Day Trading Blog

Welcome to Day Trade The World™ day trading blog. Please click on an article to read it.

Blog del 6 Novembre

Simple Practical Strategies to be a Happy and Successful Trader

Simple Practical Strategies to be a Happy and Successful Trader – Introduction

Why do you trade? To make money, right? Yes. Me too. But, the bigger reason why we trade is to be happy. We want to afford everything. We want to take our kids to the best schools, afford the best medical care, live in a good neighborhood, and drive the best cars.

However, the truth is, most traders are not happy. They don’t live a happy life, despite making all the money. In fact, a report by The Atlantic found that while most in Wall Street were paid well, most of them lived miserable lives, full of stress and emotional torture.

In this article, I explore this topic and how you can be a happy and successful trader.

  • Hire the best traders for your office

If you run a trading floor, the key to achieve happiness is to hire the best traders. They should be people who are experienced and who share your desire for the floor. Doing otherwise will be the worst mistake you will do. The worst mistake because, these people don’t share your vision. They are not inclined to think the same way you do. Therefore, I recommend that you take time to hire traders who are not only good in what they do, but those who share your vision. In this, I recommend that you do the hardest thing any manager can do: fire any trader who shows no interest in achieving your goal.

  • Have a well-defined trading strategy

To achieve happiness, I recommend that you have a trading strategy that is well-defined. This should be a strategy that you have created, tested, and made sure it works. By having a good strategy, chances of not being happy trading will be limited. This is because a good strategy allows you to trade and make money and when a trade fails to work the loss you take will not affect your trading.

  • Expect the worst

A rule that has made me live a happy trading life is one on always expecting the worst but hoping for the best. In every trade I initiate, I always hope that it will work out fine. I always hope that I will profit. But truth is, this is not always right. Even the ‘best’ traders always make mistake. I can mention many examples but let me mention two. Bill Ackman, one of the leading hedge fund managers recently closed a stake in Valeant that he lost $4.4 billion. David Einhorn has placed a short on Amazon. Today, he has lost millions. Therefore, always, expect the worst and hope for the best.

  • Take your time off

Another strategy is to achieve happiness is to avoid the pressure. Trust me, the financial market can be challenging. It can also present significant pressure in your life. To ease this, I recommend that you take your time off. Mostly, I usually recommend that you do this during the weekend when the market is usually closed. You can take this time to spend time with your family, hang out with friends, or travel the world.

  • Always learn from the past

To achieve happiness, you must always be open to learn from your past mistakes or successes. As a trader – or in any profession – the rule is that you should always learn from your past mistakes. If you don’t do this, chances are that you will repeat the same mistakes. And of course, you can’t repeat the same mistakes and expect a different outcome.

Therefore, I highly recommend that you follow these simple and practical strategies. Doing so will help you achieve the financial and emotional success you yearn for.

Simple Practical Strategies to be a Happy and Successful Trader – Useful Links:

  • Another interesting reading on TheBalance;
  • For further information, please, go to FXCM;
  • Visit Forbes to discover more information on the matter.

 

Blog del 6 Novembre COMMUNICATION

Nasdaq Canada CXC/CX2 Entitlement Changes

In response to a number of questions we received about the Nasdaq Canada entitlements fees, we would like to clarify some aspects of the change.

For this month, if you wish to switch to Full depth, you can do so until November 3 without the risk of getting double-charged. If you disable the CXC/CX2 Top of book entitlements and enable the Full depth entitlements before that day, at the end of the month you will only be charged for the Full depth entitlement.

After November 3, if you make the change, you run the risk of getting charged twice. If you do so by mistake, you can create a mojo addressed to the Finance Team asking for only the Full depth entitlement to be charged.

