course or is it restricted after certain time.
Is there anyone in Australia who has used this?

Yes and yes

Last question, I promise. How long does it usually take to master the strategy?
Also is there a forum available to ask questions if I get stuck with any terminology.
I am really interested in purchasing the program.

It varies per individual. My best clients/students are up and running independently in 60 days, some take 90-120 days, some longer and some never do anything. To be safe, plan for at least 2 years before you can honestly consider trading for a living. I occasionally do live sessions where we discuss clients’ questions, but I can always be reached by email.

There was a question in your FAQ
“What are your rules for entry, stops and targets? The blog is designed for you to learn what professional traders do for consistency and profitability through analysis and execution along with the psychology required. It is not similar to a chat room or forum where indicators and trading systems are given away. My rules and trade plan are designed for my trading personality and experience level. You must formulate your own rules and trade plan, do your own back testing and practice diligently so you can execute YOUR trade plan efficiently. Knowing my rules and plan will not improve your trading.”
What do you mean by: you must develop your own rules and trade plan?
How is the different to giving me your entry, stop and exit level?

(Here is where I simply lost it. After all of the information on the blog, in the workshop and in the course preview materials, this person can’t seem to understand my message – processes are the key to individualizing your own trading system and trading personality. This is the only way to establish your independence.)

No two traders trade the same. You will impose your own biases on any trading system, no matter what I tell you. You do not have the experience or discipline to trade the way I do, so it is a waste of time to tell you how I trade. Seems to me like you need to subscribe to a trade signal service. They can give you entries, stops and targets. Just Google it.
I teach people the skill of trading, not just how to trade. I show how pros trade and how to develop a system that best fits the individual by sharing two trading systems.
It’s all been explained and laid out. I am not one to try and convincing anyone. My work is all over the internet.
This will be my last response. I have many other traders that are decisive and committed that are having great success.

( . . . after some thought a few minutes later . . . )

I must encourage you to not buy the course. I fear that you simply might be too impatient and time consuming for me. I sincerely cannot engage with traders that initially indicate they will be too high maintenance.
I simply do not have the time.

I wasn’t asking you questions to convince me Rick. You weren’t very clear in your emails compared to what you have stated online. I wanted to simply clarify whether you teach trade signals rather than what fx is all about. I have spent years learning various topics including pivot highs and lows, money management, how to trade daily, weekly and intraday etc but what I was looking for is simply trade signals (entry, stop loss, profit targets etc). You obviously don’t do this or interested in sharing this information with me so I will not bother you again.

High maintenance!!!! Wow how arrogant. People are plain stupid to even give you the time of the day. How negative. I wouldn’t like to be associated with someone like you anyway.

Maybe I was too abrupt, but I can see the writing on the wall here. I mentioned everything I could about my trading philosophy and material I do and do not provide, but felt I got nowhere with this person. I don’t think I am arrogant. I state quite often that I struggled for many years. But, I did realize I had to get out of my own way. This exchange took place over the course of two weeks, and frankly I thought it was pretty generous of me to take the time to respond to each question.

The Fundamentals of Forex Fundamentals

By Justin Kuepper from Investopedia

Those trading in the foreign-exchange market (forex) rely on the same two basic forms of analysis that are used in the stock market: fundamental analysis and technical analysis. The uses of technical analysis in forex are much the same: price is assumed to reflect all news, and the charts are the objects of analysis. But unlike companies, countries have no balance sheets, so how can fundamental analysis be conducted on a currency?

Since fundamental analysis is about looking at the intrinsic value of an investment, its application in forex entails looking at the economic conditions that affect the valuation of a nation’s currency. Here we look at some of the major fundamental factors that play a role in a currency’s movement.

Economic Indicators
Economic indicators are reports released by the government or a private organization that detail a country’s economic performance. Economic reports are the means by which a country’s economic health is directly measured, but remember that a great deal of factors and policies will affect a nation’s economic performance.

