Tuesday, 15 February 2011

Learning from History

The Spanish-American George Santayana is credited with the quote:  “Those who do not learn from history are doomed to repeat it."

In trading, we see history repeat itself. We see the same patterns being repeated over and over. One such patter is the Euro between about 6.30am and 7.30am New York time. Looking at a 3 tick range bar I see the same trade over and over. The trade can be both short, or its mirror image - long. The last 3 or 4 days you could almost put the trade on in advance and go get coffee and make money. It doesn't mean that it will happen every day but the fact that a pattern is there makes it easier to make money.

There are patterns like this all over the place. Noticing them can add hugely to my results at the end of each year. Ching! Ching!


  1. Hi EL,

    I have a question concerning the first pullback. If the market changes direction and takes a new direction, would you consider the first pullback in that new direction as the most significant one?

    For example, if the market was trending down and then reversals into an up-trend. Would you consider the first pullback in this up-trend as the most significant pullback and the most reliable one?

    Thanks a lot!

  2. Depends on the context. I know that's not the answer you wanted but there is no point in getting whipped in a choppy market. Its a matter of trend change identification. We spend a lot of time on that in training. Its beyond what i can do in a blog. Very important as if you can identify the turn, you can get a long ride. See the pix of my Euro trades.