Except in this particular case, any trader shorting the 1.32 resistance level shouldn't be in the markets to begin with. The daily chart had breakout written all over it. +97 ticks, good trade B1S1.
I taught a course in the 60's in Greenwich, Zurich and then north of Philly in the suburbs. All day schools for students of that tradition. It was called environmental math because itwas a VI form course for students who had copleted the college requirements in a liberal arts orientation. Their counterparts were taking Calculus II. At that time the NYSE was pushing The 7 Keys to Value an FA orientation and filled with conventional wisdom. each student got 25 copies of ten corporate annual reports and we had one wall of the classroom filled with shelving for such as a lending library. During first week. I began the year with the math of ancient civiizations, since these were identical to the modern VI form leveL of liberal arts education. We through in stone henge as well. first two weeks On a weekly basis they drew all the components of a wealthy family financial living regime. This was leading to a full 1040 filing in March. from day one. We did FA and used the WSJ daily to get down finncial reporting. The text was "How to Lie with statstics. A chapter a day and they made chapter by chapter illustrated screw ups for all publications available. S&P made their full brokerage service available for the last school I taught at. we always were escorted at NYSE on 29OCT as a review of 1929 (in Switzerland we did UBS instead since I had a commercial account there). FA, the WSJ and "How to" lead to making money. For VI formers with checking accounts and clothing budgets (1,200 a month in those days), makig money is a fact of life for families. Before classes, students did the add/deletes on S&P to keep the service current. They automtically ASKED for away to handle market and stock and bond change in value. They used my brown lines of 7 years of dailies as a starter. Lots of three ring binders with charts in them. They took to daily charting (pencilling in charts of their choosing). I had blank charts printed by the ream. Investing was part of the weekly family life drill. Then students would take up trading as a factor in the process. The course dealt with current events all along but money and making money became a strong theme. This is the time of Darvas and these students are part of the fabrique of those running the show. The math buget for library was larger than either the English or History department. VI form students can and do learn to make money very rapidly; their relationships with their parents change and mature very rapidly. Then trading was not part of the conventional wisdom. students knew where I lived and used my tennis court on occasion and knew I sailed and had more than one Mercedes. They also had charts before charts were used in the financial industry. They also could explain to others what and how they did what they did. Some students traded real accounts as a direct consequence of their relationship with their parents. It was widely known how much a given student was making. (think of college costs and get the picture of a student covering this with real money or paper trading.) The vocabulary of your questons was uknown then. EOD was the modus of the world for people and brokers. The financial industry was based on the tradition of the C+ history major from an Ivy league school. The students did want the schol to have a "tape". They did make calls to their family's brokers. the school was infused with how geometry and algebra and stats can be used to make money. My calculus students did do charting on the side. the "room" where the S&P service was and where the wall of annual reports was...was an eternal bee hive. There was one other thing....students, annually, supported a chosen theme to help others. I did real C corporations for some classes. One was Eden Industries. They ran a greenhouse through the year to make money for the theme. Tons of this and that heating oil deliveries..planting, planting repotting, deliverying. Try negotating a contract with a 5 and 10 for thousands of gerainiums.... another corp did cord wood. Supply and demand ...conning the school dumptruck and contractor's front end loaders. They were the first in the community to give full value cords or partial cords. WSJ's were all over the place all of the time. the NYSE undershot the abilities of kids to learn. The IRS standard fare was a joke to these kids. Making money.... if a person has a annual report analysis down cold and he is reading the EOD on corporations, he is going to plot the money makers. He is going to ascertain how to time the market well before Thanksgiving from a cold start. He is going to use every bit of an S&P brokerage service to "get it" He is going to be trading, by his choice, the natural cycle of the ebb and flow of the markets and specific setors and specific stocks in hot sectors in a well understood context of what is going on in the financial industry. I had parents who said just "buy the books", get the periodicals, bring in the local professionals...we will write the checks. Students learning this stuff is the greatest antidote to screwing off in the world. a VI form course can prepare a student to go to college and really have a good take on what college is all about. What about today? It is not the asset