Weekly Initial Unemployment Claims increase to 244,000

Weekly Initial Unemployment Claims increase to 244,000

by Bill McBride on 6/29/2017 08:34:00 AM

The DOL reported:

In the week ending June 24, the advance figure for seasonally adjusted initial claims was 244,000, an increase of 2,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 241,000 to 242,000. The 4-week moving average was 242,250, a decrease of 2,750 from the previous week’s revised average. The previous week’s average was revised up by 250 from 244,750 to 245,000.
emphasis added

The previous week was revised up.

The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 242,250.

This was higher than the consensus forecast.

The low level of claims suggests relatively few layoffs.

Trading a Small Account with Patience

Trading a Small Account with Patience

As a new trader, I had enough money socked away to make a decent-sized trading account. But as my newness, and ignorance took control, I quickly had a small account. I had blown out all my money learning. At that point, I knew how not to lose, but I didn’t have any money to continue.I spent several years of my trading learning experience taking small amounts of cash from my day job and trading with that. Consequently, I got pretty good at trading a small account. Trading a small account takes different skills than trading a large account. Most of those skills involve risk management. We’ll take a look at those in this class.

What is a Small Account?

Let’s start by defining a small account. A small account has different definitions depending upon your trading instrument. I’m going to draw a line in the sand here and say that a small account is one that is less than 10,000 times the smallest per pip (tick) increment of the instrument you’re trading. I’ll go into a bit more detail regarding that in a moment, but a small account is one in which you cannot properly use all the money management tools in your toolbox because you don’t have enough margin in your account to handle it.

To calculate my definition of a small account. Let’s look at the EUR/USD for a moment. In general, on the MT4 platform, the minimum trade size is 0.01 standard lots – a microlot – or 100th of a standard lot, 1000 Euros. The value per pip in USD (I know not everyone enumerates their account in USD. I will however use USD for all of the examples in this class) is $0.10. So, roughly multiply that by 10,000 (=$1000) to get an idea of what I consider large enough to easily maintain your risk parameters (for EUR/USD trading.) Anything smaller than that, I would consider a small account. I know that a $1000 is still a pretty small account, but you should be able to use proper risk management in an account of that size.

Of course, if you’re trading, for example, Mini-Dow Futures (YM), the smallest tick is $5 per contract, so, multiplied by 10,000, you will need $50000 minimum to maintain your risk properly. For the YM, I would consider anything less than that to be a small account.

Another example might be the eMini S&P (ES), with a $10 per contract minimum. So, you should have at least $100,000 to consider this a large account.

And, of course, you are stuck with a minimum of $25,000 in the US for stock day trading minimum capital.

Risk Management is what makes it tough trading small account

That’s not to say that you can’t trade these instruments with smaller accounts. I think you can probably easily trade the futures with accounts as small as $10,000. But to do so, you will have to have strategies that allow for the fact that you can’t have 1/10th size increments for building and reducing positions and so on.

For the purposes of this class we will only be discussing forex.

Patience is the important factor when trading a small account

PATIENCE! Since you cannot size your account down as much (relatively) with a small account, you have to be sure you can get the best entries possible. Getting the best entries requires patience, patience and more patience. That is how to grow a small trading account.

If you have a larger account, you can enter experimental positions with, say, 1/10th of your normal size to see how it does. Your profit will be smaller, but so will your loss. With a small account, you don’t have that option (unless you have a broker that will allow it. More on that later.)

Small Account Strategies

Develop your strategies such that you maximize your entries and reduce your risk and help in growing a small forex account. For example, holding out until the very last second on a reversal trade serves two purposes:

  1. You will get a better price before the reversal occurs.
  2. You will reduce your loss if the price doesn’t reverse.

As you know, I use the bullet strategy on reversal trades. Since, for the purposes of example, I’m trading a small account, I have limited options for sizing the trade. I can only go in half size (my normal position size is 0.02 lots), then if I want to increase my subsequent bullet size, my only option is to double the size, which approaches gambling (doubling down.) The result of doubling increases the risk dramatically and can cause relatively huge losses if price action doesn’t reverse in due time.

The rules I use for our Momentum trade are designed for a small account. With a larger account, I would enter a position using a market order right when we get our momentum signal and all criteria are met (the Momentum Strategy Checklist.) I would use a smaller size (½-¾). If the price never pulled back to the 20 SMA, we would have some profit from the trade and we would have capitalized on the impulsive move. If it did pull back to the 20 SMA, I would add a larger size (say 20-25% increase over “normal” size) and let the trade run using whatever loss exit and take profit plans worked well. That way, we get profit if it doesn’t pull back and we get more profit if it does pull back. The sizing of the positions would ensure that we minimize our loss in the case that it never goes our way.

Since our account size doesn’t allow us to manipulate the trade sizes that way (remember our minimum size is 0.01 lots), we have to use the best possible scenario – the pullback to the 20 SMA – even if it means we will miss some trades because the price never pulled back to there.

