What Does It Take?

The greatest games have always been dominated by the masters of obfuscation, misdirection, misinformation, if not outright deceit. Of course the financial game is no exception and the price of admission to be paid every single day differs depending on personality, cunning, intelligence, fortitude, discipline, greed, market type, market cycle, liquidity, etc. Although we are all trading the very same market, the hurdles we encounter in our respective journey are a product of exogenic and endogenous factors.

Long term participation and success therefore has always been limited to a very select minority. To quote Jesse Livermore: The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the man of inferior emotional balance, or for the get-rich-quick adventurer. They will die poor. 


Most of us would list intelligence for instance as a cardinal predicate to becoming a successful trader. But like with many things in life the real picture is a bit more complicated. Because if it was just a matter of intelligence then why don’t we see more billionaire mathematicians or scientists? Many of them die poor and are often considered social outcasts. As I mentioned above, we all must face our own personal hurdles and challenges. Very gifted people don’t get a pass here as intelligence comes with a price. Former software engineers for example are more often than not inspired by complex models and convoluted solutions. Their own intelligence and ability becomes the drivers of their endeavor as they assume that the key to success lies in cracking some secret code hidden inside the market’s gyrations. The fact that chaos rules the day is an inconvenient truth equally ignored by the smart and those with lesser neuron counts. As such a smart but righteous or misguided individual may be no different to someone of lower ability who ventures nomadically from one trading site to the next or absorbs dozens of trading books in hopes of finding that one system that beats them all.

The motivations may be different but the eventual outcome will be the same as the underlying premise feeding ones action is identical. One that is inspired by an assumption that we may one day overcome some final hurdle and from then on it’ll be easy time. Make no mistake – as soon as you overcome that last hurdle there magically will appear a brand new one. Because as human beings we are wired in a certain way that assures an unlimited supply of hare brained cognitive biases and misconceptions – no matter how smart or talented we are individually. In other words – intelligence or talent doesn’t offer us a free pass. Your journey will simply be a different one and success is not guaranteed. As a matter of fact all of the most successful traders I have come across are or were a lot more street smart than brilliant. Of course there is a baseline on the IQ front and I would hazard to put it somewhere around the 120 mark. But that’s not exactly a high bar and I have met traders dumber than that who did just fine pressing that one button that they somehow figured out works on a long term basis. As such success is a side product resulting from a series of positive choices. In fact this place was created years ago to aid us all on a daily basis.

Some of you may wonder why I often crack the whip early when I see signs of decay, impulsiveness, or an abandon of some of the prime directives we all aspire to abide to here at Evil Speculator. Naturally the dynamics of a virtual community, whilst permitting global collaboration and instant communication, also serve a certain bubble mentality with little to no personal consequences. For one we seek information that already supports our current view and we are quick to dismiss anything that at the surface violates any of our core beliefs. But there is also a social aspect to this. In the past the guidance of a mentor or group of peers came with implications and personal responsibilities. Your seat at the table had to be earned (with significant hurdles to entry) and cutting and running was frowned upon and may cost you your career. At the same time success and especially failure were exposed to the people around you and there was no easy way of hiding them either.

In a digital world we are however free to simply extract ourselves in periods of discord and thus avoid personal consequences of actions, decisions, or personal behavior. Stomping your foot and running off is a character trait mostly exhibited by children but online it seems to have become the norm these days, often after angry insults have been exchanged. It takes quite a bit of discipline to overcome the temptation of avoiding negative experiences and stress but I believe cutting and running to be a cowardly choice with long term implications. Successful people are never the product of easy choices and a careless upbringing. Like a good sword the friction of life, e.g. personal strife, being forced to overcome personal limitations, creates a person who is able to face challenges with easy that would quickly thwart others.

