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The federal government is increasingly taking money out of Americans' Social Security checks to recover millions in unpaid student debt, a trend set to accelerate as more Baby Boomers retire.
Most affected recipients in fiscal year 2015 (114,000) were age 50 or older and receiving disability benefits, with the typical borrower losing about $140 a month. About 38,000 were above age 64.
Overall, about seven million Americans age 50 and older owed about $205 billion in federal student debt last year. About 1 in 3 were in default, raising the likelihood that garnishments will increase as more boomer retire.
The report showed garnishments left thousands with Social Security checks below the poverty line. Most Social Security recipients rely on their checks as their primary source of income, other research shows.
These 3 charts help you understand how moving averages work
By Elliott Wave International
Moving averages are a popular tool for technical traders because they can "smooth" price fluctuations in any chart. Senior Analyst Jeffrey Kennedy gives a clear definition:
"A moving average is simply the average value of data over a specified time period, and it is used to figure out whether the price of a stock or commodity is trending up or down... one way to think of a moving average is that it's an automated trend line."
Moving averages are both easy to create and extraordinarily dynamic. You can choose which time frame to study as well as which data points to use (open, high, low, close or midpoint of a trading range).
The following excerpt is from our online course, How to Trade the Highest Probability Opportunities: Moving Averages.
Let's begin with the most commonly-used moving averages among market technicians: the 50- and 200-day simple moving averages. These two trend lines often serve as areas of resistance or support.
For example, the chart below shows the circled areas where the 200-period SMA provided resistance in an April-to-May upward move in the DJIA (top circle on the heavy black line), and the 50-period SMA provided support (lower circle on the blue line).
The 13-period SMA is a widely used simple moving average that works equally well in commodities, currencies, and stocks. In the sugar chart below, prices crossed the line (marked by the short, red vertical line), and that cross led to a substantial rally. This chart also shows a whipsaw in the market, which is circled:
Another popular moving average setting that many people work with is the 13- and the 26-period moving averages in tandem. The figure below shows a crossover system, using a 13-week and a 26-week simple moving average of the close on a 2004 stock chart of Johnson & Johnson. Obviously, the number 26 is two times 13:
During this four-year period, the range in this stock was a little over $20.00, which is not much price appreciation. This dual moving average system worked well in a relatively bad market by identifying a number of buyside and sellside trading opportunities.
Moving Averages aren't the only technical indicators that can alert you to market opportunities -- these three charts provide only a small example of how your trading skills can improve when you learn to identify technical indicators to support your chart analysis.
Moving averages are one of the most widely-used methods of technical analysis because they are simple to use, and they work. Learn how to apply them to your trading and investing with this free 10-page eBook from EWI's Jeffrey Kennedy.
This article was syndicated by Elliott Wave International and was originally published under the headline Moving Averages Can Identify a Trade. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
The concept of retirement is evolving and changing.
The 76 million U.S. Baby Boomer (born between 1946 and 1964) who have redefined each stage of life as they passed through it are redefining this one as well. They are not retiring like their parents or grandparents.
With longer life spans, better health, and myriad opportunities to play, work, volunteer, travel, and try new things, Baby Boomers are exploring the next chapter of life with enthusiasm and creativity.
Start simple, with the basic 5 "core" Elliot wave chart patterns
By Elliott Wave International
Jeffrey Kennedy, a recognized expert in Elliott wave analysis and forecasting, explains why the Wave Principle is such a reliable and powerful way to forecast the financial markets.
Jeffrey stresses that if you understand -- and practice -- the basics of the Wave Principle, you'll be surprised how much it can impact your analysis and trading results.
Spend now through October 18 getting free trading lessons that you can apply to your trading immediately -- from one of the world's foremost market technicians, Jeffrey Kennedy. Your FREE week will include lessons on support and resistance, Elliott wave analysis, momentum, candlestick analysis and more! Register now and get immediate access to 3 introductory resources.
This article was syndicated by Elliott Wave International and was originally published under the headline (Interview, 6:13 min.) Trading with Elliott Waves Doesn't Have to Be Complicated. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
The Dallas pension system embraces risk with alternative assets
By Elliott Wave International
[Editor's Note: The text version of the story is below.]
*********
The alarm over U.S. public pension shortfalls grows louder, which brings to mind this prescient comment from Robert Prechter's 2002 book, Conquer the Crash:
If you have a pension, you are almost surely dependent upon [securitized loans]. ... In a major economic downturn, this credit structure will implode.
