How to trawl the data banks of this top-notch research firm and steal their best trading ideas
Let me tell you about a ‘secret’ vault of trade ideas I know…
It’s been around for years, but ask your average Forex trader if he’s heard of it and you’ll likely get a blank stare.
And it really does reveal trades ideas that have a proven track rate. Most of them have made money 75% of the times they’ve triggered over the last decade.
But to properly understand the true value of what this resource offers you need to know the full behind-the-scenes story.
So let me tell you a tale of mystery and intrigue. And then I’ll tell you exactly where to find the trades at the end.
This is an oldie, but such a goody.
And if you’re sitting comfortably, I’ll begin…
Trades from beyond the grave
In the early 1900s a wealthy grain trader lay on his death-bed. He’d lost his wife many years earlier and had since dedicated his life to his three children.
The children had led lives of privilege. They’d attended the best schools and never wanted for a single thing.
But now they were older, they mostly just burned through their trust fund income as fast as they could.
The trader thought them lazy. He regretted spoiling them and could see how they were just itching to get their hands on the rest of his loot.
But this trader was a wise man. He’d figured out how to teach them a valuable lesson – one that would stand them in good stead after he’d passed.
And as darkness drew in around the trader, his three children gathered at the bedside.
“Go and see Jim Levit,” the trader rasped. “I’ve left instructions with him. You’ll never have to work a day of your lives.”
So the trader’s life slipped away, and as soon as they could, the children raced round to see Jim Levit (attorney at law).
Jim pulled a small piece of paper from a file on his desk and read aloud what was written on it: “To my three children, I leave my most valuable possessions…” Smiles and expectant glances were exchanged. “…Sell March wheat on January 10th, buy May wheat on February 22nd, sell July wheat on May 10th, buy December wheat on July 1st, sell December wheat on September 10th and buy March wheat on November 28th.
“If you follow these instructions every year, the wealth you were expecting will surely be yours. The rest of my estate I leave to charity.”
His most valuable possessions were dates for buying and selling wheat futures contracts!
I’d love to have been a fly on the wall in that room. I’ll bet you could have heard a pin drop.
So anyway, legend has it all three of the trader’s children went on to place the trades year-after-year, and sure enough became very wealthy in their own right.
Once they were ready to retire, the three of them agreed to share their secrets with a few of their close associates and the story spread.
The buying and selling dates became pretty well known: they’re called the ‘Voice from the Tomb’ trades because they continued to work just as the old trader said they would.
No one outside their little circle knows for sure exactly how the trades are managed once the positions are open. But rumour has it their special method still works, even today.
A trader called George Kleinman – now president of Commodity Research Corp – did a bit of testing: over a 35-year period, if he’d bought or sold on the ‘Voice from the Tomb’ dates and simply looked for a $750 profit per contract against a $750 stop loss, he found profitable trades 75% of the time.
75% profitable – but is there any logic behind the method?
Do you think it all sounds a bit haphazard?
Well, it’s nothing mysterious. The trades are simply being driven along by seasonal trends.
You see, in many markets there are conditions and events which happen every year and influence price to a greater or lesser degree.
The change of the seasons and the harvest-cycle are the main influences in the grains. But what about the currencies? Can you gain an edge from seasonal tendencies for your Forex trades?
There are no guarantees, of course, but if you found a seasonal pattern that repeated with 80% reliability across the last 15 years you’ve got yourself a statistically significant edge.
And you don’t really need to know the reason why the pattern is there. It could be down to big corporations repatriating funds at certain times of the year to make their books stack-up. It could be due to something like the seasonal influence of oil prices affecting a country’s currency (the Canadian dollar tends to be sensitive to the price of oil).
Whatever the reason, if you’re aware of the pattern you can use it to your advantage and make it part of your decision-making process.
But who’s got time to go trawling back through 15 years worth of data looking for correlating patterns?
Well worry not, my friend, because the good people over at Moore Research do it all for you.
They crunch the numbers going back 15 years looking for trends with a minimum reliability of 80%. They do a bit more proprietary ‘fine-tuning’ and then deliver a complete trading strategy outline to their traders.
They’ll even give you the optimised entry and exit dates for the trade, the average profit earned, and also the exit date with the optimum accrued profit.
Their Forex research can easily be applied to the spot currency markets and, if you’re interested, they offer a free 14-day trial. You can read about it here.
What the research looks like
And here’s an example of the kind of research you can find over at MRCI, and how you might use it for your own trading. (Out of respect for their copyright material, I’m showing you the free sample chart they display on their homepage. It’s a T-Bond futures chart but the principle is exactly the same for the Forex stuff you’ll find in their subscribers area.)
A – The black line is the current price action.
B – The blue line is the seasonal pattern.
C – The yellow area is the statistically significant window of opportunity.
D – The chart in the lower pane is simply the 15-year seasonal pattern with the five-year seasonal pattern overlaid: you can check the more recent years are not beginning to stray from the 15-year pattern.
On this chart, the window of opportunity is to buy on 01/08 and sell on 31/8. But rather than go in blind on the entry date, I look for a breakout pattern to actually enter the trade. I like to make sure there really is buying pressure in the market first, and then let the seasonality simply carry the trade along, once the trade is triggered.
So, for example, you could look for a simple breakout of the 21-day highs anywhere within the yellow zone to get you in, and then exit with a market order on the specified exit date.
Adding this extra trade-entry filter can keep you out of some of the trades that aren’t really working in the current year for whatever reason.
Trading the seasonals can be a really nice way to trade. You simply get your ‘playbook’ out at the start of the month, have a flip through the seasonal charts to see which opportunities are due to come in, and simply wait for an entry signal in whichever currencies you’re keeping an eye on. Moore Research has done all the heavy lifting for you!
Be Prepared: Market Moving Data Coming This Week (London Time)
Wednesday 23rd March
14:00 USD New Home Sales
14:30 USD Crude Oil Inventories
Thursday 24th March
09:30 GBP Retail Sales
12:30 USD Durable Goods
Friday 25th March
– UK & Europe: Good Friday Holiday
12:30 USD Gross Domestic Product
Monday 28th March
– UK & Europe: Easter Monday Holiday
14:00 USD Pending Home Sales
Tuesday 29th March
14:00 USD CB Consumer Confidence
It’s looking very quiet on the scheduled reports front this week. Keep an eye out for thin trading conditions either side of the Easter weekend, though: it’s not unusual to see a bit of volatility creep in when the normal volume is absent.
Have a lovely Easter and I’ll catch you again next wee.
P.S. Many thanks if you were one of the Trader’s Nest readers that applied for a position on the Scalping Beta Tester team. I’m working through the emails and will be in touch with the selected traders on Wednesday as promised.