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Chasing The Market’s Tail
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Chasing The Market’s Tail

by The MoleApril 17, 2015

Judging by the measly comment count it seems most of you guys are ready to call it a week. Plus the market seems to be in shake out mode and my E-Mini campaign met its maker, fortunately at the break/even point. Heck,  it was worth a shot but the odds were low to be begin with. Just one out of 10,000 campaigns  – moving on. So I won’t bore you with more short term setups this morning  – instead let’s talk about a cognitive bias of sorts that many of us have fallen prey to but which I don’t see being addressed very often.

2015-04-17_spoos_briefing

Today’s events are actually a prime example of what I call ‘chasing the market’s tail’. In a nutshell this rather common behavior is triggered by a series of events that cleverly draw you into taking repeated entries despite diminishing probabilities of success. You may start out with getting out clean – meaning at break even or with a little win. But after being stopped out you look at your chart and you think to yourself – hey, I got swiped just by [one handle, one tick, just below that SMA, etc.]. And you just know that after shaking out those weak hands it’ll reverse and continue higher [or lower] again.

What’s happening here is that your ego has been bruised. You got stopped out – be this for a loss or perhaps at break even or a little gain. But you really really liked this campaign, especially as you got a great entry, grabbed it right off the lows, who knows what. And you want it back – plus remember your ego is a bit bruised – and there’s that little voice in your head that keeps telling you that you’re smarter than the market and that your supreme charting skills or your unique ability to predict the future will surely overcome this temporary setback.

Yes, of course you’re never going to say all this out loud – sounds quite ridiculous after all. But we all have been there – we all have felt that temptation to go right back in, haven’t we? I mean look at that E-Mini chart above – such a juicy bounce off that lower 100-hour BB and who’s to say we’re not going to run up from here after having shaken out all those weak hands?

Of course none of us really know – especially on a Friday with only a few hours left to go. All that stuff going through your head is mental masturbation and needs to get cut at the root. That is exactly how you wind up getting drawn into bad entries – and never forget, that in fact is the main function of the market – to suck you in when the odds are aligned against you. Or maybe there are no odds – it may look that way to you now but is this entry really in line with your system rules? That’s right – I didn’t think so.

Of course Dr. Mole has the right remedy – just watch the above. Whenever I find myself after a ‘regrettable’ stop out I habitually ask myself if a new entry is justified. I also monitor my own emotions and if there are any vestiges of regret or disappointment – if so, then I simply repeat the following mantra:

Homey Don’t Play That!

That’s clear enough and it usually fixes the problem. Look guys – we’ve had a great ride recently despite equities running around in circles. Let’s not test our luck, shall we? I’m fine with letting this one go – perhaps it’ll jump higher from here and perhaps it’ll drop like a rock and we test the lower border of this sideways range again. I really don’t know and my crystal ball is still in the shop. But what I do know is that this is not a good spot for taking entries and so I’ll graciously decline and wait for a better opportunity. Which will come – believe me – if nothing else we have proven that over the past seven years 😉

It’s not too late – learn how to consistently bank coin without news, drama, and all the misinformation. If you are interested in becoming a subscriber then don’t waste time and sign up here. The Zero indicator service also offers access to all Gold posts, so you actually get double the bang for your buck.

Cheers,


About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at various social media waterholes below.
  • HeadNShoulder

    It’s amazing that you didn’t take the short 2090 setup mentioned in previous post!

  • evilasevildoes

    below 2080 isnt it a short?

  • http://evilspeculator.com molecool

    You don’t get my point – on that day I would have. The way it’s playing out the odds have shifted.

  • hellbent

    Classic post. Homey don’t play that – gold. Lol

  • HeadNShoulder

    Thanks for clarifying,much to learn.

  • Billabong

    GC has gone sideways on $1200 since 17 Feb. This will come to pass when the market is ready… BB is getting tight.

  • evilasevildoes
  • trader wantabee

    do you mean “amazing” as in hindsight is 20/20 ?

  • hellbent

    Thanks for the heads up. Interesting times really. I first started trading when gold was going skyward through 1900. Scalping and tail chasing as a beginner was great fun. Late one night I was trying to finish doubling my account – in one day! – and everything started to go quiet. So I had a look at silver which I knew absolutely nothing about. Things were jumping around a bit more so I got in long, having developed a bit of a bias due to the trend at the time. You know the rest of the story… Just as mole points to above. Took about 30 minutes to empty my account on the way down! 5K. It’s a good laugh now.

  • trader wantabee

    I interpret this as:
    1. having the wisdom to know a high probability setup vs a low probability setup AND when the probability has changed.
    2. having the discipline to act as you know you should, even when your ego and desire is the opposite of what you should do.

  • http://pugsma.wordpress.com/denalis-turning-points/ denali92

    OPEX Friday GAP DOWNS Market is starting to get interesting – In 2015, there have been TWO opex Friday gap downs in four opex periods…. before this year, the last opex Friday Gap down was Dec 2012!

    Until this week’s low at SPX 2083 is broken, we are still in a very odd opex week configuration of a Tuesday low and a Wednesday high (with that new high then down for the day on Monday being quite rare)- if it is broken, then we will know more….

