Ride the Waves of Volatility with Ray Barros |
| Date Added: June 23, 2011 07:57:30 AM |
| Author: Phillip CFD |
| Category: Business and Economy: Finance and Investment |
| Especially with the recent economic uncertainties and escalating political tension in the world, volatile markets seem to be here to stay. As such, Phillip CFD organised a special presentation with Mr Ray Barros on 30th April 2011 to help guide our clients on a step-by-step trading plan to instill the discipline needed to control one’s investments. Phillip CFD’s followers on twitter were also able to gain some brief insights as we tweeted live during the event. Regularly appearing on CNBC, Bloomberg and BBC, Barros has been an active fund manager since 1990 and is a passionate educator who enjoys helping people grow and protect their assets. Barros started off the seminar by driving home the first key message that it is important to be passionate and the need to have a vision in trading. Although statistics show that 92% of retail traders lose money, to Barros this also means there is a very high chance to profit if you’re part of the 8%. Thus, one should learn how to move towards being part of the successful 8% and the first step is creating a vision. The second step is to visualize the outcome you would like from trading or from attending seminars such as this and connect it to the vision. Once these components have been identified, the roadmap to success is already set out. Barros told the audience that it is impossible to achieve 10% returns each month, and investors should not idealise or have unreasonable expectations about the returns of trading. One must accept that it is natural to lose sometimes while trading and learning from one’s mistakes is part and parcel of becoming a successful trader. Barros believes that most people fail to succeed in trading also because they have unproductive habits towards trading and he advised the audience to keep productive habits such as checking open positions, putting in stop orders and stop losses, routinely checking for major reports and never to trade on tips. A recommendation was to keep two separate journals – one to write down the win/ loss rate while the other is used to record the reasons why the trade was taken. It is important to note that it is not just the rate of wins and losses but the amount won or lost as well as the correlating psychology behind each trade, simply because one should always stick to one’s trading plan. With time and regular trading, Barros assures that one will then start to make general profits. Barros pointed out that the problem with using Moving Averages as an indicator is that one wrongly assumes that the market is moving at a constant rate. The audience was then introduced to the Wyckoff-Tubbs model, which can help set their trades up better than using traditional indicators such as moving averages. According to the Wyckoff-Tubbs model, trends normally have a period of going sideways before going up or down and there are three to four signals to show that a trend reversal is going to happen. The signals are when there is a pick-up in the volume followed by a shrinkage which is then trailed by what Barros terms as a ‘climatic volume’, meaning a massive volume of about twice the average volume. It is often taught by technical analysts that one should buy on the breakout but according to Barros, only 30% of breakout trades are ‘true’ breakouts and it is common to enter into a false breakout trade. Thus, the advice is to enter during a pullback instead, where the volume shrinks (lower than the average volume of ten periods) and this increases one’s probability of entering a profitable trade to about 50%. To add, the candlesticks or lines of the graph will have two high and two low points that sit within a channel when a valid trend occurs. This trend will normally continue for another two more highs and two more lows after which it will break out of the channel or reverse its course. A major economic problem that the world is facing currently is inflation, which does not seem to be decreasing anytime soon. This problem is further exacerbated by the banks that have increased their funds stored with the Federal Reserve instead of releasing it out to the public together with the general public’s expectation that prices will continue to increase. With all this data, entrepreneurs should beware as this period might be a better time to trade stocks than to start a new business. Optimistically speaking, Barros predicted that the next bull market will occur around year 2015 or 2016 and this would be the largest bull market ever seen yet. In the meanwhile, we hope that our clients are able to sit and ride out the volatile waves with all the above useful trading tips! To learn about CFD, visit us at www.phillipcfd.com |
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