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People are talking about Forex.
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Feature:What Is a Low-Risk Idea and How Can Traders Benefit From It?, by Gabriel Grammatidis
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Tips: The Market Abhors a Parabola and Gold Mining Stocks Just Had One…,
by D.R. Barton, Jr.
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GDPR: Read Our GDPR Statement
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"The best aspect of the course was the knowledgeable, accessible instructor."—Harold.G, Las Vegas, NV
"I am a Forex trader, and I thought Gabriel did an excellent job introducing everyone to Forex."—Anonymous, Melbourne, Australia
“Very quality documentation and presentation technology… I didn’t expect I would learn as much as I did.”—Robert Allen, Fountain Hills, AZ
"The best takeaway was the workbook, which will allow me to review and trade the system."—Rick F., Tampa, FL
“I loved the class and would recommend.”—Terry Hudgins, Farmville, VA
"The course dispelled my erroneous beliefs about the Forex market, and there is a definite nugget by integrating simulation into the course."—John G.,Melbourne, FL
Scroll down to read more about this workshop under our Workshop section.
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What Is a Low-Risk Idea and
How Can Traders Benefit From It?
by Gabriel Grammatidis
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The more trading experience one develops, the clearer it usually becomes why low-risk ideas are important for generating good trading results. Entering a trade that looks good for no specific reason other than a “gut feeling” is usually a recipe for a constantly losing system. You might have found that there are various definitions of what a low-risk idea represents. The reason for this is that there is no easy answer to it. What follows is my view of the individual criteria in which a good trading idea rests upon.
A Low Risk-Idea forms the Basis for a Good Trade
The basis of a great trading system will always be a low-risk trading idea. So, what is this exactly and how can it be defined? There are three main components;
- A tight stop (in relation to prior price activity, respective volatility).
- A low probability of getting stopped out (before reaching at least break-even).
- A strong & extended follow-through towards and beyond target.
A well-protected, tight stop combined with an extended follow-though that reaches your target quickly provides an excellent trade idea. Such a trade is characterized by both a high Reward-to-Risk ratio and a high Win Rate; typically for a great low-risk idea these are more than 6:1 (RR ratio) and a Win Rate above 60%.
The tighter the stop (eg as measured in ATR / Average True Range), the lower your risk and, in consequence, the higher your potential R-outcome. However, a tight stop will also result in an increased probability of getting stopped out early in the trade. Should you experience a high number of early stop-outs, your stop might not be well-protected.
Once you have found a good entry with a tight and protected stop, then the quality of your trades’ target will determine how good your low-risk idea really is. A target should be derived by applying technical market analysis and following a certain logic. My trading systems define their target by an extension of the swing move in trend direction that occurred prior to entry (measured swing move). A high-quality target can be positioned well above entry and represents a level that should easily be reached. The stronger the expected follow-through towards the target, the faster your trade profits can be realized.
Such a strong and extended follow through is typical for a trade setup that runs for other peoples’ stops. These are stops-losses from traders that are positioned against your trade. Once their stops get triggered, price is pushed toward the target of the trade increasing your profits. Stop-runs not only represent a major edge in defining a low-risk idea but are also more fun because you experience how other traders are caught on the wrong foot then obliged to quickly cover their losses — all to your benefit. Such a market trap is ideally an integral part of your low-risk idea as it allows for extended stop-run moves.
All three systems that will be taught in the coming Forex workshop benefit from hunting other peoples’ stops in one form or another. The Busted Breakout system (System 1) is known for its’ double trap failure pattern that triggers extended stop-run moves.
NOTE: The Traders’ article and video above only reveal part of the rule-set of System 1. The rules for the article had to be altered and are not the the original ones as taught in the workshop.
Swing Trading a Trade beyond its’ Target into a Higher Timeframe
Once a trader has learned to identify stop-run levels on higher timeframes, then a trade that was originally evaluated as a low-risk idea might become a “super-low-risk idea”. As an example, this might be a trade that provides longer-term potential beyond its’ original scope. So, a 15-minute trade might allow you to stay in the trade while trading a Weekly timeframe swing move lasting over several weeks.
