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The Once-a-Year Equity Market Event That Starts Today

It’s an equity market opportunity that accounts for billions each year, yet many traders and investors worldwide may not even know about it. We’re talking about a retail phenomenon impacting hundreds of millions of consumers, mainly in North America. That phenomenon is “Black Friday,” and it’s happening today!

So for traders around the world, do you know what Black Friday is, and understand the potential implications for traders and the broader equity market? Right now, even as we speak, business is booming for major retailers, whose shares could get a serious boost from Black Friday consumer spending. So behold the once-a-year phenomenon called “Black Friday,” and whether you trade the news or avoid it, be a more informed trader just for knowing about it.     

What Is “Black Friday?”

Black Friday Equity Market EventBlack Friday represents the official start of the holiday shopping season. Occurring every year the day after US Thanksgiving, it’s called “Black Friday” because the deep discounts and sales on many of the most desired productseverything from clothing and electronics, to new cars—help companies get “in the black,” or become profitable, not just for Q4, but sometimes for the full year.

And, more than just Black Friday, there’s also the impending “Cyber Monday,” when the biggest sales of the year will happen on retailers’ Web sites as well.

Consumer behavior changes remarkably this time of year, with millions eager to make a range of purchases, including holiday gifts to big-ticket items like household appliances, TVs, computers, and so much more, many of which will sell for literally hundreds—and sometimes thousands—less than any other time all year.

Believe it or not, some consumers even camp out for days or even weeks outside of the stores so they can be first in line when the doors open, often on Thanksgiving night, or at midnight, or even in the wee hours of the early morning!

And How It Impacts Traders & the Equity Market

Black Friday Equity Market EventAfter the equity market is closed in the US on Thanksgiving, billions of dollars in retail sales will happen on Black Friday alone, and when the retailers’ results come in days or weeks later, these shares, as well as the broader equity market, are likely to be propped up on good news.

This large-scale spending and influx of earnings may be what helps power another once-a-year equity market phenomenon: The “Santa Claus” rally, where stocks tend to rally heading into year-end.

Apple, Samsung, and a host of industry-leading companies have even been known to launch new products in time for Black Friday and the annual holiday shopping rush, and popular retailers are in full focus among analysts because their quarterly and full-year financial results can be made, or broken, by Black Friday and holiday sales.

While we aren’t keen to trade the news alone, nor necessarily pick individual stocks, Black Friday can be considered a fundamental factor that perennially drives the equity market. So for traders considering buying a broad US equity market index fund, or even a particular sector ETF, certainly figure in any potential impact of Black Friday. Even if it’s not a driving force that validates (or invalidates) your position, the effects of this once-a-year event will be felt throughout the US equity market and beyond.

See also: Year-End Forex Trends & How to Trade Them

Conclusion

Well as it turns out, “The sale of the year” started today! And while “Black Friday” may be a phenomenon that not all traders around the world know about, it can be a driving force for the equity market nonetheless…so be advised!

Now, this might be the really fun part: What do you think about this consumer phenomenon? For traders outside the North American markets, have you heard of Black Friday before? And who among us shops on Black Friday and/or Cyber Monday? Share your thoughts in the comments section below, and Happy Black Friday, everyone!

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My Terrible Trading Day & the Quick Decision That Saved It

I can’t remember the last time I’d felt as flustered and overwhelmed as I did one trading day earlier this week. In just minutes, seemingly everything that could’ve possibly gone wrong did, and as I’ll share with you, I practically shut down completely right on the spot in response to it. Sounds like scary stuff, doesn’t it? Well, it was, and as a fellow trader, perhaps you’ve had a trading day that pushed you to your limits as well.  

I’ve seen and been through a lot before, but I’ll admit that this one was a trading day like no other I’ve had before. I’m just relieved and quite proud to say that I survived without undue account damage, but only because of one conscious decision I made amidst the chaos and emotional turmoil that I felt at the time. So here’s what happened that resulted in my worst trading day in recent memory, and what I’m now really glad to have done about it.    