These reports are released at scheduled times, providing the market with an indication of whether a nation’s economy has improved or declined. These reports’ effects are comparable to how earnings reports, SEC filings and other releases may affect securities. In forex, as in the stock market, any deviation from the norm can cause large price and volume movements.

You may recognize some of these economic reports, such as the unemployment numbers, which are well publicized. Others, like housing stats, receive less coverage. However, each indicator serves a particular purpose and can be useful. Here we outline four major reports, some of which are comparable to particular fundamental indicators used by equity investors:

Gross Domestic Product (GDP)
GDP is considered the broadest measure of a country’s economy, and it represents the total market value of all goods and services produced in a country during a given year. Since the GDP figure itself is often considered a lagging indicator, most traders focus on the two reports that are issued in the months before the final GDP figures: the advance report and the preliminary report. Significant revisions between these reports can cause considerable volatility. The GDP is somewhat analogous to the gross profit margin of a publicly traded company in that they are both measures of internal growth.

Retail Sales
The retail-sales report measures the total receipts of all retail stores in a given country. This measurement is derived from a diverse sample of retail stores throughout a nation. The report is particularly useful as a timely indicator of broad consumer spending patterns that is adjusted for seasonal variables. It can be used to predict the performance of more important lagging indicators, and to assess the immediate direction of an economy. Revisions to advanced reports of retail sales can cause significant volatility. The retail sales report can be compared to the sales activity of a publicly traded company.

Industrial Production
This report shows change in the production of factories, mines and utilities within a nation. It also reports their “capacity utilizations,” the degree to which each factory’s capacity is being used. It is ideal for a nation to see a production increase while being at its maximum or near maximum capacity utilization.

Traders using this indicator are usually concerned with utility production, which can be extremely volatile since the utilities industry, and in turn the trading of and demand for energy, is heavily affected by changes in weather. Significant revisions between reports can be caused by weather changes, which in turn can cause volatility in the nation’s currency.

Consumer Price Index (CPI)
The CPI measures change in the prices of consumer goods across over 200 different categories. This report, when compared to a nation’s exports, can be used to see if a country is making or losing money on its products and services. Be careful, however, to monitor the exports – it is a popular focus with many traders, because the prices of exports often change relative to a currency’s strength or weakness.Other major indicators include the purchasing managers index (PMI), producer price index (PPI), durable goods report, employment cost index (ECI) and housing starts. And don’t forget the many privately issued reports, the most famous of which is the Michigan Consumer Confidence Survey. All of these provide a valuable resource to traders if used properly.

So, How Are These Used?
Since economic indicators gauge a country’s economic state, changes in the conditions reported will therefore directly affect the price and volume of a country’s currency. It is important to keep in mind, however, that the indicators discussed above are not the only things that affect a currency’s price. Third-party reports, technical factors and many other things also can drastically affect a currency’s valuation. Here are some useful tips that may help you when conducting fundamental analysis in the forex market:

• Keep an economic calendar on hand that lists the indicators and when they are due to be released. Also, keep an eye on the future; often markets will move in anticipation of a certain indicator or report due to be released at a later time.
• Be informed about the economic indicators that are capturing most of the market’s attention at any given time. Such indicators are catalysts for the largest price and volume movements. For example, when the U.S. dollar is weak, inflation is often one of the most-watched indicators.
• Know the market expectations for the data, and then pay attention to whether the expectations are met. That is far more important than the data itself. Occasionally, there is a drastic difference between the expectations and actual results. If so, be aware of the possible justifications for this difference.
• Don’t react too quickly to the news. Often numbers are released and then revised, and things can change quickly. Pay attention to these revisions, as they may be a useful tool for seeing the trends and reacting more accurately to future reports.

The Bottom Line
There are many economic indicators, and even more private reports, that can be used to evaluate forex fundamentals. It’s important to take the time to not only look at the numbers, but also understand what they mean and how they affect a nation’s economy. When properly used, these indicators can be an invaluable resource for any currency trader.