And that's exactly what happened during the 2007-2009 "mortgage-meltdown." Large banks had taken out home loans made by retail banks and mortgage brokers and resold them to others. As we know, too many of those loans were bad, and the result was the worst financial crisis since the Great Depression.
Many public pension funds have yet to recover, even after a prolonged stock market uptrend.
Our July Elliott Wave Financial Forecast said:
Many pension fund assets are far more precariously positioned today than they were before the 2007-2009 bear market. Losses are already mounting.
The publication mentions that the funding gap for public pensions in 2012 was $1.83 trillion. Today, it's an astounding $3.4 trillion, almost twice as large.
A big part of the public pension problem is low yields.
The September Financial Forecast elaborates on how one pension system has ramped up risk to compensate:
The Dallas pension system now has more than half of its assets in alternate investments such as homes in Hawaii, a Napa Valley vineyard, an apartment tower in Dallas and a stake in the American Idol production company. In 2010, Money Management Letter cited the Dallas plan as "one of the best-diversified funds in the U.S." Six years later, Idol is off the air and the Dallas pension system is the prime exemplar of the danger of diversification in search of higher returns.
Less than a month after the September Financial Forecast published, we learn that financial fear is running rampant among Dallas pensioners.
On Sept. 27, Bloomberg showed this chart and said:
Dallas's police and firefighters are quitting in droves, wagering that financial-market losses are about to render their promised pensions too good to be true.
With the city considering benefit cuts to help close a retirement-fund shortfall that grew by $1.2 billion last year, more than 200 workers have decided to retire or leave, about double the normal rate. ...
The public-safety system has just 45 percent of the assets it needs to cover benefits, down from 64 percent at the end of 2014 and half what it was a decade ago.
Other public pension funds are also in trouble, including the nation's largest.
The California Public Employees' Retirement System (Calpers) returned only 0.6% on its investments through the year ended June 30. It was the worst performance since the bear market ended in 2009. This is far below the 7½% that Calpers needs to meet its existing obligations.
One can only imagine the pension fund scenario when financial markets go into another full retreat.
This valuable free resource includes 8 lessons on topics critical to your financial survival, from Bob Prechter's New York Times best-selling book. You'll learn what to do with your pension plan, what to do if you run a business, how to handle calling in loans, paying off debt and so much more. Learn more and get your free 8 lessons here.
Get Your 8-Lesson "Conquer the Crash" Collection Now
This valuable free resource includes 8 lessons on topics critical to your financial survival, from Bob Prechter's New York Times best-selling book. You'll learn what to do with your pension plan, what to do if you run a business, how to handle calling in loans, paying off debt and so much more.
This article was syndicated by Elliott Wave International and was originally published under the headline Why Nervous Pensioners Are Running for the Exit. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
Our interest rates strategist explains more in this new interview
By Elliott Wave International
Peter DeSario, editor of our Interest Rates Pro Service, explains why this was a "monumental" week in the bond markets -- and offers a preview of which markets he's keeping his eye on.
[Editor's note: A text version of the interview is below.]
Alexandra Lienhard: Today on ElliottWaveTV I'm joined by Peter DeSario, interest rates strategist for Elliott Wave International's Pro Service team. Peter, let's jump right into it. You think something very significant just happened in the British Gilt, or 10-Year government bond. What was that?
Peter DeSario: Yes, I got excited this week when we really saw a very clean five wave decline traced out from the mid-August high in the Gilts. We had identified that high as potentially being one that could've ended a rally that began way back in 1990, and this is a start;it gives us a place to work from. We're, of course, expecting now to see a corrective rally, but we know that's only going to be corrective, and we'll see something more exciting to the downside to follow. So that was kind of exciting this week.
Alexandra: So, looking at Europe specifically, what's next for the bond markets over there? What are you keeping your eye on?
Peter: It's been interesting there. Back in [2014] we were looking at prices projected based on the Elliott wave counts that seemed to be developing in the Bunds and the Bobl, the 10-year and the 5-year instrument in Germany, that actually called for negative interest rates. That's just never happened before -- negative interest rates and sovereign debt. It seemed kind of preposterous, but the 133.78 price target we had for Bobls implied a negative rate of, like, -.5%. It just seemed that would be impossible for that to happen.
