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The Ichimoku Trader

Volume 1, No. 6

www.ichimokutrade.com © EII Capital

October 4th, 2015

The Ichimoku Trader www.ichimokutrade.com © EII Capital October 4th, 2015 IN THIS ISSUE On the Sidelines

IN THIS ISSUE

On the Sidelines 1 ........................................

Global Market Update

............................. US Stock Market, VIX Volatility Index, Crude Oil, Gold, Germany, Japan, China, Greece

2

Multi-Timeframe Email Alerts 5 .................

Seasonal Trades

........................................ October Pick October Statistical

6

Sector Updates

.........................................

7

Futures Updates 8 ........................................

Trading

Psychology

................................. Creating Black Boxes You Think You Are So Right But You Are So Wrong

9

info@eiicapital.com Follow Us On Twitter! @ichimokutrading

Email for Information:

On the Sidelines

W hile watching college football this weekend during the broadcast the sidelines reporter

made a few comments about what the Alabama team was doing for players in between drives and plays. They had oxygen tanks for their players to inhale for faster recovery. This is not something new to profes- sional football and has been around for decades but it is definitely novel to NCAA level competition. I did a little research into the science of this practice. The effectiveness is debated with some biochemists ac- knowledging that blood oxygen saturation may be improved by a mere 1 to 2 percent using this tactic. Is such a small difference actually effective or worth the planning and cost? That game in particular was defined by what the announcers claimed what the heaviest rain they could remember during a game. The Alabama team staff were busy on the sidelines tending to the players cleats ensuring they were clean before the players re - turned to the water soaked field. How much did these small attentions to detail outside the game itself con- tribute to Alabama’s 38-10 victory? Something that is not allowed in NCAA compe -

tition but I see often in the NFL is quarterbacks receiv- ing up to the minute printouts of the defensive forma- tions for them to review between series. Such research can enable the quarterbacks to get a high level view of not just what they are up against each play but how their opponents react and change to different maneu- vers attempted as the game progresses. During the press conferences after victories the players and coaches attribute their success to the skill and acumen of each other during the game. I think the preparation and these small technical details per- formed during the game may be overlooked because

they seem so insignificant. However, if they were truly

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insignificant I doubt teams would waste the effort in performing them consistently. It is more likely that all these little enhancements to physical, technical, and psychological performance are well known to add up to that winning edge. I can relate all of these points back to trading. Preparing ones self through physical excercise before the trading day can set your body and mind at ease and capable of handling the potential stress of a vol- atile market. It means making sure your tools of analysis such as patterns you recognize in your indi- cators are clean and sharp. Finally, taking the time to review your actions and that of the market with screenshots and trade logs will give you the perspec- tive you need to stay one step ahead.

-Wes Bennett

You can observe a lot by just watching -Yogi Berra

Global Market Update

I t is clear that Volatility is here to stay! Markets are moving up and down but they are swinging in huge values. A lot of investors are worried taking positions long term due to all the volatility. The key is not pan- ic, examine the charts and follow your trading plan. Here is the Global market update:

insignificant I doubt teams would waste the effort in performing them consistently. It is more likely

Figure 1: eSignal Ichimoku Monthly chart of E-Mini SP500 Futures

Figure 2 shows the Weekly chart of the E-Mini SP500 futures. January 2012 was the last time price was be - low the cloud. Even though the sentiment is bearish, a bearish trend still has not taken place. The month- ly support at 1882 is stopping the bearish trend. As long as the monthly support holds, the pull back to this support is still a major pull back for the bullish trend. The resistance at 1978 has to be broken for the sentiment to go bullish.

insignificant I doubt teams would waste the effort in performing them consistently. It is more likely

Figure 2: eSignal Ichimoku Weekly chart of E-Mini SP500 Futures

US Stock Market

For the US Stock Market, we will analyze various in- struments to give us a “complete” picture. The first instrument we will analyze is the E-Mini SP500 Fu- tures. Figure 1 shows the monthly Ichimoku chart for E-mini SP500 futures. Since October 2011, price has not touched the monthly 26 bar support. Now, it has touched it a couple of times to a point the green line support is flat. This is indicating that the support is getting stronger and stronger. The support at 1882 is controlling whether the E-mini SP500 futures will enter a major pull back or not. If it breaks, it will enter the first major pull back since 2011. In order for the bullish trend to continue, the resistance at 1978 has to be broken.