What Ruined My Trading Day Before It Even Started…

My Terrible Trading Day & the Quick Decision That Saved ItAny students, parents, and part-time traders among us can probably relate to this, because in all of our busy lives, trading is not all that’s on our schedule with each trading day. And so, perhaps much like you, I was in a rush from the moment I woke up that morning. I was “a man with a plan” this trading day, and I hurriedly readied myself, packed up my things, and left the house bound for a key meeting. Traffic was heavy, and I was already running late when I realized I’d left something important behind, and would have to turn around to go home and get it.

I felt butterflies in my stomach and jitters in my hands and face as I raced back towards home. That wasn’t part of my plan for the day, and as I’ve mentioned before, change isn’t always a real forte of mine. In fact, I was already a little mad at myself for being forgetful—that’s unlike me, afterall—but still I remained optimistic that I could make the meeting and get on with my trading day as planned. A few blocks later, though, I heard that unmistakable and sickening rumble coming from beneath my car, and just like that, I knew that things were going from bad to worse.

A flat tire in rush hour traffic, and no spare tire to boot, would effectively fray my last possible nerve. I hit rock bottom the second I realized I had no way to fix it myself, and that my plans for the morning, and quite possibly the trading day, were dashed.

…and, Fortunately for Me, What I Did about It

My Terrible Trading Day & the Quick Decision That Saved ItIt was a couple hours before I was able to get the car towed in for service, and get my affairs for the day either cancelled or rescheduled. Even after I managed to return home, though, I realized that I was still reeling inside from what had just transpired. And so I found myself at a difficult crossroads: To trade or not to trade?

As it happens, there were set-ups I was eyeing at the time, but when I considered my then-weakened capacity to stay calm, be patient, and leave emotions out of it where they belong, I quickly decided that I would take the day off from trading, and I honestly believe that decision most likely allowed me to escape this dreadful would-be trading day without sustaining any further damage.

Just think of all that could go wrong whenever any trader, even a pro, tries to just trade through such trying circumstances: While hurriedly trying to begin the trading day hours after they normally would have, they’d tend to be overanxious and willing to take non-qualifying set-ups just to “get in the game.” Or, already full of anger and emotion, they might go “on tilt” in the event of a failed set-up or losing trade. From there, they could be prone to complacent or revenge trading, which would likely only exacerbate their losses and make what was already a bad trading day into an outright disastrous one.

For me, it just didn’t seem safe or smart to take any risk with my mind and body already in a compromised state, and I feel strongly that I made the right decision. That’s just me, though. So what do you think you would’ve done in a similar situation? Might you have tried to push through anyway in hopes that you could “block it out” and still salvage what was left of the trading day? Maybe you’ve even tried to do that before?

See related: 3 Scenarios Even Pros Do Not Trade…But Do You?

Conclusion

My reason for publishing this post was not to complain or beg for sympathy, mind you. Afterall, plenty of people deal with far worse things that what I did! I merely wanted to share these circumstances and what I did as a result to illustrate that just as traders can exercise complete control over which set-ups they trade, we can also do the same with whether or not we trade in the first place…and there are times when the best trade is no trade at all!

So make sure that the next time life or the markets interfere with your trading day or compromise your ability to be disciplined and objective, you remember that there’s a better alternative to forcing trades or trying to “fight through” a weakened physical and/or emotional state. One trading day this past week, I was forced to give myself the day off, and in the end, I’m extremely glad that I did!

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Stunning Market Trends I Never Imagined Until They Happened!

There’s a part of me that still can’t believe what I’m about to say, but…greetings from Malaysia! I’m sure honored and humbled to be here this week to meet with and educate aspiring traders, and I have to say, I very seldom, if ever, thought trading would enable me to see so much and travel to so many places along the way.

It’s experiences like this that make me realize that most anything is possible in the markets and in trading, even things you wouldn’t expect or dream of in the beginning or at points along the way.

Perhaps it’s understandable why I also now find myself reflecting quite a bit about some of the surprise market trends that have materialized in recent years. Much like with this trip to Malaysia, I never saw many of these coming, either, and I wonder if anyone really did? So if you’re ready, let’s run through some memories about prominent and perhaps controversial market trends from recent years, and perhaps even touch on what may be the next big bombshell to hit the financial markets in the not-too-distant future.

The Most Stunning Market Trends of Our Time…So Far!

