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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
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  • Shades Of Corn In 2006 In Dollar Of 2014

    In 2006 I did not fully understand that markets have a tendency to often "reset" just prior to a large price move. I also did not know beans about corn but I did know that every commodity broker from Chicago to Dallas was telling their clients that corn was going to double in price. Now any time a broker tells you something that sounds too good to be true, it usually is. But here is the tricky part, it did come true. But most of those calls and long futures contracts that all those brokers had begged their clients to get into did not pay off.
    (click to enlarge)
    Figure 1. Corn Weekly Chart in 2006

    The Sept '06 out-of-the-money calls expired worthless, and many of the long futures were stopped out below $2.20 when for no reason that an analyst could explain, corn turned south in July and early August and posted a lower low in the face of screaming bullish fundamentals. Once the public and half the trading pit's positions were stopped out, the corn was free to move higher.

    Everybody knew it was going higher, and it did, yet most of the participants lost money…

    (click to enlarge)
    Figure 2. The U.S. Dollar Weekly Chart Today

    I can't help but think of that market bottom in corn when looking at the U.S. Dollar today. Everybody thinks it's going higher, and it probably will.

    The trick is to balance the risk now, and increase it once price accelerates beyond the 2013 highs. This is the opposite of what many investors do. They go in heavy at the perceived bottom and lighten up once they get the acceleration. This is human nature, which is the opposite of the nature of markets.

    There is a priceless lesson in that corn chart for both investors and traders.

    Jay Norris teaches at Trading University and wrote The Secret to Trading: Risk Tolerance Threshold Theory.

    Trading involves risk of loss and is not suitable for all investors.

    Disclosure: I am long UUP.

    Tags: UUP
    Jan 16 4:13 PM | Link | Comment!
  • Successful Trading: Reinforcing Something That Works

    One of the many misunderstandings about trading is if you have a successful method you need to keep it secret or it will lose it effectiveness. The truth is if you have found a successful trading method it is because that method is in-line with how markets are already moving. The more people that utilize that method the more the market traits that accommodate that method will become ingrained - and they are pretty well ingrained as it is.

    The market has an infinite capacity to support winning traders just has it has a bottomless capacity to support losing traders. The largest traders, primary dealers, may not be as profitable in their pursuit of taking the other side of every trade, but they will still be in business and there will still be a market. It is telling that the best capitalized traders, primary dealers, are not directional traders but market makers - they do not speculate on market direction; they take the other side of everyone's trades who does. On occasion they are put in a position where they have to "reset" a market -- temporarily reverse it and "run stops" -- to avoid being run over themselves during those times when the majority of speculators do get it right. But this is risky and exceptional behavior even for the best capitalized traders.

    Another great misunderstanding is market behavior "will change", which is the same as saying human behavior, will change. Short of a major temperature variance, or catastrophic plague, it takes humans longer than the average lifetime to significantly change their behavior. Most adults in fact can't change their behavior from how it was programmed when they were a toddler.

    No matter how good of a trading method someone puts in your hands, the older you are, the less likely you are of being able to replicate it with your own money. If mindfulness were easy we would all be enlightened!

    The relationship between traders and market is a two way mechanism. Successful trading comes down to taking advantage of what the market is already doing, which will reinforce that same market behavior.

    Jay Norris teaches at Trading University and wrote The Secret to Trading: Risk Tolerance Threshold Theory.

    Trading involves risk of loss and is not suitable for all investors!

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Jan 09 12:45 PM | Link | Comment!
  • Live Webinar: The End Game In Trading Education
    Statistical Validation: The End Game In Trading Education

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    Statistical Validation: The End Game In Trading Education

    Jay Norris

    Director of Education at Trading University

    Tue, Jan 07 2014 11:00 CST

    Change timezone
    Type: Webinar
    Duration: 0 h, 45 min
    Moderator: Adinda Firdaus

    Participants: 87 pre-registered participants

    Register for this webinar

    If you have any questions, please feel free to contact us


    Trader and author Jay Norris talks about the importance of having a trading method that lends itself to benchmarking, or statistical validation, and demonstrates the method he uses. You will learn why benchmarking is imperative to your success as a trader and of the 4 steps you need in place before you can build a history of reliable statistic data to valid the method you have chosen to trade.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Jan 07 10:54 AM | Link | Comment!
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