What Makes A Great Trader

by Gary Dayton

Many traders believe that successful traders are born special. Great traders have inherited the “trading gene” or have a natural talent for trading. Nothing could be farther from the truth. Although it is a popular misconception, trading success has little to do with intelligence, personality makeup, family background, or other inherited characteristics. Scientists have studied what makes outstanding performers from the arts, business, medicine, and sport outstanding. What they have found may surprise you.

What Makes a Great Trader

Over the past 35 years, much research has gone into the question: What makes the extraordinary performer extraordinary? The answer consistently has been something other than natural talent. The results are always the same, natural talent is truly overrated.

What makes a great performer great includes the following three things:

Dedicated practice. Regardless of the field,those who make notable achievement spend time practicing their craft. Many traders underestimate the amount of time and practice needed; it clearly involves more than buying trading software and having a few trade setups. It requires a certain kind of practice. It is what scientists call deliberate practice or deep practice. It is a high quality and intensive practice that is sustained over many months and years.

A real secret to trading success is to develop a trade setup and then practice that setup in all kinds of market conditions. You can do this through simulation and bar-by-bar replay. Such practice gives a deep understanding of the trade setup and the market context in which it works best putting the trader on the road to achievement and success.

Training and coaching. Top performers in every field study their craft thoroughly. Most have a coach to helps them develop their skills. Traders, too, can benefit by careful study and working with coaches on both technical and mental skills.

Traders should select their training with care and make sure it meets their needs. As the research on deep practice is now becoming more available to the public, training that incorporates deliberate practice procedures are beginning to emerge. This is good news for traders as their study and training can be guided by what works well, according to scientific principles.

Support. All extraordinary performers have support from family and friends. Traders have a definite need for support. For most, trading is lonely. It helps not only to have family support, but also support from like-minded friends who trade. A trading buddy or two can provide valuable relationships.

Internet forums and trading clubs offer ways to connect with other traders. In the best of these trading communities you will find like-minded traders who are interested in learning and can help inspire one another.

Of the three elements that lead to success listed here it is the consistent, high-quality practice that is the most important to a trader’s development. Use a daily practice routine to acquire highly specialized trading knowledge, skills and abilities.

Reaching high levels of success comes not from your genes but from your effort.

Getting There From Here

The Uncomfotable Path to Success by Todd Smith

After having worked with thousands of entrepreneurs over the last 29 years, I have seen many succeed but many more fail. And what distinguishes the two groups? Successful people consistently push themselves outside their comfort zone to achieve their goals.

Best selling author Brian Tracy, whose teachings I have been following for more than 25 years said, “Move out of your comfort zone. You can only grow if you are willing to feel awkward and uncomfortable when you try something new.”

Another best selling author, Denis Waitley who has trained countless U.S Olympic athletes said, “To achieve your dreams you must break out of your current comfort zone and become comfortable with the unfamiliar and the unknown.”

I am convinced that you must push yourself outside your comfort zone to make any advances in your life. Think about it. Your comfort zone is where everything feels safe and familiar. How can you reach greater heights personally and professionally if you aren’t stretching yourself and growing on a regular basis?

It’s Time to Get Uncomfortable

Being honest with yourself, do you avoid doing things you know you should do because they make you feel uncomfortable?

Contemplate how your life could change if you ventured into the “discomfort zone”. Would you feel better about yourself? Would you become more respected by your peers and colleagues? Would you have more self-confidence? Would you be more successful?

Your first step on the road to greater achievement focuses on the little things you know you should do but don’t feel comfortable doing. If you push yourself to do the little things that thrust you outside your comfort zone your confidence will begin to grow. It could be as simple as saying hi to a stranger.

As you build your confidence in doing the little things, you’ll slowly build your confidence do the big things. This is how it works for all of us. We all start by building our confidence in the little things.

When you first step outside your comfort zone it’s likely you’ll feel nervous and perhaps some fear. But unless you are doing something dangerous or risky nothing bad is going to happen to you. To the contrary, that knot in your stomach is your signal that growth and opportunity lay ahead. So feel the fear and do it anyway.