But low and behold, we got to -.6% and we had a spike top in late June. As far as the instrument underlying, the Bobl, we saw rates get to -.6% around early-mid July. And now, just last week, again we saw a spike back up. The futures actually tried to surpass that high, came very close basically, made a double top, but the cash did not. Now they've reversed course. So, it looks like we may be looking at some monumental turns there as well.
We're starting to see this in some of these sovereign debt markets around the world. Germany now has met our upside targets, and it looks like we're starting to see the early phases of a reversal. Now, a top does not necessarily mean a drop. That's one thing that we can get too excited about sometimes, but you have to remember that before you can go down, you have to stop going up. And that seems to be what's happened in a lot of these markets. We are going to be pretty excited about what's happening.
The Australian market looks like it's probably seen a major turn. And Japan is certainly flirting with one -- and, of course, everyone is excited about the United States, what's the story there?
Alexandra: Well, it's certainly an exiting time for sure. Changing the focus a little bit, this time of the year is when equities tend to be a bit more volatile. Does the same hold true for Treasuries? Are the two markets correlated at all?
Peter: Well, the correlation between equities and interest rate futures, or markets and instruments, is very interesting. We go for long periods of time where they go lockstep together, up and down together. We go for long periods of time when they go diametrically opposite. A few months back, it was like they were on opposite ends of a teeter-totter. Every time the S&P was up, bonds were down and vice versa. Then, all of a sudden, when everybody gets accustomed to correlating one way, it changes and goes the other way. So, it's not anything that you can count on. But you can count on the volatility kind of mirroring: When stocks start to get much more volatile, very often you're going to see the very same thing happen in the bonds.
It's interesting now, everybody is so concerned about Fed policy, it seems that every little tick down in bonds was supposed to be negative for stocks in the last week or so. They're afraid of the Federal Reserve and afraid of a change in interest rates, so for this moment, it looks like [stocks and bonds are] trying to go back in line with each other, but that can change. And it can change in a dramatic way that can fool a lot of people.
Alexandra: The sentiment swings and equity volatility of late, especially if they continue, given your experience, have we been in this kind of environment before?
Pete: I think it's interesting when we saw a period that the interest rate situation undermined the stock market, go back to 1987 and the bonds topped basically in April of '86 and were in a bear market and were going down, down, down and the stock market was ignoring it and ignoring it and ignoring it and kept moving higher. But then, all of a sudden, the stock market became sensitive to it and stated to collapse in September, October of 1987 to the extent that we saw the crash.
I was involved with a major brokerage firm at that time. There were rumors going around that they had lost lots of money in the bond market going down, while the stock market had been going up. While the market was basically making its bottom on the day of the crash, the head of the company came out and started bragging about the fact that they didn't have any more bonds, that they had cleaned them all out! And don't think that we're going to get wiped out because we don't have any bonds! Because the bond market took us apart, he said "we don't have any bonds now."
Of course, as he was talking, the bonds at that moment were making a bottom that stands to this day that was a major, major, major bottom. And of course the bond market saw a tremendous rally, and to not have the bonds because you're afraid of them was the worst thing you could've done at that time.
But, anyway, it's interesting the way the relationship between stock prices and bond prices will change. Even if we have a top in bonds this time around, there's no way you're going to be able to get through a situation when the stock market takes a really hard hit, or when the next inevitable recession comes, you're going to see again attempts to see a flight to quality. So it's not going to be a straight-line decline in bond prices by any means, and we hope to be on top of exactly what's going on with each jiggle as it happens.
Alexandra: It sounds like we're in an interesting market environment, for sure. Thanks for taking a couple of minutes today Pete, I know you're a busy guy.
Unleash the power of the Wave Principle
Much like a great sports play; to appreciate a great market forecast, you have to see it. In fact, we'd like to show you four. Our examples do indeed show what can happen when Elliott analysis meets opportunity. But we're not asking you to attend a class in 'good calls.' In each of these four markets, the unfolding trends have (once again) reached critical junctures. You really, really want to see what we see, right now.
This article was syndicated by Elliott Wave International and was originally published under the headline Global Bonds: Why Our Analyst Says Things Just Got "Monumental". EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
"You really can't hope to experience a long, happy life without growing older. It's a fact of life," says Nelson. "But here's the problem: our mental picture of life over 75 is pathetic. And over 80, 90, 100---even worse. We like the idea of living a long, happy life, but no one wants to grow old. Old age scares the heck out of us."
