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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I was staring at the E-Mini futures this morning – it must have been almost ten minutes just pondering and trying to figure out what was bothering me so much about this chart. And then suddenly I realized what was going on – and what also became apparent was that, no matter how long you are in the game, the tape still can always pull one over on you. The mighty Mole is not immune.


So the big epiphany I speak of was that nothing really has changed, folks. Remember all the sideways crap we endured for most of this year? And then suddenly we got a big slide (almost) out of nowhere – which we actually played quite well, but I digress. What I’m talking about is the collective assumption we are all suffering from right now: that of an impending RESOLUTION.

Think about it – most of the bulls are most likely seeing this as a prime buying opportunity. Fear and blood in the streets and all. The bears are waking up from their seven year hibernation and are also smelling the blood. They don’t trust it just yet – once bitten twice shy – 100 times bitten and you’re comatose. What they all share in common is a sign that one side or the other is losing its grip, that the stalemate is over and that one side is running for the hills.

I’m not saying that it is wrong to expect the potential for resolution but I also realize that the timing of it could be outside your trading horizon. It could happen today or it could happen three months down the line after NYE – perhaps mid January. Retail put holders would very much enjoy that scenario, right? Exactly – theta burn is a bitch, as they say.

My point here is not that we should not take any action. What I’m saying is that we need to pick our exposure points very carefully. For all we know we could be pushing sideways here for weeks and months to come. Which means NOT chasing the tape – selling major highs and buying major lows when price action paired with diverging momentum permits it. Zero subs take notice here as it will be your very best friend in the weeks/months to come.


Bottom Line: This is prime tape for trapping retail rats en masse. You know our prime directive here: Fade the noise – watch the price action – strike when the odds are in your favor. So from now on before pressing that buy button ask yourself this: Do you think the odds are clearly in your favor?

Well, do you, punk?

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Forward Projection

As the long weekend approaches we should expect only minimal participation today, which is a good opportunity to pass along some food for contemplation. A seasoned trader really never fully rests; although there may be extended periods in which no actual trading activity takes please you should not confound this with a license for mindless pursuits. I personally spend quite a bit of time on pertinent activities such as system building, bug fixing, support issues, etc. But at the same time I do spend extensive hours in meditation and self examination. This may happen whilst laying in bed, while listening to music, or during a trading session – thoughts come and go and do enjoy revisiting and re-analyzing previous days in my mind.

And that is not by accident. Although I would characterize myself as a pretty cerebral person in general, I am keenly aware of the fact that my activities here at the evil lair are constantly open to public scrutiny, and that there is very little room for mistakes. As such the privilege of commanding the attention and perhaps respect of a lively trading community counting into the tens of thousands comes at a heavy price.

Whereas you may one day find yourself on an emotional bender after a series of trading mistakes the Mole does not have that luxury. I’m only as good as my last campaign and nobody gives a rat’s rectum about how well I did during the past week, past month, or past year. You’re only as good as your last trade, and it only takes a handful of bad trading decisions to not only tarnish your reputation but to also seriously impair your own self confidence. Unlike you I can’t just say ‘screw this’ and then walk away for a few weeks or months and then return and pick up where I left off. Passive income via monthly subscriptions sounds like an enviable scenario to most until they realize that you will never ever be able to truly take a day off again. And the same applies to anyone running automated strategies – unless you hire a person you can trust 100% you will not be able to completely detach yourself.

Which is why I am sometimes surprised that I’ve managed to keep this place together for more than seven years now. And what has kept me in the game here for so long, post after post, is not the additional income. Clearly it’s a benefit as it blunts the pressure a little, but I could easily do without it. No, the biggest personal reward of doing what I do here is to impose personal accountability. I do not believe that I could have become the trader that I am today had it not been for this project. Evil Speculator started as my personal trading log back in 2008 and its secondary function was that of educating and possibly benefitting others in the process. But I have never lost sight of my core mission – which is to become the damn best trader that I can possibly be. To never stop learning. To be a consistent earner who is able to negotiate any market terrain. And to be in full control of my emotions, to never act reactively, and to abide by a set of rules and principles that I have defined for myself over the years. Sounds easy enough, doesn’t it? 😉

In fact it’s a pretty daunting task for the most resilient and talented amongst us. Now imagine if at the same time an audience of thousands follows your every action. If everything you do is being analyzed and often criticized on a daily basis. It can either make you or break you. The one principle that I believe has kept me in the game so long is that of forward projection, which is my personal technique for avoiding self deception.


