WARNING: This text is a word-for-word transcription of Mac’s daily forex trading video. That means the writing will reflect the way he speaks, if anything seems out of place, please refer to the forex video on the page.
All right, everyone, it’s take two. I was right in the middle of my recording, and it died. So what I was talking about the comments that I made on Twitter. And on Twitter, I was talking about the market over here. This is the hourly chart, zoomed way in. But more specifically, when I send something out on Twitter, I’m talking about resistance or I’m talking about support, oftentimes I’ll get a question of, “Hey, Mac, what are we supposed to do with that?” With the support or resistance comments.
Well, oftentimes, nothing. In fact when I’m looking to do something, I’ll typically be very specific. Like I’m looking for a particular pattern. At this stage of the game, I really am just waiting to see what’s going to happen.
Now I do have short positions in the equities market, so I’m short the NASDAQ 100 and I’ve gone long on some volatility futures. In other words, I’m expecting the equities market to go down. But in the process of waiting for the market to go down, what I need to do is observe what’s going on with price.
So let’s talk about a couple of things. First of all, the theme of my videos for the last six or seven months has been consistency, right? We all want to be consistently profitable. In many cases we’re trying to replace income from a job, which means we work for a couple of weeks, we get a paycheck. We work for a month, we get a paycheck.
So what we have to do then, is we have to think about trading from the standpoint of being consistent. What does that mean? What does it mean to be consistent?
First of all, what it means to be consistent is that over time you will make money. Does that mean you’re going to win every single trade? No. That really is never going to happen. I don’t know any trader that was 100% for very long. There are some guys who put together strings of winning trades, of course, but you can’t count on that day in and day out for the rest of your life.
What we can count on, though, is techniques that will help us to over time make money. So at the end of the month, the end of the quarter, the end of the year, we wind up with profits.
The first thing I need to is look at what’s going on inside of the circle. What’s the daily doing. Well, the daily is going sideways, so it means we need to focus on counter‑trend type of trades.
If I’m looking then on the hourly chart and I’m seeing the market come in resistance, that means I’m looking for an opportunity to capitalize on the market going down. There are a couple of ways of doing that. I talk about them on disc two, three and five.
But basically what I do then is I start looking for a pattern. Whether I see a double‑top, a flag or a pennant, I’m looking for a pattern that tells me that there’s a struggle in the marketplace.
In other words, we have one side which says, “No, no, no, the market needs to go down, ” and then we have another side which says, “No, no, no, the market needs to go up.” Similar to what happened right here. The pound pushed into resistance right here; later on in the day it had come down, pushed right back up into resistance.
And then the market formed what I call a “compression pattern.” You have some people saying, “No, no, no, the market needs to go down, ” other people saying, “No, no, no, the market needs to go up.”
Ultimately, the people saying the market needed to go down won, which means all of these people are losing, and so they have to get out of the market.
Now if I’m really conservative, I can wait for the pattern to appear, wait for the pattern to break, and then wait for this ‑ which, remember, is the little dipper ‑‑ and then get on the market.
So what am I waiting for over here now that I’ve identified possible resistance? Well, I’m waiting for possibly a pattern like that, which would be more of a wedge. Possibly a pattern like this, which would be a flag. Or maybe something that looks like this, which is more of a pennant.
In every case, though, I’m looking for the market to form something that tells me that you have people lining up one side or the other. Patterns like this, patterns even like this, tell me nothing except the move has already started. And I run the risk of trying to jump on a bandwagon that’s tied to the losing horse. So we’ve got to be careful about that.
So coming into tomorrow’s session, not a lot going on. We need to see if this resistance is going to hold or if it’s going to break. Looking at the daily, we’re starting to see the market accelerate to the upside. We just need to keep our eye on that and focus on watching and waiting for a particular pattern to form.
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