As a reminder, the new entitlements and their prices are as below:

New Packages/Prices as of November 1:
CXC TSX Listed Top of book –> 16.95 CAD (13% HST included)
CXC Venture Listed Top of book –> 3.955 CAD (13% HST included)
CXC TSX Listed Full book –> 40.68 CAD (13% HST included)
CXC Venture Listed Full book –> 9.04 CAD (13% HST included)

CX2 TSX Listed Top of book –> 5.65 CAD (13% HST included)
CX2 Venture Listed Top of book –> 3.39 CAD (13% HST included)
CX2 TSX Listed Full book –> 15.82 CAD (13% HST included)
CX2 Venture Listed Full book –> 6.78 CAD (13% HST included)

If you have any questions or comments, please create a mojo.
Blog del 30 ottobre

New Release: DBOT Gateway

We are pleased to announce that effective Friday, November 3, 2017, Day Trade The World™ will be releasing the new DBOT gateway for the OTC market.

DBOT is a fully automated, auto-execution Alternative Trading System (ATS) that provides an electronic platform for trading Over-the-Counter (OTC) equity securities. The below destinations are available for this gateway.

  • DBOT ATS – Direct access to DBOT, no routing away.
  • DBOT SOR – Ping electronic MM’s prior to routing to DBOT as book only, ping Global OTC, and then post at DBOT
  • Post GlobalOTC – Direct access to GlobalOTC (ARCE), no routing away
  • GlobalOTC SOR –  Ping electronic MM’s prior to routing to Global OTC as book only, ping DBOT, and then post at Global OTC
  • HighTouch MM – Ping High Touch OTC MM (non-electronic) and wait for execution
  • OTC SOR1 – Ping electronic MM’s prior to routing to DBOT and Global OTC as book only, and then spray the balance out to DBOT and Global OTC
  • OTC SOR2 – Ping electronic MM’s prior to routing to OTC Markets as book only, ping Global OTC and DBOT, then post at OTC Market
This gateway charges a flat fee of 0.0004 per share per trade.For more information about this gateway, please refer to their official site and our Order Type Reference Guide.

If you have any questions or comments, please create a mojo.

How to Trade Silver and Silver Stocks

How to Trade Silver and Silver Stocks – Introduction

This year has not been kind to silver and silver stocks. While silver has gone up by 6.0%, the iShares MSCI Global Silver Miners ETF (SLVP) has gone up by just 3.73%. On the other hand, gold and the VanEck Vectors Gold Miners ETF (GDX) have gone up by 11.81% and 10.52% respectively.

Exhibit 1: Silver & Silver Mining ETF VS Gold and Gold Miners ETF

This contrasts with what happened in 2016 where silver and silver stocks outperformed gold and gold stocks as shown below.

Exhibit 2: 2016 Silver & Silver ETF VS Gold & Gold ETFs

The weakness in silver compared to gold is attributed to several things. First, this year, geopolitical tensions such as those relating to North Korea have increased. In such situations, investors tend to allocate substantial resources to gold. Second, the global equities market has performed really well this year (exhibit 3). This has made investors move their money to stocks. In the United States alone, stocks have gained by more than $5 trillion.

Third, cryptocurrencies have dominated the market this year with most people comparing bitcoin and similar cryptocurrencies as the next gold. This year alone, bitcoin has gained in value by more than $60 billion. I believe that some gold and silver investors have moved some of their funds to the better-performing cryptocurrencies.

There are claims of market manipulation whereby, the volume of paper silver is much more than the physical volume, when compared to gold. Caiman Valores has done a good analysis on this which you can find here. As shown in exhibit 4, traditionally, gold and silver have had a tighter correlation but in recent years, the gap between the two has widened.

Exhibit 4: Gold and Silver Chart

 

Be Fearful When Others Are Greedy and Greedy When Others Are Fearful. Warren Buffet

One of the most common indicators of the valuation of silver is the gold-to-silver ratio which reflects the amount of silver that can buy one ounce of gold. Today, silver is trading at $17.4 an ounce while gold is trading at $1277. This reflects a gold-to-silver ratio of about 73.3. Historically, the ratio has averaged about 15 to 1 in the long term and 40 to 1 in the near-term.

