Share:

Best Educational Content

I have been involved with the markets for almost 20 years. I started on the institution side of the business but have spent much more time trading and building financial education content for the retail trader and investor world. While I truly feel I am speaking the truth when it comes to supply and demand, how the markets really work and how money is really made and lost in markets, I am and likely will always be very outnumbered when it comes to popular belief regarding strategies; and that is perfectly fine with me. It really comes down to two schools of thought. Should your trading or investing strategy focus on market timing, which means identifying market turning points in advance and then taking action at those turning points, like I am always suggesting? Or, should you focus on trend trading and try and capture part of the meat of the move which is popular belief.

When most people hear my ideas for the first time, the initial words I often hear are: “Seems high risk,” “Is this contrarian,” “Picking tops and bottoms can’t be done,” and so on… Most people focus on “trend” trading and staying out of market turns. I understand this because that is what the trading books tell people to do. It’s also what Wall Street professionals tell the public is best for them. Two problems with that though… First, people who read trading books and employ conventional technical analysis and such tend not to be very profitable. Second, what Wall Street suggests is typically better for them, not for you. Still though, the vast majority want to focus on the middle, the trend, and not the turning points and I get that. In other words, most people are far more comfortable buying after price has risen and selling after price has fallen.

A while back a friend sent me an email with a quote from someone who is regarded as one of the best traders in our life time, Paul Tudor Jones. If you don’t know him, look him up. The email said “Sam, you’re going to love this quote,” my friend was correct. When I read this quote I could not believe it. It was like the words in the quote were coming right out of my mouth, only they were not from me. They were from someone who is worth over $3,000,000,000.00 (yes, that’s 3 billion according to reports). The quote said exactly this:

“I believe the very best money is made at the market turns. Everyone says you get killed trying to pick tops and bottoms and you make all your money by playing the trend in the middle. Well, for twelve years I have been missing the meat in the middle but I have made a lot of money at tops and bottoms.” – Paul Tudor Jones (source: Business Insider)

I could not agree more with Mr. Jones. Being in the trend is great, but I get in at the turn before the trend is under way. I honestly can’t figure out how you would even enter into a trend after it is well underway. To me, that is VERY high risk and low reward trading. Where do you enter, how in the world do you properly manage risk and reward when buying after a rally in price? Let me share a trade in the NASDAQ from last week to help illustrate my point. The yellow box represents where banks were selling the NASDAQ and the circled area is where I entered the trade and sold short.

Nasdaq Futures 6/11/15. Active Income Profit: $1,159.60

Lessons From The Pros

Each entry, as you can see, is getting in at the turn just like Mr. Jones is suggesting. The reason why my ideas are the opposite of the masses is because I didn’t learn to trade like the masses. I learned to trade from the Wall Street side of the business, on a trading floor, dealing with some of the largest order flow in the market. From that experience, there is only one way to do it. You buy where the significant buy orders are and sell where the significant sell orders are (supply and demand), again, just like Mr. Jones is suggesting. The masses learn to trade from trading books, seminars, the internet and so on. Also, keep in mind that I am not just talking about short term trading for income. I am equally talking about long term trading for passive income and wealth.

Believe me, I am not trying to twist your arm or beat up trading books. As someone involved in the somewhat unregulated world of financial education, I feel it’s my responsibility to share these ideas and different views with you.

Hope this was helpful, have a great day.

Learn to Trade Now

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Editors’ Picks

EUR/USD holds above 1.0700 on weaker US Dollar, upbeat Eurozone PMI

EUR/USD holds above 1.0700 on weaker US Dollar, upbeat Eurozone PMI

EUR/USD holds above the 1.0700 psychological barrier during the early Asian session on Wednesday. The weaker-than-expected US PMI data for April drags the Greenback lower and creates a tailwind for the pair. 

EUR/USD News

GBP/USD posts modest gains above 1.2450, BoE policymaker dampens hopes of summer rates cut

GBP/USD posts modest gains above 1.2450, BoE policymaker dampens hopes of summer rates cut

The GBP/USD pair recovers to 1.2450 on Wednesday during the early Asian session. The downbeat US April PMI data and increasing appetite for the risk-linked space exert some selling pressure on the US Dollar. Later in the day, the US Durable Goods Orders and weekly Mortgage Applications will be released. 

GBP/USD News

USD/JPY hangs near 34-year high at 154.88 as intervention risks loom

USD/JPY hangs near 34-year high at 154.88 as intervention risks loom

USD/JPY is sitting at a multi-decade high of 154.88 reached on Tuesday. Traders refrain from placing fresh bets on the pair as Japan's FX intervention risks loom. Broad US Dollar weakness also caps the upside in the major. US Durable Goods data are next on tap. 

USD/JPY News

Editors’ Picks

AUD/USD jumps above 0.6500 after hot Australian CPI data

AUD/USD jumps above 0.6500 after hot Australian CPI data

AUD/USD extended gains and recaptured 0.6500 in Asian trading, following the release of hotter-than-expected Australian inflation data. The Australian CPI rose 1% in QoQ in Q1 against 0.8% forecast, providing extra legs to the Australian Dollar upside. 

AUD/USD News

USD/JPY hangs near 34-year high at 154.88 as intervention risks loom

USD/JPY hangs near 34-year high at 154.88 as intervention risks loom

USD/JPY is sitting at a multi-decade high of 154.88 reached on Tuesday. Traders refrain from placing fresh bets on the pair as Japan's FX intervention risks loom. Broad US Dollar weakness also caps the upside in the major. US Durable Goods data are next on tap. 

USD/JPY News

Gold price cautious despite weaker US Dollar and falling US yields

Gold price cautious despite weaker US Dollar and falling US yields

Gold retreats modestly after failing to sustain gains despite fall in US Treasury yields, weaker US Dollar. XAU/USD struggles to capitalize following release of weaker-than-expected S&P Global PMIs, fueling speculation about potential Fed rate cuts.

Gold News

Crypto community reacts as BRICS considers launching stablecoin for international trade settlement

Crypto community reacts as BRICS considers launching stablecoin for international trade settlement

BRICS is intensifying efforts to reduce its reliance on the US dollar after plans for its stablecoin effort surfaced online on Tuesday. Most people expect the stablecoin to be backed by gold, considering BRICS nations have been accumulating large holdings of the commodity.

Read more

US versus the Eurozone: Inflation divergence causes monetary desynchronization

US versus the Eurozone: Inflation divergence causes monetary desynchronization

Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Fed might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.

Read more

RECOMMENDED LESSONS

7 Ways to Avoid Forex Scams

The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?

What Are the 10 Fatal Mistakes Traders Make

Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.

Strategy

Money Management

Psychology