    For now, here is my Opex Friday Gap Down summary:

    Really depends on how the week has progressed – in Nov 09 and May 10, we had been going down all week and this was the low or very close to the low – the others had all seen midweek strength with generally the highs being made on the Thursday and then an overnight reversal and down with lows some time the follow week

    While we have not made a Thursday high, the Wednesday high is close enough.

    When did we bottom when we had midweek highs and an opex Friday gap down (data since 2009)?
    -Feb 09 – Monday post opex – short term bottom
    -Apr 10 – Monday post opex
    -May 10 – Tuesday post opex
    -May 11 – Wednesday post opex
    -July 12 – Tuesday post opex
    -Oct 12 – The Friday post opex
    -Dec 12 – Friday post opex for futures – and Monday, Dec 31st for cash

    The edge for April opex has always been on the long side with bottoms on the Monday post opex in 2010, 2011 and
    2012 and the Tuesday post opex in 2009. (and opex week bottoms in 2013 and 2014)

    -D
    The next ten days could now be quite interesting. Let’s hope so,

    -D

  • Skynard

    /ZW IHS, here we go

  • Skynard

    SPX 2080 support, we shall see:)

  • mugabe

    have a vague feeling that I’ll end up today lower than I started, lol

  • Skynard

    Do not try to catch this one!

  • ridingwaves

    China short sale restriction lifted, I had no idea it was in effect, no wonder the Shanghai and Hang Seng have been shooting towards the supernova……..this is interesting to me as China has been soaring north thru a bunch of bad data…why lift it now?

    too short it…

  • mugabe

    it’s basically not letting emotion cloud you judgement .. easier to do if you’re operating on a longer time frame, I think

  • mugabe

    asia getting beaten up today .. but it’s had quite a run, to say the least

  • Ronebadger

    Trend Day, ehhh?

  • mugabe

    hah .. just a fakeout before we blast higher by EOD :)

  • ridingwaves

    $bpspx seems to reverse near here on daily and weekly chart over last couple years with a couple throw overs…

  • ridingwaves

    spectacular run….thus a reversal is going to hurt a lot of new Chinese investors….I was reading where the move north has driven Chinese retail in mass towards stock ownership and trading

  • Skynard

    If 2080 SPX is broken today bulls will capitulate

  • Ronebadger

    ZL Hourly divergence finally playing out…

  • Skynard

    Yep:)

  • mugabe

    yeah .. agree … remains to be seen what sort of reversal … could be a blip, could be more. being leveraged won’t help them, tho

  • bullethead

    It’s getting close imho. If this isn’t the turn, then next dip may be it. I had the set-up, took it and running risk free now. Let’s see where she goes.

  • mugabe

    well, we are (were) at the top of the range

  • Skynard

    Indeed:)

  • newbfxtrader

    Title of the post!

  • Skynard

    Getting long again AUD on a 98,00 retest

  • Skynard

    At VWAP, short the bitch

  • Skynard

    long /NG again 2.64

  • Skynard

    Div on the 5 min

  • Skynard

    Ruh Roh! Puts on fire:)

  • ridingwaves

    Top EU official to Greece: Agree to reform by May 11 or else: FT

    me thinks Greece might just let it ride…

  • ridingwaves

    breaks 2080 hard and it could get to 2060 quickly but as Scott preaches, the easy move is over
    https://www.youtube.com/watch?v=h9JArvEJ64M

  • Skynard

    2040 rather:) Just getting started

  • http://evilspeculator.com molecool

    The odds are always shifting – just because I would sell xxxx on one day doesn’t mean that I will do it again on a revisit a day or two later.

  • ridingwaves

    dax closed down 2.6%, spx catching up would take you there

  • BKXtoZERO

    and NEVER tell the leeches

  • ridingwaves

    yes…I think they leave everyone guessing over weekend and pin it to 2080-2

  • HeadNShoulder

    heavy tick fight going on…..and on……and on….

  • Kidd Cudi

    Caught it. Entered two days ago.

  • ridingwaves

    getting interesting

  • BKXtoZERO
  • ridingwaves

    needs to end day above 14.50…

  • http://evilspeculator.com molecool

    So what’s the deal with T.K. – are the rumors true?

  • BobbyLow

    Afternoon Folks. Been running errands and “honey do” lists all day.

    Got stopped out of Long SPX (SSO) this AM at BE. Also flipped to Short (SDS) at about the same time. My Long Energy Companies (DIG) is still up close to 5 R and getting nearer to being stopped but not today. Long Bond (UBT) helped to offset most deficiencies today. And I’m also still long Crude via (UCO).

    On the Forex front I have Swing Positions in Long GBP/JPY and Short EUR/AUD

    Had a net positive week and it’s working the way it’s supposed to. :)

  • BobbyLow

    OK, I’ll bite. What’s the rumors? :)

  • ridingwaves

    yep..

  • Scott Phillips

    What rumors?

  • HeadNShoulder

    was it about the mobile app project that he completed recently and cause the market to tank today?