Financial Market TrendsBubbles, the “flash crash,” and the financial crisis: Hardly adding to the benefit or enjoyment of investors and traders in the modern era is the fact that we’re all now trading in crisis times. Gains and prosperity aside, our generation may ultimately be remembered by catastrophic market trends and events like exploding debt and real estate bubbles; epic boom and bust cycles in equity and commodity markets like gold, oil, and countless others; and even the “flash crash” of May 6, 2010, where billions disappeared in less than a second due to almost inexplicable automated selling.

Even today, many years later, constant news headlines and lingering fears about renewed financial crisis, or the next stunning and unforeseen events and market trends, typify the world in which we all now live and trade…and that’s just the way it is for traders and investors in this modern era!

Traders going “rogue”: It was—and in fact still is—one of the “sexiest” of all market trends, and the one that captivates small retail traders like us the most. Young “whiz kids” trading billions on behalf of the world’s biggest banks, some single-handedly moving markets, and earning quick fortunes in the process…or so everyone thought!

“Rogue” traders acting alone—and illegally—have cost banks billions in recent years. Just one trader cost UBS $2 billion in 2011; another, Nick Leeson, brought down Barings Bank with a $1.3 billion loss back in 1995. And then, there’s the “granddaddy of them all,” and the single biggest loss in banking history: $6 billion by “rogue” trader Jerome Kerviel while trading without authorization at Societe Generale in 2008. (Now with that in mind, tell me again why you get so angry over “by-the-book” drawdowns of 1% or less?)

Computers and Internet technology: The Internet and technology really have changed everything, and that’s a social and cultural phenomenon, in addition to being one of the most significant of all modern market trends. Just think about what it’s done for traders and the trading industry! I now have the pleasure of knowing some veteran traders who still speak of the old days of paper charts, calling trades into the broker by phone, and trading over unreliable, dial-up Internet connections, and it’s hard to imagine how they did it! Some traders probably still don’t have all the modern conveniences enjoyed by those in New York, London, Chicago, Tokyo, and elsewhere, but as a trader (and mentor) that makes my living at both over the Internet, I’ll never be one to take these breakthroughs for granted!

See also: Is Mobile Trading Right for You?

And Another That May Be Shaping up Right Now!

Major Market Trends: Legalizing MarijuanaLegalized marijuana: Among the very latest market trends that many, myself included, have found to be shocking and controversial, is the move by many local, state, and even national governments who are voting to remove criminal prosecution and legalize marijuana for regulated (and taxable) distribution. This has already become a viable growth investment all its own, as seen just this past week in Canada, where the announcement by incoming Canadian Prime Minister Justin Trudeau that he and his Liberal Party will move for rapid legalization sent select cannabis stocks 25%-45% higher in only a matter of days!

Moral opposition aside, cannabis is becoming legal across much of North America, and as this continues in the years ahead, many believe it could rival or even replace biotech as the most explosive growth sector on the equity market, making this one of the key fundamental market trends to watch starting right now!

Conclusion

I’ll soon have to depart Malaysia and return home to my native London. Back to reality, you might say, although that’s not all bad—far from it, in fact! On this journey, I’ve made sure to take time to reflect and appreciate the opportunities I have through trading, and I suppose one of the primary messages here is to encourage you to do the same.

Day in and day out, it may not seem like much, but possibilities are endless in the markets, and as market trends and the world around us continue to change, we’re trading in exciting and unprecedented times! Just look at what’s already happened that few ever really thought possible. Now, who really knows what’s coming next, but I think we can all agree that we want to stay knowledgeable and well-funded so we can be a part of it!

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Right (and Wrong) Ways to Handle Changing Financial Markets

You know how they say that change is often the only constant in life, and indeed, in the financial markets? Well, as it happens, I’m adapting to some sweeping (although very positive) changes in my personal life right now, and if that’s taught me anything, it’s this:

I hate change. I dread it, in fact, and in my life outside the financial markets at least, I’m surprisingly inept at coping with it!

When trading the markets, though, it’s traditionally a different story—and quite fortunately for me, it would seem—since trading requires you to block and even outwardly defy certain natural, human instincts…like how to cope with change, for example.

Perhaps needless to say, I’ve become pretty fascinated with this of late, and naturally, I thought I’d share it with all of you today. So let’s examine how each of us may tend to deal with change in real life, and if that has any bearing—be it positive or negative—on our endeavours within the financial markets.