Figure 3 shows the CBOE Market Volatility Index. It has an inverse relationship with the US Stock market. If the market goes up, the $VIX goes down and vice versa. We have been using the $VIX in conjunction with the E-mini SP500 to give us early indication on market direction. Since the beginning of this year, we have been posting the $VIX chart on Twitter and determining the market direction on a weekly basis for day-trading/swing trading. The main level that has been critical throughout the year has been 20.73. Initially, it was the top of the consolidation pattern re - sistance. However, this level is a major support now. The new resistance is 32.13. Until we break this sup- port, there is still a high probability for price to move up the resistance of 32.13 to follow the consolidation pattern.

This is a gauge we monitor on a weekly basis. Please note, during the week, price can go above and below the support/resistances. The key is where it closes by end of the week.

This is a gauge we monitor on a weekly basis. Please note, during the week, price

Figure 3: eSignal Ichimoku Weekly chart of $VIX Futures

The weekly time frame is at a major support. There - fore, we are going to watch the daily time frame to help determine if that support can be broken. Figure 4 shows the daily chart for the $VIX. The sentiment in the last 3 days has finally gone bearish. However, the weekly support is stopping the bearish trend for now. Probabilities are high to break the support right now. The longer it takes to break the support, the lower the probabilities will become to break it.

This is a gauge we monitor on a weekly basis. Please note, during the week, price

Figure 4: eSignal Ichimoku Daily chart of $VIX Futures

Crude Oil

Figure 5 shows the Weekly Ichimoku Chart for Crude Oil Futures. We have been posting this chart for weeks now on Twitter. Crude Oil is basically in a bear- ish consolidation pattern between 50.17 and 43.54. The trend is still bearish. If the resistance at 50.17 is broken then crude oil will undergo the first major bull pull back after starting the bearish trend. If the sup - port is broken, the bearish trend will resume.

This is a gauge we monitor on a weekly basis. Please note, during the week, price

Figure 5: eSignal Ichimoku Weekly chart of Crude Oil Futures

Figure 6 shows the Daily Ichimoku Chart for Crude Oil Futures. The daily shows a miniature consolida- tion pattern compared to the weekly timeframe. It is ranging between 43.48 and 46.93. Due to the volatil- ity, we have to observe where price closes in relation- ship to the red line resistance. Every day, the red line resistance has been holding. Price is in the cloud so crude oil will remain very volatile.

This is a gauge we monitor on a weekly basis. Please note, during the week, price

Figure 6: eSignal Ichimoku Daily chart of Crude Oil Futures

Gold

A lot of people analyze Gold in order to determine what is going on with the fundamental side of the markets. Figure 7 shows the Weekly Ichimoku Chart for Gold Futures. Gold is in a bearish trend. Howev- er, it is starting to show some weakness. Price should have started to retest the last low of 1080 but in- stead price is retesting the major resistance of 1151. If the resistance of 1151 is broken, then Gold will go through a major pull back trying to get to the bottom of the cloud.

Figure 7: eSignal Ichimoku Weekly chart of Gold Futures Germany Figure 8 shows the weekly Ichimoku

Figure 7: eSignal Ichimoku Weekly chart of Gold Futures

Germany

Figure 8 shows the weekly Ichimoku chart for the Ger- man Stock Market Index. Since our last monthly up - date, nothing really has changed. The German stock market is still consolidating between 10378 and 9217. The sentiment is bearish but this is still the major pull back for the bullish trend from the beginning of this year. If we break the support at 9217, this major pull back will turn into a bearish trend. The more that price consolidates, the higher the probability that the support will be broken.