As Dale Carnegie said, “Do the thing you fear to do and keep on doing it… that is the quickest and surest way ever yet discovered to conquer fear.”

So, will you start to be intentional about pushing yourself outside your comfort zone? Will you commit to doing the things you know you should do even though they make you feel uncomfortable?

When you get a shortness of breath and your heart starts to beat out of your chest, just ask yourself, “What’s the worst thing that can happen?” Then fire yourself up and do it without further hesitation! You will feel great! You will have conquered a fear. Your confidence will grow.

“Nobody ever died of discomfort, yet living in the name of comfort has killed more ideas, more opportunities, more actions, and more growth than everything else combined. Comfort kills!”- T. Harv Eker, Author of Secrets of the Millionaire Mind.

Why Forex Traders Need a Business Plan

by Andrew Mitchell

Forex trading can be a great way to make money. However, it requires a substantial commitment of both time and resources. Some of the costs of getting into Forex trading include:
•Broker commissions and fees
•Software that can perform detailed analysis
•Research services
•Losing money on bad trades (this is inevitable I am afraid)

The foreign exchange market is the largest market in the world. More than $200 billion worth of trades are conducted every day, which means that traders have a substantial opportunity to make a lot of money.

However, Forex trading is also very risky. It is a zero-sum game. This means that every dollar one player wins will be a dollar another player lost. Forex traders will either win big or lose big. You also need to keep in mind that when you are trading on the Forex market you are betting against some of the biggest sharks in the financial world. You definitely need to know what you are dong if you are going to operate a Forex trading business.

Tips for Running Your Forex Business

The most important thing to keep in mind when you are trading Forex is that you are running a business. You can’t treat it like a hobby if you want to succeed. Make sure you have a detailed business strategy as you work the markets. I have outlined a couple key things to keep in mind here.

Revenue Model

First of all, you need to know how you will be making money on Forex. You will calculate your profit the same way you would with any other financial investment. Your profit will be the sum of your winnings minus the sum of your losses.

You probably already knew that, so let me tell you something a little more informative. The mistake many people make is assuming that they are going to need to win more often than they lose. That tends to be more the exception that the rule.

Some of the best traders have struck it rich with Forex trading by winning less than 40% of the time. However, other people have taken less risk and still don’t win often enough to realize a net profit. The trick is to take smart, healthy risks that will yield high returns that outweigh your risks. You will need to have an organized approach to win as a Forex trader.

Common Forex Trading Mistakes

As I said, Forex is a zero-sum game. In the long-run there are more losers than winners, but the winners tend to make a lot more money. That’s because they know how to operate a serious business.

Here are some of the biggest reasons Forex traders lose money:
•They make their trades on emotions.
•They don’t have a system they are willing to commit to.
•They don’t understand how to use risk to their advantage.
•They don’t learn how Forex markets work or how to trade effectively. These mistakes have cost traders a considerable amount of money. Many financial institutions have also lost money with traders who have made these mistakes. Many banks now require people to have a business plan before they will even allow them to open an account.

Remember, as a Forex trader you will be competing with seasoned traders all over the world. Most of them are trading full-time. You will need to make the same commitment and take the same risks if you hope to beat them.

You need to take the time to develop an optimized system. You will need to implement your strategy consistently if you intend to make money with Forex. You will be better off having a good strategy that you use consistently than having a great strategy that you never implement.

Top Ten Tips . . .

I would like to share another Article by a fellow trader Jade Gate titled “Top Ten Tips Part 1 for Forex Success.”

This contains some very good information to reinforce good trading habits and maintain your trading mindset.

Hope you enjoy it.

Here’s the link: Top Ten Tips Part 1


The Right Attitude

“Whether you think you can or think you can’t you’re right.” Henry Ford

Much has been said about how one’s attitude can determine one’s outcome. Time and time again this has proven to be true.

“The last of the human freedoms is to choose one’s attitude in any given set of circumstances.” Viktor E. Frankl

For traders, the fact remains that a positive attitude creates positive expectations which lead to positive results. The opposite is also true – a negative attitude creates negative expectations and therefore leads to negative results. Either way, these emotions and attitudes will determine your actions.

