Hello again, and welcome to the first ever WICS that has no charts attached to it - I'm afraid 'something of a technical nature' has afflicted my laptop - very possibly, it became seasick after a more than stormy crossing a couple of days ago and it hasn't yet quite recovered - I have not a clue. But fortunately, "I know a man what does". or at least, I hope he does!
Anyway, despite my having both coaxed it and cursed it in equal measure, it has steadfastly refused to come to life today, so a trip to the magic computer wizard will be required on Monday morning.

As it happens, I have been able to scrounge some time on a machine from which to write to you, but since it has only a dialup connection and no 'Paint' facility, there's no possibility of drawing pretty pictures for you this weekend, although I'm by no means blind to the markets for all that.

In any event, not focusing on 'pictures' may well be a blessing in disguise this weekend, frankly, because a few recent emails have caused me a slight frisson of concern.

There have been one or two emails whose tone almost seems to be complaining that overall, markets have risen sharply, and I have concluded, not for the first time, that a few of you seem to hang on my every word.

That's BAD, folks! The only words to hang on, should be your own. It's a bit of a dilemma, really - I didn't start off WICS by speaking about the 'Big Picture' but you asked me to do so, so many times, that I felt obliged to start sharing my observations.

Now, it appears I get the blame for everything that might go wrong with your trading! I have frequently said that I believe that markets will fall steeply - which I stand by absolutely - and now that there has been a sharp upturn, it's all MY fault when YOU get stopped out!

Don't worry - that kind of attitude bothers me not a jot - it has been a very long time since I blamed others for my own shortcomings - but if my words apply to YOU, then perhaps this world of trading is not really where you ought to be playing. It's for people who can accept 100%, that the responsibility for success (or failure) lies with themselves.

If that sounds as though I'm abdicating responsibility for helping you, please be assured that is emphatically NOT the case - most of you, I'm delighted to say, understand perfectly well the massive difference between asking for help after genuine hard work on your part, or simply jumping in to any old trade and then blaming me when inevitably it goes wrong.

Anyway, the above 'rant' thankfully applies only to very few of you, but nonetheless I still want to make it as clear as I possibly can to everyone, that MY views of the 'Big Picture' are MY VIEWS ONLY. Therefore I'm using this issue of WICS just to try to put a few things straight.

Over 35 years of research and study tells me very clearly what is going to happen next in the markets, but other than 'soon', I simply do not know WHEN the big drop will come. Last weekend in WICS, the one thing I was pretty sure of, would be a bit of a rebound in the FTSE100 after its earlier falls - I certainly didn't expect to see such a sharp upwards correction, but that's just the way it goes - 'the market will do what the market will do' and no - one can successfully go against that.

Why am I rabbiting on about this? just to fill up some WICS space?
No, just to try to ensure that you well understand that sometimes - maybe more often than you might expect - market conditions will mess up the best laid plans, never mind the not so well - laid ones. And the 'not so well laid plans' have little chance indeed of surviving in a world where you are paid EXACTLY what you are worth.

A great example of what I'm getting at - last weekend in WICS I mentioned, inter alia, Enterprise Inns, and hey ho - some of you jumped in AFTER I had mentioned it, only to be stopped out almost immediately of course when it too turned sharply back up, dragged along by overall market conditions.

Now that the trade is over and done with, I'll share its mechanics with you here, in the hope that a detailed explanation may let you understand why one of the greatest trading mistakes is to 'chase trades' after they have developed.

The trade was ordered on 22nd September, to be filled if the price hit 799 in the cash market (ie the 'screen' price.) Why 799? See last weekend's chart.
At the time, the 25dma that I felt would be the best 'manager', was running just below 840 so I made my '£ per point' calculation based on that, exactly as per the TTEW manual. ( - yes, I DO personally Trade The Easy Way!)
So a notional SL (stop loss) of 841, minus the proposed open at 799, equals (hang on till I take my socks off...Ah yes, 42.)
Sticking with the £2000 bank mentioned in the manual - just so you don't know how desperate I am for cash - we have a total available risk capital for this trade, of £80. And £80 divided by 42 is 2, as near as.
So I ordered the trade to be filled for £2 per point, IF the screen price of Enterprise Inns reached 799, 'good till cancelled'.
Some of you will wonder - 'why 841?', given that by the time 799 might be reached, the dma 'should' be well below 841. What if the price had fallen to 799 the very next day? And what if the dma had remained where it was, for weeks?

