August 28 DBFFOA Call Notesheet

Major Trend Is Now Up... March Stock Bottom Confrimed!

Your Bias Should Be Bullish On All Stock Index Futures Positions... now for questions and answers...

Hi Doc,

The description (Forex 1) of the worldwide "FX Multi-tier Setup" with SWIFT, Reuters, EBS, Central Banks, International Banks (100-200) etc. was great. Is there anyone who has tried to draw this "FX Multi-tier Setup" and how the market is kept in line ? Such a drawing could explain a lot more and give even better insight to how the setup is working.

Is it possible to look at the Fx market as a huge Dynamic systems with a lot of subsystems that works together trough positive and negative feedback?

The answer is “yes” and “no.” “Yes,” you could try to create a function linking all the systems. But, “no” because you’d almost certainly be wasting your time. Stanley Kroll made money trading foreign exchange by simply paying attention to when the USD was at extreme highs or lows on a weekly and monthly chart.

He knew that currencies fluctuate between bearish or bullish major trends in cycles of about 3 to 7 years.

When the weekly and monthly chart showed that the USD was at an extreme Kroll would wait for technical indicators to show a break in the major trend followed by follow through price activity that indicated confirmation. He would then load up on a current trend reaction against the new major trend.

The key thing is that a wise trade always trades with the major trend. You can only see the major trend on a weekly or monthly chart.

I understand that the Arbitrage Vultures keep the market in line so the difference in spread do not differ to much from one broker to another. Are these Arbitrage vultures also responsible for making in-balance so they can take out huge amount of money in short time?

Sometimes sudden +100-200-300 pips spikes are seen on our charts i.e. spikes that are 10-20 times higher than normal bars? How can you explain these? How frequently are they. Do they carry any signal to a daytrader or swingtrader? Anything to concerned about? Do a stop-loss at the broker even work in such a situation i.e. at FXCM.

There are enourmous entities at work in Forex markets as you have learned in my course, Doc Brown’s Futures, Forex, and Options Autopilot! And, they have lots of money — much of it legally stolen from tax payers due to the bank bailouts. The spikes you are referring to can knock you out of a good position when you wer actually correct.

You have one of two solutions:

First, you trade with enough margin on a contract to ensure that you can have wide enough stops to withstand the spike.

Second, you can study when the spikes tend to occur over the year. During those times you can trade Fx futures call options when the major trend is bullish or put options when the major trend is bearish.

In the introduction you say "Spotting these manipulations should be your major job" ! Okay, but then you tell that the central banks try to intervene the FX system by buying or selling their own currency and in next sentence you say "...just as a drop of fresh water doen'nt affec the salinity of the ocean!" Wow, so who is capable of doing any manipulations at all if not the central banks? And what timeframe are you actually talking about when it come to manipulations?

When you explained all about the cross-rate madness, rounding problems, triangular arbitrage system and bla bla it stroke me that all this cross-rate calculation, rounding and etc. can in itself explain the chaotic behaviour especially at lower time frames like 1 and 5 minutes or maybe even on the 15 minutes timeframe. It might even explain a sudden start of a momenton and a breakout that are not necessary caused by real supply and demand i.e. a dynamic system within chaos built in. Do you agree?

Yes and could also explain the spikes you mentioned before.

The SSI - Speculative Sensitivity Index found on Daily Fx site something that can be used in trading on the 4 hour timeframe?

Same principles in short term trading apply to long term trading but decisions have to be made much quicker. Discipline is key!

The whole intention behind futures and currencies is to try to “get big or go home.” Keep you’re eye on the all important goal of taking a little money and making it really big fast!

That’s why I teach you in chapter 9 of the futures course to calculate how much you can risk each year without hurting your family. Make sure you do that so that you can day trade calmly without fear.

Also, I have never known a person to consistently make money with the Commitment of Traders Report by itself — and I know the guy who created it…

The forex SSI is related to the COT.

If your trading a 4 minute chart you are so close to the floor’s price action which randomly whips around due to arbitrage that you might as well flip a coin when it comes to your long or short positions.

I recommend that people position trade Forex using the information that also exists in the futures markets.

If you are going to try to day trade do a lot of work system building and testing with the TNT autopilot plug in.

Day trading is very hard work just like counting cards in BlackJack in a Las Vegas casino. Make sure you know what you’re up against when you do it.

TnT Autopilot suggestion:

In a whipsaw situation I see some of my autopilots are just entering and exiting very fast! What do I do about that if not just going a higher timeframe? Wouldn't it be an idea to be able to control the autopilot to stop autotrading until it gets out of the whipsaw i.e. "Start trading when higher that xxx.xxxxx" and "lower than yyy.yyyyy" similar to "Use time Restrainst" ?

Same principles in short term trading apply to long term trading but decisions have to be made much quicker. Discipline is key! You’re hitting sideways markets and need to find a way to step to the sidelines through your own analysis of the markets your trading.

How do you use the Autopilot? Any hints or tips to share?

Use a combination of technical indicators that work well together and then play with the values.

For instance you could combine the TNT Bulls and the Bears with the ribbon indicator as a base and then work form there. By building your own system you’ll know its quirks and that is critical.

Here’s a link to the Bulls and Bears system:

http://www.geckosoftware.com/futures/futures-trading-plug-ins/bulls_n_bears/bulls-n-bears-intro.htm

That's it for now!

I hope that you got some inspiration for what to speak about?

regards,

J P

P.S. Thanks for the link to traderspress. I got one about RSI that was an eyeopener. Anything else to recommend to FX wannabees?

Yes, I just got of the phone with Ed Dobson of www.TradersPress.com.

Ed is a short –term trader himself and says to get these three books to learn more about short term trading…

Also, get “Trading S&P Futures and Options…A Survival Manual and Study Guide” by Humphrey E.D. Lloyd.

http://www.traderspress.com/detail.php?PKey=3

“Technical Analysis Using Multiple Time Frames” http://www.traderspress.com/detail.php?PKey=604

“A Professional Look at S&P Day Trading”

http://www.traderspress.com/detail.php?PKey=98

During your next call I would appreciate your analysis on the EUR/USD pair…

Look at weekly or monthly first...

Then go to the daily...

Watch this video on the ribbon indicator:

http://www.geckosoftware.com/futures/futures-trading-plug-ins/bulls_n_bears/bulls-n-bears-intro.htm

…Lumber double bottom…

…Sugar to go short…

…Mini nat. gas bottom…

…Cocoa top…

…do you think it possible to conduct some webex calls to observe your tech analysis using Gecko charts.

Thanks,

David, D. Washington, DC

If Lan is willing to do it with me I can do it once a month...send and email to Lan telling him you want analysis webinars... or better yet come to the 1st Annual Trade Mentors Conference October 24 adn 25 in Las Vegas, Nevada!

neal weintraub-chicago

will be listening on cell phone. Think Gold will get past $1000.00 by Xmas?

Rick -Oceanside

Hi Doc, Do you approach all your trading with a limited number of products that you watch and looking for extreme tops and bottoms? Stocks, Commodities and Forex? Dec. Wheat is forming a Dec. saucer formation with a 480 bottom. Is this a candidate even though it will not be a historical low?

Doug-

Also, I cannot find any posting in the forums about systems for the auto pilot. Could you send me a couple to check out or a link to see where I can get a couple?

I will Jeff Kaller answer this...

Rich-Northampton UK

How should the weekly COT figures influence our trading