How to Protect Your Trader Status Just because you call yourself a securities trader doesn’t make you one in the eyes of the Internal Revenue Service. In fact, Uncle Sam is predisposed to consider you merely a hyperactive investor—and thus deny you more favorable tax status—unless you meet a number of criteria that are frustratingly open to interpretation. You read that right: the tax code contains no actual definition of trader tax status. Instead, the IRS has issued guidelines that the tax courts have expanded upon with case law, most of which denied tax appeals by traders. What we’re left with is a blurred image, like a photograph of a trader taken from a speeding car. According to the IRS, to qualify as a trader: You must seek to profit from daily market movements in the prices of securities and not from dividends, interest or capital appreciation; Your activity must …

Achieving success at anything in life is about planning. But it’s about more than just writing down a list of things you’ll do. It’s about envisioning success and the behaviors which are likely to lead long term objectives being met. Most things in life which are truly great achievements for a person come as a result of many years of dedication and persistence. Sometimes the road is smooth, but usually it’ll be rough in places too. Without a vision of what success might look like to guide us, that journey becomes much longer and inevitably will have more rough parts to negotiate. The first step to having a vision of your success is to assess your trading from the point of view of a highly successful trader. Would a really successful trader hold on to a losing position past their predefined stop? Would they not have a predefined stop at …

Tried and True Methods In this final post about higher probability, I want to wrap up what we can look for to increase the odds of a successful trade. Why are the probabilities increased following this method? Simple. In trading, while there are many ways to accomplish something, there are a few tried and true (and dare say trusted) methods that the majority of traders use. I think a huge percentage of traders are very familiar with: Support and resistance via horizontal lines Support and resistance via trend lines Fibonacci levels Moving averages Trades look to take trades in various areas of the charts for many reasons but the four listed above, are talked about in almost every forum and every trade book you will ever see. Why this is a good thing is because you certainly need other traders to help move the market and if you can zero …

Recently I was discussing with a friend the pros and cons of the new ipad and tablet computers in general. I’m not a particular advocate of the devices, but I can see how their application might be useful to someone who’s always on the move. My friend thinks it would be great to have one and I asked why, as my view is that they could be just a luxury unless you have specific needs for one. My friend said that in their line of work, they need to be able to access certain data and take notes while they are with clients etc. This got me thinking about note taking and process or event review in general in respect to trading. The conclusion I came to might perhaps seem very obvious to many and indeed this is something we do during our everyday lives. Reviewing market activity and trading …

What Are Kase Bars? If you know NetPicks, you know we are always looking for ways to improve your (and our) trading. We like cutting-edge charting and tools that can give us a read on the market. That is one reason we use Renko and Range bars in our swing trading and even day trading. We have many customers and we encourage everyone to share their ideas and experiences so that we can share with others. This is what leads me to our discussion today… In December we released our latest Seven Summits Trader Automation and Strategy Back-Test software. Those SST Pro members could take their ideas and run some tradeplan tests. That is exactly what inspired Benjamin Gerard Sanchez. He took an idea on Wheat and tested it with Kase Bars. It had fantastic results, which we will share in this article. But first, we need to educate you …

In a recent communication with someone interested in purchasing a Netpicks trading strategy and joining the very successful live trade room, he mentioned a term that I wanted to address. My initial response to the term in our email exchange was shorter (there was much to cover) so I wanted to take the time to expand on it further. The term is “Investing”. Many people that enter Forex trading also have experience trading stocks. For the complete trading newbie, they have mostly been exposed to stock terminology via news broadcasts and other media and therefore use the term investing with all interactions with the markets. In stocks, many people hold individual or a basket of stocks for a certain period of time usually running into months and sometimes years. As a matter of fact, if you day trade stocks, depending on amount of round turn trades, you will be classified …

Reversal Type Behavior In my second article in the series, I wrote a little about the price levels and how to use them to watch for market extremes. Coupled with watching for repetitive trading behavior, a trader can watch at certain prices to gain a better idea of whether an extreme is possibly forming. But the caveat to this approach is once a market has reversed to some extent, does it then continue and form a good extreme? Well in this final article before looking at some examples, I want to explore with you the basics of what you might expect to see after the market has started to reverse. The way the market operates is that when certain levels are reached, there is usually some opposition to the current direction. This doesn’t have to be new positions being taken. It can be simply a place where people feel it …

Consistency If you are serious about making money trading, I am sure you have taken a professional approach to trading. You have learnt a little about what are the main drivers of a currency and are also well aware of what news announcements have the potential to move the markets the most. You have zeroed in on a trading strategy that you are comfortable with and have ensured you have undertaken a back testing time period, if you are able. The fact is, some strategies are almost impossible to back test. You have sat in the live markets forward testing your strategy and are confident that over the long term, you can succeed with the strategy. Now, after months of practice, you have gone live with a real money account. The question is have you discovered one of the most important keys to succeeding? Some may even call it the …