The Price Action Trader

USDJPY Analysis - End of the Negative Interest Rate Policy?                                                   Kazo Ueda, Governor Bank of Japan                                                                USDJPY Daily Chart A glance at the daily chart shows the order flow has turned bearish. Driving this rally are the recent hawkish statements by the Bank of Japan members. Traders are interpreting this as a sign that the BOJ plans to exit the negative interest rate policy. The governor's comments on inflation were more positive than in previous meetings, signalling a path to policy normalisation. The central bank is consideri...

Six Elements to Trading Success When it comes to trading, other than a trader's internal makeup, there are 6 key quantitative factors you should be analyzing and closely tracking when determining the viability of a system. These metrics act as a barometer of whether you are succeeding or not.  The six elements I learnt after reading the book, Trade Your Way to Financial Freedom taught by the late Dr. Van Tharp in his book Trade your way to financial freedom are outlined as follows: Reliability - What percentage of time do you make money? A fact about trading is that you can have a win rate of 40% and still make money in the long run. The viability of a method is a combination of payoff and probability, of course, also considering how often you trade. A higher winning rate will sustainably boost your profits but this must be supported by a higher R per winning trade. The relative size of profits compared to losses when traded at the smallest possible level. You want your losses to...

  Welcome to part 2 of Lessons from a trading great - Jesse Livermore.  This is a continuation of lessons I picked from reading the book Reminiscences of a stock operator by Edwin Lefevre : Lets dive in: The speculator is not an investor. His object is not to secure a steady return on his money at a good rate of interest, but to profit by either a rise or a fall in the price of whatever he may be speculating in. Therefore, the thing to determine is the speculative line of least resistance at the moment of trading; and what he should wait for is the moment when that line defines itself, because that is his signal to get busy. Stocks are never too high to buy or too low to sell. The price, per se has nothing to do with establishing the line of least resistance. In trading, a man has to guard against many things, and most of all against himself - that is, against human nature. It is not wise to disregard the message of the tape, no matter what your opinion of the fundamentals is....

If you go online scouting for the best trading books, Reminiscences of a stock operator by Edwin Lefevre will always pop up among your searches. I consider it to be among the best trading books ever written. I have personally read it a couple of times and in today's blog I will be sharing the timeless lessons I got from the book. This is the first of several series I will be doing about this great book, I hope the lessons resonate with your trading journey and that they are helpful: A battle goes on in the stock market and the tape is your telescope. You can depend on it seven out of ten times. Whatever happens in the market today has  happened before and will happen again. Only play the markets when you are satisfied that precedents favored your play. There is a plain fool, who does the wrong thing at all times everywhere, but there is the wall street fool, who thinks he must trade all the time. No man can have adequate reasons for buying or selling stocks daily. The desire for ...