Trading Club: Weekly Q&A, 09-02-2018
Posted on February 9, 2018
That was quite a week! The VIX has seen its biggest 1-day increase on record, touching 50, which coincided with US equities represented by the S&P 500, Dow Jones Industrial Average and Nasdaq benchmarks losing the most in a single trading session since 2011 (though the next day, they staged the biggest rally in a couple of years too). There was also panic in cryptocurrency land, with Bitcoin plunging below the $8,000 level from which it had bounced last Friday…
I’m glad to be taking some time out to answer more of your questions today. Those of you who are members of our Trading Club may recognise the email below which provided inspiration for this week’s video on the Canadian dollar, which was uploaded yesterday:
Thanks again for the great product and the research you provide. Sorry to bother you with so many emails in such short time. Just thought i'd propose a question, don't know if it's fitting for weekly Q&A or not, but anyway would be very thankful for any type of response.
It's regarding the ideas presented in the tradingclub. I am under no illusion that all of those are guaranteed tips for profit, so this is not in any way a complaint or demand for "trade signals" :)
I have started to build a longcase for the CAD recently, and have also noted that such a view would largely be supported by the data and the score systems in the clubs market reports. However, i am concerned about downside risk shortterm due to the CADs sensitivity to crude oil.
Using that as an example, my question is:
does the idea generation for the ideas presented in the tradingclub, in general terms, have a fundamental basis that's open for discretion, like taking such a factor into consideration, or is the fundamental basis for idea generation in the tradingclub's ideas more or less strictly based on the scorecards only?
This was a great question! I explain more in this week’s video, but you are right to consider other factors beyond the Checklist score - this is what we always mean by ‘doing your own further research’. The Checklists are a robust means of understanding the market dynamic and generating ideas. However, you can take them even further with experience and filter out the best potential longs and shorts by exercising discretion against the macro view that you have personally. When the two are aligned, it can be a very effective combination (when the two are aligned, it can be a very effective combination (which is how Lex and I apply them, and we do not suggest blindly following every score - please also do not forget our usual disclaimer: all our content is produced for educational purposes and we do not provide investment advise).
Your example of the Canadian dollar demonstrated this perfectly, as crude oil is a primary driver and we had that down as a negative on its related Checklist this month. So in the short-term, you were absolutely right to avoid getting long CAD in light of this (and also the positive score featured for the US dollar). Now though, with WTI down almost -10% off the high, the risk there has come out of the market to some extent… For further analysis, please refer to the Trading Club/Idea Analysis section! (If you are not a member yet, we look forward to welcoming you at the Academy)
Next up, we had a question about Bitcoin (one of hundreds actually, so congratulations on being selected!);
I want you to send me information of how to critically analyze a crypto-currency coin before investing into it. I look forward to your reply, Thank you very much once again.
I found your videos about Fundamental Analysis and Technical Analysis! As you taught in the video, I now have good idea about Technical Analysis which involves reading the story of the market charts, But I do not know how to Execute Fundamental Analysis of Crypto-Currencies like Bitcoin and Altcoin.
Thank you very much for the awesome contributions you are putting to better improve our knowledge about Crypto-currency trading analysis. I have been trading for some days with loosing my trade position to current Bitcoin dips until I found your course about "How To Become A Trader And Investor" The few minutes I watched your video I discovered I've been making a hell of mistakes and that's why I've been trading at a loss all the time.
Its always nice to receive feedback from people who have learned with us and feel much better equipped to trade the markets with their newly-acquired knowledge. Whilst we don’t (currently) have a course specific to trading cryptocurrencies, many of the principles relating to psychology and technical analysis are pretty relevant and transferrable to this emerging asset class. It is difficult to understand the fundamental drivers (beyond supply and demand) of the likes of Bitcoin, Ethereum, Litecoin and Ripple for example, which is why we haven’t really featured them in our main analysis here at the Academy. Thats not to say that we aren’t interested in them (we have made investments in the blockchain space) but for now we don’t think that the market has the same fundamental integrity as say equities, currencies or commodities which are far easier to understand if you are trying to learn about trading them.
That’s all we have time for this week. I’m trying to keep my weekly commentary fairly brief as I understand that by Friday afternoon most of you will be ready to switch off from markets and enjoy the weekend (and rightly so!). Do keep your questions coming next week if there is anything you would like to ask me. And of course, if you haven’t already, there is no time like the present to take the step up in your education and join us here by taking the Million Dollar Traders course or Trading Club membership (you can also contact us at [email protected] to learn about available discounts and promotions).
Have a great weekend,
Disclaimer: Our service is intended for educational and informational purposes only and should not be considered investment advice. Do not make any decisions based on the articles and material presented on www.lexvandam.com and never trade with money you cannot afford to lose. We cannot be held responsible for your trading results. For more information, please check Risk Disclosure - T&C.