Nelson contends that we all have the capacity to live happier and healthy lives as we age. She provides a roadmap through an assortment of tips, tools and techniques for everyday life situations.
Step away from comparing yourself to others. Focus on your talents, skills and behaviors that you are proud of. Appreciate how very valuable they are to you, how meaningful they are to your home life, your work, your relationships. Tend to your mental, emotional and physical well-being by being grateful for your skills and talents.
Be grateful you are you! It's a much surer road to happiness, and wonderful for your happy, healthy longevity.
Learn why it's important to wait for confirming price action before pulling the trigger
By Elliott Wave International
Jeffrey Kennedy, the editor of our popular Trader's Classroom educational service, weighs in on how you know when it's time to enter a trade.
[Editor's Note: A text version of the video is below.]
Alexandra Lienhard: When does analysis become actionable? That's a question many ask themselves when analyzing and trading financial markets. To answer that question, I've got Jeffrey Kennedy joining me today. Jeff is the editor of Elliott Wave International's popular Trader's Classroom educational service.
Jeff, you recent published a Trader's Classroom lesson discussing the importance of waiting for confirming price action before entering a trade. Something you often tell your subscribers is that once you finish your analysis, you need to take off your analyst hat and put on your trader hat. But for many, perhaps easier said than done! So Jeff, how do you know when analysis becomes actionable?
Jeffrey Kennedy: Well, simply put, when you have enough evidence. For example, if you're counting a move to the downside as a counter-trend price move, say specifically a zigzag, it's going to be a 5-3-5 pattern typically contained within parallel lines. That's your foundation, that's your core. What you need to do next is simply wait. Wait for confirming price action because if your analysis is indeed correct, prices indeed will respond exactly the way you foretasted them to. So what sometimes I do is I'll actually wait for example a bullish engulfing pattern on the heels of an A-B-C decline to really provide additional evidence of the original forecast and then that's when I begin to take action. Simply put, again it goes all the way back to evidence, price evidence.
Alexandra: And the example you just spoke of actually reminds me of a section in your book, The Visual Guide to Elliott Wave Trading. You have a portion where you go through the 5 core Elliott wave patterns and offer guidelines for entering a trade upon the completion of each pattern. Can you take me through a conservative guideline on how to enter a trade upon completion of one or two of the core patterns?
Jeffrey: Well, there are 5 core Elliott wave patterns: the impulse wave, the ending diagonal, the zigzag, the flat and the triangle. In The Visual Guide to Elliott Wave Trading book I outline specific guidelines on how to enter a trade following each pattern. Just for an example, on the heels of a zigzag, a 5-3-5 pattern, A-B-C, I typically like wait for prices to exceed wave B extreme before actively looking for say a buyside trade setup. If we were working for example a flat pattern, then typically my confirmation point is that I want to see prices exceed the extreme of wave 4 of C before aggressively looking to take action.
Alexandra: And those are examples of how to enter a trade following the completion of two of the core patterns, but you go through many more in your book, The Visual Guide to Elliott Wave Trading, which as a side note, is a great read for any analyst or trader who are interested in learning how to spot high-confidence trade setups for themselves. Jeff, as always, it's been great to chat with you. Thanks for talking with me today.
Jeffrey: My pleasure Alex, any time.
Alexandra: If you analyze and trade financial markets and haven't read The Visual Guide to Elliott Wave Trading -- you should. Using more than 200 charts and 20 market examples, Jeffrey Kennedy and his co-author Wayne Gorman teach you how to identify high-opportunities trade setups in your own charts. Best of all, you get this book free when you subscribe to Jeff's Trader's Classroom educational service.
Learn "The 4 Best Elliott Waves to Trade -- and How to Trade Them" -- FREE.
Join Trader's Classroom editor Jeffrey Kennedy August 17 - 23 for free daily video lessons that will teach you to find -- and act on -- trade setups in your own charts. Learn which waves offer the best trade setups, how to set price target with Fibonacci and more.
This article was syndicated by Elliott Wave International and was originally published under the headline When Does a Forecast Become a Trade?. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
Our new free report gives you our well-researched opinion on Brexit -- and the markets
By Elliott Wave International
The campaign for the June 23 referendum on whether or not Britain should remain a member of the European Union has just hit a horrific milestone. CNBC reports that,
"A British lawmaker was shot to death while meeting with constituents Thursday in an attack that halted campaigning over whether the U.K. should leave the European Union.