As exhibit 4 shows, the ratio is currently at similar levelsas in 2008 before the crash.

Exhibit 5: 30-Year Gold to Silver Ratio

In the long or mid-term, I believe that this ratio can narrow down as more demand for physical silver increase and supply decreases as projected by the Silver Institute.

Consider the words of Paul Mladjenovic in a recent article by Barron’s:

Silver is definitely undervalued compared to gold and as a stand-alone investment. I consider it likely to be the most undervalued asset in the general investment markets. Silver isn’t keeping pace with gold because the market perception is that gold is a safer play, while the market perceives silver’s role as exposed to economic weakness. But as inflation heats up, more of the public will realize silver’s second role as a store of value and inflation hedge.

The second reason for being bullish on silver is the likelihood of a market correction in the near future. While no one can predict accurately whether such correction will happen, historical indications show that the market could correct. Historically, after the end of a recession, it takes less than ten years to see a major market correction. Today, we are about eight years after the 2008/9 recession. Consider the chart below.

Exhibit 6: Dates of U.S. recessions

 

 

Couple this with two facts. First, using any measure, including the Shiller PE ratio, the stock market is currently overvalued. Even Goldman Sachs admits this. Second, consider that historically, recessions tend to happen when there is a republican in the Whitehouse. A study by CFRA, and reported by USA Today, showed that every republican president since Teddy Roosevelt has endured a recession. Will Trump be an exception?

Historically, during recessions, silver prices tend to go down and then see a sharp increase as investors move their funds to safe havens. This is shown in exhibit 7 below.

Exhibit 7: Silver Chart. Notice how it reacts during recessions.

The third reason to be optimistic about silver and silver stocks is the industrial one. Unlike gold, silver has many industrial uses. I believe that the price of silver tends to be supported by the industrial requirements in times of a strong economy. Exhibit 8 below shows the supply and demand of silver in the past ten years.

Exhibit 8: Silver supply and demand

From this chart, there is evidence that the global supply of silver is declining. In a January article, Henry To, a Forbes contributor noted that:

Except for secondary supply from copper miners (which makes up 22% of annual silver mine supply), silver production is expected to decrease at primary silver producers (30% of annual silver mine supply), gold producers (13%), and lead/zinc producers (34%). This is due to the ongoing move towards cost rationalizations and balance sheet deleveraging in lieu of CAPEX growth and acquisitions in the silver, gold, and lead/zinc mining industries.

As the supply reduces, the demand for silver and silver products is likely to go up. For example, in the energy sector, it is estimated that in the near future, most energy will come from renewable sources like wind and solar. Silver is used in the manufacture of photovoltaic cells which could lead to more demand for silver. The same can be said about the current wave in electric vehicles where silver is used to enhance the performance of the battery.

Another way to predict the increasing demand for silver is a hypothetical one. Trump and his administration have proposed a tax plan that aims to cut taxes across the board. If the tax plan passes, and as wages continue to grow, albeit slowly, chances are that people will increase their discretionary spending. This could lead to an increase in demand of silver-made products considering that the United States is one of the biggest consumers of silver products.

While the above factors seem to be positive to silver, a key downside risk is in monetary policy. The Fed has signaled that it will continue increasing interest rates, albeit gradually. A high interest rate environment is usually not good for precious metals. This is because they don’t pay an interest rate.

The following exhibit shows that since the time the Fed introduced near-zero interest rates, silver has gained about 65% while the dollar index has gained by about 12%.

Exhibit 9: Silver Vs Dollar Index Vs Interest Rates

The person who will be appointed the new Fed chair could influence the interest rate regime which could affect the price of silver. However, Trump has said that he loves low interest rates meaning there are no chances he will name a very hawkish chair.

If all the bullish factors I mentioned work out and if interest rates stay this low, chances are that silver and silver stocks will soar. As the final exhibit shows, there is a strong correlation between the silver prices and silver stocks.