  • Scott Phillips

    Welcome to the future. Traded from my iphone on my jetski today, placed orders, stops, everything

  • Scott Phillips

    Another of the litany of classic beginner mistakes is thinking that classical TA applies to VIX, which is a derivative of a derivative. There are no buyers and sellers (it trades as an arbitrage to the real VIX rate and is self equallizing) , it is a variable in an equation, nothing more.

    Trendlines, oscillators, indicators, support and resistance. There is ABSOLUTELY NO BASIS for even suggesting that these things work on VIX.

    What does work on VIX? Using it like a sentiment measure for extremes works. Selling massive outlier spikes works. Bill Luby has an excellent blog, VIX and more, which dispels many of the common myths about VIX and it’s use.

  • Scott Phillips

    Good info, thanks for posting :-) I would be very wary of imputing an edge from a small number of instances of anything. 7 instances of a coin flip the highest probability outcome is either 4 heads 3 tails or 3 heads 4 tails.

    Suggest the minimum number of occurrences to make a tradeable “edge” would be 25.

  • Scott Phillips

    Part of the problem is that when we take a setup our brain starts wanting that setup to succeed. We then subconsciously block evidence that it is fucked, and ignore the counter evidence.

    One of the very strong indicators that a contributor here is a good trader is their willingness to reverse an opinion. Read about all the greats, Tudor Jones, Soros, Livermore, they will all change their opinion on a dime when the facts change. If you want to emulate the better traders here, then objectively seeing what the real evidence is, and being willing to change your mind when the facts change is a good place to start.

    Today the facts changed. The market was approaching resistance, attempting to break out. That breakout failed. Therefore an ENTIRELY different dynamic is now in play, and the highest probability is a downleg of unknown duration.

    We still don’t have an edge to get short right here, a LOT of selling pressure was used up today, the onus is really on the bears to follow through from here. If they waste this chance, then a new leg up is a certainty.

  • http://evilspeculator.com molecool

    Now if they just could do something about the hair! 😉

  • mugabe

    range or trend (on a daily time frame)? range

  • mugabe

    less resistance skiing like that

  • mugabe

    got stopped out of my oil-based play today (OXY)- trailing stop hit

  • Scott Phillips

    Emotions and bias exist because (incomplete list)

    – We were bred for pattern matching ability. We tend to see patterns in things where none really exist

    – Humans evolved without the ability to accurately calculate odds very well, which is why lotteries are so popular.

    – We evolved with fight or flight instincts which serve us very well escaping from a predator, but less so when making a decision to exit a losing trade, and our brains are incapable of seeing the difference.

    – We tend, by nature and nurture to avoid painful experiences. Losing money is emotionally painful, and we subconsciously block evidence that we suck at trading.

    – Humans bred for certain properties like bravery, risk taking, perseverence, which are very useful survival traits in small groups in the wilderness, but extremely poor traits in the markets.

    -Humans bred to exist in tribes. Evilspeculator is a tribe of sorts, and it is no accident that the contributors here are roughly the size of an early times village. We are most comfortable making decisions in groups (herd behavior) and instinctively seek out others with similar views (like slopeofhope with the beartards huddled together for warmth). Because of the dynamics of market behaviour, the herd is always wrong at turning points.

    – Most traders invent incredibly complicated theories, and then trade their own pre-existing personality biases. Like Skynard, who has a million valid technical reasons to trade against the trend (he is quite good at catching reversals). It is not because this is the best way to trade, just because he is a naturally go-against-the-grain type of guy. Similarly Tim Knight is a naturally pessimistic, bitter about the success of others, snarky, passive aggressive beta-man, and trades exactly like his personality. More famous examples…. Taleb (black swan guy) was the son of the Lebanese finance minister when the country fell apart, his formative experience is that no matter how good things seem, it can all go to shit quickly. He invented a complicated mathematical theory, and used it as justification for going and trading what he believed at a deep level anyway. Soros bases his entire investment theory on a childhood experience hiding in a cupboard from the Nazi’s in Hungary, that anything that seems insane cannot last indefinitely.

    Can people think of any others?

  • Scott Phillips

    I’m having a great hair day!

  • Scott Phillips

    Range – agree

  • Scott Phillips

    And how do we trade ranges? We scalp, holding only for short amounts of time, being very quick to bank profits and move stops to breakeven. We scale out of positions when we see profit, and never trail stops to catch a big move.

  • Scott Phillips

    After a big down move we naturally assume that a new trend must form. The highest probability is for a choppy, hard to trade range, that lasts for a long time. In fact that is exactly what is happening here.

  • BKXtoZERO

    Thanks.

  • mugabe

    not such a short term trader, but wouldn’t want to trade it here – you trade ot at the extremes of the range, no? btw, v interesting about taleb and soros (meant as a reply to scott)

  • hellbent

    Availability bias: We will make a judgment based on the scant information available. Instead of, or without, judging the scantness of that information.

  • Scott Phillips

    Happy to help :)

  • Scott Phillips

    Good one!

  • Scott Phillips

    I wouldn’t want to trade it here either. The fly in the ointment is that increasing volatility ranges trade very differently than low volatility ranges. Great market to stand aside

  • Scott Phillips

    Unless you take every single setup Mole posts, picking and choosing here and there is a good way to blow up your account. Selecting the cherries, even from a basket of pretty good cherries, you will be amazed at your ability to pick bad cherries.