I will try to explain this to you as best I can – in essence it involves using reliving past behavior/emotions to teach you that none of them really matter. It’s not really a cognitive bias – it’s more related to the Dunning Kruger effect. In a nutshell – we all want to be right – whether or not we admit to it or not. At the same time we all have a tendency to over estimate our personal skills as novices whilst at the same time under estimating them the more experienced we actually become. Being wrong creates internal tensions and frustrations which we suppress during the initial stages of learning – which is good to some extent as it keeps us from giving up. Heck, had I truly known how tough it would be for me to learn Spanish I may have just not bothered. Now that I have three+ years of constant practice under my belly everyone tells me how well I talk but deep inside I truly think that I still suck.

When it comes to trading however the incessant human urge for making predictions combines with that of wanting to be right. And I have written quite extensively how those two motivations can wipe out a trading account in a very short amount of time. My personal technique for constantly reminding myself of this fact is to project forward. Take the chart above – pick a spot (and perhaps cover everything past it) and then think to yourself: What would I have thought at that very moment? There are times when the tape is more explicit and gives us many clues. But then there are times when it’s a complete coin toss. Especially when it matters the most. Remember I mentioned that the other day?

Two day ago I’m sure that many of you were short (I was with a tiny position). Then we got squeezed a bit the next day and I’m sure the very same people were thinking – ‘hey, clearly this is going to continue further now’, conveniently forgetting that they were 100% certain that the tape would drop like a rock just a day earlier. So what are you thinking today? Are you convinced we are descending lower? If you are – how will you feel about that if find out you were completely wrong next week? As a matter of fact – how do you reconcile the fact that you have been wrong so many many times in the past? Do you actually acknowledge this to yourself or do you conveniently suppress it – rationalizing it by saying to yourself ‘let’s move on, that’s yesterday’s news.’ You’d be surprised by how many people do exactly that and it’s usually the ones who are most vehement in defending their opinions here in the comment section.

However if you were looking at that chart whilst thinking that it’s almost impossible to know, well then congratulate yourself. That’s the first step in embracing nothingness – in accepting randomness and chance. There are times when it’s possible to pick a spot and proclaim: ‘Here’s a great spot to be long and if this and this happens then I’ll be out.’ Done. Perfect. Not because you know the future but because sufficient technical context (i.e. your lens) affords you a momentary opportunity. But there are times like right now when the tape is sitting at a knife’s edge and market makers are determined to take both sides to the woodshed. Do not over estimate your ability to make any type of prediction – instead simply project forward and consider what the odds are for each possible scenario.

When I post my charts here I have always already gone through that very exercise. I evaluate all clues offered to me and then arrive at various scenarios that seem most plausible. Most of all – I remind myself that my trading decisions have to hold muster in the presence of a large audience. If things go against me next week (and they often do) then it’s important that I made this call based on technical evidence present at the time and not because of wishful thinking. I project forward and ask myself: ‘what happens when (not if) I’m wrong’? Am I still going to be satisfied about having taken this entry? If the answer is ‘hell yes – this is an entry I would take every single time’ (even if it was scary) then you won’t be losing any sleep over it. Even if someone’s watching 😉

Enjoy your Labor Day weekend!

The future is now – so don’t bring a knife to a raygun fight. If you are interested in becoming a Zero subscriber then don’t waste time and sign up here. A Zero subscription comes with full access to all Gold posts, so you actually get double the bang for your buck.


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