Good traders usually do not move with the crowd; they use their own judgement and take their own opinions and make their own strategies to suit their own lifestyles. Some people like to day trade while others like to trade over a weekly horizon and then there are others who wish to trade long term over stretches of weeks. It all really depends on the temperament of the trader. there is nothing wrong with trading over a short or longer time horizon. it is all down to the individual to choose.
Jesse Livermore b. 1877 d. 1940 was one of those unique characters whose lifestyle and trading methods carry a huge undertone for the moral that I am trying to show.
Immensely talented, the young 'boy plunger' gained a reputation for consistent short tactics, made his first $1000 by the age of fifteen years and became banned from most 'bucket shops' in Boston by the time he was eighteen years. Thereafter, he went to New York City and continued his short-selling strategies at legitimate trading houses, earned his first $3million in 1906 after the great San Francisco earthquake and he made $100 million in 1929 shorting stocks during the great Wall Street crash.
Yet, when the great trader started to listen to other people he quickly lost his money. The fortune he gained in 1906 was lost in 1908 after some bad advice he received to trade cotton which was a market unknown to him as he was a stock trader. Thereafter, painstakingly he rebuilt his fortune towards the great success of 1929 but once again in 1932 he was thought to have listened to people and entered into long commodity trades which never bore fruit as the markets grinded sideways in attrition.
The moral of this story is easy to comprehend
Jesse Livermore made money when markets trended and were volatile like in 1906 and the years leading up to 1929. But when markets went flat as in 1907 and after 1929 the great trader lost money
Jesse Livermore b. 1877 d. 1940 was one of those unique characters whose lifestyle and trading methods carry a huge undertone for the moral that I am trying to show.
Immensely talented, the young 'boy plunger' gained a reputation for consistent short tactics, made his first $1000 by the age of fifteen years and became banned from most 'bucket shops' in Boston by the time he was eighteen years. Thereafter, he went to New York City and continued his short-selling strategies at legitimate trading houses, earned his first $3million in 1906 after the great San Francisco earthquake and he made $100 million in 1929 shorting stocks during the great Wall Street crash.
Yet, when the great trader started to listen to other people he quickly lost his money. The fortune he gained in 1906 was lost in 1908 after some bad advice he received to trade cotton which was a market unknown to him as he was a stock trader. Thereafter, painstakingly he rebuilt his fortune towards the great success of 1929 but once again in 1932 he was thought to have listened to people and entered into long commodity trades which never bore fruit as the markets grinded sideways in attrition.
The moral of this story is easy to comprehend
Jesse Livermore made money when markets trended and were volatile like in 1906 and the years leading up to 1929. But when markets went flat as in 1907 and after 1929 the great trader lost money
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Today, as I write the USD is in trouble in the short term. Traders were not happy with the FOMC and the inertia of the Japanese Central Bank and so the USD slipped a little where before it exhibited strength. Doubtless it was the Apple earnings report that spooked traders into dumping the Dollar more than anything. But a contrarian trader like Jesse Livermore who tended to take longer term trades would have stepped aside and waited for the market oscillation to wave in favor of the Dollar again. After all; he mastered his entry points in the stock market and the great thing about forex is that you have less sideways grinding action and more frequent wave oscilliation moving price up and down. So doubtless Jesse Livermore would have become a great currency trader moving against the crowd. Keeping in mind the movement of interest rates he would have positioned himself with ease. But woe unto anyone that listens to the so called pundit telling them where to enter a trade. Are you waiting for a golden cross? Are you waiting for a Doji? Whatever the trigger you use, stick with your plan because woe unto he or she that changes plans frequently when trades are entered.
Entering a long trade on the Dollar or a short trade on the Dollar is neither wrong nor right; it all depends on the tactic horizon you have chosen whether for a short term or longer term objective. Choose your own tactics and if they go wrong keep your same framework without listening to others too much.
Pieter Bergli - Trader X16
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