How Some—Myself Included—Handle Change in Real Life…

Changing Financial MarketsTraders come in all sorts, of course, but I’d venture to say that most tend to be analytical in nature and like regiment and structure, since that helps promote discipline and strict adherence to the strategy at hand. I certainly fall into that category in real life as well, and that can make it harder to adapt to any changes or things that lie outside the normal “comfort zone.” With it, I’m never one for trying new foods, wouldn’t want to live outside my “hometown,” and feel most comfortable trading only when it’s in my home office...and that’s just to name a few of my “quirks!”

In a way, it’s funny, because it’s the same qualities that often promote trading success—things like conservativeness, careful risk aversion, and an unwavering commitment to repetition—often produce unwanted results whenever we face changes outside the financial markets. Those things include:

Resistance to changeDo you ever oppose change or try to prevent it simply on the basis that something is new and perhaps unfamiliar?  

Fear & Emotional ResponseDo you react emotionally or behave out of character when change is at hand? (As it happens, I do.) And, even if you ultimately give in to change, do you do it with trepidation, and lack confidence and conviction until the new item becomes routine or is somehow proven?

“Analysis Paralysis”Maybe worst of all, is change enough to stop you in your tracks? Do you freeze or become bogged down, finding it hard to take any action when faced with what you perceive to be a major or important change?

…and Why That Doesn’t Work in the Financial Markets

Changing Financial MarketsIn the financial markets, traders aren’t as quick to resist change. In fact, it’s often quite the opposite, and we run into trouble mostly when we’re too quick to change markets or methodologies in response to one or a couple losing trades. Each day, it seems, in the news and financial media, there’s some hot, new trade set-up, or an asset that’s the next “sure thing,” and while trying to get ahead, traders are all-too-quick to pile in, even if it means breaking their rules for successful trading and entry.

The financial markets are constantly changing, though, and at least to a certain degree, traders are required to change—or at least to adapt—in order to keep pace, although I can’t emphasize enough that it doesn’t mean switching wildly between markets and unproven strategies. Instead, here are some of the most common changes that impact the financial markets and those who trade them:

New technology: Traders are always allowed to evaluate the latest broker platforms, analysis tools and indicators, and charting software, and make informed, objective decisions about whether or not to use them, much the same way we would when considering a new investment or trade idea.

New products/assets: We discussed recently how deciding what to trade is just as important as deciding how to trade. With that, traders can always consider new markets and currency pairs, but should do so only on their own merits and based on how these alternate assets fit within the structure of their own, existing trading strategy.

Changing market conditions: News and volatility, volume, seasonal cycles, and institutional interests are only a few of the conditions that can change and impact how we trade world equity and currency markets. Some traders even have distinct set-ups and/or strategies for trading trending and range-bound conditions, and that—rather than a total overhaul—may be just fine for adapting to changes in the financial markets.

See related: How Many Trade Set-ups Do You Really Need?

Conclusion

For traders, it’s often easy to think “The grass is greener” elsewhere, and that changing to some other market, methodology, or asset would solve whatever problems they think they have right then. That feeling becomes especially prevalent in down markets, or whenever clever marketing messages show stellar backtested results over the last number of years. Realistically, though, change isn’t always a trader’s friend, although being rigid and averse to change isn’t a good solution, either.

Recent life changes have really tested my limits, and made me consider change in a way I hadn’t before. I realized that adaptability isn’t a strong suit of mine, but objectivity, discipline, and risk aversion are, and so I rely on those strengths to achieve success, both in the financial markets and in my life outside of them. In closing, I ask you to consider your own strong suits, and whether you’re truly using them to their fullest when it comes to your trading?

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Nimble Adjustments Needed in Such Volatile Markets

Remember when volume and volatility were almost non-existent, and so, too, were quality trading opportunities? Well, surely you do, since that was only about ten or so trading days ago! It’s actually quite shocking that right from the dreaded “Summer Doldrums” have emerged some of the most volatile markets seen since crisis years…so how are you adjusting to them?