Money is just the result of being successful. You can chase simply money but drug dealers and career criminals do that a lot more effectively than the rest of us. Personal growth however bestows wisdom and experience which will lead you to new challenges you didn’t even know existed. And that my dear steel rats is what we really should aspire to as it is the real key to happiness and a successful life. Not one of convenience and easy answers. If you seek those, well – there are plenty of people selling that out there and I’m afraid you’ve come to the wrong place for that.

And there’s your answer – I crack the whip early because you need it. We all do – nobody gets a free pass. You may curse me today but you’ll thank me later (one hopes).


Alright, let’s get to work. I’m tempted to grab a long here as the tape is getting ready for a big move. Directionally this could go either way but I don’t see anything bearish just yet so I’ll stick with the long side – for now. Watch the Zero for a hawk today and tomorrow – something’s going to give here soon.


EUR/CAD – very small short here on a bounce higher. I do like the daily panel and the idea here is a ride lower to the 100-day SMA. The trend has been to the upside until recently and until now I expected a sharp push higher. However we have accumulated quite a bit of resistance now and I think the upside will be plastered with hurdles.


Gold – things are coiling up here and this chart is starting to look pretty bullish. But we can always be easily fooled and thus we should not relent to directional thinking. For now the long side looks good but only with a small position. I would actually like to see a drop lower near that NLSL at 1129.6 – that would be a wonderful long opportunity given the current context.

A few more symbols below for my intrepid subs:

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Entry Opportunity

Sorry for the late update – I had a rough night and it took me a while to get my head on straight. We’re at the open and I’m seeing a temporary ST entry opportunity right now:


I’m short here with a stop near ES 1940 – our bullish inflection point. Above that I’m flipping for a long position, assuming that the Zero is showing decent momentum.


CAD/JPY – long with a stop below the recent spike low on the hourly. I do like the daily formation however it’s still early in the game – 1/2R only.

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Wicked Wednesday

It’s all smiles down here at the evil lair as Scalpius is starting to get its groove on and managed to bank over 20R in the past two sessions. I’m still fiddling with the trailing logic but at this point it is outperforming what I’m seeing in historical tape. Reason being is that you can never properly simulate the spread, the offers, the available volume – it has to be done live.  Proper trailing is as much an art as it is science as it needs to consider the momentum of the price action and weigh existing against potential future gains. Yes, you can come up with MFE stats but they can be deceptive because your strategy may not be banking coin consistently – some thrive in trending tape, others due to mean reversion. So you want to optimize it for the type of tape it’s built to exploit. In the case of Scalpius that’s ST trending tape.


Picking a range inside that coveted sweet spot has been my recent endeavor and I have resorted to some rather creative approaches, which are truly pushing the envelope but seem to be paying off. The stats above show you the recent live track record which actually missed a few 4R winners (one today) as I’m still fiddling with my b/a spread filters. Definitely work in progress but it’s getting there and clearly I’m on the right track.


Quick update on natgas – this one looks like it’s good to go. I’ve moved my stop up to the break/even spot now and until this thing picks a direction there’s nothing to do. Natgas has been in this sideways hell for months now, which is rather uncharacteristic. When it finally takes off one of these days there will be hell to pay. They call it the widow maker for a reason.


Alright, we have a ton of setups today, ladies and leeches! Let’s start with the bonds, here’s the five year contract which I’m long with a stop below 110’3. This one could turn into a trending candidate but it’s still a bit early to judge.


Ten year futures – also long here with a stop below 128.


And the thirty year – you get the idea. I have split my R between those three in case you wonder – I’m not that bold and neither should you be.

Quite a bit more below the fold – meet me in the lair:

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By the way the Evil Lair’s genetic science division managed to splice together gene samples of Ragnar Lothbrock plus some essence of Godsmack and Disturbed. Here’s what came out the test tube:

Now I admit – nothing really new here BUT for some reason it’s absolutely brilliant. Can’t stop listening to it. It’s a new band so these guys need some promotion. If you like it send it to everyone you know. And let’s not forget Disturbed is releasing a new album in a few days. Maybe there’s hope for rock & roll in this decade just yet.


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