Figure 7: eSignal Ichimoku Weekly chart of Gold Futures Germany Figure 8 shows the weekly Ichimoku

Figure 8: eSignal Ichimoku Weekly chart of Germany DAX Stock Market

Japan

Figure 9 shows the Weekly Ichimoku chart for the Ja- pan Nikkei Stock Index. Nothing has really changed since our last monthly update. The Japanese stock market is undergoing a major pull back. The major pull back support is 17071. If this support breaks, then the bullish trend will be officially over and then the market will enter either a major consolidation

pattern or start a bearish trend. The resistance it has to break is 19173 in order to retest the. There is high probability that the Japan stock market will continue to consolidate holding the support at 17071.

Figure 7: eSignal Ichimoku Weekly chart of Gold Futures Germany Figure 8 shows the weekly Ichimoku

Figure 9: eSignal Ichimoku Weekly chart of Japan Nikkei Stock Market

China

Figure 10 shows the weekly Ichimoku chart for the Chinese Stock Index. The Chinese stock market is holding the support of 3186 outlined in the last newsletter. In 2014, the Chinese stock market started a major trend where price doubled! June this year, it started a major pull back. The major pull back sup - port is 3186. If it breaks this support then the bull- ish trend will be officially over. Next week is going to be a very critical week. Will price “climb” the cloud up maintaining a neutral weekly sentiment or will the sentiment change to be bearish?

Figure 7: eSignal Ichimoku Weekly chart of Gold Futures Germany Figure 8 shows the weekly Ichimoku

Figure 10: eSignal Ichimoku Weekly chart of China Stock Market

Greece

Figure 11 shows the weekly Ichimoku chart for the

Greece Stock Index.

The Greece Stock market has

been in a bearish trend since September of 2014. The minor pull back occurred this month but it didn’t even reach the resistance of 1110.34. Therefore the bearish trend is still very strong. There is high proba- bility of retesting the support at 854. If we break that support, the next major support is 677.

been in a bearish trend since September of 2014. The minor pull back occurred this month

Figure 11: eSignal Ichimoku Weekly chart of Greece Stock Market

The years teach much which the days never know -Ralph Waldo Emerson

been in a bearish trend since September of 2014. The minor pull back occurred this month

Figure 1: Ichimokutrade.com 7 TF Buy/Sell Alert for AUDJPY

been in a bearish trend since September of 2014. The minor pull back occurred this month

Figure 2: TDAmeritrade Ichimoku 120m chart of AUDJPY

Multi-Timeframe Email Alerts

I want to show you how the 7x email alert can also be used to find trend reversals. 7x email alerts are

great because there is a high probability of a trend starting. But what happens when the trend does not start? Is the high probability trade over? Yes and no. Yes the trend failed but there is also high probability for a trend reversal. Everyone was thinking one way then it stops and can turn hard the other way. For the month of sept there were a few 7x email alerts for cur- rencies. And a good hand full were good examples of a trend failing then reversing. Let’s take a look at a few of these examples. First we have a demonstration of using a MTF email alert failure for AUDJPY. In Figure 1 you can see the email alert received on 9/3/2015. Figure 2 shows the chart of the 120 minute timeframe marked with the time of the email when it was received. Shortly after the bearish signal price pulled back to the Kijun Sen and continued the bearish trend. One could take a pull back to enter a low risk trade in the direction of the alert.

Next is EUR/CAD. Figure 3 shows the MTF email alert that occured in oin 9/17/2015 in conjunction with the EUR/NZD currency pair. In Figure 4 the 60m chart you can see that price had a bullish move up to create the bullish alerts on the multiple timeframes. However, price soon crossed below the Kijun-Sen to create a trend failure and thus a signal failure. Price then re - versed as traders began hitting stops and going the other way.This was followed by a break out of the Ichimoku cloud which could have been played bear- ish by a Kijun-Sen pullback shortly after.

been in a bearish trend since September of 2014. The minor pull back occurred this month

Figure 3: Ichimokutrade.com 7 TF Buy/Sell Alert for EURCAD and EURNZD

Figure 4: TDAmeritrade Ichimoku 60m chart of EURCAD I would recommend backtesting a few yourself. Take

Figure 4: TDAmeritrade Ichimoku 60m chart of EURCAD

I would recommend backtesting a few yourself. Take some live trades in a practice account untill you can see the trend failure for yourself. The email alerts are a great tool to find high probability trades. Now you can also look for high probability failures. If you like, we could continue this conversation one on one with a 30 minute help session with me if you feel you have a few more question about how to use and set up email alerts. Email me at mcolquitt@ichimokutrade. com.