For trend traders especially, volatile markets can be tough, because you’ll get the kind of choppy and unpredictable moves that are practically impossible to anticipate in advance, and way too dangerous to chase after once in progress. Without question, though, this resurgent volatility does bring a renewed excitement to the markets, so as you set your sights on trading once again, consider these select adjustments, each one designed to promote more safety and trading success in such volatile markets.

Protect Capital First and Foremost

Protect Capital in Volatile MarketsFor traders who had been stifled by the markets of late, this may feel like a renaissance of sorts, and once they see some movement on the charts, many can’t wait to jump back in and “make up for lost time.” Now I love that kind of enthusiasm—and I’m excited to seek out new opportunities, too—but remember that volatile markets like these are no time to take chances, trade unfamiliar or unproven set-ups, or be unusually aggressive.

These are not especially rational times, so you want to protect your assets and book at least partial profits early on so you’re well-capitalized once all the knee-jerk buying and selling dissipates, true momentum is restored, and the highest-quality trend moves may emerge. In the meantime, in such volatile markets…

Consider trading half positions: Cut position size down to 1% or even just .5% of total account capital in order to gain exposure while taking less monetary risk. You’ll ultimately save in the event that you require multiple attempts at a successful entry, a fate that is particularly likely when trading volatile markets.

Beware conflicting signals: Don’t be surprised to see fewer confirmation signals flashing in your favor, whether it’s indicators like the Stochastic, or even correlations across other equity and currency markets, many of which have recently failed or even been reversed. In volatile markets, it can actually be harder to find set-ups that have a confluence of factors in agreement, and if your strategy requires that confirmation, well then…

Don’t force trades: Whether craving the money and excitement, or due to expectations that traders thrive on volatility, or because a set-up meets “some” or “most” of your qualifications, don’t force trades in volatile markets, or any markets for that matter. As we’ve seen just recently, market conditions are ever-changing, but the need for discipline in trading remains constant!

Avoid Fear & Biases Caused by Volatile Markets

Avoid Fear & Biases in Volatile MarketsEmotions run high in volatile markets, and if you’ve seen the sheer size and scope of the intraday price action, the sharpness and severity of the moves, and even the news headlines and daily coverage from the financial media, then you know that’s more than an opinion, it’s a fact. For traders, though, it’s not always about blocking or eliminating emotion, but instead understanding how it impacts you and the way you tend to behave when trading in volatile markets. A couple of the more common pitfalls may include:

Fear of missing out: Again, it’s because of expectations that all traders love and thrive in volatile markets that many think that anytime volatility spikes like this, that it’s “showtime” and high season for active trading! That will cause them to overtrade in volatile markets, take set-ups that don’t truly qualify, or even just trade more “on edge” or high alert during these times. If this sounds like you, identify that this may be your tendency, and then strive to stay grounded and trade volatile markets with the same focus and clarity you’d bring to most any other market session.

Recency bias: Sometimes even high-quality trade set-ups are no match for irrational, volatile markets. However, a not-so-funny thing can happen to traders once that seemingly “perfect” trade doesn’t work out: They become fearful or downright unwilling to take the next one. That’s an example of “recency bias” at work whenever the results of the last trade begin to influence the current one, and it can be a real problem anytime, but especially in volatile markets. So even after a good trade goes bad, ask yourself, “Do you have the poise and confidence needed to take the next one?

Conclusion

Many traders naturally subscribe to the idea that volatile markets are their friend, almost like the proverbial bank is open and the money’s just there for the taking! But sometimes lost in all that excitement is the fact that while volatile markets do spur more (potentially) tradable price action, it also increases risk.

More realistically, volatile markets can give traders plenty of trouble, and learning how to adapt for more safety and success when volatility does surge—as it has just recently—can be a significant milestone in any trader’s career. So take steps to pare down risk, avoid fear and common biases, and trade on a proper path without suffering any difficult lessons in these suddenly volatile markets.

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The Lazy Trader and ShowFX World on Tour in Kiev

Team Lazy Trader were delighted to visit Ukraine last week and present on behalf of ShowFX World, in Kiev, at their annual expo. Our company founder, Rob Colville, who was invited as a keynote speaker at the event, delivered a 90 minute seminar: “Still Losing Money Trading - Try Lifestyle Trading,” to a sell-out crowd at Kiev’s Hyatt Regency Hotel.

