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Jay Norris
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Jay Norris is a 20-year CBOT floor veteran, author of the Best Seller "The Secret to Trading Forex, Futures, and ETFs: Risk Tolerance Threshold Theory", "Mastering the Currency Market", McGraw-Hill, 2009, and "Mastering Trade Selection and Management", McGraw-Hill,... More
My company:
Trading University
My blog:
Seeking Alpha
My book:
The Secret to Trading Forex, Futures, and ETF's: Risk Tolerance Threshold
View Jay Norris' Instablogs on:
  • ESignal Weekly Forex & Futures Forecast For 3-2-15

    See author and Trading Instructor Jay Norris cover the major currency markets while emphasizing the importance of having a static trading plan that provides a benchmark performance on YouTube at Weekly Forecast.

    Jay talks about the advantage of using a systematic, independent approach to market analysis that relies on market generated information only, and highlights the trading performance of the method he employs and teaches year-to-date.

    His focus this week is back to buying dips in the dollar and selling rallies in the Euro.

    While he has put "buying dips" in the Aussie Dollar on hold because of a short-term bearish shift last Thursday he is not looking to sell rallies because of long-term support in the Aussie from .7750 to .7650.

    Mar 02 8:31 AM | Link | Comment!
  • Euro Rally, Greenback Correction At Hand?

    "Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves." Peter Lynch, legendary fund manager.

    I completely agree with Peter Lynch's thought process, along with another investor who scoffs at the idea of trying to time market corrections, Warren Buffet.

    No doubt, the trickiest part in investing or trading is to predict a market correction and trickier still gauge how long that correction will last. It takes a ton of patience just to get on the right side of the market long-term, why complicate the process by trying to time shorter-term secondary moves? The only correct answer to that question is because your method tells you to.

    Be Happy, Make Money

    The last 9 months have been great because I was so forthright that a sea change move in the U.S. dollar was on hand -- - and I positioned myself aggressively for that. Regarding my long-term cash positions nothing has changed. I'm still long UUP - The U.S. Dollar Index ETF. As a trader however, I am free to trade whichever way the shorter-term patterns tell me.

    Last year I passed on any short-term counter-trend signals and just waited to buy dips in the U.S. Dollar, and or sell rallies in the Euro. After all the golden rule of trading is: "Buy dips in uptrends, and sell rallies in down trends". I'd be suspect of any strategy where this was not at the core.

    Four Years to 50%

    This year however I will trade those shorter-term, counter-trend signals the method produces, and here is why:

    1. Cuz I can. If you have a method which produces well statistically in both long-term and short-term time frames then by all means take advantage of it.
    2. We are nearly at the 50% retracement level of the previous bear cycle in the dollar and the current bull cycle is in its 4th year -- see Figure 1. (If we take the 2011 low on the Monthly Dollar Index chart as the beginning of the new bull, then this cycle is going on 4 years. (We always want to start a cycle on a higher low or a lower high, and not on the absolute low or high). Given the rally is starting to mature it becomes natural that at some point the rate of acceleration will slow which means more corrective behavior, i.e. more retracements.
    3. Market corrections are faster and more violent than the trends they are retracing. As most traders know it is hard to find fault with profiting from a fast market.

    (click to enlarge)Figure 1.

    Nothing Has Changed, But The Aussie…

    I am no less bullish on the U.S. Dollar and U.S. economy. If the Greenback does correct however and we do see a secondary rally in the Euro once this Greek business fades from the headlines - again - I want to participate.

    Same for the Aussie -- which is a completely different scenario than the Euro --and where there is a chance a long-term bottom is being sewn in.

    Jay Norris is the author of two McGraw-Hill books and teaches the art of trading at Trading University. To see his weekly forecasts on YouTube go to: Weekly Forex Forecast

    Feb 12 2:11 PM | Link | Comment!
  • Trading: Keep It Simple

    Trading: Keep it Simple

    "Life is really simple, but we insist on making it complicated." Confucius

    The past year definitely favored traders who followed the golden rule of trend trading: "let your profits run". And I see no reason this will change in 2015.

    This past year also once again proved that the most important aspect of trading is knowing which tactic is suitable for the trading environment you are in right now. This determination is based on the pattern on the chart which is a reflection of the underlying fundamentals. If the chart is showing a pattern of higher lows and higher highs, this is a reflection of a fundamentally bullish environment and buying dips is the tactic that provides the path of least resistance to profits. Likewise if the pattern is one of lower highs and lower lows, then this is a fundamentally bearish environment and the path to profits will be selling rallies. The challenge of this, as Confucius pointed out, is keeping it that simple. If you want to help yourself, it is a question of how successful do you want to be?

    The graph in Figure 1, demonstrates the harmony and rhythm that such a simple approach can deliver.

    (click to enlarge)Figure 1. 60-minute charts of the Dollar/Swiss and the Euro/Dollar in late December 2014

    On the left side is USDCHF and on the right side EURUSD. The colored boxes represent low risk price levels to initiate trades in-line with the dominant trends. i.e.: buying dips in an uptrend for the Swissy, and selling rallies in a downtrend for the Euro. Those colored boxes also represent identical retracement ratios of previous impulse moves. This tendency of predictable behavior demonstrated by the regularity of market retracements typifies what Warren Buffett meant when he summarized the Berkshire Hathaway investment philosophy: "Our approach is very much profiting from lack of change rather than from change".

    If something is already working, why would we look for the opposite to happen? If the definition of insanity is doing the same thing over and over again expecting different results, then enlightenment must mean simply doing the same thing over and over again and getting positive results. This outlook in trading or investing becomes particularly clear when we reach the conclusion that the pattern on the chart is a definitive reflection of the underlying fundamentals of that market. With that understanding comes the realization that it is the "effect" of price movement - the pattern on the chart -- which provides a simpler path to wealth accumulation, than otherwise trying to extrapolate, or worse predict, the "cause" or price movement.

    While it might be tempting to watch news about the markets, and hear commentators talk about causation -- why the market did what it did that day or that month, or the year before - by trying to connect the dots of the daily news with what price actually did that day, we are complicating the process instead of simplifying it. Statistically it's more likely that the market will continue to do what it is doing now, rather than reverse itself. Therefore it is always better to trade with the current pattern with the assurance that should that pattern reverse, we can then trade in that new direction.

    While the charts in Figure 1 give us a great look at market behavior on a shorter-term basis, what about the long view? The chart in Figure 2 is a monthly chart of the EURUSD. The purple line marks the 50% retracement level from the 2000 low to the 2008 high. This market ended 2014 at an 8-year low settlement to close below that 50% level for the first time, and this past week posted a lower low to the 2012 low to complement the current 8-year pattern of lower highs. (Many technical studies place emphasis on the 50% retracement level with a close below making lower prices more likely.)

    (click to enlarge)Figure 2. Monthly chart of EURUSD

    With the historic long-term pattern in Figure 2 aligned with the shorter-term patterns on the lower time frames, and all the patterns reflecting underlying bearish fundamentals we see no change from the 2014 trading environment to the 2015 environment.

    Jay Norris is the author of two McGraw-Hill books on trading and teaches the art of trading in live markets at Trading University. To see his weekly forecasts on YouTube going back over 2 years go to: Weekly Forex Forecast.

    Jan 04 11:29 AM | Link | 1 Comment
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