The year that was and what comes next

As we wind down the last few days of our 5th year of operations, I’d like to take a minute to reflect on the year that was and layout what you can look forward to next. 2015 Markets Review This was a difficult year for many of the best market participants. With the S&P500 looking set to close around break even for the year and the collapse in volatility that occurred in the first half, I’m actually surprised there weren’t more fund failures: In hindsight, I’m not sure I could have picked a worse time to try to launch one, but all in all, it definitely could have been worse. After all, I’m still here and many others aren’t. Still, it was a hard year, and not just because of the markets. My personal life experienced some challenges and that no doubt had an impact on everything else. That having been said, looking back over what happened, and where I am now, I’m happy to report that I am glad to have gone through everything I did. The experience opened my eyes to aspects of my life, personality, and behavio ...

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How to Harness Volatility

Trading the right markets The Swiss National Bank has recently attracted more attention to the Foreign Exchange market than ever before. Once again, at the Order Flow Trading Academy we wish to keep aspiring traders on the right path and away from trends like this. Many traders are attracted to FX because they are told that it's the “most liquid instrument to trade”. In a previous article we touched on the actual issue of liquidity in the FX market – which is being reduced, not augmented. In this article we are going to explore the actual value – if any – of liquidity and what is instead important for trader profitability (big hint: volatility!). 1. Is there a link between Liquidity and Profitability Let's go straight to the point: when I was learning how to trade, liquidity was the last of my problems. As an individual trader, I am so small compared to the whole market that everything actually felt overwhelming. While liquidity IS an issue for large traders and funds, liquidity is not the key to individual ...

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How to Bounce Back From Trading Losses

Trading brings out the best and the worst in us, mainly because it stacks us up against the most difficult thing to accept: uncertainty. As humans, we just don't like the fact that even through extensive work and preparation, things can still go sour. What's worse is that things can go sour even when we do the right thing, which can be really difficult to accept.

One trait that allows successful people to bounce back from failure is a resilient mindset. In this article, we're going to explore what separates those that can get back up from those who just get beaten by their situation.

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The Role of Soft Skills in Trading

For most of my adult life, I've had a problem. While I've always been great at analytical processes like logic and dealing with numbers, I was at best socially insecure. For many years I went out of my way to avoid people. I didn't have many friends and those that I did have were kept at a distance. And the very idea of actively trying to make new friends was utterly terrifying. That was my problem really. Being insecure about my social skills meant a constant fear that I would say or do something foolish in the process of socializing and be forced to bear the emotional turmoil that comes with rejection. And it was debilitating. There was a time not long ago when I feared ordering a pizza over the phone and would make my girlfriend do it for me so that I wouldn't have to confront my social anxiety. Let's just say it was pretty bad. So when I tell you that the application of soft skills toward growing the fund is the highest and best use of my time, you should appreciate how hard it was for me to get there. Wh ...

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What it means to dream big

I recently re-watched Wall Street Warriors, and while I was watching it I was struck with a flash of valuable insight. In the second season of the show there is a 28 year old private equity guy named Brett Hickey, who at the time of recording had over $100m under management. As I'm watching this show I find myself asking a question; how is it that this guy at 28 years old has already accomplished so much? I'm 38 and I still haven't come anywhere close to that level of success. Which REALLY got me thinking... What is the difference between him and I? How is it that this kid can be 10 years younger than me, yet he's pulling down orders of magnitude more money? Is he really so much different? Is he better? Was he imbued with some massive advantage that I wasn't? In short, why him and not me? Then I started thinking about a friend of mine. He is a very successful man. He's built several multi-million dollar a year businesses, he's been 100% ethical in the process, and he really makes sure that everyone who is a p ...

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How to Build a Trading Position Properly

Over the long run, it's difficult to keep a 70 to 80% batting average. One way to secure yourself some leeway is to maximize your efforts when things are going well, so that you can survive the less than stellar periods. In this article, we shall explore some logical ways to compound a position.

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The Mindset of a Predatory Trader

You will get as far as you believe you can Every day, we subconsciously filter information. How do we filter it? Through the lens of our beliefs. Our beliefs heavily influence how we feel and think about everything in life and in trading, our beliefs can literally determine our results. What we believe about anything, determines how we react to it. At Order Flow Trading Academy we believe that you can learn to change your mindset and view the markets through an objective lens. In this article, we shall talk about how to change your mindset and your beliefs, in order to become a consistent market predator. 1. Beliefs If you believe in nothing, you will fall for anything – Peter Marshall What is the key to a person's success, in any aspect of life? What the best in the world usually say is something like “loosing my first championship”, “losing my first round”, “the school of hard knocks”. It seems that early failure goes hand-in-hand with future success in many cases. Why is this? Because failure helps people ...

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When to Follow vs. When to Fight

Here at the Order Flow Trading Academy, we talk a lot about sentiment, and we also talk a lot about the fact that FX is probably the most complex asset class to analyze and trade. In this article, we're going to bring forth a possible explanation of why this may be, and propose a time-tested routine on how to stay focused and find your way around FX. What is “the crowd”? “The law of an organized, or psychological, crowd is mental unity. The individuals composing the crowd lose their conscious personality under the influence of emotion and are ready to act as one, directed by the low, crowd intelligence.” - T.T. Hoyne An illustration of “the crowd” from Alessandro Manzoni's The Betrothed. Take one person, separate him from everyone else, and he will make some solid, logical decisions. Put the same person in a group of highly influential people, and the decision-maker will become the decision-taker: from following his own ideas to following others'. This is the madness o ...

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When Trading Becomes a Sickness

Are you trading for profit or for another reason? Very few articles talk negatively of trading. That's because most sources that write about trading have some sort of bias and actually need to encourage this practice. At Orderflowtrading we dare to differ. In this article we shall take inspiration from the story of a real trader, who we will call Not Average Joe, that had a problem but didn't recognize it until it was too late. Trading can become an addiction. Trading can become an escape from reality. Trading can drain you and drain your relationships. So what can we do about it? Read on to find out. The story of Mr. Not Average Joe This is the real story of Not Average Joe. I had the opportunity, a few years back, of having a direct contact with this fellow, who was a successful former FX dealer that had also managed other people's money and had eventually settled for trading his own (immense) capital. Just to put things into perspective, his account was populated by over 250 thousand Euros. After all, he ...

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Sentiment in FX

How to find your way around At the Order Flow Trading Academy we talk a lot about sentiment, and we also talk a lot about the fact that FX is probably the most complex asset class to analyze and trade. In this article, we're going to bring forth a possible explanation of why this may be, and propose a time-tested routine on how to stay focused and find your way around FX. Sentiment in FX What drives sentiment in FX? What do we, as traders, need to take into account when asking ourselves “what is driving price”? Market sentiment in FX is driven primarily by economic news and geo-political events, which of course can be related to the short term (like a FOMC meeting) or medium term (like the current tensions in Iraq which have been going on for a few weeks at the time of writing this article). So before even looking at charts and setups (I know, we're all chart junkies up to a certain extent), we need to find out what's going on in the World. Where can we find out what's going on in the world? Eas ...

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