Entries by Peter Brandt

Is it possible to copy another trader’s exact style?

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In more than 40 years of trading, I have never met consistently profitable traders who did not have a style unique to themselves

Over the  years I have constantly harped that to be successful a trader must develop his or her own unique approach to trading. The Factor is not a trading or signaling service because I do not believe in signaling services.

I am privileged to have belonged for years to a private online forum that includes some of the best traders in the world – a number of whom have been featured in the Market Wizards series. Recently the subject of mirroring another trader’s style was a topic of lively discussion within the group. There were some remarkably insightful comments made that I want to share with you. These comments were made by traders whose names you would recognize.

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My Trading Day

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I get many questions on what a typical day looks like for me.  This is an important question because the PROCESS of trading is extremely important.

Friday afternoon late
• Print out a list of my positions and open orders

Saturday
• Scroll through weekly charts of the “long list” of markets I monitor on a weekly basis. This typically includes about 50 futures markets, 25 forex pairs and 25 equities.
• Create a “short list” of markets of interest, including all the markets in which I am entering a new week with a position. The “short list” usually included about 20 to 30 markets.
• Scroll through the daily charts of the “short list” to determine those markets that could generate a buy or sell signal the following week. From this review I create my “active list” which includes the markets in which I hold a position and markets in which I will develop a trading strategy.
• The “active list” typically includes 10 or so markets. I monitor this list carefully. I may even monitor this list inter- day for an asymmetrical trading opportunity.
• For open trades, I review my target and stops orders to determine if any modifications are needed
• For possible new trades, I determine an entry strategy, risk management guidelines and trade sizing

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Factor Update, March 20, 2016

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 General Market Commentary

Not all market environments are equal. Similarly, the same market environment can treat different trading styles in very different ways – some favorably, others miserably. The current markets, in my opinion, are neutral/hostile to classical charting principles. Current markets are volatile; false and premature breakouts have increased in 2016 to date; and, there is a lack of substantial patterns under construction. I have experienced this type of trading environment before – many times. There are profits to be had in some markets, but there are also an oversupply of land mines. For me, this type of trading environment has not correlated well with a robust three-month forward ROR. Of course I will continue to take signals that are promising knowing that sooner or later markets favorable to classical charting will return.

Warning: I generally ignore one-day price action, preferring area patterns. Yet, nearly every market discussed in this Update experienced a narrow real-range bar on Friday that occurred at or just below the close of Thursday’s wide range day. This development suggests the possibility of a shake out next week. According, I enter next week in a very defensive frame of mind.

Market Review

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Factor Update, March 20, 2016

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General Market Commentary

 

Not all market environments are equal. Similarly, the same market environment can treat different trading styles in very different ways – some favorably, others miserably. The current markets, in my opinion, are neutral/hostile to classical charting principles. Current markets are volatile; false and premature breakouts have increased in 2016 to date; and, there is a lack of substantial patterns under construction. I have experienced this type of trading environment before – many times. There are profits to be had in some markets, but there are also an oversupply of land mines. For me, this type of trading environment has not correlated well with a robust three-month forward ROR. Of course I will continue to take signals that are promising knowing that sooner or later markets favorable to classical charting will return.

Warning: I generally ignore one-day price action, preferring area patterns. Yet, nearly every market discussed in this Update experienced a narrow real-range bar on Friday that occurred at or just below the close of Thursday’s wide range day. This development suggests the possibility of a shake out next week. According, I enter next week in a very defensive frame of mind.

Market Review

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Hodge-Podge

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The last Factor Update commented on a possible bottom in Soybeans based on a H&S bottom on the continuation graph (most active contract roll).

 A close above 900 would, in my opinion, complete this bottom. It is unfortunate that the charts of the individual contract months do now show the precision of the continuation graph. This chart illustrates the reasons I far prefer a flat or horizontal neckline. Even though the neckline as drawn may be violates, the left and right should highs remain as serious resistance points. Thus, even though the H&S pattern might be completed with a neckline breakout, the market remains in a trading range.

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Hodge-Podge

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The last Factor Update commented on a possible bottom in Soybeans based on a H&S bottom on the continuation graph (most active contract roll).

 A close above 900 would, in my opinion, complete this bottom. It is unfortunate that the charts of the individual contract months do now show the precision of the continuation graph. This chart illustrates the reasons I far prefer a flat or horizontal neckline. Even though the neckline as drawn may be violates, the left and right should highs remain as serious resistance points. Thus, even though the H&S pattern might be completed with a neckline breakout, the market remains in a trading range.

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Is the tarnish on Silver about to be removed?

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  Five-year bear trend in Silver may be coming to an end For the past five years Factor has remained negative on the Silver charts, calling for the bottom in Dec 2014. The weekly graph has now formed a 16-month falling wedge. This pattern can serve as a primary bottom based on classical charting principles. […]

Factor Report – March 13th

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Market Review

Factor Moves are currently ongoing in:

  • Gold
  • Japanese Yen
  • USD/NOK
  • Copper
  • AUD/NZD

A Factor Move was terminated in AUD/NZD. A Factor Move is developing in USD/SEK and New Zealand Dollars. This issue of the Factor also comments on the Soybean complex, Euro, Heating Oil, Canadian Dollars and global stock markets.

Factor Moves in Progress

 

Copper (daily chart)

After falling from a high of 465 in Feb 2011, it appears that Copper bottomed at 193.55 on Jan 18. The advance on Mar 1 confirmed a H&S bottom. I have upped the initial price target to 231.90. An eventual test of the Oct 2015 high at 244 is likely. Factor is long one layer.

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Factor Report – March 13th

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Market Review

Factor Moves are currently ongoing in:

  • Gold
  • Japanese Yen
  • USD/NOK
  • Copper
  • AUD/NZD

A Factor Move was terminated in AUD/NZD. A Factor Move is developing in USD/SEK and New Zealand Dollars. This issue of the Factor also comments on the Soybean complex, Euro, Heating Oil, Canadian Dollars and global stock markets.

Factor Moves in Progress

 

Copper (daily chart)

After falling from a high of 465 in Feb 2011, it appears that Copper bottomed at 193.55 on Jan 18. The advance on Mar 1 confirmed a H&S bottom. I have upped the initial price target to 231.90. An eventual test of the Oct 2015 high at 244 is likely. Factor is long one layer.

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Patience … Discipline … Discipline … Discipline … Patience

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I know my sweet spot. Every trader should strive to know his or her sweet spot. We should strive to only take a trade when the market set up is in our sweet spot. We should strive to avoid trades out of our sweet spot.

If you, as a trader, do not know your trade set up with great intimacy, then how in the world will you know if you are exercising patience and discipline?

Once you know exactly what your sweet spot is and is not, then the real challenges begin.

The real challenges for me (and it could be different for you) are different nuances of patience and discipline.

  • Patience to wait for just the right set up
  • Discipline to sit on the sidelines and not getting pulled into a trade that does not fully satisfy my requirements
  • Discipline to pull the trigger when the right trade comes along
  • Discipline to remain detached from open positions and properly manage each trade according to trade management guidelines developed over decades of market speculation
  • Patience to allow a position with a substantial profit potential the room and time to bear full fruit

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