This is not uncommon though most traders remain unware of this higher timeframe potential. Transitioning a trade into a Swing trade is a conscious decision that requires a different risk management approach while the stop is trailed from one higher timeframe to the next ones depending on how well the trade develops. Such a swing move is fueled by stop-run levels on higher timeframes that act as magnets towards which price is drawn to. Once such a level is broken through, then the stop-runs are triggered propelling price towards the next stop-run level in direction of your target.
Due to the 24h market activity of the Forex market, trading system should incorporate higher timeframe analysis in their core rule-sets as it represents another big edge.
Higher Timeframe Analysis Reveals Positives and Negatives of a Trade
Apart from being able to identify stop-run levels on higher timeframes, additional edges can be identified through a Top-Down Analysis making your system more robust. This requires some experience in chart reading skills — a skill every trader should develop whichever system he is trading. Important support and resistance levels can be identified that, if they fall together with other levels, become clusters of trading activity to which prices are drawn to (or rejected from). Higher timeframe alignment and special situations are other edges you might discover.
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See how, since September of last year, the scenarios have played out. Price has been rejected from the cluster level of four important support and resistance levels. After a last push into the cluster area, the different price scenarios had come true with the EURUSD falling back again into the trend channel, then formed a horizontal consolidation and is now heading towards its’ lower range. This is a failure pattern and stop runs are currently occurring pushing prices lower. With this resumption of the overall down-trend in the EURUSD, many good low-risk ideas will develop on lower timeframes for you to capitalize on.
Can Low–Risk Ideas only be found in Lower Timeframes?
This is a question that often gets raised by fellow traders. When developing your trading strategy, I recommend starting with the beliefs behind the low-risk idea first — this is the core of your trading system. In a second step, as the system rests upon a strong foundation of beliefs, the individual market and system edges can be developed. Usually these are edges deducted from humans’ psychological flaws. Remember: the average human psychology is made to lose in the markets, repeating the same mistakes over and over again. So why not benefit from this instead?
Price action behavior in all timeframes reflects rational human behavior. Thus, whether a trade is executed on the 5 minute or the monthly chart, price action and the trading idea remains equally valid. Capital markets are fractal in nature. If you want to trade a system that preserves its’ edges over the long-run, then the low-risk idea should be based on humans’ psychological biases.
I'm looking forward meeting you soon in person!
Good trading,
Gabriel Grammatidis
PS — I am teaching the next Forex Trading Systems Workshop in October, London/UK. Part of my personal mission is to help others, provide information, and transfer knowledge so that your path of trader development becomes as smooth as possible. As more experienced traders will tell you, everybody needs to transition through certain learning stages and I enjoy helping new and experienced traders make those transitions. With every workshop, I too am learning from you in how to better coach you. I like to stay in touch with attendees once the workshop is over and I offer various degrees of support after each event.
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About the Author: Gabriel Grammatidis is a successful full-time trader and graduate of the Super Trader program. He has extensive experience trading Forex and shares his knowledge at his Forex and Live Forex Trading workshops, held regularly at VTI.
For more information on the Busted Breakout psychological dynamics see his article in the Traders' magazine. Gabriel can be reached at gabriel "at" vantharp.com.
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Hear why taking Forex and Forex Live workshops have made a difference to these students and how they trade.
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The Market Abhors a Parabola and
Gold Mining Stocks Just Had One…
by D.R. Barton, Jr.
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Aristotle is traditionally credited with the concepts behind the familiar idiom “nature abhors a vacuum.” It’s just a way of saying that when something is moved out of a space, something else will move in. Or there is no true empty space.
Great minds debated this concept through the centuries. Galileo, Blaise Pascal, Thomas Hobbes, Robert Boyle and even calculus co-inventors Sir Isaac Newton and Gottfried Leibniz got in on the act.
Modern science has answered this question with a few equivocations. From a quantum perspective there is no true empty space (it would still be filled with quantum fields) but there are a good deal of mostly empty space and partial vacuums.
The markets, like nature, find a few things abhorrent. Chief among these is the parabola.
A parabola is, at its essence, an exponential function. Galileo in his final work Discourses on Two New Sciences (from 1638) proved that trajectory of a projectile traveling through a nonresisting medium is a parabola. Like a cannon ball dropping back to the ground, trading patterns that look like parabolas inevitably come back to earth as well.
