How-to: A check list for the Double Doji set-up

A double doji set-up is very simple and easy to understand, however its simplicity may well lead to some trivial error.
This is the reason why I want to offer the readers with my own check list that really helps me to properly qualify the set-up and then acting consequently.

A quick recap first

• A doji bar is basically a bar with the same opening and closing price (try to be flexible, opening and close must be reasonably near). This bar are universally interpreted as a sign of tough battle between bears and bulls, actually with no winners, since, at the end of the bar, no one of them was able to drive the price either lower of higher than the opening of the bar itself.
• The Double Doji Set-Up applies to trend continuation, i.e. when a clear trend is in place the occurrence of two (or more) consecutive dojis bars (candles) signifies tension between the bulls and the bears. This tension accumulates and finally (should) explode in a restoration of the previous trend.
• The basic and easy concept behind this trade is that, once the trend has taken a good breath, it's ready to start his path again. The two doji bars are the signal that the the countertrend momentum is vanishing so, as soon as the lower low (higher high) of the two dojis is taken out, a trader can enter a shor (long) trade with the odds in his favor. 
  For further details on the set-up, have a look to my previous post about double doijs. You might also want to spend some time studying the excellent book from Bob Volman I personally advocate as a good reference for intraday scalping.

My check list for a double doji entry

• Have I identified a clear mainstream trend? How and why I do qualify this as a "trend"?
• Are the bars forming the trend taller the the bars forming the retracement?
• Is there a significant retracement of the main trend? Is the counter trend movement retracing at least 40% of the previous trend?
• What is the shape of the retracement? Is it diagonal?
• Is the retracement touching or piercing the exponential moving average (EMA)? Is the EMA showing any ability to "slow down" or stop the retracement
• If I enter in the direction of the former trend, is there enough free path for the price to move? 

I hope you will find this quick list useful. Of course I am happy to answer your questions

Best people and place for trading (Part Two)

Dear Fellow Traders,

happy Monday and happy new trading week to everybody.
Let's continue with my suggestions about trading websites and author I can personally endorse because of my practical experience.

As stated also in the previous, similar post, this list is fully personal and might be damned wrong, just like as a movie your best friend suggested to you and you found to be kind of crappy, boring, presumptuous, etc. etc. etc.

Still talking about options, I would suggest also two authors that, in my humble opinion, stood the test of time and remain a must read for serious students.

First one is Lawrence McMillan, whose books on options, especially Options as a Strategic Investment remain paramount for many, many floor traders.
McMillan is very knowledgeable and competent in my opinion, however I don't like very much the sales pitches he continues to bombard you with, showcasing any sort of products, services, seminars, etc. A bit too much for me, even if not even comparable to other sellers who really have one or even more for-your-eyes-only offer each and every day God sends to our Earth.
Just next, Sheldon Natenberg and his classic Option Volatility and Pricing. He authored also another book more recently, but my suggestion is to stay away from that, since it is far inferior to his first work.

For the rest, if you start to get interested in options, you will easily see how many gurus will pop-up in your mail box. The simple rule of thumb is: 80% of them, maybe 90%, are a scam or slightly less, so the more easy riches they promise, the farther you (and your credit cards) should stay from them.

Let's move now to websites. Here the task is almost impossible, so instead of a list that will necessarily be incomplete, I chose a different approach: If I were forced to use just one trading website, which one I will keep in my "favorite"?
Answer is pretty easy: Big Mike is my undisputed choice, with the only limit of the site being the tremendous number of information you will have to deal with. My suggestion is to go for the Elite membership that, for a paltry amount of money, will give you access forever to webinars and all the contents of the site.

That's all for today folks. Stay tuned for the double doji set-up description.

