Do you like the idea of a trading system that doesn’t involving you staring at the markets every day?

One by which you might make five or six trades a year – certainly no more than ten – in a market that you can get in and out of easily?

And one by which you should comfortably be able to beat an index, such as the FTSE or gold?

Then I may have something for you in today’s Money Morning…

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‘One picture is worth ten thousand words’ – Fred R. Barnard, Printers’ Ink, 10 March 1927

We don’t always agree with that statement. We write about 1,000 words each day for Money Morning, so if we could send you one picture a fortnight, it would make our job a lot easier.

Of course, while it may be easier for us, it would be less useful for you, and you’d soon turn off.

But sometimes a picture really is worth ten thousand words. This morning we saw a picture that condenses the past four years of stock market action into just two-and-a-half hours of market action.

In fact, if we’ve read this right, it could be the single most important image you see as it could reveal how the market will behave for the rest of the year…

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Was This Just Another Rigged Market?

One month ago, Bloomberg News reported:

“Goldman Says ‘Underweight’ on Commodities for 3-6 Months”

Yesterday Bloomberg News reported:

“Goldman Sees Commodity Recovery as Slump Erases $99 Billion” Continue Reading

Alrighty … the last time we chatted, I told you about how Kris Sayce, Chris Tate and I were on the brink of unraveling exactly what makes successful traders earn 80% of the profits. No – it’s not sexy, and it won’t win ‘the most beautiful baby award’, but to become an ultra-versatile power trader, it’s clear that you need to do two things…
You need to set a stop loss, and you need to stick to it. This is a huge commonality of all brilliant traders, and it’s a skill you’ll need to cultivate if you intend on scooping up outrageous profits.

In this article, I’m going to tell you how to set a stop loss, and how to stick to it. If you’re determined to grab the rewards you deserve, rather than catch the mere dribbles that the professional traders are willing to spit your way – then pay close attention to what I’m about to reveal.

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Trading without a stop loss is like rock climbing without a safety harness. One small lapse in judgement could spell catastrophe, (as so many traders have found out recently).

Two weeks ago, my business partner Chris Tate (www.tradinggame.com.au) and I caught up with Kris Sayce, your intrepid Money Morning editor and all-round gentleman. I’m still buzzing from the meeting. As we munched on our lunches, the three of us got into some really high level discussions about trading. We talked about what it means to achieve exceptional gains in the market, and why for some people, money just flows naturally into their trading accounts.

I really get a kick out of every time the three of us catch up, (and it’s not just because I enjoy looking at my own reflection in their shiny bald-heads). It’s because, when you meet with people like Kris, they tend to add clarity to your thinking that you just can’t beat.

Kris asked me for my advice about how to help his readers achieve even more exceptionally cracking returns. So I’ve spent all morning huffing and puffing, and stomping around my office in deep thought. Yes, I’ve even been talking to myself and ranting a little, scaring the neighbours dogs… and then all of a sudden – Whammo! I came up with the solution. Before I tell you what I came up with, to make sure we’re both on the same wavelength, take the time to…

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Is that it? Is it blue sky from here on in? Well, we won’t get too carried away. If you recall, your editor called the bottom of the market last November – and we were wrong then.

It hit the ‘new’ bottom earlier this month, and to its credit, it’s rebounded by a good 15% since then. That’s not bad by anyone’s standards (although it’s still lagging the Australian Small Cap Investigator performance since last November by a long way – but that’s a different story).

But while I’m on the subject of the Australian Small Cap Investigator, subscribers should receive the March issue today. And you may be surprised at our latest tip. In fact you could almost say it’s a contrarian tip from a contrarian – which we guess makes it mainstream, but not quite.

Anyway, we’ve said all along this is a traders market. And I see little reason to change course now. At this point do you follow the trend upwards, take some money off the table, or move your stop losses up?

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Totally positively correlated with the S&P/ASX 200, the All Ordinaries Index (ASX: XAO) has reached yesterday a new low since August 2004. It closed 3,513.10 points. This is a key level. Actually it’s more a key area rather than a precise point. Say that between 3,400 and 3,500 points there should have some massive buying interests.

Of course the fundamentals that drive the current price action are really bearish. The momentum indicators are also really bearish. The MACD and the technical Momentum Index remain bearish and they plunge more deeply towards extreme low levels.

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