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Monday’s video – Should we be regulated plus intermarket analysis…

Charlie asks whether trading educators should prove they are genuine traders plus then looks at the key U.S markets to see whether a breakdown is ahead or not…

Traders…

Hi this is Charlie giving you Monday’s market commentary. I’m actually recording this on Sunday lunchtime.

I’m going to run through the key US indices – what I am and am not seeing there.

Before that, I was on Tip TV last week and I was talking about whether trading educators, such as Kym and myself and millions of others on the internet, be regulated? As most of you know, probably 80-90% of trading educators are not genuine traders.

So they know the theory of what an indicator is and all of the other bits and pieces, and they can do a really good job of making it sound like they’re a trading guru. Whereas in actual fact, most of them don’t trade or they trade marginally and they’re too busy teaching and doing courses.

Don’t get me wrong, there are some good guys out there, but there’s also a huge amount on the web. It just makes me giggle when some of them tout systems and show you a spreadsheet telling you how many pips it’s made and all that sort of stuff and you think, well there’s nothing real there.

I put my neck on the line every single Friday. I can’t cheat, I can’t get out of it. I can’t not put a video out. If I’m recording my Friday video and I have a bad day, I can’t not put a video out because people will say “why has Charlie not put a video out today? Is he hiding something from us? Has he had a bad day?”

Like Friday, I took five or six trades to make a measly amount of money. Not a great day’s trading. That’s the reality of trading. You can’t always have great days. Yet you see these trading educators who will just randomly put a video out showing them taking a trade, and you think, that’s random.

They could actually have been trying to record a video for days waiting to have a profitable trade in order to say, I’ll put that one on to the web and show that I’ve had a profitable trade, but all the other trades they might have taken could have been unprofitable.

The good thing with my Friday ones is that I have to do it. Unless I say that I’m not going to be around on Friday, then you expect to see them whether they’re winners or losers.

That’s the reality of trading. It’s not all about winning trades, it’s about how you manage your winners, how you manage your losers, how you manage your risk overall. Not how you make your money, but more importantly, how you come out of draw downs when you do have a draw down period, how you trade out of that.

That’s the real reality of trading. It makes me laugh when I see educators touting systems and how many pips they made and “if you were trading £10 a pip, how much you would have made on that”. Even if they do put a live video out, it’s just a random one. You think, how many attempts did you have to find a winning trade? It’s just not real.

Do it regularly, if you want to do live videos, do it on a set day every week and we’ll see how good you are.

So as a result, when I talk about trading educators, I think we should all be regulated. Not in a heavy way, just in a way that means if you want to be a trading educator, you have to prove to a regulator that you actually are a genuine trader, that you have trading accounts that are traded and the regulator can see that you have a history and a track record and you make money.

You don’t have to have a million pounds in your trading account as a trading educator, but as long as you’ve got genuine accounts and the regulator can see that you actually make money. That way they can confirm, yes this is a genuine trader and they have genuine accounts and they are profitable.

I think that sort of thing would be great for our industry. I don’t think it would ever happen, but it would be good.

Anyway, that’s my little rant done for now.

Let’s actually have a look at the markets.

Look at the Dow for starters. We can see that it’s really not done a lot this year. It’s had a great run once you start zooming out, but looking at it this year, we’ve made marginal new highs but a lot of chop for most of this year.

So where do we go to from here? Obviously lots of people are calling for the markets to come down, which they could want to come down, of course. They can want to go up or down.

What concerns me at the moment, from trying to hop on board any potential down move, not to say that we couldn’t come down, but looking at the Dow, in the last week or so, it has started to cool off a bit. It’s still within this whole chop zone but it is still certainly coming down a bit.

If we come out and look at the S&P-500 that’s held up a little bit better. It is coming down but it’s holding up a little bit better than the Dow.

Then we go and have a look at the NASDAQ, and you say, well it’s only really just come off in the last few days. It’s holding up quite well so far. If the NASDAQ starts selling off then that starts to confirm the Dow and the S&P-500 a bit more.

Remember, we’ve got the Russell-2000, which is 2000 representative stocks, smaller cap-stocks admittedly, but they’re holding up really well at the moment.

So when you’re looking at the markets, if we’re seeing the Dow and the S&P-500 looking a bit weak, what I want to see is the NASDAQ and the Russell as well. They’re not going to be looking exactly the same as these two, but I want to see them showing signs of weakness as well. They’re not showing signs of weakness just yet.

Anything could turn and it could turn on a dime, you know what the markets are like, but this is a small thing that I like to look out for across the markets. I can see some divergent behaviour on the Dow itself, because we’ve made these marginal new highs, but I’m not getting overly excited just yet about any major sell-off.

That’s not to say we couldn’t and it starts to build, but at the moment I’d like those other indices to play a little bit of catch-up and at least show signs of weakness coming through, which they’re not doing enough of just yet.

That’s the warning sign to those, because the markets could very quickly turn it back around and head back up, so we have to be a little bit carful there.

The job’s report was good on Friday and I think the markets are going to start looking towards the beginnings of the rate hikes in the US. So that could help the stock markets sell off a little bit more because they won’t initially like the rate hikes.

Having said all of that, I want a little more confirmation from some of those indices.

That’s the thoughts for this week and I will be back on Friday doing live trading. See you then.

4 Comments

  1. Mike Parsons-Reply
    June 8, 2015 at 8:14 am

    Charlie,
    Completley agree on educators. Not much use having to pass exams as that’s usually easy but to provide consistant results to a regulator would be good and a requirement to provide proper evidence for any new system they market. Also a regulator would be really useful as it give people someone to complain to – at the moment there are just a few forums.

  2. Dave-Reply
    June 8, 2015 at 10:08 am

    Hi Charlie,

    Completely agree that it would be great if trading educators were regulated,and agree with you on how they should be regulated too. I’ve literally just sent Sam at Ezee Trader an email to so it’s nice to have finally found a company where the educators actually trade themselves and show their live trades and don’t simply make all their money teaching but never trade anything themselves.

  3. Kevin-Reply
    June 8, 2015 at 12:29 pm

    Echo all the points, I decided to look into trading six months ago and as many people do I just googled “trading”‘ it’s scary what you get. I hate the strategies and educators that tell it’s easy, follow this and you’ll make it, well, if it was that easy we’d all be millionaires wouldn’t we.

    As I’ve found out it’s far from being easy but I do the education and a community of people that I get here and are actually trading, I want to learn properly, not just what a spreadsheet says.

    I think what you do is very valuable, keep it going but how you would regulate it, sounds complicated!

    Kevin

  4. wrenchos-Reply
    June 8, 2015 at 5:19 pm

    Hi, I think regulation is a sound idea and i think it would weed out the cowboys to some extent. I would also look at someone’s ability to educate and look for how successfully they transfer their knowledge as it’s just as important as being qualified.

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