Missed Trades is the penalty for Patience

So, the penalty for patience is missed trades. Yes we will miss a few trades, but the ones we get into will have greater possibility for reward and smaller risk if price goes against us.

The reversal rules are also optimized for small accounts. Our “Reversal Min” number ensures price has moved sufficiently for a reversal. My interpretation of the H4 move is also designed to ensure an imminent reversal. And lastly, the experimental 15 min RSI(8) divergence is also designed so we can be sure to get our reversal without adding additional positions.

Learn to Read Price Action

In addition to our trade rules, you should be particularly conscious of the price action. Watch for stalling and reversal signals to get in or out of trades at the right time. Recognizing these price action signals requires time and experience. Plus, if you’re going to trade using price action signals, be sure you know yourself. Don’t allow yourself to be scared out of positions just because price might be going against you. Be sure that you are seeing real price action signals (pin bars, rejection wicks, price movement as it approaches support and resistance zones, etc.)

Trading a large account is MUCH easier than trading a small account. That may seem obvious, but it’s not really for the obvious reasons. When you trade a large account, your trade size is larger and can be more easily split incrementally. For example, if your normal trade size is 0.02 lots, you can split it in half and that’s it. But if your normal trade size is 0.20 lots, you can split that 20 ways. You can enter a trade ½ size and add 10% for each additional position. Or you can enter ¼ size and add 20% for each additional position. In either of these cases, you will not be up to your full size for many positions. If you want to be able to do that and you don’t have enough trading money, you can open a small account with the broker Oanda (there may be others of which I’m unaware.) Oanda will allow you to trade in increments of one unit of currency. That’s 1000th of a microlot.

Some Brokers Allow Smaller Trade Increments

The downside to trading with Oanda is limited leverage. US accounts will only get 50-1 leverage (I have 1000-1 with Trader’s Way). Non-US accounts get 100-1 leverage. 100-1 is better, but still tough to put on many positions. BUT, if you use my arbitrary 10,000 multiplier, you will find that you only need $1.00 to have a “large” account with Oanda (1 unit of EUR/USD is $0.0001 per pip.) While I was floundering in my trading, I was able to trade with Oanda and gauge my learning using $100 trading accounts. Of course, making $0.02 on a trade seemed counterproductive, but it was more real than trading a demo account. I was, however, very happy that I could do forex trading with 100 dollars.

If you want to use MT4 with Oanda, you’re still relegated to a minimum of 1 micro lot. But Oanda now includes TradingView charting, so you can trade directly from very nice charts and still use single unit trade sizes.

These are just a few things to remember when you are trading a small account. The most important thing to remember is patience is the order of the day when trading forex.

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Trend Following is All About Patience & Discipline

Trend Following is All About Patience & Discipline

Trend Following is All About Patience & Discipline

What do I mean by this title? To me it is exemplified in a current trade. I had a signal to buy the French Stock Market CAC. If I would chose, this would not be a trade that I would choose, however trend following is following signals…no opinion…being consistent and having an open mind. I have been in this trade since Feb 2017. So firstly I had the discipline to take a trade that I did not like and more so the patience to stick with it. Currently my trailing stop is very close to being hit. If it hits, I am out…I do not over ride the system. Have a set of rules and follow them. 

London Property Bubble Bursting? UK In Unchartered Territory On Brexit and Election Mess

London Property Bubble Bursting? UK In Unchartered Territory On Brexit and Election Mess

– London property bubble bursting? UK in unchartered territory on Brexit and election mess
– Evidence of downturn in London housing market

– Over 75% of London homes now selling below asking price
– Prime north London property down 6 per cent annually
– House prices have not fallen for three consecutive months since the 2009 crisis
– Bank of England report expresses worry over UK property market
– ‘Adverse shock’ to UK economy may amplify negative feedback loop

– Increased political and economic uncertainty has weakened fragile London buyer sentiment
– Bank of England Financial Stability Report: “Mortgages are the largest loan exposure for UK lenders”
– BOE FSR refers to a “self-reinforcing feedback loop” that, if triggered, would cause another 2008-style crisis in the UK

Is the London property market heading for tough times? The most recent housing figures and a new Bank of England report suggest it may well be.

Recent figures show that 77% of London houses sold in May went at below asking price, up from 72% in April. London as the capital of UK reflects international market but international investors have major concerns over uncertainties namely Brexit and the current state of the government. As a result London house prices are rising at their weakest rate in five years (if they are rising at all).

In prime estate London things are particularly bad, with prices in prime north and north west London falling by 6% in the last year.