Your trading success will be based on accepting the fact that losses are a part of trading and in spite of that, you will remain confident to execute trades and follow the rules of your trading plan. That is the blueprint for profitable trading in a nutshell.

Your confidence will grow as you learn what works and what does not. The more you begin to repeat what does work, you will become disciplined to ignore what does not. Your confidence will grow as you begin to believe in your ability to focus on what works, take the correct action over and over again, and accept the outcome. This positive growth pattern will diminish the fear, remove the emotional investment and lead to consistent action.

Consistent action can only come when you accept both emotionally and financially that losses are a part of trading.

Notice others that participate in highly competitive fields – professional sports for example. They accept the risk of a loss before ever stepping on the field of play and still expect to win – that is, they have a positive attitude.

Imagine how crippling it would be if every time the team lost, they gave up, or let the loss devastate them emotionally to the point where they expected to lose or could not bring themselves to even go back on the field (a negative attitude, to say the least.) They know they cannot change the past – so why dwell on it. They know that one game, or one contest, is just one of many they will compete in, so why let one result determine the outcome of the others.

They know that to win, they must quickly recover from a loss. They evaluate what worked and what didn’t, make adjustments to their plan, and prepare for the next contest – all with the positive expectation (confidence) that they will win the next time, execute their plan, and not repeat the same mistakes.

It’s the same in trading. Starting off with the right attitude, knowing losses (assumption of risk) are part of the game and shaking off mistakes are all essential if your goal is to be a consistent winner.

‘Winning traders learn from mistakes, losing traders repeat them.” Jason Stapleton

Be positive, stay positive, learn from your mistakes, follow your plan and accept the responsibility and risk that comes with being a winning trader.

What are your techniques or strategies for staying positive after a loss. How long did it take for you to accept that losses are a part of trading? What keeps you focused and optimistic?

Make a list and reinforce those insights.


It’s Not Witchcraft, It’s Fibonacci

From the July 2013 Issue of Futures Magazine (illustrations not included)

It’s Not Witchcraft, it’s Fibonacci by Billy Williams

Fibonacci numbers are almost as familiar to traders as they are to mathematicians, but they have not been used as effectively in the markets. In many ways, this failure to fully utilize Fibonacci analysis is because of a focus on its application with respect to support and resistance, where it is less effective.

Instead, there are ways to use Fibonacci’s measures of price retracement to peer into price action and better understand the strength of a price move. Employing this practical application of Fibonacci retracements can complement a trading approach as well as serve as a standalone method for identifying pullback entries.

Another powerful aspect of Fibonacci trading is that retracement levels are robust. They can be used in day-trading, swing trading and investing in all markets: Grains, forex, stocks, Treasuries and other commodities. Their measurements are relative and adjust to whatever market and time frame you are using.

A reliable set of guidelines will define the characteristics of key retracement levels so that they offer a practical way to gauge where price is likely to rise and where it is likely to fall. Based on those terms, any price reaction at these levels can help you determine profit targets and areas where caution is advised because of possible weakness. We’ll demonstrate some of these techniques using a grain-based exchange-traded fund (ETF) and equity ETFs; however, these methods are applicable across markets.

Voodoo & prophecy
In its most basic form, a retracement is a price move in the opposite direction of the most recent price move.

Price does not magically reverse at Fibonacci retracement levels and these points are not the Holy Grail of trading. Instead, they are a signpost for a possible destination that acts as a guide for price movement. A lot of things can happen on price’s journey, but Fibonacci helps point its likely path.

While some investors look at Fibonacci numbers as the equivalent of reading tea leaves or fortune telling, the reality is that they have their place in a skilled trader’s arsenal of technical analysis. If for no other reason, Fibonacci levels deserve attention because they are so popular among traders. Like a self-fulfilling prophecy, when price scales back, many institutional and retail traders alike take notice of where price is in relation to the Fibonacci retracements.

