Ep. 60 - Trading Active Markets vs Inactive Markets with Brandon ‘The Boss’ Turner
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In this episode:
Brandon Turner returns! He trades Forex using fundamentals and sentiment and talks about the differences between trading active markets and trading inactive markets
He also talks about what it is like working at a prop trading firm, how to get a job as a prop trader and whether becoming a prop trader is a good idea at all!
Owen has begun forward testing his new monthly reversal system
Tom mugs off Goldman Sachs
Trader Interview - Brandon Turner - Trading Active Markets vs Trading Inactive Markets
Brandon Turner has been on the show many times. It was he who first interested Owen and Tom in trading Forex using the fundamentals (interest rates, jobs data etc) and sentiment (short term price action driven by the economic and political news and data).
This was Owen’s first love in Forex trading and he harbours a passion for it to this day! Tom was always less sure on the practicalities of trading Forex using the fundamentals on a day to day basis. But he recognised the usefulness in understanding what was driving price action.
Rookie Trader Graveyard
Brandon offers advice on the dangers and opportunities of trading active markets. When the markets are moving fast they often have a strong reason to move. If you can try and get in on that move you stand to profit greatly. But the risks are also tremendous.
Brandon knows that other traders with better information, or indeed ‘non carbon based lifeforms’ can make decisions far quicker than us. Without experience, trading inactive markets using sentiment can be a rookie trader graveyard.
The markets can move so quickly after big news, like Non Farm Payroll reports, that it scares retail traders into the market and then scares them out again. This usually leads retail traders to buy the top and sell the bottom of these moves!
Brandon and Owen both love a fib. Brandon explains how to use shallow fib retracements on these fast moves (the 38.2 is a particular favourite) to ensure you get in, but in at a discount. It probably also has a calming effect - making you sit on your hands while the big move happens!
But, in inactive markets, where traders are looking for a reason to trade, the price will often drift slowly back from highs or lows. This is where he looks for a 61.8 fibonacci retracement and gets in with a big discount on the prevailing trend.
There is one aspect of trading fibonacci retracements that it is essential you understand, regardless of whether the market is active or inactive. Owen has made the mistake of ignoring this rule for a long time! If the price comes off the top of a move and retraces, you can’t just guess which level to get in at - you must wait for a rejection.
You might have an idea of what you are looking for, but you HAVE to wait for a rejection of that level. In other words, the price must bounce, to some extent, off the fibonacci retracement level you want to trade. This might mean a 5 or 15 minute reversal candlestick completing, depending on the timeframe. Without this confirmation of a reversal you are just trading against the price movement - a sure fire way to lose money!
Some great advice today from a great trader - we hope you enjoy having The Boss back on the show!