    I personally find that many of the setups I think are “too good not to take” are losers. I don’t know why, but many of the “quiet achievers” were trades I was pretty marginal about.

    If Mole’s setups appeal to you (they are good) suggest you start saving them, work out at a deep level why and how they are an edge, categorize them into different types and build a system around them.

  • mugabe

    recency bias

  • mugabe

    is it true to say the the more categorical a person is in their opinions in general, the worse trader they will be?

  • http://pugsma.wordpress.com/denalis-turning-points/ denali92

    I have almost all of the detailed data for the last 100 opex weeks – ie. back to 2007 – though my gap data only goes to 2009…. I use all of the opex info to provide me with a number of potential scenarios to see if there is a long or short edge… as an example of the 7 April opex periods since 2008 – ALL have produced buying opportunities for rallies in to late April (2009) to late May (2013)

    That is a decent edge…..

    My next challenge is to pull together all of the detailed data to 1998 – I have a lot of it … but not all of it…

    -D

  • HeadNShoulder

    Thanks, I have a system to trade SPY intraday wise via options (applicable to IWM and QQQ but not the net profit is a lot lesser since the intraday movement is less than SPY hence) but not suitable for swing trades. I am just amazed at mole’s call which usually swings smoothly. Swinging will just make me feel uneasy and suffer sleepless night. Trading intraday however with cash position end of the day makes my life easier and more relax.

    It’s just a boring job staring at monitor and placing trades and adjust the risk/reward accordingly since it changes every tick. Nevertheless, it makes money.

  • Scott Phillips

    No it is not a decent edge. 7 instances of anything doesn’t mean a thing. This is not my opinion but fact. Ask any first year statistics student

  • Scott Phillips

    Not necessarily, but if those opinions are about market direction then CERTAINLY.

    The “I think we go to SPX 2100 then fall to 1900” type forecasts are generally resulting from a desire to be right.

  • trader wantabee

    some believe in the concept of fairness, and when they are denied the opportunities, experiences or rewards that others get, (denied rightly or wrongly) they concoct elaborate reasons to justify and explain it, mostly to make themselves feel better about not doing the work required to examine the reality and the truth, sometimes to get out of the work required to improve themselves to get the rewards and opportunities. they therefore devise biases that things are unfair, skewed, etc., without deep thought. they can still survive in the world because of the tribal effect, where the social trade allows forgiveness in exchange for peace, but in the pure financial marketplace, there can only be one winner.

  • Scott Phillips

    Denali, statistics are the basis for your method. Great! The best methods and systems are constructed using exactly this sort of method. Victor Neiderhoffer has an incredible record using just this sort of thing, but used properly.

    You need to read the following, and understand everything in it at a deep level, and then generate confidence intervals for the edges you seek to rely on.

    http://en.wikipedia.org/wiki/Confidence_interval

    I read recently that 6 out of the last 7 Tuesdays were down (don’t know if it is true). Obviously to impute that there is a downside edge next Tuesday is complete rubbish. You are doing a very similar thing here :-)

  • Scott Phillips

    Options!!!! Tool O’ the devil!

  • Scott Phillips

    This is one of the few places where EVERYTHING is out in the open. The behind the fold content is no different than the above the fold, just more of it.

    Mole is remarkably upfront and honest about his method, his process, his thinking… all of it.

    He would make way more money if he was a prediction monkey like all the other bloggers, but that is straight up fraudulent.

  • BKXtoZERO

    I was kidding, Actually I think that Mole is one of the kindest and hardest working guys out there. I already wrote him that I was amazed and very thankful for what he shares for free. Hell he was giving practically live updates at critical turning points throughout the last trading range. I kid a lot….. he posted the picture of Putin and told subs NOT to tell leeches what it meant. That is more tantalizing than trades. I am 50% Jackass

  • http://pugsma.wordpress.com/denalis-turning-points/ denali92

    I would NEVER rely on down or up days…. I agree it is RUBBISH!

    The US equity market is a different animal, and due to money flows (pensions, IRAs, etc…), it has some very distinct signatures compared to most every other market that I have observed or traded in the past 30 years…. I am sure there are also signatures in certain commodity markets, but I do not follow them to the detailed level of statistics that I have compiled on the SPX and MID.

    The opex turns are a reality due to the huge volumes and flows in US equity options markets.

    Will we turn post April opex? If we get oversold enough, I believe we will. What I have not provided in my comments is that the Midcaps (which is what I trade a lot) became Hourly Oversold during each of those April opex bottoms. The Monday post opex hourly oversold signal identified the bottom in April 10, 11 and 12 and The Tuesday post opex signal nailed it in April 09.