"Cox, a 41-year-old member of the opposition Labour Party, had been campaigning to keep the U.K. in the European Union."
While the police are still investigating the motive, it wouldn't be a stretch to imagine that it had to do with the lawmaker's position on Brexit. After all, this event would have a huge impact on the future of the EU, and passions are running high.
The financial markets are seen to be particularly at risk if Britain votes to leave. As our May 2016 European Financial Forecast put it,
"... the market's Brexit reaction was deemed to be so critical that Bloomberg conducted a special 30-minute webinar on the subject. Entitled 'Market Response: 'Brexit' vs 'Bremain,' Bloomberg brought together four leading economists to pour over the 'financial market implications of the vote.'
"Clearly, the recent headlines show that the bulls and bears identify strongly with the view that the historic vote will severely affect the country's financial markets.
"But is it true that the vote will cause upheaval in the financial markets?"
You may be wondering the same thing.
That's why we've put together this free report, "The Vote Heard Around the World," featuring EWI Chief European Market Analyst Brian Whitmer.
Brian has been tracking EU break-up signs since he first made a forecast for the Union's coming unraveling back in 2009.
This new report comes right out of Brian's May European Financial Forecast. In it, he asks and answers investors' most pressing questions -- your questions.
Close to ninety percent of all traders lose money. The remaining ten percent somehow manage to either break even or even turn a profit -- and more importantly, do it consistently. How do they do that?
That's an age-old question. While there is no magic formula, Elliott Wave International's own Jeffrey Kennedy has identified five fundamental flaws that, in his opinion, stop most traders from being consistently successful. We don't claim to have found The Holy Grail of trading here, but sometimes a single idea can change a person's life. Maybe you'll find one in Jeffrey's take on trading. We sincerely hope so.
The following is an excerpt form Jeffrey Kennedy's Trader's Classroom Collection eBook.
Why Do Traders Lose?
If you've been trading for a long time, you no doubt have felt that a monstrous, invisible hand sometimes reaches into your trading account and takes out money. It doesn't seem to matter how many books you buy, how many seminars you attend or how many hours you spend analyzing price charts, you just can't seem to prevent that invisible hand from depleting your trading account funds.
Which brings us to the question: Why do traders lose? Or maybe we should ask, "How do you stop the Hand?" Whether you are a seasoned professional or just thinking about opening your first trading account, the ability to stop the Hand is proportional to how well you understand and overcome the Five Fatal Flaws of trading. For each fatal flaw represents a finger on the invisible hand that wreaks havoc with your trading account.
Fatal Flaw No. 1 -- Lack of Methodology
If you aim to be a consistently successful trader, then you must have a defined trading methodology, which is simply a clear and concise way of looking at markets. Guessing or going by gut instinct won't work over the long run. If you don't have a defined trading methodology, then you don't have a way to know what constitutes a buy or sell signal. Moreover, you can't even consistently correctly identify the trend.
How to overcome this fatal flaw? Answer: Write down your methodology. Define in writing what your analytical tools are and, more importantly, how you use them. It doesn't matter whether you use the Wave Principle, Point and Figure charts, Stochastics, RSI or a combination of all of the above. What does matter is that you actually take the effort to define it (i.e., what constitutes a buy, a sell, your trailing stop and instructions on exiting a position). And the best hint I can give you regarding developing a defined trading methodology is this: If you can't fit it on the back of a business card, it's probably too complicated.
Fatal Flaw No. 2 -- Lack of Discipline
When you have clearly outlined and identified your trading methodology, then you must have the discipline to follow your system. A Lack of Discipline in this regard is the second fatal flaw. If the way you view a price chart or evaluate a potential trade setup is different from how you did it a month ago, then you have either not identified your methodology or you lack the discipline to follow the methodology you have identified. The formula for success is to consistently apply a proven methodology. So the best advice I can give you to overcome a lack of discipline is to define a trading methodology that works best for you and follow it religiously.
Fatal Flaw No. 3 -- Unrealistic Expectations
Between you and me, nothing makes me angrier than those commercials that say something like, "...$5,000 properly positioned in Natural Gas can give you returns of over $40,000..." Advertisements like this are a disservice to the financial industry as a whole and end up costing uneducated investors a lot more than $5,000. In addition, they help to create the third fatal flaw: Unrealistic Expectations.