-Michael Colquitt

Our final example is CADJPY. In Figure 5 we received a bearish MTF alert signal on 9/15/2015. In Figure 6 on the 60m chart you can see the trend fail by a cross of the Kijun Sen and then break out of the Ichimoku cloud in a bullish direction.

Figure 4: TDAmeritrade Ichimoku 60m chart of EURCAD I would recommend backtesting a few yourself. Take

Figure 5 Ichimokutrade.com 7 TF Buy/Sell Alert for CADJPY

Figure 4: TDAmeritrade Ichimoku 60m chart of EURCAD I would recommend backtesting a few yourself. Take

Figure 6: TDAmeritrade Ichimoku 60m chart of CADJPY

One of the things I notice with most new traders is their bias to be glued to one direction. They get stopped out and don’t think to look for signs to go the other way. The great thing about trading is you can trade the market up and down. The important part is to keep risk low and not go on that rollercoast- er ride. You can use this method for any instrument.

I hate to be wrong. That has aborted many a tempting error, but not all of them. But I hate much more to stay wrong. -Paul. A Samuelson

Seasonal Trades

O ctober is typically a volatile month for the mar- kets. We have seen some of the largest swings

occur in this month. The 1929, 1987, and 2008 crashes all occurred in the month of October. Those were just the big crashes, there have been many mini crashes in the month also. Despite all the doom and gloom that has occurred in October, the Stock Trader’s Alma- nac refers to the month as the “bear killer” because in this month, 12 post-WWII bear markets have turned around. The month also marks the end of the “worst six months of the year” strategy.

As we mentioned in our last newsletter, the markets typically follow a seasonal bearish pattern from Sep - tember 20th - October 10th. This has happened in 6 out the last 10 years including the last 4 years straight and the massive 30%+ drop in 2008. So essentially if this craziness is going to end, it should do so by mid-October. Will October be the springboard that kickstarts the markets? If by the end of October we do not break the 1982.50 level on the E-Mini S&P 500 Futures, that could mean more pain for the markets.

October Pick

Our pick for October is Delta Air Lines, Inc. (DAL). As seen below in Figure 1, (DAL) needs to hold the key

support level of $41.46. When the markets took a nosedive on August 24th, (DAL) gapped down over 20% to $34.61. Within minutes the stock began to recover and by the end of the day, closed above the previous days close. This was a strong indication of just how bullish this stock was.

support level of $41.46. When the markets took a nosedive on August 24th, (DAL) gapped down

Figure 1: TDAmeritrade Ichimoku Weekly chart of DAL Stock

Since this month is a volatile month, we will be look- ing at a quarterly seasonal play rather than a monthly play. The seasonal for (DAL) begins on October 7th and ends on December 31st. Over the last 7 years, the stock has moved an average of 30.6% with a maxi- mum move of 110.2% and a max drawdown of 18.1%. Ideally we would like to see a pullback to the $41.46 level, which is a multi-time frame Ichimoku level. If that level holds, the stock will retest the previous high of 51.06. If the markets have cleared the resistanc- es by then, we will break the high by the end of the quarter. As always, these dates and moves are not set in stone and are the average of the data from the last 7 years. You have to use your technical/fundamental analysis in combination with the seasonal to get the maximum benefit.