allocation of B1S2, it is not going to cash in April because the markets are down; it is not being unleveraged position trading indexes and Forex (the 1to1 thingy) with a max of 20% of capital. Today it is the computer globally in real time. Today it is using platforms to plot charts and to make use of money making knowledge, skills and experience. Today it is sitting down and coding (drag and drop) what is needed to enhance platforms. It was clear to students plodding away plotting in the 60's that the could use price and volume to make money by timing the markets. It was very clear to their paents and in turn their brokers that something powerful was available. There is no way a student did not see "channels" and cycles and volume relating to price. Trends of various sorts are as clear as a bell to those who are working at building a record of what is going on. If a student says how does music work during an "environmental math class, then 12 foot rolls of paper (3 feet tall) are used to plot two cycles of an oboe and a flute to see how all the harmonics fit together. Can you hear the question.. before we start this, do all the harmonics begin at the same time? Phase angles became important at that moment as a reflection of trying to figure out somehing. Those graphs lead students to "see" how the market was a synthesis of various harmonics in economic trends. short term, intermediate term, long term... Any formal course in learning about the markets simply starts with some money and the unfolding record of what is going on. If a person gets to a place of learning and sits down in a seat and has the riht to ask any question he wants, the path always turns out the same. Trends are the first thing discovere and cycle are right in the picture too. The connection to volume is not long in coming either. when the short, intermediate and long term is dicovered (look in WSJ for graphics in articles) then the boundaries are set and the question is "Why are they doing it that way?" becomes the demolition bulldozer. So as time passed I got to lecture at various places around the world and work for (consult) on various problems. Modgliani and Yunus are the guys that can help the world get families to better places. Making money can be done by everyone. And managing the wealth on a multigeneration basis is the econometric answer to a lot of our problems from the ground up to global. Imagine what 500 billion dollars in Yunus hands would do for terrorism abatement. What if some people in ET could learn to make money in the natual way kids do? What if some of those excess profits were put into the "social investing" Yunus mentioned in his Nobel Prize lecture. It is a lot better to take money and invest it socially than to pay taxes into a military oriented political system. Learn to make money; make money and make some money work to help out others. In Greenwich, two young ladies knocked on my door one midnight. They had some qestions. I see them as "flute" and "oboe" and one had just turned 21 a few minutes ago. We were looking at lots of dollars it turned out, so there were questions and consequences of learning on the table. There were going to be discussions with parents and how it all was going to go. The parents, among other things, thought some input would help so naturally, midnight on a birthday seemed the time to talk "officially". She was a math major and really knew how to get down to work.
And let me guess, the "breakout" traders all took their profit at the top? No, they're stuck long and will stop out probably 200 points lower from here. Charts aren't enough for forex, it's one of the oldest markets around and you just won't get very far reading tea leaves and drawing lines.
I've been long for quite a while and sold out of the money calls when we had the pullback beginning with the initial separation from the upper BB. I have made quite a bit on this play and will not look to short until the reaction low on the daily charts is breached. Charts are the only thing that one needs in forex futures--in fact forex futures are the easiest markets to trade with charts only. I never pay attention to news or fundamentals at all and yet am still very very profitable.
My cheeky post was in response to the "shouldn't be in the markets to begin with" guy. Sure, whatever works for you, but not all of us have 8 figures where all you need is one or 2 good trades on the daily chart a year to make the numbers sound nice. Some of us need a much higher velocity of returns until then. I disagree with you here, but hey, the more traders that "just need charts" to trade this market, the better. I should just keep my mouth shut. PS -- what's the difference between "scaling out" and selling calls?
Selling out of the money calls is producing extra income while allowing the position to continue to advance. Thanks for the question! As regards the point about needing a few good trades to offset the losers and become a winner, that strategy applies to low capitalization as well as high.
It's also reducing your "optimum" profit if you are wrong. So I guess it must be an inferior strategy.
But you still have full exposure to a retracement? At low capitalization, you should/need to be more ambitious.
No. Since as I approach strikes I add positions and then sell more out of the money's above. Remember, I sell out of the money's that most of the time don't get hit.