G’day Traders,

Yesterday’s rally was contributed to by rumours that the Fed was going to cut the rate it pays for bank deposits to zero from 25b.p. Ummm – I thought this was pretty stupid, but obviously stocks (and bond) traders believed in it because when Bernanke spoke, it was too boring and the market realised it was just that… a rumour. So stocks fell. I mean c’mon Ben – don’t you know anything about confidence. At least be a little bit optimistic!

Bonds rallied so much they broke out on the upside. This shows me that the smart money is VERY scared because as I keep saying – “Why would anyone lend money to the US government at just 2.88% – fixed for 10 years.”

All this news can be very inspiring, but we are in a crazy sideways market at the moment – stuck in the middle of the range – for many financial products. This is why I said to reduce exposure, but of course this depends on what type of trader you are. Forex and Indexes are not good right now, but check out some of the grains – like Wheat and Soy. This is a great lesson for traders – the best trends often come out of nothing markets. The Softs have also been quiet good with Cocoa and Coffee continuing south and Sugar marching higher (in a choppy manner).

Of course, as I said, I am focusing on options. Last night I got filled on a couple of BECS before the market fell (which I am very happy about). So far my trades look great except one ICS where the stock is getting close to the strike. I have my auto-exits on, so no issue.

The US S&P500 -1.28 European top 500 +1.01 (Before Bernanke spoke), UK +1.46%, China +0.21 (after 2 hugely positive days) and Nikkei -0.23.

ETFs – If you have been nervous lately, those T-Bonds rallying should be a good sign. But hey – you need to think longer term and we need to move significantly higher to break out of this range so just leave them alone. Very good sign if you are short.

Options – Seeing as we are in a range and I have a few BECS I will look for some BUPS to balance out a bit (even though I believe the major risk, if the market moves out of this range is to the downside. But for now we are here and I think “it’s summer and the markets are doing nothing out by the pool”.

Today’s Top Tip!

Trade Now.

For traders using Trade Now, how do you know if you got filled on the trades you placed?

You will get an initial email confirming that the order is placed for you. If the order is filled you will get an email confirming that fact and that your conditional orders are active. If you don’t get this email, then it means your order wasn’t filled, you are not in the trade and would not have received the income.

Information for Beginner traders- This is a good time to be learning about diversification. Early in your trading career you need to be focusing on following your rules. Keep paper trading (it will highlight to you when you are not). Keep risk low on Forex right now. Look at Grains and Softs. Options are the easiest to trade from a psychological point of view, so this is the best product to start live trading with – especially now.

Information for Intermediate traders- Yes – it is a little bit mixed right now, but what is important is the lessons you learn. If you are live near Sydney and trade Forex or Commodities and would like to learn some advanced strategies from a technical point of view, then you will get some benefit out of the upcoming Real-Time course. Even though they look at Real-Time, you can apply these technical methods to help your LT style. You will also learn some pretty fancy ways to trade off the IB platform.

Information for Advanced traders- Take the best trades according to your strategy. Smart traders will be looking more at Real-Time and options.

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Earlier in the year, Lifestyle sponsored an event that featured two Accountants who shared fantastic information on Self Managed Super Funds.

Since many missed out on these events, we got John & Chris into our studios and recorded their presentations.

This week, we present John Illingworth, a Director of IPS, a forward thinking accountancy practice, that we use for all our activities.

To watch John’s presentation, click on the link below:

http://www.lifestyletrader.com/media/ips-presentation-john/

Next week, we’ll list Chris’ presentation.

We’re recording quite a few interviews and presentations like this – all for our Lifestyle Members.

Enjoy.

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Scott Goold

Head of Lifestyle R&D