Hello and welcome to the July edition of the Safety in the Market Platinum Newsletter.

I’m writing this introduction in the middle of the ongoing lockdown in Sydney, which still seems to have no end in sight. I think it’s been a month so far, but the days just blend into each other, so I’m not 100% sure! I know that for many people, this is a challenging time, so I wanted to share a personal story with you from my early days of trading.

Back in 2005, I quit my job to become a full-time trader. I was living the dream for about a week, staying up and trading the US markets all night, and sleeping all day, until I managed to rip up my $30,000 trading account (which had taken me years to save up) over a 48-hour period. To cut a long story short, I took a very large FX position on impulse, but didn’t attach a stop loss order immediately. In seconds, my account was down 10%, and I was stunned. I had never lost $3,000 in my life, and certainly not in seconds. I decided that I would close the trade as soon as it got back to breakeven but of course it never did. It just continued to go against me, and I watched my account fall by 20% and 30% and 50%. I hardly slept for 48 hours, and when I did, I dreamt about my losing trade. Eventually, the broker closed the position due to a margin call when my account fell to about $3,000. This was a blessing, really, because if the broker didn’t close the position, I would have lost even more, and would have ended up owing them money.

It’s not a nice feeling, falling from that place of extreme optimism, where I bragged to all my friends and family that I was quitting my job to trade from home for a living, only to find myself with my account almost wiped out and very little will to continue trading. However, there is a light at the end of the tunnel!

For the next six weeks after wiping out my account, I stayed on US time, sleeping all day and working all night. My Dad is one of the most stubborn people I know, and I must have inherited some of that from him because I just wasn’t ready to give up on trading just yet. I didn’t really know what to do, so I decided that I would create hand-charts using the data from every one of WD Gann’s books, hoping that I might miraculously stumble across some secret that Gann had hidden in there for me to find. I worked my backside off during those six weeks, piling up chart after chart on the desk in front of me. Truth be told, I loved studying at night because there were zero distractions – there was nothing on tv, none of my friends were awake, and there was no YouTube or streaming channels back then! As I worked, I kept a quote that Gann mentions in Tunnel Thru the Air in front of me. The quote is taken from the poem “The Ladder of St Augustine” and says:

The heights by great men reached and kept

Were not attained by sudden flight

But they while their companions slept

Were toiling upwards in the night

I know that verse by heart, because it was the one thing that kept me going through those dark nights. Everyone else was asleep, but I was “toiling upwards in the night”. And although I didn’t know it at the time, that was my swing trading apprenticeship. Through drawing all of those charts for six weeks non-stop, I learned that markets tend to do the same things over and over again. I learned about swing charts and form reading, not just in theory but in practice. If I hadn’t of wiped out my account, I may not have studied those techniques with the same amount of fierceness and desperation. In the end, looking back years later, I’m grateful that I had that opportunity to study this wonderful material with no distractions.

So if you find yourself locked inside and feeling a bit down, just remember that there are some things in life that you can’t control, but there are other things that you CAN control. What you focus on, grows, so pick something important and focus on it, and get to know it – whether it is a technique or a market – like a cow knows its calf. Hopefully, one day, you just might look back on this lockdown period with a feeling of gratitude because of the growth you experienced during it.

In our articles this month, Rob unpacks a quote from Gann on time cycles and the human body. Then, Gus takes you through some recent market action on the SPI200 using a 4-hour bar chart, while Aaron examines the US Dollar during these times of low interest rates and easy money and ponders the effects this might all have on the commodity markets.

On behalf of Di and the team at Safety in the Market, we wish you good health and safety during these challenging times.

All the best

Mat