Across the country, price drops in May signalled the third consecutive monthly drop, something which has not been seen since the 2009 crisis. Banks are well aware of what this could mean for them and as a result are now offering mortgages that scream……

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Brexit & Beyond: Brexit Negotiator Urges ‘More Ambition’ on EU Citizens’ Rights, May Clinches DUP Deal, Trump and the German Elections

Brexit & Beyond: Brexit Negotiator Urges ‘More Ambition’ on EU Citizens’ Rights, May Clinches DUP Deal, Trump and the German Elections

Brexit & Beyond: Europe in Flux is The Wall Street Journal’s round-up of news and analysis of how Brexit will affect global business, economies and finance. You can sign up here. MUST READS Britain’s Prime Minister Theresa May (L) with Democratic Unionist Party (DUP) leader Arlene Foster at 10 Downing Street. / AFP PHOTO / […]

Stocks Up, and Peso Recovery Extended

Stocks Up, and Peso Recovery Extended

Stocks Up, and Peso Recovery Extended

June 26, 2017

Equities began the final week of the second quarter mostly on a rising note, with gains of 1.3% in Taiwan, 0.9% in China and Hong Kong, 0.6% in New Zealand, 0.4% in South Korea and 0.1% in Japan and Australia. Several markets were shut for the end of Ramadan. Share prices in Europe have advanced 1.5% in Italy, 1.2% in Switzerland, 1.1% in France, 0.8% in Germany and 0.7% in Britain.

The dollar fell 0.4% against the peso, 0.3% relative to the loonie and 0.1% vis-a-vis sterling but rose 0.4% against the yen and Swiss franc as well as 0.1% versus the euro, kiwi, and yuan. The Aussie dollar is steady.

West Texas Intermediate oil firmed 0.3% further after ending last week with a slightly better tone, but at $43.12 per barrel, the price is still rather low. Comex gold sank 1.1% to $1,242.10 per ounce, weakest since mid-May.

Ten-year German bund and British gilt yields are 2 and 1 basis points softer. Many central bankers speak today including Draghi and Kuroda.

The IFO German business climate index rose a half point to a new record high of 115.1 in June, prompting IFO officials to raise their GDP growth projections for both 2017 and 2018 and to declare that “Germany’s economy is performing very strongly.” Current conditions and future expectations each advanced.

Japanese corporate service prices slipped 0.1% for a second straight month. Their 12-month rate of increased dipped to 0.7% from 0.8%.

Japan’s index of leading economic indicators for April was revised lower as was the index of coincident economic indicators that month.

The Summary of this month’s Bank of Japan Board meeting, a pre-minutes if you will, concedes that the 2% inflation objective cannot be met in a short frame of time but advocates maintaining very accommodative QQE settings and avoiding any exit plan talks lest such spoil the effort to lift inflation expectations. While inflation remains near zero, stimulus is aiding economic growth and fiscal conditions.

The British Bankers Association estimated that mortgage approvals in May fell to an 8-month low of 40,347.

The Swiss current account surplus last quarter of CHF 11.12 billion was only half as big as in the previous quarter.

In May, producer price inflation decelerated to 4.1% in Finland and 5.3% in Spain on falling energy prices.

A political accord was reached between British Prime Minister May and the Democratic Unionist Party, a Northern Ireland regional group on whose support the Conservative minority government must get to govern.

In the Czech Republic, business sentiment improved a bit but was counterbalanced by a 10-month low in consumer confidence.

Three U.S. economic indicators will be reported today: durable goods orders, the Chicago Fed National Activity Index, and the Dallas Fed manufacturing index.

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.


Tags: Draghi, German business climate index, Japanese corporate service prices


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Crude: The newest bear market

Crude: The newest bear market

Crude oil in a new bear market? 
The newest bear market is in crude oil. The definition of a bear market is when an ‘asset class’ is down more than 20% from its recent high: (Bear Market Rally Definition Investopedia). It has been more than five years since the market fell so hard so fast from its’ high. Two months later, it was even lower. During the past 20 years, the SPX has struggled when oil fell into a bear market.

Oil prices broke to a fresh seven-month low on June 21, with WTI crude oil dropping to $42 per barrel. The renewed and heightened pessimism over the pace of rebalancing has sunk in as OPEC, is struggling to reduce its’ inventory. U.S. shale continues to grow production. There are large volumes of supply back in the market at the worst possible time.

WTI crude oil now technically bearish

Most oil companies are now adjusting to “lower for longer.”

The Wall Street Journal reports that “most in the oil industry are resigned to low prices for years to come, recognizing that a range of $50 to $60 might be a semi-permanent equilibrium.”

Between 2014 and 2015, 105 oil producers and 120 oilfield service companies went through bankruptcy. 

In short, these extreme price movements and key support levels can provide some fantastic opportunities to trade oil like my last trade in SCO for a 21% move a couple weeks ago.


About the Author

Founder of AlgoTrades Systems., internationally recognized market technical analyst and trader. Chris is also the founder of TheGoldAndOilGuy.com, a financial education and investment newsletter service. He is responsible for market research and trade alerts for of its newsletter publication. He is the author of “Technical Trading Mastery – 7 Steps To Win With Logic” and has  been featured in Futures Magazine, Gold-Eagle, Safe Haven, The Street, Kitco and dozens of other financial websites. You can follow him on Twitter @TheTechTraders.