    In the last six years, there have been 14 hourly oversold signals on the Monday post opex:
    These produced 13 post opex bottoms with the latest being four trading days post opex and 1 (Sep 14) was an opex Friday top that was no where near a post opex bottom. I do not blindly take all the signals, as I believe other conditions also need to be present. The exact stats are

    14 signals: (but 2 double signals – ie. Twice in one day)
    4 Monday post opex lows
    3 Tuesday post opex lows
    2 Wed post opex lows
    2 Bottoms 4 trading days after opex (Post Thanksgiving in Nov 11 and Sep 13)
    1 Start of a significant move lower (Sep 14)

    I would love to be able to provide stats that had 25 plus observations, but these conditions simply are not going to occur 25 plus times over the 6 years that I have been tracking this data in super detail as there have only been 235 hourly OS buy signals in the last 6 years across all market conditions. (As it has been a bull market there have been 310 hourly sell signals – the latest of which triggered at 1:30pm this past Wednesday)

    THANKS for getting me to think about my approach in terms of statistics and confidence intervals. It is a good debate, and I am sure it will help me improve the way I use my data and also the way I represent it.

    Until last year, I had just kept it privately, but now that I am posting my detailed preview observations here https://pugsma.wordpress.com/denalis-turning-points-2/ my trading (really positioning) has improved significantly, as I am now only taking the absolute best set ups which means taking positions (or as Mole would call them campaigns) just one to four times a month.

    Have a good weekend,

    -D

  • http://evilspeculator.com molecool

    Hair is a liability during fights and Scott is a lean mean fighting machine.

  • http://evilspeculator.com molecool

    You really have leaned out mate – and look at those guns!

  • Sean

    I’m curious as to how many actual trades you have made and what has your expectancy been on those trades?

  • Sean

    To your point about our inability to calculate odds… I think we are actually excellent at calculating the odds in the low occurrence – high impact environment in which we evolved… we needed to find and kill for that one large game so we didn’t starve for a week (and/or to feed the tribe and win the women)… or run immediately if that bush made a sound so we didn’t die (whatever you find in that bush probably isn’t going to get you more women and could kill you)… nature favors risk-takers, they get the recognition so they get to procreate the most… we are all decedents of the very best risk takers of the last 100 million years or so, good luck fighting that effectively! … but to your point, this makes us extremely poorly engineered to look for, find and be satisfied with small opportunities or systems that generate 1-2R/week, week in and week out (50-100R/year!)… and the biggest problem is that people refuse to admit that they are the problem and so they look for external ways fix a problem that they don’t know they have (I’ll read everything on this blog and 100 books on trading and then I’ll know enough to make a system and be rich), everyone who is not a shining lite of perfect balance needs to admit that they are driving jalopy across a WWII battlefield where both sides are trying to kill them (heck most are running naked)… unless you have a functioning system that you operate perfectly everyday (unfortunately I don’t think most people even knows that this means) then that is you (not you Scott, the general you), stop immediately, thank God you have not been killed you, turn around, go home and build yourself a tank and a plan… don’t grab a gun and run out to “see if it works”… don’t steal some one else’s plan and run out to “see if it works” (spoiler alert, it won’t)… stop looking for short cuts and do the work… if you can’t take the emotional pain acknowledging your own deficiencies (ex. Gerb running and hiding whenever some one tells him to examine himself) then you will never be successful in this game… anyway, that’s my Saturday rant… off to golf!

  • mugabe

    Warning – macro

    Excellent in-depth (50 mins) interview with market wizard- Stan Drukenmiller:

    http://www.ritholtz.com/blog/2015/04/druckenmiller-look-for-three-market-surprises-in-2015/

    Interviewer is not very good at listening /digesting what’s been said.

    Mole – according to Mr D, euro only about halfway through through its move- let’s hope he’s right

  • http://pugsma.wordpress.com/denalis-turning-points/ denali92

    Of the three or four turning points that occur each month, one or two usually represent great low risk / high reward opportunities –  March had two – the post employment buy set up (which was only low risk as a post employment turn was due and by the Tuesday or the Wednesday the long side was getting low risk) and the post opex short set up.  I do not have a real expectancy – I manage them as a campaign where I attempt to trade 1/2 the position and have a trailing stop on the rest of the position.
    Though with the March post opex trade, I took it off fully and reversed to long as there is a Q1 quarter end quirk that I felt had a good chance of playing out which it did.   Generally, my campaigns last to the next turning point and sometimes longer if I do not expect a turn. If I do not see a strong edge, I will generally stand aside.   In 2014, I undertook 10 campaigns – one of which was problematic (post August opex), and I missed 3 campaigns that I wanted to take – but was too conservative on my hoped for entry levels (one of the reasons I am now a ZERO sub) or entry timing  (Feb 14 employment low came a day earlier than I would have predicted) and I missed 3 campaigns due to illness / vacations / taking care of my kids (which is my primary role). For 2014, from the perspective of my turning point work, there were 12 great campaigns – 7 of which were opex related. -D

    From: Disqus
    To: davidforster@yahoo.com
    Sent: Saturday, April 18, 2015 5:15 PM
    Subject: Re: Comment on Chasing The Market’s Tail

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    Sean
    I’m curious as to how many actual trades you have made and what has your expectancy been on those trades? 11:15 a.m., Saturday April 18 | Other comments by Sean |   |
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    | | I would NEVER rely on down or up days…. I agree it is RUBBISH!The US equity market is a different animal, and due to …Read more |
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  • http://evilspeculator.com molecool