The highly anticipated, interactive presentation was packed full of information, including:

    • The problem - Why 92% of intra-day traders fail
    • The solution - How to copy the winning elite What is lifestyle trading?
    • Lazy trader strategy - Trend Rider Pro
    • Having the right attitude.

ShowFX interviewAfter the presentation, our founder took part in an interview, conducted by Show FX (click here)

Not only did this opportunity give the Team Lazy Trader a chance to stray off the usual seminar circuit of London, Singapore, and Penang, we were able to enjoy the enthusiasm and energy of both attendees and exhibitors alike.

The Lazy Trader featured alongside the Russian and Ukranian analysts:

  • Sergey Belyaev,
  • Maksim Magdalinin
  • Nadezhda Zhizhko
  • Gennadiy Babak
  • Eugeniy Shakotko
  • Dmitriy Kramarenko

We look forward to further developing a longterm relationship with ShowFX World as we continue our progress in developing The Lazy Trader into a global leader in ethically mentoring private investors how to become profitable and successful traders.

We will be making our seminar slides available to attendees - please email our Client Services department (info[at]thelazytrader[dot]com) for your free copy.

 

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How We Traded the UK General Election (May 2015)

Regardless of whether you were rooting for David Cameron and a Tory victory, or David Milliband’s Labour party stealing the show in this year’s UK General Election (May 2015), we were able to position ourselves in the market so that we could make money regardless of who won!

How We Traded the UK General Election

(Above video: describes our 2015 General Election Hedge, outlining the technical buy set-up for GBPAUD and the sell set-up on GBPJPY)

We predicted that if the Conservatives trumped Labour, the markets would rally, sending the FTSE350 and the British Pound (GBP) upwards. After all, they are the party traditionally backed by business and commerce, and this year’s lead up to the election has proved to be no exception to the rule. However, if Labour won, we considered it very likely that we would see the reverse - with flash crash with the FTSE and GBP.

On the day of polling we had two text book set-ups, one on GBPAUD (daily buy) and the second, GBPJPY (weekly sell). Both set-ups has positive reward so that if either played out, we could have made significantly more in profit than we had risked on the trade (2% of our trading account)

With the Conservative and Labour party both neck and neck in the opinion polls, a victory for either side will guarantee us one thing in the market - movement!

Our long set-up for GBPAUD which was a trend continuation set-up would capture a potential rally in GBP is the Conservative party won, yet, our GBPJPY trend reversal sell set-up would capture the move if Ed Milliband’s party did win. This meant we could potentially make money no matter who won and which way GBP cross pairs moved. The perfect storm, thanks to the power of trade set-ups with positive reward and hedging.

What Happened?

A landslide Conservative victory caused our GBPAUD buy position to rally. After we were triggered into the trade, our trading account saw immediate profits as GBPAUD went to meteoric heights. The GBPJPY sell set-up, on the other hand, invalidated itself and we deleted our resting orders for a no loss outcome (please watch video above)

 

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New Traders Forum for our Online Trading Community

Lazy Traders have asked for it and now they’ve e got it!! We are delighted to announce the imminent arrival of a forum which we aim to become cornerstone of our online trading community. 

The forum facility will form a large part of The Lazy Trader’s Online Trading Community and will be provided as a “value added bonus,” to members who are on our flagship Ultimate training program.

Online Trading Community forum let you:

  • Discuss trades and set-ups
  • Learn from one another
  • Fast track your learning
  • Interact with fellow, dedicated Lazy Traders and mentors
  • Bring fresh perspectives to the community
  • Network and “match” yourself to fellow traders

All we ask in return is to respect the forum’s “code of conduct,” which will be enforced by our forum moderators.

In order to ensure that all forum members have a threshold level of knowledge and commitment to their trading, it will be a requirement that all fellow peers will have been a member of Ultimate for at least 3 months so that you can be sure that conversations/interactions will fulfil a “benchmark” level.

We have every confidence that traders will benefit from this and thoroughly look forward to engaging them in this manner.

We are looking to launch the forums in April, which will be made available to over 100 Lazy Traders.

Our developers have been briefed and will start work in March.

