By: Adam Hewison

Two months ago, I wrote a blog that many people are still talking about. It was about a trading rule I learned over 30 years ago in the pits of Chicago and one I still use today.

How this amazing rule works is way beyond my pay scale, but I can say without hesitation that it works.

It works on intraday charts, daily charts, weekly and monthly charts. I do not know why it works in the financial markets, and through all my reading and research I’ve never found a reason that explains why this particular rule works.

Anyway, I’m going to show you in this intraday video on gold how this rule works. I also recommend that you watch the video I made two months ago using the exact same tools on a daily gold chart.

This is something that you should really look for when a market has a correction, as it will allow you to enter a position with very little risk.

So enjoy, there is no charge or registration required to watch this video. This is part of MarketClub’s educational trading video series to help you achieve greater success in your own personal trading.

Here is the video link.

All the best,
Adam Hewison
President, INO.com
Co-creator, MarketClub

Today, we are dissecting and examining one of my favorite markets … the Forex market. The Forex market is the biggest in the world and is traded on a 24/7 basis.

What makes these markets so exciting is the fact that they have a very strong tendency to trend, that is, once they get started in one direction they tend to continue in that direction for some time.

I learned how to trade Forex in the trading pits of Chicago where I was a member of the IMM, a division of the Chicago Mercantile exchange. The CME has grown dramatically over the years, and I have many fond memories of trading in the old exchange in Chicago. Today, you can trade the stock of the CME (NASDAQ_CME). That’s a good idea for our next video, let us know if you would like to see a video on trading the stock of the CME.

I digress to today’s video.

Forex markets video link

Today we are exploring the relationship between the Euro and the Dollar (EURUSD). In this short video, which we are making available without cost or registration, you’ll catch a glimpse of a conservative way to trade the Forex markets. This approach will detach you from your computer screen and show you how to enjoy your free time without having to worry about the markets.

I would not recommend this movie if you are risk adverse. Trading in Forex, the futures markets, and in any market for that matter always has an element of risk.

Forex markets video link

I hope you enjoy this educational Forex trading video and that you’re able to see the value in this approach.

Every success in the markets.

Sincerely,

Adam Hewison
President, INO.com
Co-creator, MarketClub

As recently, or as far back, depending on your perspective, as the middle ’80s the only way the Average Joe could reasonably get involved in profiting from foreign exchange rates was with regular time deposit accounts. The big banks allowed you to open time deposits in Japanese Yen or German Marks or Swiss Francs. Not a big deal you say? Consider that in the post Carter years interest rates on savings accounts were sometimes 15%. If the currency rates moved in you favor you could make 20% or more in a guaranteed savings account. There isn’t a money manager on Wall Street today who wouldn’t sign a contract for an annual, locked-in 15% gain.

Today the Average Joe can jump into the middle of the world’s most liquid market with a $200 account and trade 24 hours a day for most of the week. I suspect the liquidity thing may be overblown, however. It’s true that $2 trillion or $3 trillion is being exchanged every day all around the world, but the Average Joe is locked inside some Forex broker’s computer system. A little island in a very big ocean. The expanse of Joe’s liquidity horizon depends more on his broker’s banking relationships than the absolute size of the Forex market. For that reason alone it’s worthwhile to comparison shop Forex brokers. It’s a wired world, and maybe I’m way off base, but the idea of a Forex broker plunked down in the middle of New York or London is more comforting to me than the image of some outfit based in the Seychelles.

So what is it exactly that I like about Forex trading?

I like what you can do with the leverage. 100:1 is probably the most common, but 200:1 is common too, and some brokers provide a whopping 500:1.

Leverage by itself doesn’t mean much but it means a lot when you combine it with the ability to vary the lot size on every trade. The image below is a snapshot of the manual order entry window from Metatrader.

You can spin up the leverage (volume in the Metatrader window) anywhere from .01 to 8.0 on any trade.

What does that mean?

Say you have a $100 account with some Forex broker at 100:1 leverage. If you selected .01 as the lost size then each PIP in price movement is worth $.10 in your account. If you selected .1 then each PIP in price movement is worth $1.00 in your account.

The range of the average daily bar in EURUSD is more than 100 PIPs. Some days the range is 2 and 3 times that amount. If you break a daily bar into 1 minute segments then with the constant up and down oscillations the average daily movement in PIPs could be several hundred PIPs.