    You’re hoping for me and my exchange rate? Appreciated – and yes, life has gotten significantly cheaper here in the past year. NOT that it was expensive for us, even when the EUR was scraping 1.4. You guys in the States simply have no concept of how low low living expenses are in certain parts of Europe – e.g. housing, food, electricity, gas, Internet. I’m paying very little in comparison with what I spent in the States and the quality is much better. Don’t even get me started on health care – LOL :-)

    I spent 20 years in Los Angeles watching people bust their asses to amass fortunes which they blew on overpriced crap and inflated basic living expenses. These days you can’t even find a decent place to rent in under $2k anywhere on the West Side. Don’t even try to by a place – $500k gets you a dog house somewhere in the Valley. People are spending money as if they’ve got a printing press in the cellar. Beats me, especially given the low quality of life over there – sorry to say. Many Americans need to get a passport and see other places, then come back and re-evaluate their priorities and their spending.

  • mugabe

    valenica is also v reasonable by spanish standards, or so I’ve heard / read, especially compared to madrid, barcelona and bilbao with regard to accommodation

    edit: I’m also hoping for my hefty non-euro positions … although these are not based on any macro,but on a closed mehanical momentum system

    re-edit: you’re also lucky / shrewd in coming here post-boom … prices much lower than a few years back

  • evilasevildoes

    Just watched a beautiful film on NFLX on the Iberian peninsula…looks gorgeous…next stop for me

  • evilasevildoes

    watch out for contango short term

  • evilasevildoes

    saw big vix bets for september yesterday
    love pnf

  • mugabe

    would recommend the north in the summer and the south in the spring (you can skip the east)

  • Sean

    That took you an awful lot of words to not really answer the question… just # of trades and expectancy is fine (win rate too if you have it).

  • http://pugsma.wordpress.com/denalis-turning-points/ denali92

    I do not look at it that way.  Sorry.

    For opex turns, I expect 11 turns a year for a minimum move of 25 SPX points (not as much as it used to be…).  Usually, there are at least 4 MAJOR opex moves of 50 plus SPX pts. So far this year, we have had two major moves in Jan and March. My personal expectancy is to catch turns in 8 of the 12 opex periods per year, and ride them for as much as I can extract from them.
    -D

    From: Disqus
    To: davidforster@yahoo.com
    Sent: Sunday, April 19, 2015 3:16 AM
    Subject: Re: Comment on Chasing The Market’s Tail

    #yiv3385365346 #yiv3385365346 a:hover, #yiv3385365346 a:hover span {color:#1188d2!important;}#yiv3385365346 .yiv3385365346button-cta:hover {color:#ffffff!important;background-color:#1188d2!important;}#yiv3385365346 .yiv3385365346button-cta:hover span {color:#ffffff!important;}#yiv3385365346 #yiv3385365346 #yiv3385365346 #yiv3385365346outlook a {padding:0;}#yiv3385365346 body {width:100% !important;}#yiv3385365346 .yiv3385365346ReadMsgBody {width:100%;}#yiv3385365346 .yiv3385365346ExternalClass {width:100%;display:block;}#yiv3385365346 @media screen and ( _filtered_a ){#yiv3385365346 html {}#yiv3385365346 .yiv3385365346content {width:100%;}#yiv3385365346 table {border-collapse:collapse;}#yiv3385365346 h2.yiv3385365346headline {font-weight:700;font-size:20px!important;margin-bottom:5px;}#yiv3385365346 .yiv3385365346button-cta {display:block!important;padding:0!important;}#yiv3385365346 div.yiv3385365346header {padding-top:20px;}#yiv3385365346 div.yiv3385365346footer {padding-bottom:20px;}}#yiv3385365346 #yiv3385365346 p.yiv3385365346mod-tools a:hover {color:white!important;background:#8c989f!important;}#yiv3385365346 @media screen and ( _filtered_a ){#yiv3385365346 td.yiv3385365346avatar, #yiv3385365346 td.yiv3385365346spacer {width:38px!important;}#yiv3385365346 td.yiv3385365346avatar img, #yiv3385365346 td.yiv3385365346spacer img {width:28px!important;}}”That took you an awful lot of words to not really answer the question… just # of trades and expectancy is fine (win rate too if you have it).” | |
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    That took you an awful lot of words to not really answer the question… just # of trades and expectancy is fine (win rate too if you have it). 9:16 p.m., Saturday April 18 | Other comments by Sean |   |
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  • Scott Phillips

    VIX and its cousins, and the implied volatility curves underpinning it, are very valuable tools and worthy of deep study.

    If I was to build a stock trading method i would use VIX as a filter

  • mugabe

    A well constructed portfolio consists of many relatively independent bets, each with positive expected return. This smooths the equity curve while allowing the trader to place a higher proportion of capital at work. Diversification requires the ability to see multiple edges in the market.

    http://traderfeed.blogspot.com.es/2015/04/what-i-learned-by-studying-my-exits.html

  • Scott Phillips

    I read the stuff on Pugsma you posted. You have a hypothesis, that opex, fed days etc etc are turning points. Certainly worth a test, expecially fed days.