Exhibit 10: Silver and Silver Stocks chart

Think about this

A week ago, Barron’s published an interest article about gold. In the article, they quoted billionaire Thomas Kaplan who predicted that gold could go up to $5000 per ounce. When Kaplan talks about precious metals, people listen. This is because for more than 30 years, he has made a fortune trading precious metals and crude oil.

In the article, he said:

Investors will make money on gold even if the world is doing well, but “won’t get carried out on a stretcher if any of the black swans show themselves

Then, if his projections turn out to be true, how will silver – gold’s poorer cousin – perform?

How to Trade Silver and Silver Stocks – Useful Tips:

  • Discover more on Kitco;
  • To find out more, please, go to HowWeTrade;
  • Another interesting reading on IG.
Blog del 30 Ottobre

How to Trade the Dollar Weakness

How to Trade the Dollar Weakness – Introduction

The United States dollar has had a difficult time this year. The dollar index which tracks the dollar against major currencies has lost about 9% of its value. It has however gained some points in the past few months with hopes of a new federal reserve chair and hopes for a tax reform. Even if a new hawkish chair is named and a tax reform proposal is passed, hopes of a bull run in the dollar might be slim.

The dollar has weakened because of several factors. First, the economies of other countries that constitute the dollar index have strengthened. The Euro, which has been a drag for years has performed well with the improving European economies. The only drag has been the British pound which continues to suffer from the uncertainties of the Brexit. Secondly, the new American president favors a weaker dollar as a way of helping bridge America’s trade deficit which continues to increase.

The financial market is always cyclical. All assets undergo the process of weakness and strength all the time. For example, the energy sector which saw big declines last year are on a path to recovery. Equally, the Euro which has struggled in the past three years is doing well. However, analysts and traders should understand that for the dollar, this time is different, and it might not recover fully as it has always does.

First, with the new American protectionist agenda, the world realizes that it cannot depend on America fully. In fact, this year, America’s view from overseas has plummeted. This opening has led to a new world order where China is now very powerful. In fact, last month’s edition of Economist named the Chinese president the most powerful person on earth.

China is now slowly taking the place America used to have. In this line, China has asked its oil suppliers like Russia and Saudi Arabia to ditch the dollar and use the Yuan to trade oil. If this plays out and is replicated in other oil countries, chances are that the American dollar will be under pressure.

Further, in the short term, the demand for oil is expected to rise but in the long term, things will change as countries adopt to the electric vehicle revolution. In the next few years, it is estimated that electric car sales will overtake combustion-based cars. China, European Union, and other countries like Norway have resolved to end selling of combustion cars.

Therefore, as demand for oil reduces, and as countries move from the dollar to the Yuan, the demand of the dollar could plummet.

A weaker dollar is not necessarily bad.  In fact, a weak dollar opens trading opportunities to many American stocks.

If you have read or listened to American companies conference calls, you know that currency fluctuation is one of the major excuses CEOs make for underperformance. This is especially often to the multinationals like P&G which make most of their money from overseas. They blame currency when the dollar is strong.

A weak dollar helps companies like these multinationals because it helps them sell their products at affordable prices. Companies that comes to mind in this are companies like Boeing, Proctor & Gamble, Lockheed Martin, and General Electric among others.

Another way to trade a weak dollar is to trade its correlation with other assets. For example, I have written several times about the inverse relationship that exists between gold and the dollar. Often, gold strengthens when the dollar weakens. This year, while the dollar has lost about 9%, gold has gained by 11% and I believe it could be more if not for the cryptocurrencies. Therefore, if you are a long-only trader, you can comfortably invest in assets like gold and silver that do well when the dollar is weak.

How to Trade the Dollar Weakness – Useful Links:

  • For further information, please go to Investopedia;
  • Another interesting reading on TheStreet;
  • Discover more on the matter by visiting CNBC.