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New Hedging Strategies – Coming Soon

Don’t you just hate it. You know, those picture perfect trade set-ups that fulfil your rules for entry and trigger you in by a pip...only to suddenly turn around and bite you?

You may have waited ages for the perfect, most obvious set-up, placed your orders with meticulous accuracy.....except, you get pounded like a 100mph train by the market.

It happens and yes, it’s the definition of frustration.

But what if there was a way to immediately hedge against this? So that you can benefit from either way the market turns?

Well, the good news is that we are working around the clock on a breakthrough set of hedging strategies which could bring those days to a dramatic end. It will enable you to benefit from those trades that go wrong (providing certain rules are met!)

Face it, no one has a crystal ball and can accurately predict every turn of the market. But this new strategy will enable you accurately read the early, tell-tale signs that your trade set-up on the daily/weekly chart is not going to plan, and give you the ability to hedge against it. This means that you could potentially profit big from the hedge if your original trade fails.

If the hedge is successful, not only will you – in many cases – make the money back from being proved “wrong” on your originally trade call – you have the potential to make more as a “compensation” from the market.

Hedging Strategies - The Benefits:

  • The ability to rapidly hedge against trade set-ups on the Daily and Weekly on any currency pair
  • No longer endure the stomach churning wait for a losing trade to hit your stop loss
  • Fast track your ability to become flexible and adaptable in unpredictable markets
  • Get your trade’s verdict from the market far faster
  • Peace of mind – safe in the knowledge that if your hedge is proved right, you could make even more than your original (losing) trade idea

The hedging strategies are in the testing phase and will be intended for immediate use in the currency markets in March/April.

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The Shock SNB Announcement and What to Do Next

Last Thursday, the Swiss National Bank (SNB) rocked the markets with their shock decision to end their commitment to defending the 1.2000 level on the EURCHF cross-pair.

The world’s largest purchaser of Euros, the SNB, suddenly declared it was no longer going to prop up the value of the Euro against the Swiss Franc in order to keep the exchange rate competitive with the single currency.

This unprecedented announcement caused sudden volatility in the market as extreme panic and desperation caused EURCHF to plummet up to 30% of its value in just a few short minutes. The same happened to all Swiss pairs as CHF, traditionally viewed as a “safe-haven” currency, rocketed in value across the board.

This caught many traders and brokers alike off guard and, in many cases, wiped out the accounts of those who were trading against the Swiss Franc (CHF).

It got worse; many broker accounts of people trading against the Swiss Franc actually exceeded zero and went into negative balance. The sheer speed of the move meant that brokers did not have time to submit their clients a “margin call,” and the negative balances clients’ were unable to repay the negative balance that soon followed, meaning that brokers then became liable to pay this debt.

Some brokers have since announced they have become insolvent. Alpari has since closed its UK arm after announcing its insolvency while FXCM since remain in a precarious position after announcing they may not be able to meet certain regulatory capital requirements after clients collectively suffered a loss of $225m. Many smaller brokers remain exposed and it is likely that there will be more casualties to follow.

What now?

If you were adversely affected by last Thursday’s events then you have our deepest sympathies. This was an unprecedented “black swan” event which nobody, apart from the SNB, saw coming. Their manner in delivering their decision to cease propping up the Euro’s value against the Swiss Franc has little to be desired.

While it is very difficult to predict the fortunes of any given broker, we thoroughly advise you to follow the following steps so that you can ensure that your money is safe in the face of the worst case scenario.

Firstly, select a brokerage who offers segregated accounts. Many good brokerages will do this in principle but never assume – many still do not! Do you research and ensure that your money will be placed in a segregated account. This means that your deposit will be kept completely separately from theirs and your funds will remain intact if the broker was to go into liquidation and you will therefore receive them back.

Secondly, make sure you are protected in the event of your broker going out of businesses by a financial compensation scheme that covers the value of your deposit in the event of broker insolvency. In the United Kingdom, the Financial Services Compensation Scheme (FSCS) compensates losses up to £50,000 per person, per institution.

This varies from country to country, so too does your domestic regulator’s level of commitment in such an event. In the European Union, the Markets in Financial Instruments Directive (MIFID) compensates losses up to €100,000.

Please conduct your own due diligence to ensure the country in which you and your broker are domiciled have such a facility.

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