Tag: Mark McRae

Momentum Trading with Mark McRae

Posted on by The INO.com Team

In my position I'm blessed to have access to dozens of top traders and investors, Adam being the BEST (in my humble opinion) and one guy I can always turn to is Mark McRae. Mark has taught us many times over the past year (see previous Mark McRae posts) and today I asked him back for your benefit! He's recently released a new trading report that's more of a mini-course then a one time report, so it'll be updated with ALL his latest findings. Please enjoy the article, ask Mark questions in the comments, and jump on his new trading report/mini-course!

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One of the most basic and widely used indicators is that of momentum.

Before I go on to tell you how we can use the momentum indicator to trade with, I want to explain the difference between a leading and a lagging indicator.

Nearly all indicators are lagging indicators. That is to say that the price must first move in order for the indicators to react. So you will inevitable get a situation e.g. where the market will rise shortly followed by the indicator. This is where the term lagging comes form in trading.

Continue reading "Momentum Trading with Mark McRae" →

10% Of Traders Go Bankrupt

Posted on by The INO.com Team

One of our most requested Guest Bloggers is Mark McRae, author of Traders Secret Code, and today I'd like you all to welcome him back! I've asked Mark to touch on a subject that most seasoned traders know, and rookie traders don't want to hear...most traders fail and a percentage of those failures turn into bankruptcy! Please read the article, comment to Mark or about the ideas, and check out Marks Traders Secret Code.

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I was thinking about an article I read some time ago that 90% of traders who ever trade lose their account and that 10% actually go bankrupt. If the first number doesn't scare you then the second definitely should.

Why is it then that there is such a large number of traders failing? It is not because they are stupid; in fact most traders have an above average IQ and are above average in most categories such as education and income. So why do they fail?

Lack of trading education! ( INO TV will help solve this problem!)

By education I don't just mean learning how RSI works or drawing lines on a chart. I mean thoroughly educating yourself in all aspects of your chosen profession.

Educating yourself on the correct psychological approach to the market! Educating yourself in the correct risk management techniques relative to your account size. Educating yourself in the correct entry and exit methods for the trading style that suits you.

This, my friend, is where I hope to be of some help. I don't have all the answers nor do I profess to be some kind of guru but I will do my best to point you in the right direction.

Continue reading "10% Of Traders Go Bankrupt" →

Parabolic Trading System

Posted on by The INO.com Team

Last week I invited Mark McRae from SureFireTradingChallenge.com, to come and break down support and resistance..and did he ever! Check it out HERE if you missed it. After the post went live we received a ton of feedback with regard to the post AND Mark's project, SureFireTradingChallenge.com, and all the feedback was positive!

So I wanted to give you the chance to learn from Mark again. This time I asked him to go into the Parabolic SAR and the trading system that goes with it. Adam is a HUGE fan of the SAR, as you know, and I think this post will help you see why Adam and Mark both use it. Don't forget to swing by SureFireTradingChallenge.com and give Mark your feedback there.

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This particular technique has been around a long time and is still widely used by many analysts because of its adaptability to most markets.

History

The parabolic time/price system was first introduced by J. Welles Wilder Jr. in his book 'New Concepts In Technical Trading Systems'. It is very often referred to as the SAR system meaning stop and reverse. This means when a stop is hit the system reverses so it is permanently in the market.

The actual point at which the system is reversed is calculated on a daily basis (or whatever time period you are looking at) and the stop moved to create a new reverse point. The SAR point never backs up.

In other words if you are long the market the SAR point will increase every day. The same is true for short positions. This is the time part of the system.

The other important part of the system is the speed at which the SAR point moves. If the market is moving fast the SAR point will move slowly at first and then increase as the market moves higher, this is the price part of the system. The rate at which the system increases is called the acceleration factor.

It is beyond this lesson to give the exact calculation of the acceleration factor and it is not really necessary to know the formula as most charting services now incorporate the system in their indicator range.

Example of what SAR looks like.

My Use Of SAR

So far so good. The system is simple to trade and is very visual so it's easy to know when you should be short or long. If the SAR point (dots) are above the market you should be short and if they are below the market you should be long.

Here's the problem! It doesn't perform very well in the markets I have tested it on nor do I know any traders who trade it as a stand-alone system. Maybe in the markets of the past it would have worked well but not so now. The problem is there is just too much whipsaw.

Now you may be asking if there is too much whipsaw why mention the system at all? Good question and here are two reasons I find a good use for the system.

* The system can be very effective if a filter of some sort is used. In the example below of the eur/jpy I have used a MACD as a filter. If we were long the market then only long signals would be taken and the short signals ignored as long as the filter (MACD in this case) remains long. If a short signal is triggered but the filter still remains long you could close the position and wait for the next long signal. The reverse is true for short positions. You could use any oscillator you feel comfortable with or even trend lines.

* Sometimes it can be very difficult to find a good place to put your stop. With the SAR system you will always know exactly where to place a stop and it will increase everyday to help lock in profits. It also gives the move enough room for market corrections without taking you out of the position. I like this particular method if I have a long-term position which; I only want to check on once a day. I can quickly check how the position is and then move my stop accordingly.

I am sure you can find many other uses for the SAR system and its well worth playing around with the parameters to see if it can be added to your trading arsenal.

Good Trading

Mark McRae

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Be sure and visit SureFireTradingChallenge.com to learn more about Mark and the contest!