However, while it’s important to be aware of Fibonacci levels, it is vital that you view and apply them differently than the vast majority of traders.

There are two retracement levels that deserve the majority of your focus: The 38.2% and 61.8% Fibonacci retracement.

As price trades near each of these levels, a reversal or inflection point often will materialize. In a Fibonacci retracement, the reversal point is where price halts its pullback and resumes trading in the direction of the original price move. At the inflection point, price weakness is revealed and the market could fail to gain a foothold to reestablish the original trend.

These two concepts form the cornerstone of using Fibonacci retracements and are key to unlocking the door of successful price interpretation that can lead you to picking low-risk setups. This will serve as a reference when sizing up turns in price that occur within these retracement levels to measure how strong the preceding price move, or trend, was previous to the pullback.

While opportunities exist with each retracement level, these are general guidelines and broad target areas, not exact points.

For a 38.2% retracement level, the guidelines are:

• If price holds at the 38.2% retracement level, the prior move is considered to be strong. As a result, the counter move should be strong.
• A 38.2% retracement after a strong advance typically is followed by a move to a new high.
• A 38.2% retracement after a strong decline typically is followed by a move to a new low.

For a 61.8% retracement level, the guidelines are:

• If a stock experiences a 61.8% retracement, the prior move is considered weak (or near its end). As a result, the counter move should be weak.
• A 61.8% retracement after a strong advance often leads to a move with a one-in-three chance of exceeding the prior high. The same also applies in reverse.
• The first retracement after a strong up move is considered a buy most of the time, but you need to consider exiting a trade as price nears its previous high or low.

These guidelines act as a safeguard to keep your own emotions under control to prevent any euphoric anticipation of a runaway move or sense of overwhelming fear of a losing trade. Keeping your personal expectations in check will preserve your objectivity and prevent you from projecting those feelings into your trading.

Staying accurate
For beginners, it can be maddening to attempt to use Fibonacci retracements to achieve any kind of real clarity on price points and future price movement. Often, new traders simply draw retracements from every angle, resulting in a price chart that is so littered with Fibonacci retracement levels that it looks more like graffiti than sound technical analysis. In the end, measuring Fibonacci retracements incorrectly can do more harm than good.

It’s important to understand that price highs and lows are relative to retracements when calculating retracement levels. That said, it’s important to look for a strong move without a significant pullback to the 38.2% or 61.8% level. If price pulls back slightly without touching any of those levels and goes on to make a new high or low, then adjust your measurement to account for it. This keeps your measurement of these levels in sync with the dynamics of the market, which are constantly in flux.

When one of these key levels is touched, you are looking for some kind of reaction as this level becomes a pivot. You are looking for support/resistance levels to be established, for a trend to resume or the next Fibonacci level to be tested.

It’s common to look for advice on how an average trader can be successful in today’s market; the answer is not to be average. Average traders lose money, while exceptional traders take money from average traders.

One way not to be average is to examine common technical tools in depth. Cookie-cutter analysis of Fibonacci retracements fails to provide the value add needed for consistent signals over time.

Fibonacci numbers are used pervasively by traders, but the real benefit is looking beyond common beliefs and realizing they are better employed to size up other traders, just as a good poker player doesn’t play his cards, but plays the other players. Measuring the strength of Fibonacci retracements can help you glean insight into what comes next.

Billy Williams is a 20-year veteran trader and publisher of, where you can read his commentary and a report on the fundamental keys for the aspiring trader.

An interesting perspective and some food for thought.


The Power of Positive Thinking

How Positive Thoughts Build Skills, Boost Health, and Improve Work by James Clear

Positive thinking sounds useful on the surface. (Most of us would prefer to be positive rather than negative.) But “positive thinking” is also a soft and fluffy term that’s easy to dismiss. In the real world, it rarely carries the same weight as words like “work ethic” or “persistence.” But those views may be changing.