Anyway, the order was filled on 12th October at 799 screen price (don't ask re the actual 'fill' {'quote'} price because mine would likely be different from yours anyway, given the fact that different providers offer different prices and these can vary minute to minute - 'screen' is all that ever matters in my view. I count my profits and my losses 'net of costs' - obviously - but never my fills nor stopouts. Life is just too short!)

Okay so far? The day after the fill (I normally only check such things after the market close) it was clear the notional 841 I had in mind for the SL, would have been too tight so I placed the initial one at 851, thus risking a little more than intended originally - sometimes that's just the way it goes.
I trust I have made it abundantly clear by now that trading is not, never has been, nor ever will be, an exact science. Not ANY kind of trading, no matter what methodology you end up using.

NB: I did NOT move the SL against my position - this was an initial SL only and as such, often needs some adjusting. Once a SL has been moved in my favour, however, I would NEVER move it back again.)

Anyway, slowly but surely the dma dropped towards 800 and by November 1st, my SL was at 811 screen price. Those of you who took the trade, know exactly what happened on 2nd November!

However (and this is the main message) the stopout was NOT for a full £80 (4% of the bank), but for 12 points @ £2 plus spread costs.(811 minus 799).
It had been a 'perfect trade' and those of you who sold Enterprise Inns at 799 by having ordered in advance - there were one or two of you according to your emails - should be very happy with the outcome, loser or not. But another 'one or two' of you decided to jump on the bandwagon (as you thought) and there were a couple of sales at around 780 on 31st October! These trades of course were almost immediately stopped out for much more than 12 points plus spreads, and had been extremely badly executed.

My stopout cost me (including costs) just over one third of a 'full' stopout, but a trade taken at 780 -ish sure as heck cost a lot more than that. Roughly, I expect a losing trade to cost about 1.7% of the bank on average, and a winner to pay around 4.3%. These are approximations only and the sole point in mentioning them now, is to let them reinforce for you a point made several times - you only need 50% winners to succeed in this business, IF you follow a proven methodology.

You 'chase' the market at your peril, folks. And never, ever, should you chase anything that I have mentioned. TTEW/WICS charts are for educational purposes only, as I try so hard to make clear at all times. I am not going to start putting up only charts that have yet to develop into something of trading interest, because I just know that if I do so, some of you will simply wait for them instead of doing your own research. Those of you who regularly use the mentoring service are well aware that I will always comment on a chart for you - either pointing out something to consider, or agreeing with your analysis, or whatever - but the true nature of this entire project, is to teach YOU to become self sufficient at this game, and therefore my comments are always designed to trigger even more thoughts for you to consider.

I mentioned the other week that I go through a series of 'What if?' type questions when looking at a chart, and that leads me on to another angle on today's main topic.(Which, just in case you hadn't already guessed, is all to do with 'taking responsibility for your own decisions'.)

Anyway, someone asked during the week if I could provide a list of common errors made by beginners - an excellent idea - and one of the biggest in my view is 'failing to ask enough questions' ie laziness/unwillingness to analyse.

There's nothing to beat talking to yourself in this game - schizophrenia? Who cares? Just keep on asking the questions and hope you have an understanding family or else a soundproof room.
'What if the price drops to x?'
'What if it doesn't?'
'If it does, why would that be significant?'
'Where is there resistance?'
'If the directors are buying, why is the price still dropping?'...and so on.
There are zillions of questions you can ask, I realise that, and of course you can't cater for all eventualities, but it's not that hard to stand back a little and go through a rational thought process before entering any trade.
'DYOR': DO YOUR OWN RESEARCH - a useful trading mantra perhaps?

The next two most common errors I would say have equal status: fear, and greed. Yes, you have heard it all before and I KNOW it doesn't apply to you! (?)
Fear of missing out when the markets finally do turn down, fear of losing money, fear of not making enough money....it's all in the manual!
Greed - the alter ego of fear.