An EURUSD swing can move 1000 PIPs in a few days with little interruption.

There is nothing else out there for the little guy that provides the same flexibility. If you’re new to Forex or still not sure that you trust the Forex Robot then trade in the smallest lot. If all the oscillators from H4 to M1 are pegged and Jupiter is aligned with Mars then kick up the lot size and take your best shot.

Maybe it happens only 1 time in 10,000 but where else do have the opportunity to turn a $200 account into $20,000 in less time than it takes for a loaf of white bread to grow mold?

The Focuser tool in the Fibonacci software helps to identify and target the Fibonacci ratio that may be the most significant.

In this image the Fibonacci Retracement ratio of 1.272 nearly overlaps the Focuser line directly above it. The combination provided tradeable information about where the EURUSD rally would likely hit the wall.

What do Blaise Pascal and Leonardo Fibonacci have in common? Find out in our Fibonacci Pinball article.

[If the image does not display see it at the Forex Robot Blog]

A year and a half ago we decided to track the results of our MarketClub “Trade Triangle” technology in six different markets. The markets we decided to trade were corn (CBOT_C), wheat (CBOT_W), soybeans (CBOT_ZS), crude oil (NYMEX_CL), gold (XAUUSDO) and finally the dollar index (NYBOT_DX). We picked these markets at random, not because we could see into the future, but because these markets historically have had prolonged and therefore profitable moves in the past. Most big markets have one or two moves every year. Our “Trade Triangle” technology allows you to catch these moves and stay on top of the market. Watch the video.

I have truly been surprised and amazed that we have had such big returns, especially in the last two quarters. When I helped co-create MarketClub, I knew we had something great… but even these results would astound anyone.

In Q3 of ‘08 we had a phenomenal return and one that I did not think we would see again. However, in Q4 of ‘08, not only did we exceed the Q3 results but we did it in different markets which is quite remarkable. This underscores our fundamental belief that investors/traders should be diversified into several different markets.

In Q4 of ‘08, the results we had in corn were significantly less them in Q3. Non-the less, they were positive. Our Q4 results in the wheat market were almost double that of our previous quarter’s earnings. Soybeans on the other hand proved to be very positive, but not as positive as Q3 which was our best quarter ever for that commodity. The star of the show, or I should say the quarter, was crude oil. Crude oil produced an astounding gain of 40,040 per contract in the quarter. This return was practically double our Q3 results and by far our best returns of any market in this quarter. You may want to watch our Q3 movie and see what we were saying about crude oil at that time.

Gold proved to be just that, golden, as the yellow metal produced another stellar return in the quarter. Lastly, the dollar index showed it’s best returns in 6 quarters.

Q4 of ‘08 turned out to be a record quarter producing 78,142 in gains before commissions. This was our best quarter ever and quite frankly it was more than we had expected.

The return on capital for the last six quarters was 624%. The number of positive quarters (for all six markets) was 34 out of 36, that’s a 94.44%positive streak. Losing quarters for the six commodities totaled to just 5.5%. (Special note: We are trading six markets and six quarters gives us a universe of 36 individual quarterly results to judge our results by.)

In the 6 quarters we have traded the six commodities listed above, we have never seen a losing quarter dollar wise or quarter wise (no pun intended).

Certainly there is no guarantee what Q1 of ‘09 will bring. Certainly the markets we are in have a tendency to move, therefore they should present opportunities to make good returns in the future.

Take a look at this short video that I have prepared to show you the results. I will go through some of the actual signals that we dynamically generated with our “Trade Triangle” technology. The “Trade Triangles” are just one tool of our MarketClub service.

You may also want to look at our earlier Q3 video and check out our past signals. We use the same formula and same approach each quarter for the markets we are tracking.

Enjoy the videos. If you have any questions about our results, please give us a call. As many of you know, brokers love us because we are not brokers, we simply provide educational material to help traders improve their trading.

Every success in trading in 2009,

Adam Hewison
President, INO.com
Co-creator, MarketClub

The TED Spread is in normal range for the several months preceding the credit freeze. This means that banks are more willing to lend to each other. Although not a clear signal that adequate consumer and business credit will soon follow the resumption of interbank lending is a necessary precondition.

The chart shows that Velocity is below 1. The very short implication is that no matter how much money the Fed pumps into the economy it won’t do squat to stimulate productive activity because it’s falling into a hole, or a mattress as the case may be.