Here’s an easily remembered chart of Shake Shack (SHAK) not too long after its IPO:
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I know at least one trader who got caught shorting this parabola too early. But when this parabola ended, it really broke down.
I was teaching a seminar outside of Phoenix in 2011 when silver hit a parabolic top:
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It had a two-day drop and fake-out to a higher high, but it went the way of all parabolas.
To be honest, these parabolic moves are pretty rare. So when I saw one at the end of last week, I jumped on it. As you’ll see in the chart below, this one is a parabola that’s going the other way (down).
I found it because some good analysts I talk with were looking for a bottom in gold, but it just wasn’t coming. Then, in overnight trading on Wednesday night, I saw this pattern show up in Gold futures:
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Looking for additional ways to play this, I saw this chart of the triple-leveraged gold miners ETF (NUGT) the next morning:
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And I knew that this move couldn’t be sustained. I got in a couple of hours early, but am already up 11% on this leveraged ETF in just a little more than three trading days.
My belief system is that parabolic moves down usually give a quick bounce back — and that’s what I’m playing. I don’t have the same expectation for a prolonged move in the other direction like I do when get a parabolic move into a blow-off top. So for all you gold bugs out there, the intermediate bottom may be in, but we need a lot more price action to the upside for a technical confirmation.
I always enjoy hearing your thoughts and comments! Please send those to me using drbarton “at” vantharp.com
Great trading and God bless you,
D. R.
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About the Author: A passion for the systematic approach to the markets and lifelong love of teaching and learning have propelled D.R. Barton, Jr. to the top of the investment and trading arena. He is a regularly featured analyst on Fox Business Networks’ Varney & Co. TV show (catch him Tuesdays at 9:30 a.m. EST), on Bloomberg Radio Taking Stock and MarketWatch's Money Life Show. He is also a regular guest analyst on CNBC World, CNBC's Closing Bell, Fox Business Network’s Cavuto Coast to Coast and Making Money with Charles Payne and the China Global Television Network. His articles have appeared on SmartMoney.com, MarketWatch.com and Financial Advisor magazine. You may contact D.R. at "drbarton" at
"vantharp.com."
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Presented by R. J. Hixson
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September 14-16
Friday-Sunday
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The How to Develop Winning Systems Workshop teaches you what you need to know to develop your own system. The material you will learn is not market or time-frame specific. So whether you trade stocks, futures, currencies, gold, etc., or
whether you place 50 trades per day or 50 trades per year, you will learn all of the components that work in any system. With this knowledge you can both modify existing systems to fit you or the market type better, or master your own system development. Two locations to choose from, Cary, NC in September and London, England in October!
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Presented by Libby Adams and RJ Hixson
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September 18-21
Tuesday-Friday
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Peak Performance 202 is SOLD OUT! Look for the next event January 2019.
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October 2018 - LONDON, ENGLAND
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Presented by Van Tharp,
with RJ Hixson
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October 12-14
Friday-Sunday
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Do any of the following sound like you?
- Are you always looking for a new trading system? Or, are you always trying to improve the one you have?
- Do you find your trade setups never quite fit all of your criteria so you have trouble entering trades?
- Do you get anxious about the market or get anxious about risking your money so that you have trouble pulling the trigger?
- Do you get excited and ignore your rules or do you get distracted and fail to follow your system's rules?
- Does a losing trade take your energy away from the next trade or conversely, does a winning trade make you confident about the next trade?
- Is your trading (or your life?) ruled by fear, anger, greed, or shame?
- Are you constantly losing money?
- Do you lack a strong plan to guide your trading or do you fail to follow the plan you created?
- Do you have a performance ceiling where you fall apart or stop doing well consistently? Does your account reach a certain size and then it plateaus or you start losing money at that point?
If you answered yes to any of these questions, then you are experiencing some form of self-sabotage. But don’t worry, these are some very common patterns for traders and you can overcome them in order to reach your potential. This workshop will help you identify and resolve the underlying conflicts causing these patterns — as well as leave you with the tools to address conflicts that come up in the future for you.
It's been Van Tharp's cornerstone workshop for over three decades. Read more to learn the benefits you will walk away with.