Yes, it is possible to experience above-average returns trading your own account. However, it's difficult to do it without taking on above-average risk. So what is a realistic return to shoot for in your first year as a trader -- 50%, 100%, 200%? Whoa, let's rein in those unrealistic expectations. In my opinion, the goal for every trader their first year out should be not to lose money. In other words, shoot for a 0% return your first year. If you can manage that, then in year two, try to beat the Dow or the S&P. These goals may not be flashy but they are realistic, and if you can learn to live with them -- and achieve them -- you will fend off the Hand.
Fatal Flaw No. 4 -- Lack of Patience
The fourth finger of the invisible hand that robs your trading account is Lack of Patience. I forget where, but I once read that markets trend only 20% of the time, and, from my experience, I would say that this is an accurate statement. So think about it, the other 80% of the time the markets are not trending in one clear direction.
That may explain why I believe that for any given time frame, there are only two or three really good trading opportunities. For example, if you're a long-term trader, there are typically only two or three compelling tradable moves in a market during any given year. Similarly, if you are a short-term trader, there are only two or three high-quality trade setups in a given week.
All too often, because trading is inherently exciting (and anything involving money usually is exciting), it's easy to feel like you're missing the party if you don't trade a lot. As a result, you start taking trade setups of lesser and lesser quality and begin to over-trade.
How do you overcome this lack of patience? The advice I have found to be most valuable is to remind yourself that every week, there is another trade-of-the-year. In other words, don't worry about missing an opportunity today, because there will be another one tomorrow, next week and next month...I promise.
I remember a line from a movie (either Sergeant York with Gary Cooper or The Patriot with Mel Gibson) in which one character gives advice to another on how to shoot a rifle: "Aim small, miss small." I offer the same advice in this new context. To aim small requires patience. So be patient, and you'll miss small.
Fatal Flaw No. 5 -- Lack of Money Management
The final fatal flaw to overcome as a trader is a Lack of Money Management, and this topic deserves more than just a few paragraphs, because money management encompasses risk/reward analysis, probability of success and failure, protective stops and so much more. Even so, I would like to address the subject of money management with a focus on risk as a function of portfolio size.
Now the big boys (i.e., the professional traders) tend to limit their risk on any given position to 1% - 3% of their portfolio. If we apply this rule to ourselves, then for every $5,000 we have in our trading account, we can risk only $50 - $150 on any given trade. Stocks might be a little different, but a $50 stop in Corn, which is one point, is simply too tight a stop, especially when the 10-day average trading range in Corn recently has been more than 10 points. A more plausible stop might be five points or 10, in which case, depending on what percentage of your total portfolio you want to risk, you would need an account size between $15,000 and $50,000.
Simply put, I believe that many traders begin to trade either under-funded or without sufficient capital in their trading account to trade the markets they choose to trade. And that doesn't even address the size that they trade (i.e., multiple contracts).
To overcome this fatal flaw, let me expand on the logic from the "aim small, miss small" movie line. If you have a small trading account, then trade small. You can accomplish this by trading fewer contracts, or trading e-mini contracts or even stocks. Bottom line, on your way to becoming a consistently successful trader, you must realize that one key is longevity. If your risk on any given position is relatively small, then you can weather the rough spots. Conversely, if you risk 25% of your portfolio on each trade, after four consecutive losers, you're out altogether.
Break the Hand's Grip
Trading successfully is not easy. It's hard work...damn hard. And if anyone leads you to believe otherwise, run the other way, and fast. But this hard work can be rewarding, above-average gains are possible and the sense of satisfaction one feels after a few nice trades is absolutely priceless. To get to that point, though, you must first break the fingers of the Hand that is holding you back and stealing money from your trading account. I can guarantee that if you attend to the five fatal flaws I've outlined, you won't be caught red-handed stealing from your own account.
14 Critical Lessons Every Trader Should Know
Since 1999, our Trader's Classroom editor, Jeffrey Kennedy, has produced hundreds of actionable trading lessons to help traders spot opportunities in their own charts. This 45-page chart-packed eBook titled "The Best of Trader's Classroom" gives you our top picks: 14 of the best lessons every trader should see.
This article was syndicated by Elliott Wave International and was originally published under the headline The 5 Fatal Flaws of Trading. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