Exact Swing Points -Support And Resistance

Posted on by The INO.com Team

Today I'd like to welcome back Mark McRae from SureFireTradingChallenge.com. I personally have known Mark for over three years, with Adam knowing Mark well over 5, and Adam and I both agree that Mark is truly an innovator and one of the hardest working traders we know. His latest project, SureFireTradingChallenge.com, kept him holed up with charts and traders from all around the world to find some of the best methods in the world for trading. Check it out here.

Now his blog post today is more applicable now then it ever has been...support and resistance! Let me let Mark teach you a bit more:

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Where exactly are the support and resistance points?
Where exactly are the swing points on a chart?
This is a particularly important lesson!
Just about every system or method of trading at least takes note of where the key support and resistance levels are.

I have found a double use for my method of identifying these points - They are also Swing Points!

You may think you know where Support and Resistance is, but do you really?

How do you know where support and resistance really is?

The problem with Support and Resistance (S&R) is that it is not a definite number. It is not an exact point on the chart at which price will, without any hesitation stop.

In fact S&R is actually an area - it is not an exact number as we would all like to think.

The dilemma of course, is that in order to do our calculations we need an exact point. You can't enter $50.10/20 area when using fibonacci or working out your stops and limits. You need an exact number even though S&R is not an exact number.

Try telling your broker that you want a stop loss at somewhere between 50 and 55 and watch him burst a blood vessel.

This is what I want to concentrate on in this lesson. This is a technique I have found to be particularly good at not only identifying strong S&R points but also swing points.

In order to find S&R we must first identify market swing points. There are various ways of doing this but I am going to use the one I have used for years.

For the purpose of swing points we are not interested in the open or close of the bars only the high and low.

Take any bar and think of that bar as the start bar (S). If there are two consecutive higher highs than the bar you marked (S) then that is a swing up e.g. bar (1) has a higher high than bar (S) and bar (2) has a higher high than bar (1). If there are not two higher highs than bar (S) then you move to the next bar and see if there are two consecutive higher highs.

This can be particularly useful if the market is trading sideways and you are trying to determine the breakout point. There may be many peaks and valleys but for me there is only one real point - that is the most recent swing up or swing down.

Look at the next diagram

You can see that although there were a few highs and lows that you could have taken as support or resistance, but it wasn't until bar (M) that a definite swing point had been identified and you could mark bar (K) with an (S).

Swing Down

To work out the swing down point - take any bar on a chart and think of that bar as your start point - bar (S). If the next two consecutive bars make lower lows than the previous bar then that is a swing down e.g. bar (1) has a lower low than bar (S) and bar (2) has a lower low then bar (1). If there are not two consecutive lower lows then it is not a swing point and you move to the next bar.

Just as in the example above you can see exactly the same thing with the swing down. Even though price made a few highs and lows it wasn't until bar (M) that you could mark bar (K) as the (S) point.

Support And Resistance

Only once we have clearly marker swing points can we go on to identify our support and resistance points.

As you can see from the chart I have marked all the swing up points and swing down points. When we are in a down trend then the swing down points act as resistance and when we are in an up trend the swing up points
act as support.

Marking the support and resistance points using this method of first identifying the swing points will give you definite points on a chart from which to calculate your stops, limits and projections.

Good Trading

Best Regards
Mark McRae

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Please take some time to visit Mark and see his new project: SureFireTradingChallenge.com.

Forex 1-2-3 Method

Posted on by The INO.com Team
Let's face it... Forex is a market that has HUGE potential, HUGE liquidity, and little good information out there on how to trade it with success. That's why I've asked Mark McRae from Forex Avenger to come and teach us a bit about a 1-2-3 Method that his partner David Curran from Forex Avenger has had major success with. Please take time, read the blog entry, and visit Forex Avenger to see the success they have experienced trading forex!

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This particular technique has been around for a long time and I first saw it used in the futures market. Since then I have seen traders using it on just about every market and when applied well, can give amazingly accurate entry levels.

Lets first start with the basic concept. During the course of any trend, either up or down, the market will form little peaks and valleys. see the chart below:

The problem is, how do you know when to enter the market and where do you get out. This is where the 1-2-3 method comes in. First let's look at a typical 1-2-3 set up:


Nice and simple, but it still doesn't tell us if we should take the trade. For this we add an indictor. You could use just about any indicator with this method, but my preferred indicator is MACD with the standard settings of 12,26,9. With the indicator added, it now looks like this:

Now here is where it gets interesting. The rules for the trade are as follows:

Uptrend

  1. This works best as a reversal pattern, so identify a previous downtrend.
  2. Wait for the MACD to signal a buy and for the 1-2-3 set up tobe in place.
  3. As the market pulls back to point 3, the MACD should remain inbuy mode or just slightly dip into sell.
  4. Place a buy entry order 1 pip above point 2
  5. Place a stop loss order 1 pip below point 3
  6. Measure the distance between point 2 and 3 and project thatforward for your exit.
  7. Point 3, should not be lower than point 1

The reverse is true for short trades. As the market progresses you can trail your stop to 1 pip below the most recent low (Valley in an uptrend). You can also use a break in a trend line as an exit.

Some examples:



There are a lot of variations on the 1-2-3 setup but the basic concept is always the same. Try experimenting with it on your favorite time frame.

Good Trading

Best Regards
Mark McRae Forex Avenger

Bio - Mark McRae is a fulltime professional trader, author and coach. He has coached some of the top names in Forex trading. David Curran, Forex's latest rising star attributes his success in the Forex market to the teachings of Mark McRae. To read more about David, go HERE