Two dojis a day keep the doctor away

Dear Readers,
indeed I should probably say dear reader, having seen the number of followers, but I don't feel worried. I always advocate starting small to grow fast *blink*

Today I want to talk about an easy trade when the market is trending: the continuation scalp after a correction.
Let's focus on a few key words:

1. First and foremost: Continuation. I trade in the direction of the trend in place
2. Correction. A correction is a short-lived movement against the direction of the main trend. A correction may reverse a trend but, believe me, most of the case, correction are indeed good chances to enter the market in the direction of the previous trend

Look at the picture. Do you see a trend? Not for sure in the first half of the graph! Yes, indeed in the second half. Is there any chance to project the explosion of green candles. Not for me, I am not that good, but I can ride a trend for a while.
Have a look at bars 1 and 2. After the initial "explosion" with big green bars, the trend looks like taking a breath, with two doji candles, i.e. small candles where the opening is at the same level of the close. Our two doji friends are not of the out most quality (a specific topic on the dojis setup will follow in the next days, for the time being, take my words for granted). When the market broke up the top of the 1 and 2, I entered with a market order and took my chunk of profits in this bull leg.
I am sure some of you are now asking: "Why you did not the long trade by the same token with candles 5 and 6". 
Good question, complex answer.
The basic reason is that my feeling was the market was topping, because of three different attempts he made to break previous top. 
As you see, interpretation of the market is key and there are no bullet-proof rules and guidelines (if there were, we all were Warren Buffet). In doubt, I prefer to refrain my greed and force myself to out of the market.

In this particular circumstance, I was right and indeed the market topped-out and then fell for a bit (and I took another small profit on the downpath, but this is not a double doji setup)
Enough for now. Stay tuned for more on this setup in the next day or even before.

DISCLAIMER 

***Please Read Carefully***

This site is for educational and discussion purpose only
Trading is a risky and hopeless business. Only a tiny minority of traders are successful and the chance to be part of that tiny minority is smaller than the Higgs Boson. Future trading is even more dangerous because of the derivatives leverage (if you are now switching to Wikipedia, chances are this blog is not suggested for you).
Trading, therefore, should be not be approached at all or, if you are so crazy to still be willing to deal with it, you must look for appropriate guidance and tutorship from qualified professionals in your own Country.
The author and all the future contributors make no claim they are those kinds of professional, neither financial experts, nor trading advisors or consultants.
Furthermore, they are probably idiot, surely incompetent and unreliable. In short: they are complete morons, so that reading their crazy posts is a total waste of time.
Even though, from time to time, you might find a good trade on this blog, this is due either to the law of large numbers, unfair luck, damned randomness and indeed current results are not at all a guarantee for future performance.
At the end of the day, every reader is responsible for his own financial decisions and especially to ascertain whether or not the particular types of trading described here are suitable with his lifestyle, his Country's laws and regulations. If they are not, please cease immediately to read this blog.

Best places and people in trading (Part one)

Trading is a domain where charlatans and self-proclaimed gurus truly flourish without any concrete demonstration of their value.
It is still astonishing to see how almost anybody on the Internet can declare "80%+ successful trades", "bullet-proof systems" or similar type of scam and still getting a decent number of followers, ready to pay also big bucks in their quest of the latest quick-riches scheme.
Indeed, all this folks clearly understood that is way easier to get people's money selling trading craps than competing in the markets and their task is made much easier courtesy of traders' first enemies: greed and laziness.

Greed is easily understood: people (we :-)) want easy money and normally do not approach trading with passion, but just as an easy path to riches.
Consequence of that? Laziness. They want their soup cooked and digested, as we say in Italy, so they look for that easy-recipe-in-5-or-less-steps that will turn them overnite from mediocre employees to envied, successful traders and this means easy money for dream sellers.

We all know traders, like Rome, are not built in a day. Somebody will explain me one day why it is normal to think that years and years are required to be a good doctor, while whatever idiot in a week can be transformed in a great trader, competing with the brightest mind in the Earth.

Because of the incredibly high offer of trading-related education, it took sometime for me to navigate the mare magnum of trading expertise, tutors and mentors over the Net, but, at least as of today, I would suggest just a very, very limited set of people from whom you might get some effective tools or education, paying a reasonable tuition fee.

