YES!!! Thank You Mr. Draghi

In one of the most telegraphed Central Bank moves ever, the ECB out-stripped expectations and is looking to buy large sums of bonds on a monthly basis right through and towards the end of 2016.

As I said in a private note to members yesterday, there are always risks involved in trading in front of large news events, but in system trading, if you were to run a back test, the system does not care about news, it just trades the price and the trend…I also mentioned that you have to be in it to win it…and we were.  It was a fantastic day today, based on a calculated low risk/high reward basis we placed all our ducks in a row and we were able to take full advantage of the rally over the last few days.

Now, just how long this rally will last is anyone’s guess, but once again the system was able to recognize another high probability bottom and swoop in.  What is really important is that we don’t think in these situations, as Jesse is quoted as saying in the quote above, trading will always be an emotional battle, not an intelligent one.

This is why it is so important to have a system and to more importantly follow that system to the letter.  As human beings we can make mistakes, but they must be honest ones, when we make a decision based on emotions it seldom works out well.  This is why Mr. Livermore said ‘you must know yourself’ to be a good trader.  You must confront any propensity to stray from the rules and curtail them before it effects your account balance.

Market News:

U.S. stocks climbed on Thursday, extending gains into a fourth session, after the European Central Bank unfurled expanded stimulus and companies including Southwest Airlines posted upbeat quarterly earnings.

ECB President Mario Draghi said the central bank would make monthly bond purchases of as much as $70 billion starting in March, and running through September of next year.

Draghi’s announcement came after the ECB held benchmark rates unchanged at record lows.

Thursday’s economic data had 307,000 Americans filing for jobless benefits last week, down 10,000 but more than the 300,000 forecast.

Friday:

8:30 a.m.: Chicago Fed national activity index for December

10 a.m. Existing-home sales for December

10 a.m. Leading indicators for December

News Sources:  CNN Money & CNBC