October Statistical Opportunities

support level of $41.46. When the markets took a nosedive on August 24th, (DAL) gapped down

Sector Updates

T he markets have provided many investors and traders headaches over the past 6-8 weeks. Large

swings across many indices show the increase in vol- atility making it challenging to find and enter new opportunities. We at Ichimokutrade continue to leverage the Ichimoku cloud indicator as part of our analysis due to its ability to provide direction along with boundary conditions to watch. We now enter the 4th quarter of 2015 which is known as the festive season with the arrival of nu- merous holidays and the end of another year. Trad- ers often are on the lookout for what is known as the Christmas rally. That being said, we decided to pro - vide an update on the sectors that are on our watch- list to take advantage of a potential rally. Once we are able to confirm a sector is breaking a boundary con- dition which could trigger a move to the next bound- ary, we can scan for specific stocks to enter. Here is a summary of all the sectors:

support level of $41.46. When the markets took a nosedive on August 24th, (DAL) gapped down

We begin with the top 3 bullish sectors being the Consumer Discretionary (XLY), Healthcare (XLV) and Technology (XLK). Below are the weekly charts and key levels respectively. In Figure 1 XLY continues to hold the key multiple time frame support of 73.29. Despite going below the level during the week, price was able to close above this level for the month as well indicating its bullish potential. Although we may seem some consolidation for the next little bit, this sector may provide great opportunities for the up - coming quarter. Figure 2, XLV and Figure 3, XLK round up the top 3 list but remain weaker given the neutral sentiment on the weekly with price within the cloud.

-Hiren Patel

Figure 1: TDAmeritrade Ichimoku Weekly chart of XLY Figure 4: TDAmeritrade Ichimoku Weekly chart of XLP

Figure 1: TDAmeritrade Ichimoku Weekly chart of XLY

Figure 1: TDAmeritrade Ichimoku Weekly chart of XLY Figure 4: TDAmeritrade Ichimoku Weekly chart of XLP

Figure 4: TDAmeritrade Ichimoku Weekly chart of XLP

Figure 1: TDAmeritrade Ichimoku Weekly chart of XLY Figure 4: TDAmeritrade Ichimoku Weekly chart of XLP

Figure 2: TDAmeritrade Ichimoku Weekly chart of XLV

Figure 1: TDAmeritrade Ichimoku Weekly chart of XLY Figure 4: TDAmeritrade Ichimoku Weekly chart of XLP

Figure 5: TDAmeritrade Ichimoku Weekly chart of XLF

Figure 1: TDAmeritrade Ichimoku Weekly chart of XLY Figure 4: TDAmeritrade Ichimoku Weekly chart of XLP

Figure 3: TDAmeritrade Ichimoku Weekly chart of XLK

The remaining sectors including Industrials (XLI), Tele - com (XTL), Utilities (XLU), Materials (XLB) and Energy (XLE) continue to hold a bearish bias. Check out our blog for a detailed view on all the sectors. Whichever way the market decides to move this 4th quarter, we hope you can be prepared to take advantage of it. Af- ter all, success occurs when preparation and opportu- nity meet and the financial markets are no different.

-Pranav Khattar

Below are the weekly charts for Consumer Staples (XLP), Financials (XLF). In Figure 4, XLP was able to close above the key level of 47.33 for the 2nd week in a row despite retesting the support of 46.53 on an intra-week basis however the monthly was unable to close above it. Probabilities continue to remain on the bullish side until price closes below the 46.53 level. In Figure 5, XLF bounced off the multiple timeframe support of 22.07 with the monthly closing above this level. Despite this, we still need further confirmation before this sector can begin a move one way or an- other.

Futures Updates

Take Control of Your ‘Future’

F or many of us, trading is a tool to reach the elusive goal of financial freedom; however, most are only ever chasing it with little to no success. It is clear that the average retail trader knows not much more than to invest in stocks, however there is an abundance of options available. One such option is to trade a de - rivative product such as a Futures contract. By incor- porating Futures into your portfolio, you will diversi- fy your exposure and take a step closer to achieving your goals.

The purpose of the associated research article is to outline the long-term and short-term outlook on some of the most actively traded futures contracts. The research was conducted using purely technical analysis. The analysis looked at the Monthly, Weekly, and Daily time frames. The monthly time frame pro -

vides a 2 to 5 year projection; the weekly time frame provides a 6 month to 2 year projection; the daily time frame provides a 1 to 6 month projection. Full Research Article:

https://www.ichimokutrade.com/c/uncatego - rized/update-take-control-of-your-future

The purpose of the associated research article is to outline the long-term and short-term outlook on

a point where they are consistently successful. Why? The major reason is they are trading with their emo - tions, instead of trading with a plan or system. Let’s analyze the process of creating a “black box” solution compared to regular retail trader.

