Unstable Market – Stable Emotions

The past couple of weeks in the market was a harsh reminder of what the market can do to one’s focus and emotional stability.

5 Essentials of Price Action Trading

A fellow trader, TraderCisco (his Twitter handle), suggested I write a post on price action trading – also known as “tape reading”.

The term “tape reading” comes from the old ticker tape containing real-time stock prices that used to stream endlessly onto the floor of physical stock exchanges in the early days. This was before the electronic ticker that you now see everywhere from the one hanging above the Big Board’s floor, to television and the mighty NASDAQ market site in Times Square. Traders back in the day used to read this strip of paper streaming out of a ticker tape machine (as pictured in this post’s feature image on my blog’s homepage). Ticker tape now is used to throw around during big VIP parades in New York City along the Canyon of Heroes…dealing with the mess afterwards is a different story.

Obviously, the days of reading stock prices on a narrow piece of paper being spit out by a machine is over. But reading prices, tape reading, lives on in its modern form via Level II screens and/or charts. For the purpose of my post, I will focus on chart reading since true Level II doesn’t exist in the FX markets (FX is a decentralized market with no single order book) and FX is what I trade. Here are what I would consider the five essentials of tape reading with charts:…

Behind the Closed Doors of FX Market Makers

Probably one of the best write-ups I’ve seen in a long time describing how retail FX market making works can be accessed here. The article was written by Javier Paz, President of Forex Datasource.

If you ever wondered how how retail FX market makers (like FXCM, GFT, Gain/Forex.com, etc.) make prices and fill trades, this article says it all. I’ve heard a lot of crap over the years from amateurs or those new to trading the FX market who have interesting stories about how market makers screwed their trades. Though it’s possible for a market maker (particularly of a Dealing Desk model – see article for explanation) to routinely “screw” their clients, it’s very unlikely to not possible with external execution (No-Dealing-Desk) models.

The sad truth behind who’s to blame behind so many, “I got screwed by XYZ market maker…

Trading – The Best Technical Indicator

I wasn’t entirely sure that I was going to be blogging about trading again in some way with my new blog. But since some of you have continued to email questions on FX trading (you’re all clearly obsessed) I guess I’ll go ahead and start a small segment on trading. Keeping in mind that I’m a pure technical (chartist) trader and that my views on trading will always be relative to how I trade the FX market.

Probably one of the most common questions that I get a lot is, “What indicators do you use?”. Let’s put this one to bed…