Read the whole thing at Market Ticker

The following article is excerpted from a recent issue Elliott Wave International’s Financial Forecast.

Elliott Wave International (EWI) is offering the full 10-page issue, entitled “The Most Important Investment Report You’ll Read in 2009,” free for a limited time. In addition to the following market commentary, it includes independent forecasts of stocks, bonds, metals, the U.S. dollar and economic trends.

Visit EWI to download the full report, free.

By Steve Hochberg and Pete Kendall
Editors of The Elliott Wave Financial Forecast

As Conquer the Crash so boldly counseled, prosperity entails managing one’s finances and livelihood so as to be in tune with a 1930s’ style deflationary depression. But conventional wisdom disagrees. “There’s no comparison” to the Great Depression, says the world’s leading financial authority, U.S. Federal Reserve Chairman Ben Bernanke: “I’ve written books about the Depression. We didn’t have the social safety net that we have today. So let’s put that out of our minds.” He cites as evidence a 25% unemployment rate, a one-third decline in U.S. GDP and a 90% decline in stock prices, all of which occurred during the 1930s’ depression.

Unfortunately, what Bernanke’s managed to do is put one important word out of his mind—yet. Like the rest of the “this is no depression” camp, he fails to note that his cited figures are the extreme readings of that era. Bernanke also ignores the critical fact that today’s bear market is actually ahead of where the stock market was at the same point during the 1929-1932 decline and that the economy is lurching lower in a manner suggesting strongly that it will have little trouble keeping pace with the economic contraction of the 1930s (see Economy & Deflation section below).

Another common refrain is that, in contrast to the early 1930s, there are now competent financial authorities doing everything in their power to unlock the credit markets and reignite the bull market in equities. It’s certainly true that the Fed is doing everything in its power, and even some things that aren’t, to reel in the crisis. The U.S. Treasury is doing likewise. By Bianco Research’s tally, the potential total of U.S. bailouts is closing in on $9 trillion. But these efforts are every bit as impotent as Conquer the Crash and the September issue of The Elliott Wave Financial Forecast suggested that they would be. Here’s the key quote from the September EWFF: “The bailouts keep coming at lower lows, signaling further declines ahead.” Incredibly to most people, since this quote appeared the Dow has declined by another 30% and various government financial wizards have put forward even bolder yet more haphazard “rescue” initiatives.

The ballooning bailout makes us more convinced than ever that it will fail. The whole “Keystone Cops” approach to “the rescue” strengthens our conviction. One day the bailout is aimed at jacking up asset prices; the next it is buying mortgages; the next it is rescuing the consumer; and the next it’s all-hands-on-deck to prop up whoever it is that happens to be failing on that day. The alphabet soup of rescue programs now includes ABCPMMMFLF (no, we didn’t make this up), which is supposed to “shore up” the $1 trillion asset-backed commercial paper markets. And still, credit spreads shoot higher.

Another program, the “systematically significant failing institutions program” (SSFIP), was established in November to deliver a $40 billion “equity injection” into AIG. The problem, which will probably become the focus of intense Congressional scrutiny at some later point, is that the injection was made in October, before the program even existed. The Wall Street Journal puts it this way: “Practically every day the government launches a massively expensive new initiative to solve the problems that the last day’s initiative did not.” At the latest economic summit in mid-November, the U.S. and other nations were reputedly “close to a deal to create a new ‘early warning system’ to detect weaknesses in the global financial system before they reach epic proportions.” Among the stated objectives: greater transparency. Of course, “sources spoke on the condition of anonymity because plans are still being worked out.” The real reason that these people want to remain anonymous is that like everyone else, they recognize the proportions of the unfolding epic and thus the futility of the bailout effort.

For more information on navigating the current market turmoil, including forecasts of stocks, bonds, metals, the U.S. dollar and economic trends, download Elliott Wave International’s free 10-page report, The Most Important Investment Report You’ll Read in 2009.

Steve Hochberg began his professional career with Merrill Lynch & Co. and joined Elliott Wave International in 1994. He became co-editor of The Elliott Wave Financial Forecast for its inaugural issue in July 1999. Pete Kendall joined Elliott Wave International as a researcher in 1992. He has been co-editor of The Elliott Wave Financial Forecast since its inception in July 1999. He is also the director of Elliott Wave International’s Center for Cultural Studies.