Research is beginning to reveal that positive thinking is about much more than just being happy or displaying an upbeat attitude. Positive thoughts can actually create real value in your life and help you build skills that last much longer than a smile. The impact of positive thinking on your work, your health, and your life is being studied by people who are much smarter than me. One of these people is Barbara Fredrickson.

Fredrickson is a positive psychology researcher at the University of North Carolina and she published a landmark paper that provides surprising insights about positive thinking and its impact on your skills. Her work is among the most referenced and cited in her field and it is surprisingly useful in everyday life. Let’s talk about Fredrickson’s discovery and what it means for you…

What Negative Thoughts Do to Your Brain

Play along with me for a moment. Let’s say that you’re walking through the forest and suddenly a tiger steps onto the path ahead of you. When this happens, your brain registers a negative emotion—in this case, fear. Researchers have long known that negative emotions program your brain to do a specific action. When that tiger crosses your path, for example, you run. The rest of the world doesn’t matter. You are focused entirely on the tiger, the fear it creates, and how you can get away from it.

In other words, negative emotions narrow your mind and focus your thoughts. At that same moment, you might have the option to climb a tree, pick up a leaf, or grab a stick—but your brain ignores all of those options because they seem irrelevant when a tiger is standing in front of you. This is a useful instinct if you’re trying to save life and limb, but in our modern society we don’t have to worry about stumbling across tigers in the wilderness. The problem is that your brain is still programmed to respond to negative emotions in the same way—by shutting off the outside world and limiting the options you see around you.

For example, when you’re in a fight with someone, your anger and emotion might consume you to the point where you can’t think about anything else. Or, when you are stressed out about everything you have to get done today, you may find it hard to actual start anything because you’re paralyzed by how long your to–do list has become. Or, if you feel bad about not exercising or not eating healthy, all you think about is how little willpower you have, how you’re lazy, and how you don’t have any motivation.

In each case, your brain closes off from the outside world and focuses on the negative emotions of fear, anger, and stress—just like it did with the tiger. Negative emotions prevent your brain from seeing the other options and choices that surround you. It’s your survival instinct.

Now, let’s compare this to what positive emotions do to your brain. This is where Barbara Fredrickson returns to the story.

What Positive Thoughts Do to Your Brain

Fredrickson tested the impact of positive emotions on the brain by setting up a little experiment. During this experiment, she divided her research subjects into 5 groups and showed each group different film clips. The first two groups were shown clips that created positive emotions. Group 1 saw images that created feelings of joy. Group 2 saw images that created feelings of contentment. Group 3 was the control group. They saw images that were neutral and produced no significant emotion. The last two groups were shown clips that created negative emotions. Group 4 saw images that created feelings of fear. Group 5 saw images that created feelings of anger.

Afterward, each participant was asked to imagine themselves in a situation where similar feelings would arise and to write down what they would do. Each participant was handed a piece of paper with 20 blank lines that started with the phrase, “I would like to…” Participants who saw images of fear and anger wrote down the fewest responses. Meanwhile, the participants who saw images of joy and contentment, wrote down a significantly higher number of actions that they would take, even when compared to the neutral group.

In other words, when you are experiencing positive emotions like joy, contentment, and love, you will see more possibilities in your life. These findings were among the first that proved that positive emotions broaden your sense of possibility and open your mind up to more options. But that was just the beginning. The really interesting impact of positive thinking happens later…

How Positive Thinking Builds Your Skill Set

The benefits of positive emotions don’t stop after a few minutes of good feelings subside. In fact, the biggest benefit that positive emotions provide is an enhanced ability to build skills and develop resources for use later in life. Let’s consider a real world example.

A child who runs around outside, swinging on branches and playing with friends, develops the ability to move athletically (physical skills), the ability to play with others and communicate with a team (social skills), and the ability to explore and examine the world around them (creative skills). In this way, the positive emotions of play and joy prompt the child to build skills that are useful and valuable in everyday life.