Peak Performance is also a very important workshop to put on your calendar if you want to qualify for and apply to the Super Trader Program.
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October 16-18
Tuesday-Thursday
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The How to Develop Winning Systems Workshop teaches you what you need to know to develop your own system. The material you will learn is not market or time-frame specific. So whether you trade stocks, futures, currencies, gold, etc., or
whether you place 50 trades per day or 50 trades per year, you will learn all of the components that work in any system. With this knowledge you can both modify existing systems to fit you or the market type better, or master your own system development.
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Presented by Gabriel Grammatidis
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October 20-22
Saturday-Monday
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Presented by Gabriel Grammatidis
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October 23-24
Tuesday-Wednesday
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The Theory: All You Need to Know About Forex
Gabriel will spend most of the workshop teaching his trend-following systems. The first half day is spent to go over the specifics of trading the Forex market and cover such topics as:
- Why trade Forex?
- What are the advantages and drawbacks of trading Forex versus other instruments?
- What are the main market characteristics, and who are the Forex market participants?
- What methods work best in the Forex market?
- All you need to know about Forex trading sessions and the currency pairs.
- How are Forex chart characteristics different than stocks or futures?
- What do you look for in a Forex broker? What do you avoid?
- Why Forex may actually be the best market for new traders to learn trading.
- What are the trading edges that work in Forex?
- The Method
Gabriel teaches three specific trading systems. All three are trend-based; you can see the price action patterns in the price charts. His systems can be traded in various timeframes and can be traded across a wide range of currency pairs. Attendees of Gabriel’s workshops enjoy swing trading the systems using primarily 5-min ,15-min, 60-min and daily candle charts. The trades tend to evolve over a timeframe of anywhere from several hours to a couple of days (or even weeks, in the case of strong trends).
Two additional days of live forex trading side-by-side with Gabriel is available as well for hands on trading experience.
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October 26-28
Friday-Sunday
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In this workshop, you begin to build your plan that includes specific, actionable steps you can begin as soon as you get back home. Here are some of the benefits of attending the workshop:
- Assess your beliefs about trading and about yourself so you can leverage your useful beliefs and eliminate the ones that are holding you back.
- Learn how to steer your entire system development process through your objectives.
- Find the key ingredient that most traders and investors are missing in their objectives that will make you thrive financially.
- Create a business plan with 3 trading strategies compatible with the big picture so your trading results are consistently profitable.
- Learn the 8 critical areas of contingency planning that most traders find out about the hard way (i.e., the expensive way). Developing plans for contingencies minimizes the risks to your trading business that could otherwise wipe you out.
- Discover how to leverage the strengths of your personality type and minimize your personal challenges to improve your trading.
- Learn how to cultivate the most important attitude required for successful trading.
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Presented by Ken Long
Monday includes instruction plus live trades
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November 10-11-12
Saturday-Monday
Note schedule change.
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Exciting New Work from Van Tharp
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November
15-17
Thursday-Saturday
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FREE Book!
We pay for the book, you just pay for shipping.
When you add the free book to an item already being shipped there is generally no extra shipping charge (of course, depending on your location).
Read Van’s Latest Book —
TRADING BEYOND THE MATRIX
The Red Pill for Traders and Investors
Eleven traders tell their stories about transforming
their trading results and lives, in this 400 plus page book.
Below is a brief video on how powerful this book is to traders.
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GDPR COMPLIANCE:
The European Union General Data Protection Regulation (GDPR) went into effect on May 25, 2018 and is designed to allow individuals to more effectively control their personal data. At The Van Tharp Institute (IITM, INC) , client information is private and confidential; we do not share, trade, or sell to anyone. We never have. You may ask us at any time to unsubscribe. We keep your information safe. If you’d like access to your information just ask. You receive this information from us because you opted into the Van Tharp newsletter either through direct registration or registration through our Tharp Trader Test.
102A Commonwealth Court | Cary | NC | 27511
Cary, NC Workshop Information
For a list of nearby hotels for our Cary, North Carolina locations,
click here.
Book your flight arriving to the Raleigh-Durham International Airport (RDU).
When traveling to a three-day course, it's best to arrive the evening before.
To help determine your arrival and departure times, see:
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800-385-4486 * 919-466-0043 * Fax 919-466-0408
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