And of course, it's a combination of fear and greed that causes us to chase trades, which I guess actually may well be mistake Numero Uno by a long way.

It's also Fear and Greed that make us feel a need to be 'in the market' at almost any price - ie overtrading by having too many positions open, and not having the courage simply to sit on the sidelines for a time.
I believe 'patience' has been mentioned before in WICS from time to time.
There is no law that says you have to take any trade. Tony might well have banned pretty much everything, but for now at least, it's still not illegal just to loiter with intent in the trading arena.

I'm kind of assuming that you don't ever make the mistake of moving SL positions against you, or not having stop losses at all, or letting losers run, or dumping winners too soon, or....but that kind of thing is dealt with in the TTEW manual so of course you're not doing that sort of thing by this stage, if indeed you ever did at all.

Some of you however, still listen to the opinions of others (!)

To make a serious point despite my slightly facetious approach above, the main mistake is to enter a trade with no good reason for having done so - my points above focus on the negative for good reason! If you are unsure, having had a really good think through for yourself, why not then ask me? I have made totally clear that I'll never give you specific trading advice, but I'm always more than happy to help you with your chart analysis. That is what the mentoring service is for, after all.

Oh yes, and one more major mistake: trading with 'scared money'. That comes under the 'fear/greed' category of course, but it merits a separate mention because all too often, people trade with money that has no business at all being used for such a pursuit - again, the manual discusses this. If you're trading with next month's mortgage payment, it's simply not going to work. I'm afraid there is no exception to that fact - you might have a lucky run but it will all catch up with you in due course I'm afraid.

Which reminds me of another thing that affects us all - not just beginners - the losing streak.
A series of losers that seems to happen for no apparent reason, can test the resolve of any trader, beginner or hard bitten.
Sometimes, such things come along and the only thing I can say about them is that they happen to me too, but I have such total confidence in my methodology that I simply shrug them off (with the odd wee swearie word, mind) and get on with my life.
When you're setting out on this journey, though, that's not so easy to do - but the only reason for that, is because you have not yet found YOUR OWN methodology -ie whatever modification/tweak/mishmash/ of TTEW that you feel at one with.

It's also probably true to suggest that when you actually make the effort to analyse a losing run with a degree of honesty, you'll find a lot of the underlying reason won't simply have been 'bad luck' - mostly, a losing streak implies a laziness - derived divergence from your rules and the losers concentrate the mind wonderfully. I know that's often the case for me, which is why after a few losers I walk away for at least a couple of days, if not longer, till I straighten myself out again.

Which rather gets me back to where I started today: I can help/guide/mentor you - whatever you want to call it - but ultimately, your trading success or failure will be dictated entirely by the degree to which you are prepared to take ownership of your decisions, win or lose.(By the way, don't crucify yourself over a string of losing trades. I don't care who you are, you WILL experience these from time to time.)

In the manual, I mention the excellent Mark Douglas book 'The Disciplined Trader'. He says it all for me, frankly, and if you haven't already done so, find yourself a copy and get stuck into it. It will be time well spent, I assure you.

Moving on, I'm not going to comment much this weekend on the 'Big Picture'. I'll merely point out that a) according to Capital Economics, 'consumer spending' now accounts for two thirds of the UK economy, and b) personal bankruptcies are up 46% this year, according to the DTI.

I leave you to draw whatever conclusion you will, from these two snippets, and I wish you well until next weekend.
All the best as always,
Ian.

PS: There have been a few questions during the week about GSLs (Guaranteed Stop Losses) - please read what I say about these, in the Archive FAQ section, before you email me about the difficulties that surround them these days.

Oh, and also -please don't send attachments with questions, and PLEASE, recent subscribers who are still with ntlworld or tesco.net, send me an alternate address if you expect a reply from me!

.'IMPORTANT NOTICE: These WICS charts are for EDUCATIONAL PURPOSES ONLY. They represent only MY understanding of what is happening in the market for any particular share, stock, commodity or index. In NO circumstances should they be construed as recommendations to trade. If I choose to trade what I see, that is MY decision. YOU must, in turn, come to YOUR OWN conclusions about what action, if any, YOU might choose to take'.