These skills last much longer than the emotions that initiated them. Years later, that foundation of athletic movement might develop into a scholarship as a college athlete or the communication skills may blossom into a job offer as a business manager. The happiness that promoted the exploration and creation of new skills has long since ended, but the skills themselves live on. Fredrickson refers to this as the “broaden and build” theory because positive emotions broaden your sense of possibilities and open your mind, which in turn allows you to build new skills and resources that can provide value in other areas of your life.

As we discussed earlier, negative emotions do the opposite. Why? Because building skills for future use is irrelevant when there is immediate threat or danger (like the tiger on the path). All of this research begs the most important question of all: if positive thinking is so useful for developing valuable skills and appreciating the Big Picture of life, how do you actually get yourself to be positive?

How to Increase Positive Thinking in Your Life

What you can do to increase positive emotions and take advantage of the “broaden and build” theory in your life? Well, anything that sparks feelings of joy, contentment, and love will do the trick. You probably know what things work well for you. Maybe it’s playing the guitar. Maybe it’s spending time with a certain person. Maybe it’s carving tiny wooden lawn gnomes.

That said, here are three ideas for you to consider…

1. Meditation: Recent research by Fredrickson and her colleagues has revealed that people who meditate daily display more positive emotions that those who do not. As expected, people who meditated also built valuable long–term skills. For example, three months after the experiment was over, the people who meditated daily continued to display increased mindfulness, purpose in life, social support, and decreased illness symptoms.

Note: If you’re looking for an easy way to start meditation, here is a 10–minute guided meditationthat was recently sent to me. Just close your eyes, breathe, and follow along.

2. Writing: This study, published in the Journal of Research in Personality, examined a group of 90 undergraduate students who were split into two groups. The first group wrote about an intensely positive experience each day for three consecutive days. The second group wrote about a control topic. Three months later, the students who wrote about positive experiences had better mood levels, fewer visits to the health center, and experienced fewer illnesses. (This blew me away. Better health after just three days of writing about positive things!)

Note: I used to be very erratic in my writing, but now I publish a new article every Monday and Thursday. I’ve written more about my writing process and how you can stick to your goals in this article.

3. Play: Schedule time to play into your life. We schedule meetings, conference calls, weekly events, and other responsibilities into our daily calendars… why not schedule time to play?

When was the last time you blocked out an hour on your calendar just to explore and experiment? When was the last time you intentionally carved out time to have fun? You can’t tell me that being happy is less important than your Wednesday meeting, and yet, we act like it is because we never give it a time and space to live on our calendars. Give yourself permission to smile and enjoy the benefits of positive emotion. Schedule time for play and adventure so that you can experience contentment and joy, and explore and build new skills.

Happiness vs. Success: Which Comes First?

There’s no doubt that happiness is the result of achievement. Winning a championship, landing a better job, finding someone you love — these things will bring joy and contentment to your life. But so often, we wrongly assume that this means happiness always follows success.

How often have you thought, “If I just get ___, then I’ll be set.”

Or, “Once I achieve ___, I’ll be satisfied.”

I know I’m guilty of putting off happiness until I achieve some arbitrary goal. But as Fredrickson’s “broaden and build” theory proves, happiness is essential to building the skills that allow for success. In other words, happiness is both the precursor to success and the result of it.

In fact, researchers have often noticed a compounding effect or an “upward spiral” that occurs with happy people. They are happy, so they develop new skills, those skills lead to new success, which results in more happiness, and the process repeats itself.

Where to Go From Here

Positive thinking isn’t just a soft and fluffy feel–good term. Yes, it’s great to simply “be happy,” but those moments of happiness are also critical for opening your mind to explore and build the skills that become so valuable in other areas of your life. Finding ways to build happiness and positive emotions into your life—whether it is through meditation, writing, playing a pickup basketball game, or anything else—provides more than just a momentary decrease in stress and a few smiles.

Periods of positive emotion and unhindered exploration are when you see the possibilities for how your past experiences fit into your future life, when you begin to develop skills that blossom into useful talents later on, and when you spark the urge for further exploration and adventure. To put it simply: seek joy, play often, and pursue adventure. Your brain will do the rest.