    You probably have enough data to confirm a hypothesis on fed days at least, and a preliminary hypothesis on some of the others. Here is how, it will take you a few days of work. Right now your work is proof of nothing, in a statistical sense. There are certainly many observable characteristics and edges inherent in fed days, but right now you are taking a very unscientific “see what matches my preexisting hypothesis” type approach. This will lead to disaster in the real world, markets are confusing enough and we should always seek objective truth. If you start off with only a hammer everything looks like a nail.

    You are going to produce “scatter plots” (google is your friend)

    https://www.mathsisfun.com/data/scatter-xy-plots.html

    If you can produce scatter plots with a strong positive correlation that would be enough for a preliminary hypothesis. This is the gold standard for examining relationships between data points.

    The way you are doing it now – “this happened on X date, and SEE IT WENT UP!” is, in an objective sense, retarded :-)

    So for example the OPEX gap down hypothesis.

    One one axis plot “points gap down”

    On the other axis plot “market up/down in points after Y days”

    Take a few different values for Y (suggest 1 week, 2 weeks, 3 weeks, 1 month). If your hypothesis is worthy of further investigation you will have a clear positive correlation on most timeframes

    https://www.mathsisfun.com/data/correlation.html

    I’m interested to see the resulting scatter plots. FYI Neiderhoffer covers building scatter plots to test market edges in detail in his book “practical speculation” which I think you would like.

  • Scott Phillips

    You think too much – your trading will improve if you remove the word “why” from your vocabulary for a while :-)

  • Scott Phillips

    Examples of retarded odds thinking we inherited from DNA

    – We fear snakes, but not cars
    – We fear spectacular, unlikely events like terrorist attacks
    – We fear cancer but not heart disease (we have difficulty understanding small risks that add up)

    I’m a smarter than usual monkey and to a large degree a prisoner of my shitty DNA.

    I agree substantially with all your points :-)

  • Scott Phillips

    Examples of retarded odds thinking we inherited from DNA

    – We fear snakes, but not cars
    – We fear spectacular, unlikely events like terrorist attacks
    – We fear cancer but not heart disease (we have difficulty understanding small risks that add up)

    I’m a smarter than usual monkey and to a large degree a prisoner of my shitty DNA.

    I agree substantially with all your points :-)

  • Scott Phillips

    I lost 24kg of fat and put on 14kg of muscle within 3 months of starting testosterone replacement. And I feel awesome, sleep better, and a bumpy ride on the bus gives me a hard on.

    Highly recommend anyone who feels his age past 40 to investigate this miracle treatment – it’s been a total game changer for me.

    http://www.dangerandplay.com/2013/11/12/testosterone-replacement-therapy-trt/

  • Scott Phillips

    Is the edge due to the opex or due to the fact we are in a low volatility bull market?

  • http://evilspeculator.com molecool

    Yeah, everyone told me I was crazy to move to Spain during the crisis. Didn’t really see the problem as I’m not working here.

    VLC is pretty reasonable – not sure why as it’s gorgeous here. Madrid is definitely more costly but in comparison with L.A. it’s still cheap.

  • http://evilspeculator.com molecool

    Remind me to not go on a bus with you…

  • http://evilspeculator.com molecool

    I’m at the tail end of my 40s and last time I got checked (six months ago) my count was 800, very much on the high side for my age group.

    No wonder I couldn’t fucking concentrate on anything when I was in my 20s. Life is a lot more peaceful now that I don’t chase after every skirt that passes by.

  • Scott Phillips

    Everything that guy writes is bang on point

  • Scott Phillips

    800 is putting you in the top 10% of men for your age. I was in the bottom 15%, so it made a huge difference. With supplementation I am up to 870

  • Scott Phillips

    I’m suspecting you don’t trade with stop losses as you have not mentioned it.

    I hope you understand you could never use the phrase “low risk setup” about any trade without a stop loss

  • tomek

    Make sure you monitor your e2 (Estradiol) (via blood test) and blood pressure regularly as testosterone can significantly raise both. Side effects of elevated e2 take a while to show and are worse than those of low t. Hypertension is called “the silent killer” Not all docs are mindful of this while prescribing/during TRT.

  • Scott Phillips

    Yep I get regular bloodwork and estradiol is good

  • Scott Phillips

    If you had breasts on your back I’d marry ye

  • captainboom

    Shit, I’m mid 50’s and still can’t pass up a skirt. Pretty damn distracting.