In creating a “black box” solution, here is the step-by- step process:

  • 1. Determine a “foundation” strategy that is success- ful. The “foundation” strategy is a simple strategy that does not have a lot of rules. It has a lot of trades but has at least the following minimum characteristics:

    • a. 50% or higher win/loss ratio

    • b. 1:1 or higher reward/risk ratio

    • c. Lots of trades

    • d. Minimum backtest time of 10 years

  • 2. Analyze the losing trades of the backtest results to determine ONE rule that can be applied to reduce the number of losing trades but keep the winning trades.

  • 3. Backtest everything with the addition of the new rule.

  • -Zeeshan Ahmed

    • 4. Repeat the provess of analysis and backtest until you get a reward/risk of 3:1 or higher and a win/ loss ratio of 75% or higher. If all efforts are ex- hausted and you cannot see these results then a new “foundation” strategy has to be found.

    • 5. If the results are acheived, the strategy has to be tested for various instruments and various time - frames to make sure you did not “curve fit” to one instrument and one timeframe.

    • 6. If Step #5 passes, now the strategy is ready to be coded up in a programming language and exe - cuted.

    • 7. Observer the slippage and trade commissions during live trading. With these factors, the strat- egy should be able to maintain a 3:1 reward/risk ratio over a certain time period.

    I hate to be wrong. That has aborted many a tempting error, but not all of them. But I hate much more to stay wrong. -Paul. A Samuelson

    Trading Psychology

    Creating Black Boxes

    H ow many times have you thought you had the perfect setup where you “knew you were cor-

    rect”? Then all of a sudden, you are wrong! When this happens, what do you think? What do you do? What is your confidence level on the next trade? Do you question your strategy? Do you question your thought process? What happens if this occurs on the next trade too? Has this happened to you? If so, how many times? What did you do when it oc- curred? Did you get emotional or did you move into the next trade without that trade influencing your thought process? 90% of retail trader’s never get to

    This is the process that an institution has to undergo in order to create a successful automated strategy. It is a long tedious process but once it has been done successful, it is well worth it.

    You Think You Are So Right but You Are So Wrong!

    N ow, let’s analyze a retail trader and see what hap - pens. I will take a real live example of the trade with Visa that took place this last week. We will ex- amine various time frames to captures the various types of trader’s that exist i.e. day, swing, long term, etc.

    Figure 1 shows the eSignal chart for Visa on 240m timeframe. If a trader observes price action, they no - tice that a big bearish pike occurred and then price tried to go bullish when it went above the cloud. How- ever, it consolidated above the cloud. After a while of consolidation, broke the bottom of the consolidation and closed below the cloud. When it closed below the cloud, the sentiment changed to bearish. Now, it is undergoing a pull back to the major resistance of 69.85 which is the Ichimoku Green resistance of 26 bars. Price hit the resistance at 69.85 but closed right at the Ichimoku 9 bar resistance of 69.27. The trad- er’s thought process is that the resistance should hold and price should start to move downward to start a bearish trend. Would you agree?

    N ow, let’s analyze a retail trader and see what hap - pens. I will take

    Figure 1: eSignal Ichimoku 240m chart of VISA Stock

    Figure 2 is the 60m eSignal chart for Visa. If you ob - serve the price action on this time frame, you will no - tice a consolidation pattern around the cloud where sentiment kept on going bullish and then bearish and back and forth. Later, it broke the bottom of the consolidation pattern and started a bearish trend. It was a powerful bearish trend since it trended for a couple of bars. Now, it had gone through a pull back. The pullback occurred to the Ichimoku green resistance for 26 bars which is also the bottom of the consolidation pattern. In order for the bearish trend to continue, this resistance has to hold. Price after reaching this resistance, decided to consolidate with this resistance as the top of the consolidation. The probabilities are still high for to retest the pivot low as

    long as this resistance holds.

    Would you agree?

