Recommended blog - embracethetrend.com

One of the few blogs I make a point of reading is written by fellow trader Richard Chignell at embracethetrend.com. He focuses on the psychological aspects of trading, which as we all know is a critical component of achieving long-term success.

Another couple of nice trends

I've posted two more charts here (one long trade, one short trade) that once again show the value of riding a trend for absolute returns. Both gave valid signals as per the system rules when these price moves started, and if you were lucky enough to trade them, then congratulations!

Stock selection

I've posted below two charts of UK stocks that a few weeks ago gave entry signals - one on the long side and one on the short. As you can see, both trades have done very well.

Update on protected twitter feed performance

Since starting the protected Twitter feed back in July, and once again calling my trades in 'real time', the markets have given us a choppy uptrend, which looked like it may take off, followed by another bout of choppiness (and the resulting loss of open profits), before the general market trend reversed to short in the last week or so. Indeed, the FTSE has moved up less than 1% over the last three months.

Training and mentoring for non-UK residents

When I initially started offering training and mentoring services, the intention was to solely provide this for people in the UK. As it turns out, due to the popularity of the blog and the general Twitter feed, I have been able to correspond with people in Australia, the US, Singapore and Hong Kong as well as other parts of Europe.

Updated - protected Twitter feed performance

These days I'm more inclined to express my performance to others in terms of overall R attained, rather than in percentage terms. This is because everyone has their own opinion on how much to risk per trade, as well as their own overall position limits (and consequently overall portfolio risk).

Next webinar

What a week! Some lovely profits made simply by following the system rules. Of course, not all trades have worked out, but that is trading for you, and why we use strict risk controls.

The next webinar is scheduled for Tuesday 11 September at 2000BST.

To find out more details and to enrol, please click here.

Some nice comments from other trend followers

The bias in the markets over the last few weeks has been to the long side, while still having some short positions open. Despite the choppy uptrend and the low trading volume, this has generated decent profits over the last few weeks. 

Today the markets moved up significantly following the news announced by the ECB. This has only helped to increase the profits in our existing positions. How long this uptrend will last is anyone's guess, but while it lasts we will avoid trying to be 'clever' by trying to pick a top in the market and will stay in out positions until we get appropriate exit signals.

Protected Twitter feed performance

Despite the rather languid level of market activity recently, there have been plenty of trends in stocks to profit from.

Since the protected Twitter feed started in mid-July, the entries disclosed (all given in real time) have generated a cumulative return of more than +18R, despite not even being half way to fully invested, as per my position limits (I am only counting new positions opened since that point in time). Currently I have a mixture of long and short positions in stocks from the UK, US, Germany, Italy and Spain.

Fear and sabotage in trading

The biggest danger that an inexperienced trend follower would have encountered over the last week or so would have been fear. This is as a result of the general markets pulling back over the last few sessions, dragging traders' long positions down with them.

Come and join the trend following band of brothers

It is a strange, but true, fact that a lot of inexperienced traders jump from system to system, paying out hundreds if not thousand of pounds, either in signing up to a number of systems or in actual trading losses incurred, without doing their homework and determining before they start what sort of trader they want to be, as well as how much time they are prepared to sit in front of a computer screen a week.

More rapid results

After corresponding over the last 2 or 3 weeks, combined with a good training session last Sunday, one trader I know is already reaping the profits of looking for good setups per the system rules (see charts below). The ease which people are able to understand and use the scans combined with the knowledge of what we are looking for proves that, once you know what to look for, this isn't rocket science. And, as we know, the simplest solutions are often the best.

You guys are fast learners!

One of the things that gives me pleasure is how many of the people I have given training to are very receptive to the methodology and ideas I use and teach. In addition, a lot of them also are quickly able to have a good idea of what constitutes a good looking set up, as well as which ones to avoid.

Trinity Mirror

Here is a chart that shows the patience required to wait for an appropriate signal before entering a position. UK stock Trinity Mirror had been in a pronounced downtrend since March, but price action had levelled out and consolidated throughout June and July.

Training and mentoring

Having spoken to a few people who I have given 1-2-1 training and/or mentoring to over the last few months, compared to other services they consider my services to be excellent value for money. Some have also been on seminars and other training courses provided by other far more expensive (and highly advertised and promoted!) services, and have commented that the difference in the quality is like 'night and day'. Some of those people have been kind enough to provide testimonials, which are here.

Trend following commandments

Michael's Covel book Trend Following was a big influence on my early journey to trading the way I do today. He has just released this short video, which I consider to be essential viewing for reminding you of the basic principles involved in using such a methodology.

It's all in the exits

If you took a straw poll of say 100 relatively new or inexperienced traders, at least 90% would guess that the entries are more important than the exits. I strongly suspect that if you asked those who have been round the trading block a few times, and have been successful, they would say the opposite.

Why is this? The answer is fairly simple:

• Exits protect your capital when you are wrong;
• Exits also ensure you capture the bulk of your profits before price starts to reverse, eroding those profits.

A lot of unsuccessful traders have an endless fascination with entries - as if that's the secret to trading success. Of course, having entry signals that get you into a position as early as possible, maximising the potential from the trade is important, but it is not the be all and end all.

Want proof? A trader I know who is successfully trading his own system has recently tested both aspects of his system, once with completely random entries combined with his exit rules, and then with his entry rules and random exits. Now, which do you think made money and which lost money???

Nice long set up

This chart of Canadian Solar shows a lot of the characteristics of a good long set up - higher high and higher low, a prolonged period of consolidation, and low volatility compared to previous months. If the signal is given then I will open a position here. I have no knowledge of the fundamentals here - all I know is that this sort of set up works well.

Next webinar date

The next webinar date is scheduled for Sunday 15 July at 2000hrs BST.

Details on what the webinar will cover, and how to book your place, are here.

The three critical areas of a trading system

There are three aspects to using any trading system, that you must be able to stick to. I have likened  these three areas to the legs of a bar stool - if one of the 'legs' is deficient or missing, then the stool (and your trading system) will fall over. These are: