Andrew Abraham

andy-0101 My name in Andrew Abraham. I have been investing in commodities and managed futures since 1994. I adhere to the philosophy of trend following. Trend following stresses a disciplined approach to commodity/ futures trading. Successful trend following and commodity futures investing requires patience, discipline and actively managing the risk. What sets me apart from other traders is that I am not only concerned about the return on investment but how much risk I will have to tolerate to achieve my goals.

Contact Details

If you are interested in contacting for speaking engagements. Please email me at Andrabr9@gmail.com or call 954 903 0638.

Books Worth Reading

Sponsored Listings

Risk Warning

Futures and commodity trading involve substantial risk. The evaluations of futures and commodities may fluctuate and as a result, clients may lose more than their original investment. In no event should the content of this website be construed as an express or an implied promise, guarantee or implication by, that you will profit, or that losses can or will be limited in any manner whatsoever. Past results are no indication of future performance. Information provided on this website is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible, where projections of future conditions are attempted.

infolinks

Links

Trend Following CTA abraham investment management
Binary Options
Learn Forex Trading Online
Get a grip on forex trading with this free online course.
Tax Software

Learn How to Analyze Volume in the Stock Market

Yesterday in the Stock Market, volume was higher across the board and well above average. Volume in the stock market is the footprints of the big institutional investors. There was distribution on all the major averages and clearly strong selling by large institutional players.

Another key issue is to watch the leading stocks….Look at Apple…SWKS, PANW, AMBA among others. The volume on these leaders was also above average to the down side.

The short term moving averages are turning back rally attempts. More negative is the failed rallies we have been seeing intraday as well as daily.

A rally attempt after a big decline that can’t even get above these resistance levels is pretty weak. As stated prior, watch the 200 day exponential moving average. This will show if the stock market can truly rally.

Watch the stock market volume…watch the 200 day exponential moving average….
I like watching from the sidelines at this moment…Less stress and no emotional toll.

I have a colleague who finished half a bottle of Vodka. At least it was Grey Goose!!!

I prefer my green tea..

[Post to Twitter] Tweet This Post 

Add This! Blinkbits Blinklist Blogmarks BlogMemes BlueDot BlogLines co.mments Connotea del.icio.us de.lirio.us Digg Diigo DZone Facebook FeedMeLinks Folkd.com Fleck Furl Google Google Reader icio.de IndianPad Leonaut LinkaGoGo Linkarena Linkter Magnolia Mister Wong MyShare Ask.com MyStuff Ask.com Yahoo! MyWeb Netscape Netvouz Newsgator Newsvine Oneview.de RawSugar reddit Rojo Segnalo Shadows Simpy SlashDot Smarking Sphere Spurl Startaid StumbleUpon TailRank Technorati ThisNext yigg.de Webnews.de ReadMe.ru Dobavi.com Dao.bg Lubimi.com Ping.bg Pipe.bg Svejo.net Web-bg.com Plugin by Dichev.com

The Stock Market Lows Will HOLD!!!

I had this phone call already this morning….I asked this client..how does he know? How does he know the future? I was not trying to be insulting…however this was a Cramer Statement I told him. No one knows what any market will do. This is why as a trend follower we have a trading plan. Otherwise traders freeze….let emotions rule…and simply fail!!

Lets see if the Stock market lows will hold??? The futures are down only 300 points plus!!!

[Post to Twitter] Tweet This Post 

Add This! Blinkbits Blinklist Blogmarks BlogMemes BlueDot BlogLines co.mments Connotea del.icio.us de.lirio.us Digg Diigo DZone Facebook FeedMeLinks Folkd.com Fleck Furl Google Google Reader icio.de IndianPad Leonaut LinkaGoGo Linkarena Linkter Magnolia Mister Wong MyShare Ask.com MyStuff Ask.com Yahoo! MyWeb Netscape Netvouz Newsgator Newsvine Oneview.de RawSugar reddit Rojo Segnalo Shadows Simpy SlashDot Smarking Sphere Spurl Startaid StumbleUpon TailRank Technorati ThisNext yigg.de Webnews.de ReadMe.ru Dobavi.com Dao.bg Lubimi.com Ping.bg Pipe.bg Svejo.net Web-bg.com Plugin by Dichev.com

The Resistance of the 200 Day Moving Average – Trend Following

As I have said many times…The 200 Day Moving Average is the line of delineation of bears and bulls.

If the Nasdaq and SPY can get back above this level with some conviction & stay there there is a good chance we could be moving higher. Conversely, if not then lower prices are likely ahead. At this point I am at a wait and see…or wait and potential prove. Otherwise I could be catching a falling knife and this is not trend following…

From the low on Tuesday there have been three successive up days on lower volume each day. These are wedging rallies that are usually not successful. This pattern must be broken if there averages are to have any chance of moving higher.

Time will tell…but in order to succeed one needs a complete trading plan. This is why I teach trend following. It is never easy nor something simply learned over the weekend….

[Post to Twitter] Tweet This Post 

Add This! Blinkbits Blinklist Blogmarks BlogMemes BlueDot BlogLines co.mments Connotea del.icio.us de.lirio.us Digg Diigo DZone Facebook FeedMeLinks Folkd.com Fleck Furl Google Google Reader icio.de IndianPad Leonaut LinkaGoGo Linkarena Linkter Magnolia Mister Wong MyShare Ask.com MyStuff Ask.com Yahoo! MyWeb Netscape Netvouz Newsgator Newsvine Oneview.de RawSugar reddit Rojo Segnalo Shadows Simpy SlashDot Smarking Sphere Spurl Startaid StumbleUpon TailRank Technorati ThisNext yigg.de Webnews.de ReadMe.ru Dobavi.com Dao.bg Lubimi.com Ping.bg Pipe.bg Svejo.net Web-bg.com Plugin by Dichev.com

Trend following Stock Market Question

After a decline as large as we saw in the last week a rally is to be expected. The key in my mind now is the 200dma on the COMPQ. The index is now 2% below this moving average which is now resistance. If the index can break above this level with some strength it might have a shot at returning to recent highs or even a new Bull Run. If it can’t then we should see lower prices.

What does this mean…Have a trading plan. Both Bulls and Bears have been hurt over the last week. I have fielded many calls and the bottom line was most did not have a trading plan. My students have avoided all of this for the most part. They have exited and now sitting on the sidelines with out any emotions waiting to see what to do. One does not need to be in the stock market at all times when trend following..

[Post to Twitter] Tweet This Post 

Add This! Blinkbits Blinklist Blogmarks BlogMemes BlueDot BlogLines co.mments Connotea del.icio.us de.lirio.us Digg Diigo DZone Facebook FeedMeLinks Folkd.com Fleck Furl Google Google Reader icio.de IndianPad Leonaut LinkaGoGo Linkarena Linkter Magnolia Mister Wong MyShare Ask.com MyStuff Ask.com Yahoo! MyWeb Netscape Netvouz Newsgator Newsvine Oneview.de RawSugar reddit Rojo Segnalo Shadows Simpy SlashDot Smarking Sphere Spurl Startaid StumbleUpon TailRank Technorati ThisNext yigg.de Webnews.de ReadMe.ru Dobavi.com Dao.bg Lubimi.com Ping.bg Pipe.bg Svejo.net Web-bg.com Plugin by Dichev.com

Index funds or FX trading?

Index funds or FX trading?

We all have heard it now and then. “Mike quadrupled his money by investing in Apple!”, or “Jenny from accounting made a killing shorting the EURUSD pair”. But is this really the norm? How could an average Joe pick out winning trades all the time, while preserving his capital? The answer is they obviously can’t. Good news however, there are ways to invest in the stock market while at the same time eliminating all of the unsystematic risk. With a bit of discipline and good money management it is even possible to consistently profit from trading Forex.

1.Dawn of Mutual Funds

The urge to be part of this great machine called the US economy was there ever since wall-street has been invented. Not so long ago, however it was an expensive process to buy even a single stock, unless one had access to a massive amount of capital. Mutual funds were the first step into the direction of making investing more attractive to the general public, since a large pool of money could trade much more cost effectively. Once a pool has been created it had to have a purpose: usually it was to generate a return, no matter what, hence most of them were “actively managed” or “total return” type of funds.

The theory sounds great, but the many different strategies and money managers were not always on the right side of the market. It was not until 1951 until a man called Jack Bogle came along with his senior thesis called: “Mutual Funds can make no claims to superiority over the Market Averages.”, where he pointed out that if someone would buy the entire US Equity market, then this person would probably beat over two-thirds (or more!) of the actively managed mutual funds while at the same time achieving the average return of the market.

Of course his hypothesis was greeted with scorn and it was deemed “un-American”. Who, after all, would like to belong in a group of “average” investors? Nonetheless the first market tracking, low cost, passive index fund was created by Mr. Bogle in 1975 with a meagre $11 Million in Assets under management. Today, his index funds are among the biggest players in the financial markets as investors reach out to benefit from the many advantages.

2.Why Index Funds?

When someone invests in a stock, then he is expecting to make money from it. Unfortunately there is risk associated with this, since it is possible to lose the entire investment if the company goes bust. This risk is called unsystematic risk, and it refers to this single stock/company. Then there is the market risk, systematic risk, which is the risk of the entire market. When bulls are on the loose, then a large chunk of the equities available for trading are usually rising, and when the bears ruin the party then it’s time for them to drop. When investing in a single stock then the investor carries unsystematic risk on top of the systematic risk. In exchange for that he expects a larger return.

When trading Forex the unsystematic risk is something entirely different. A value of a currency does not simply drop to 0, therefore one can assume that it will always be worth something. However country specific risks are able to cause massive gains or losses if certain economic conditions are met. It helps to imagine that a currency pair, the EURUSD for example, swings like a pendulum around a middle point, sometimes up, sometimes down, depending on how the two economies are doing relatively to each other and the world.

For long-term investors, the future is as cloudy as it can get. No one can predict which companies will make the cut, and even large blue chips can go belly-up if they fail to adapt to the future needs of its clients. For example, the only company who is still in the Dow Jones Industrial Average since its inception is General Electric – and even they have been dropped now and then. Kodak, a household name in the 80’s and 90’s has declared bankruptcy in 2012.

This type of risk has to be eliminated when someone is thinking to invest for the long term. Since it is impossible to predict which companies will make the cut 10, 20 or even 40 years from now the investor has to build a portfolio of dozens of stocks, which he would need to analyze and select in his own time. On top of that he would have to pay brokerage fees when buying or selling his stocks.

Thanks to index funds however, it is much cheaper and more effective to invest in stocks than it has ever been. In a few clicks of a mouse the investor can buy a share in a fund tracking the S&P 500 for example. With this investment he is invested in all the 500 (501 as of today) companies of the S&P500 index, without the need to purchase 501 separate stocks and rebalancing them all the time. He will earn the average return of the US Equity market, receive dividends, and on top of that he doesn’t have to worry about unsystematic risk. Since an index fund tracks an index it will always automatically contain the given stocks, as long as an equity market in the US exists.

3.Past performance is not…

Necessarily indicative of future results. Most of us have heard this phrase. But since it is so well documented it’s easy to check how the market as a whole has fared during the last 100 years. During 100 years there were 2 world wars, and so many economic downturns worldwide it’s pointless to count. The compound annual growth rate of the S&P500 since 1900 is around 7%. That means that for a decade’s long investment horizon it is not too unreasonable to expect at least 7% return. This is more than enough to allow for a comfortable retirement after a working career. It is important to note however, that the markets are usually very volatile. The S&P500 has seen gains and losses of over 30% in some years.

Expectations when trading Forex

Now that we have covered a lot of ground regarding index funds, it is time to compare that to a self-traded Forex account. As mentioned previously, a long term investor in an S&P500 can expect to have an average return of 7% annually. Not too bad. But at the same time a trader who has some experience and uses a bit of leverage can sometimes make this amount in a single day. Obviously a self-traded account can be much more volatile, and it is necessary to have a good trading plan and money management strategy. The possible reward however is much higher, and many people spend a couple of hours a day in examining charts, reading up on fundamental news in order to trade a few currency pairs – and they do so successfully. But this comes at a price, as it is usually preluded by years of experience. It is not impossible however, and even an “Average Joe” can do it. A successful trader can expect to beat the “market” and earn at least 15%-20% a year on his forex trading account.

As a summary, investing in index funds is a perfect alternative for those who do not have the experience or time to select and analyze various stocks. Forex Trading can also be time consuming, as the trader has to be in front of the screen to find the best setups and to analyze the markets. It gives however a very useful skill set: after mastering the art of trading forex, one can expect to earn a positive return on his account for as long as he keeps trading, which is invaluable in today’s society of mass-layoffs and market turmoil.

[Post to Twitter] Tweet This Post 

Add This! Blinkbits Blinklist Blogmarks BlogMemes BlueDot BlogLines co.mments Connotea del.icio.us de.lirio.us Digg Diigo DZone Facebook FeedMeLinks Folkd.com Fleck Furl Google Google Reader icio.de IndianPad Leonaut LinkaGoGo Linkarena Linkter Magnolia Mister Wong MyShare Ask.com MyStuff Ask.com Yahoo! MyWeb Netscape Netvouz Newsgator Newsvine Oneview.de RawSugar reddit Rojo Segnalo Shadows Simpy SlashDot Smarking Sphere Spurl Startaid StumbleUpon TailRank Technorati ThisNext yigg.de Webnews.de ReadMe.ru Dobavi.com Dao.bg Lubimi.com Ping.bg Pipe.bg Svejo.net Web-bg.com Plugin by Dichev.com

In Just Three Trading days the Stock Market Changed

In just three trading days the market has completely changed its character from a friendly bull market to something entirely different – a bear market or just a nasty correction? My students have avoided this volatility by using simple rules. I have checked in with them and not one of them was hurt by recent stock market volatility.
( Thank GD)

Contrarily I have an acquaintance who lives in an extremely huge house, trophy wife ( with her own travel blog), yacht and too many cars to count who locked the door of his office and drank himself into a stupor of vodka. He did not have a plan and scoffed at even having one.

Which one are you?

[Post to Twitter] Tweet This Post 

Add This! Blinkbits Blinklist Blogmarks BlogMemes BlueDot BlogLines co.mments Connotea del.icio.us de.lirio.us Digg Diigo DZone Facebook FeedMeLinks Folkd.com Fleck Furl Google Google Reader icio.de IndianPad Leonaut LinkaGoGo Linkarena Linkter Magnolia Mister Wong MyShare Ask.com MyStuff Ask.com Yahoo! MyWeb Netscape Netvouz Newsgator Newsvine Oneview.de RawSugar reddit Rojo Segnalo Shadows Simpy SlashDot Smarking Sphere Spurl Startaid StumbleUpon TailRank Technorati ThisNext yigg.de Webnews.de ReadMe.ru Dobavi.com Dao.bg Lubimi.com Ping.bg Pipe.bg Svejo.net Web-bg.com Plugin by Dichev.com

This is a Stock Market To Stay Out

One would have to be on Mars not to have heard of yesterdays volatility in the stock market. Even my wife knew of the 1,000 point crash and later some what of a rebound. When markets are this wild….the sidelines with cash are the place to be. Only fools try to catch bottoms without a plan.

I had many thank yous yesterday from those I taught how to stay on the right side of the market. These investors did not have the emotional swings that so many did.

The volatility is immense!!!

Dow futures moved over 4,500 points intraday today

from zerohedge

4000

[Post to Twitter] Tweet This Post 

Add This! Blinkbits Blinklist Blogmarks BlogMemes BlueDot BlogLines co.mments Connotea del.icio.us de.lirio.us Digg Diigo DZone Facebook FeedMeLinks Folkd.com Fleck Furl Google Google Reader icio.de IndianPad Leonaut LinkaGoGo Linkarena Linkter Magnolia Mister Wong MyShare Ask.com MyStuff Ask.com Yahoo! MyWeb Netscape Netvouz Newsgator Newsvine Oneview.de RawSugar reddit Rojo Segnalo Shadows Simpy SlashDot Smarking Sphere Spurl Startaid StumbleUpon TailRank Technorati ThisNext yigg.de Webnews.de ReadMe.ru Dobavi.com Dao.bg Lubimi.com Ping.bg Pipe.bg Svejo.net Web-bg.com Plugin by Dichev.com

1929 Stock Market Crash or Are We in for a Bounce in the Stock Market?

Guess what…I actually had this question posed to me after Friday’s action. No one has a crystal ball but for quite a long time I have been out of this choppy grinding market. I recently had a post about Apple before it imploded. I would assume students that followed the rules in which I taught them have avoided this selloff. There is tremendous complacency and now questions are being asked why did the selloff occur on Friday…UM>>>>.

Could it be China only the worlds 2nd largest stock market

Could it be Greece…( soon Spain…Italy…Ireland..Portugal)

Could it be complacency…

Could it be greed…or I forgot..which I was told..We are in for a Super Cycle. I can stand a 20% selloff. Well I am so glad they know it can only be a 20% selloff.

The facts are very clearly:

The Stock market has been down on successively higher volume

Inability to rally much

The biggest Fact

When the Stock market that refuses to rally from a deeply oversold condition is a dangerous market.

I do not know what Monday or any day will bring…anything can happen and one needs a complete trading plan.

I am using this time to study past trades that I took and those that I missed in order to better myself. This is not a market I want to trade right now..

[Post to Twitter] Tweet This Post 

Add This! Blinkbits Blinklist Blogmarks BlogMemes BlueDot BlogLines co.mments Connotea del.icio.us de.lirio.us Digg Diigo DZone Facebook FeedMeLinks Folkd.com Fleck Furl Google Google Reader icio.de IndianPad Leonaut LinkaGoGo Linkarena Linkter Magnolia Mister Wong MyShare Ask.com MyStuff Ask.com Yahoo! MyWeb Netscape Netvouz Newsgator Newsvine Oneview.de RawSugar reddit Rojo Segnalo Shadows Simpy SlashDot Smarking Sphere Spurl Startaid StumbleUpon TailRank Technorati ThisNext yigg.de Webnews.de ReadMe.ru Dobavi.com Dao.bg Lubimi.com Ping.bg Pipe.bg Svejo.net Web-bg.com Plugin by Dichev.com

Most Stocks Down 2.39% Less Leading Stocks

Sure the market is healthy! Why are you worried…That was a call I had yesterday…However now we have 10 Distribution when in the past 6 were enough to tip the market. More so the Nasdaq is now well below it’s 50 day moving average and the SPY is sitting on it’s 200 day moving average.

The 200 day moving average is really the dividing line between bull and bear markets….The word Deflation is screaming as one looks at the price of crude to copper.

Mike Scott and IBD ( investors business daily group leader) did an interesting screen I today and found that the average stock in the Marketsmith database is 21.39% below it’s 52 week high. This shows that a smaller and smaller number of big cap stocks are preventing the major averages from looking even worse. This is typical late cycle action as the market gets narrower and narrower. I see little reason to be taking positions right now. Cash is looking much better!

[Post to Twitter] Tweet This Post 

Add This! Blinkbits Blinklist Blogmarks BlogMemes BlueDot BlogLines co.mments Connotea del.icio.us de.lirio.us Digg Diigo DZone Facebook FeedMeLinks Folkd.com Fleck Furl Google Google Reader icio.de IndianPad Leonaut LinkaGoGo Linkarena Linkter Magnolia Mister Wong MyShare Ask.com MyStuff Ask.com Yahoo! MyWeb Netscape Netvouz Newsgator Newsvine Oneview.de RawSugar reddit Rojo Segnalo Shadows Simpy SlashDot Smarking Sphere Spurl Startaid StumbleUpon TailRank Technorati ThisNext yigg.de Webnews.de ReadMe.ru Dobavi.com Dao.bg Lubimi.com Ping.bg Pipe.bg Svejo.net Web-bg.com Plugin by Dichev.com

Trend Following – Honoring Trailing Stops

When Trend following most trades do not work. This is the first reason most quit. The next reason is that traders who attempt trend following do not manage their risk. Managing the risks when trend following mean…risk per trade…risk per sector…overall risk…
In this video on trend following I discuss honoring your stop.

Many have issues doing this as well when trend following

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. THE RISK OF LOSS IN TRADING COMMODITY FUTURES, OPTIONS, AND FOREIGN EXCHANGE (“FOREX”) IS SUBSTANTIAL

[Post to Twitter] Tweet This Post 

Add This! Blinkbits Blinklist Blogmarks BlogMemes BlueDot BlogLines co.mments Connotea del.icio.us de.lirio.us Digg Diigo DZone Facebook FeedMeLinks Folkd.com Fleck Furl Google Google Reader icio.de IndianPad Leonaut LinkaGoGo Linkarena Linkter Magnolia Mister Wong MyShare Ask.com MyStuff Ask.com Yahoo! MyWeb Netscape Netvouz Newsgator Newsvine Oneview.de RawSugar reddit Rojo Segnalo Shadows Simpy SlashDot Smarking Sphere Spurl Startaid StumbleUpon TailRank Technorati ThisNext yigg.de Webnews.de ReadMe.ru Dobavi.com Dao.bg Lubimi.com Ping.bg Pipe.bg Svejo.net Web-bg.com Plugin by Dichev.com