Scalping and Price Action

Al Brooks is my favorite author in this domain. He manages a website here and authored a comprehensive, yet very complex, set of book, a sort of opera omnia about price action.

He recently launched also a price action course, but I cannot endorse it yet, since I am still studying the modules.

Second but more focused on ForEx, is a nice little gem I found on Amazon: a book from Bob Volman, very much suggested. Here a short review I've written about the book.

Option Trading

Yes, options are my passion and one of the domains that truly capture my heart and soul.

First and foremost, if you like options, Charles Cottle, the Ri$kDoctor, is the number one. As I wrote in my revision of his book (a MUST for any option trader), when you sail the perilous sea of options, you only understand their nuances and complexities when you shore to Doctors' work, though if it will take hard work to get into it.

I also had a good learning experience with the flying pig of Random Walk. The guys here always gave me the impression of genuine commitment to teaching and not to steal your hard-earned bucks.

Finally, if you want a monster yet affordable tool to evaluate options and options position, Hoadley Excel(tm) Add-in is a fantastic piece of work from Peter Hoadley, which effectively couples sophisticated option theory and practical trading tools.

Let's talk tomorrow about websites and ... another topic, actually the very first one I touched in my earliest day as a wanna-be trader.

Let's talk tomorrow, good night for now.

Let's start

I fell in love with options, futures and trading in 1987, a few days before the infamous Wall Street 25% crash, that October.

If there is one person I have to thank for my passion, it is Prof. Emilio Barone, a very unique person and a truly dedicated teacher, the one who, among tons of other contributions, translated the monumental work of J.C. Hull in plain Italian. 
Thank you Prof!

This blog will be an open diary about my approach and what I have learnt in 5 years of study about trading, scalping indeed.
It is a challenge to myself, to my ego and the lessons I've learnt in those years; am I a guru, an expert, a man who can turn a grand into a million? Not indeed. I am and always will be a learner in an endless fight with his ego who likes to win, as everybody, and is keen to obnubilate his defeats.

However, I am confident that I can also be a dedicated teacher with a genuine passion for teaching and sharing my knowledge, provided that somebody finds it of any value; I am a honest person, open to criticisms and with really no interests in catching day-dreamers, looking for the latest trading "Holy Graal" and planning for the 100K BMW they are going to buy with their trading proceeds.

My goal is to create interest and discussions about trading the free markets, the very ultimate bulwark of capitalism!
So, please, dear readers feel free to join my blog, read, criticize, insult my posts, but always bear in mind the following:

1. This site is for educational and discussion purpose only
2. Trading is a risky and hopeless business. Only a tiny minority of traders are successful and the chance to be part of that tiny minority is smaller than the Higgs Boson. Future trading is even more dangerous because of the derivatives leverage (if you are now switching to Wikipedia, chances are this blog is not suggested for you).
3. Trading, therefore, should be not be approached at all or, if you are so crazy to still be willing to deal with it, you must look for appropriate guidance and tutorship from qualified professionals in your own Country.
4. The author and all the future contributors make no claim they are those kinds of professional, neither financial experts, nor trading advisors or consultants.
5. Furthermore, they are probably idiot, surely incompetent and unreliable. In short: they are complete morons, so that reading their crazy posts is a total waste of time.
6. Even though, from time to time, you might find a good trade on this blog, this is due either to the law of large numbers, unfair luck, damned randomness and indeed current results are not at all a guarantee for future performance.
7. At the end of the day, every reader is responsible for his own financial decisions and especially to ascertain whether or not the particular types of trading described here are suitable with his lifestyle, his Country's laws and regulations. If they are not, please cease immediately to read this blog.

Having said that, I will humbly start my travel into the desolate lands of trading, wishing to find a good bunch of virtual friends, my personal "Salvation Army" to nurture and grow my long time passion.

Welcome aboard to whoever will follow me