  • http://pugsma.wordpress.com/denalis-turning-points/ denali92

    In answer to all of your questions / comments Stops and low risk for March employment:When a position is established, I always use stops.  I do scale in topositions based on the probability of each turn scenario. Why low risk for theMarch employment turn?-There has only been ONE fall past the Wednesday postemployment since 2007 – (100 instances) – that was in the extreme environmentof October 2008.   I did trade that turn in small size due to thevolatility.  We did not bottom until the following Friday (there issomething about the first three weeks of October – but that is for anotherresearch project) and then bounced 220 SPX pts. ****** Here are the %s forturns since 2007 for each turn event:·        Employment 82%  turns from the Tuesdaybefore to the Wednesday after      ·        Opex 94% turns from Opex Monday to the Wednesdaypost opex·        FOMC  98%  turns from three daysbefore to four days after·        Holidays 73%  turns from two days before tothree days after   For employment, I only take the highest probability turns from the Thursdaybefore till the Wednesday after  – though it also depends on whether themarket is falling or rallying. For opex, I tend to focus primarily on turns from opex Thursday to theWednesday after opex – unless we hit some hourly extremes earlier in the week.  For FOMC. I only take short set ups post FOMC, while I will take long set upfrom two days before to four days after  (though the latest bottom hasbeen two days after) For holidays, while I use them for the stats, certainly holidays are verylow probability events – like MLK and President’s Day at the start of opex – Iwill never take those.  Christmas is also low probability, though we didsee turns post Christmas in 2007, 2008 and 2014. If there is a Christmas turn,then there is usually not a holiday turn. I do think it will be valuable tofurther drill down in to the %s to try narrow the turn probabilities forfalling and rising markets.  Given thebull market, the %s for bottoms is MUCH higher than the %s for tops for allturn events.    I have added the idea to my research list.   ******************* For opex, why do we turn?  I dobelieve the turns, particularly the bottoms are related to the delta hedgingdynamics of opex. While it seems that position exhaustion occurs when we arerallying, (ie. Every one that wants to be long is long) as some of the besttops have occurred late in opex or just after opex. ****************Your suggestion regarding the scatter plots is an interesting one. I havesaved the comment and added it to my list of research projects.  I agree it would be an excellent way toprovide visual confirmation of my approach. Thanks for the suggestion. You are right.  I do have a hypothesiswhich I have now been trading actively for six years.  I have found the process of writing up theresearch and publicly exposing it has helped my results significantly.  Pug felt the research was valuable enough tooffer me the spot on his site. I take far fewer setups than I used to, as theresearch and writing has gotten me to just focus on the highest probabilityturns – generally just one to two a month.  I am the opposite of diversified – but it is what works for me and for mylifestyle. I am sure part of my approach is also due to the narrow remit I had whenI was an institutional trader and positioner. One of my objectives for this year is to improve my entry timing, particularlyon bottoms.  I am hopeful the Zero, andthe insights from Mole and others on this site will help me in that regard. Have a good week, -D
    From: Disqus
    To: davidforster@yahoo.com
    Sent: Monday, April 20, 2015 1:14 AM
    Subject: Re: Comment on Chasing The Market’s Tail

    #yiv7486954026 #yiv7486954026 a:hover, #yiv7486954026 a:hover span {color:#1188d2!important;}#yiv7486954026 .yiv7486954026button-cta:hover {color:#ffffff!important;background-color:#1188d2!important;}#yiv7486954026 .yiv7486954026button-cta:hover span {color:#ffffff!important;}#yiv7486954026 #yiv7486954026 #yiv7486954026 #yiv7486954026outlook a {padding:0;}#yiv7486954026 body {width:100% !important;}#yiv7486954026 .yiv7486954026ReadMsgBody {width:100%;}#yiv7486954026 .yiv7486954026ExternalClass {width:100%;display:block;}#yiv7486954026 @media screen and ( _filtered_a ){#yiv7486954026 html {}#yiv7486954026 .yiv7486954026content {width:100%;}#yiv7486954026 table {border-collapse:collapse;}#yiv7486954026 h2.yiv7486954026headline {font-weight:700;font-size:20px!important;margin-bottom:5px;}#yiv7486954026 .yiv7486954026button-cta {display:block!important;padding:0!important;}#yiv7486954026 div.yiv7486954026header {padding-top:20px;}#yiv7486954026 div.yiv7486954026footer {padding-bottom:20px;}}#yiv7486954026 #yiv7486954026 p.yiv7486954026mod-tools a:hover {color:white!important;background:#8c989f!important;}#yiv7486954026 @media screen and ( _filtered_a ){#yiv7486954026 td.yiv7486954026avatar, #yiv7486954026 td.yiv7486954026spacer {width:38px!important;}#yiv7486954026 td.yiv7486954026avatar img, #yiv7486954026 td.yiv7486954026spacer img {width:28px!important;}}”I’m suspecting you don’t trade with stop losses as you have not mentioned it.I hope you understand you could never use the phrase “low risk setup” about any trade without a stop loss” | |
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    I’m suspecting you don’t trade with stop losses as you have not mentioned it.I hope you understand you could never use the phrase “low risk setup” about any trade without a stop loss 7:14 p.m., Sunday April 19 | Other comments by Scott Phillips |   |
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  • Careus
  • http://evilspeculator.com molecool

    ____ ____ ____ __ __ _ ____ __ ____ ____
    ( _ ( _ ( __) / _ ( / )( __)/ _ / ___)(_ _)
    ) _ ( ) / ) _) / ) ( ) _)/ \___ )(
    (____/(___)(____)_/_/(___)(__) _/_/(____/ (__)

  • http://evilspeculator.com molecool

    Oh well – we shouldn’t complain. I guess once that goes away I’m ready to put together my bucket list.

  • http://evilspeculator.com molecool

    Works well during dancing!

  • http://evilspeculator.com molecool

    I think it’s all the exercise – less than 10% of men in my age group hit the gym regularly. Once you become sedentary it all goes to shit.