    N ow, let’s analyze a retail trader and see what hap - pens. I will take

    Figure 2: eSignal Ichimoku 60m chart of VISA Stock

    Figure 3 shows the 30m eSignal chart of Visa. If a trader observes the price action, they will notice a bearish trend that started from a break of a consol- idation pattern. It went through a major pull back to the resistance of 69.27 and held. The 69.27 was a “future” resistance since it was not directly above price. This test of the resistance at 69.27 was a ma- jor pull back because price was still below the cloud. After testing this resistance, it consolidated and now we have a direct resistance of 69.27 which is the top of the cloud. This was now indicating that the re - sistance was strong compared to before, and price should start to move down to try to retest the pivot low. Would you agree?

    N ow, let’s analyze a retail trader and see what hap - pens. I will take

    Figure 3: eSignal Ichimoku 30m chart of VISA Stock

    Based on the 240m, 60m, and the 30m, this trade looked like a high probability to go down now be - cause the resistance level for all three timeframes was bearish. The day traders and the swing traders were thinking the same way. In a retail trader’s mind, this looked like a trade they “can’t lose”. However, they did! Why? The retail trader would not even bother to find out why they lost because they would be re - ally upset. They entered the trade with the idea that

    they were correct. When the trade failed, they felt like they got defeated which brought on emotions. If they weren’t trading with emotions they would ex- amine why they lost and try to fix it for future trades. Here was the problem with the trade. Figure 4 shows the eSignal Daily time frame for Visa. Notice price is above the cloud. The daily time frame and a sen- timent were bullish. Therefore, they should NOT be looking for bearish setup, since they would be going against the higher time frames. Why didn’t the retail trader analyze the Daily time frame? Well, most retail traders don’t trade in the direction of the higher time frame because it keeps them out of a lot of trades. Most retail traders think about the number of trades instead of quality. They view the higher the number of trades they enter, the better the chance they have. This is why retail traders evaluate a system based on win lost ratio instead of reward/risk ratio. How many webinars have you been on where they talk about a great win/loss ratio but the reward/risk is 1:1 or less (inverted reward/risk)?

    they were correct. When the trade failed, they felt like they got defeated which brought on

    Figure 4: eSignal Ichimoku D chart of VISA Stock

    In conclusion, you should never think “I’m definitely going to be right with this trade” because that is an emotion. You may win occasionally but you just got rewarded for a mistake. Sooner or later, that mistake will turn into a habit and you will continuously keep on losing. We are here for trade for life not for a few months!

    -Manesh Patel

    Thank You for reading! Please look forward to our next newsletter November 1st, 2015! To subscribe email request to:

    info@eiicapital.com

    Disclaimer. The Ichimoku Trader newsletter contains or may contain references to other companies. E.I.I Capital Group makes no representations, warranties or endorsements whatever about any other companies , or any products or services of those other companies, even if the products or services of those other companies or their Web sites are described or integrated with E.I.I Capital Group products or services. You use this newsletter and all E.I.I. Capital Group (and affiliated) products and services at your own risk. In no event shall E.I.I. Capital Group be liable for any special, incidental, indirect or consequential damages of any kind, or any financial losses or damages whatever, including, without limitation, those resulting from loss whether or not we have been advised of the possibility of such damages, and regardless of the theory of liability. This newsletter could, and likely does, include some technical and other inaccuracies and errors.

    Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options futures or forex); therefore, you should not invest or risk money that you cannot afford to lose.

    U.S. Government Required Disclaimer - Commodity Futures Trading Commission. Futures and options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This website is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this website. The past performance of any trading system or methodology is not necessarily indicative of future results.

    CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REP- RESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY, SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN. Testimonials appearing on this site are actually re - ceived via email submission. They are individual experiences, reflecting real life experiences of those who have used our products and/or services in some way or other. However, they are individual results and results do vary. We do not claim that they are typical results that consumers will generally achieve. The testimonials are not necessarily representative of all of those who will use our products and/or services. The testimonials displayed are given verbatim except for correction of grammatical or typing errors. Some have been shortened, meaning; not the whole message received by the testimony writer is displayed, when it seemed lengthy or the testimony in its entirety seemed irrelevant for the general public.