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Winding Down The Week
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Winding Down The Week

by The MoleJuly 2, 2014

Today will the last full NYSE session for this week and I’m sure most of you guys are already mentally checked out. I’m glad however we paid attention yesterday as that short term campaign on the equities side paid off very nicely. As I’ve said in the past: the bus moves the fastest once everyone got off.

I don’t expect a repeat of yesterday’s smooth run higher – but the GBP/JPY carry trade correlation is looking positive as of right now. So let’s see what we got:

The NQ has camped sideways and the 25-hr BB is now compression. That hourly NLSL right below in combination with the SMA may be good for a final spike higher but I wouldn’t risk more than 1/2 on it plus the ISL should be nearby (~3880).

Platinum has been riding its 25-hour very nicely over the past few sessions and I am waiting for a touch to grab a few long contracts. The idea is a retest of yesterday’s highs after which I would be out.

CHF/JPY – I’m short here right now with a stop above the NLBL/SMA. The idea here is a last kiss goodbye move. Again, I’m risking less than 1/2R here – easy to get stop run in low volume weeks.

Finally here’s EUR/NOK – I think this is the first time I feature it here. This formation reminds me a bit of what we saw on the equities side yesterday. Long here on a recovery of the 25-hour SMA and Net-Line Buy Level (NLBL). Once positioned my stop would be placed below that diagonal on the chart, i.e. below 8.42.

I’ll probably chime in quickly tomorrow, assuming anyone’s here to watch the half day session.

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.
  • BobbyLow

    Heads up. It might be a holiday week but Yellen is scheduled to speak in Washington at 11:00 AM EST Today.

    I flipped to Long Bucky on a couple of pairs based on RBT. I wish the Fed would stay in their offices. But it is what it is.

  • http://www.ProfitFromPatterns.com/ Ivan K

    I wondered what happened to my challenge regarding OP’s here ? … ah yes … other priorities rose to the surface!

    Ditto IP’s.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    Policy makers meet in Frankfurt tomorrow
    yeah – I’m checked out. cleaning the grill.

  • ridingwaves

    whacking the vix before july 4th pretty hard…

  • Billabong

    I’m working on an expanded version covering different markets at the same time to see what/if any variations exist. You were right, it is an interesting exercise, especially when there is multiple OP/IP days. This will take a me a couple more weeks. Other priorities did surface like emergency surgical operation for a family member with young children.

  • Billabong

    US football team set a new record for the World Cup … most goals saved by a goal keeper since they started tracking the stats … go Tim Howard – 16 saves.

  • Billabong

    SI making multi-month highs this morning. Anyone following FCX?

  • Billabong

    TLT now has a solid sell signal.

  • mugabe

    No, but looks v good, Copper miner have also broken out: COPX.

  • mugabe

    AAXJ -asia ex- japan- making all time highs.

  • BobbyLow

    It appears that the text of her speech was passed out before she began speaking and there doesn’t appear to be any surprises. Although, there could always be an unscheduled utterence.

    Her written speech was mainly comprised of Bla Bla Bla, Bla Bla Bla, and Bla Bla Bla, when translated it meant that if we throw enough Bullshit against the wall, perhaps some of it will stick. :)

  • badflightrisk

    There was a piece on “Zero” yesterday on how “they” do it.

  • mugabe

    if you know how ‘they’ do it, you should be able to make a fortune

  • vladv

    IP’s have very little edge by themselves when tested across a large futures portfolio. Entering on a break of the IP, using the previous bar’s high/low as your stop loss and exiting simply 1-10 bars after entry does not provide enough of a positive result to outweigh slippage and commissions. If you add as a filter that the IP must have a close in the direction of the breakout then this improves the result. Trading with the direction of the medium term trend provides an additional kicker.

    Much more interesting results arise if the IP is used as part of a complex pattern such as the hikkake where you a trading a failure of the initial IP breakout.

  • ridingwaves

    the boys in XIV noticed and have made millions….heck I was looking at it around 20 and had to back off based off etf…

  • bdoone

    ES 1967 level been in play since yest EOD. 25hr sma caught and now…1967. bot pong churnfest. Watching time/sales, looks like every low volume attempt lower is met with a volume bid for a stick save.

  • http://www.ProfitFromPatterns.com/ Ivan K

    Daily timeframe for the IP ?
    Break means that Open above / below is a valid buy / sell ?
    Previous bar’s high / low means the bar before the IP ?
    Exiting simply 1 -10 bars after the entry means ISL remains unchanged?

    These questions and more … !

  • http://www.ProfitFromPatterns.com/ Ivan K

    The exercise unto itself … and hence the process … is very revealing … on many levels … besides the obvious.

  • http://evilspeculator.com molecool

    Yeah, looks like we’re going to have a churn session today. Not surprising.

  • http://evilspeculator.com molecool

    I have done some extensive testing of IPs and without additional context they are rough, depending on the time frame. IF the entry candle closes positively (i.e. above the trigger for a long or below it for a short) then there is a 65% chance of it banking 1R. Problem is that you can’t know when that happens when you take the entry. I have considered other approaches but Heisenberg has kept me pretty busy. it’s a research topic I will probably revisit in the future when I have more time.

  • ridingwaves

    the ultimate fuckery will be if 16998 dow doesn’t get hit again until November…but I doubt it…

  • ridingwaves

    I’m going short on Monday afternoon after any push higher….Mole and Scott always says to have a plan…

    Happy 4th of July everyone…mine was made better this morning

    ridingwaves • 12 days ago

    just need to convince wife of how sometimes 3 is better than 2

    ZGNX is a buy…..stacked up a lot in 1.70-1.80

  • BobbyLow

    Well if this means that you had an addition to your family, Congratulations!

  • ridingwaves

    no, one in college already and that is enough plus a 1 yr old Aussie sheppard that acts like a kid..
    ZGNX was stacking in 1.70’s and sold 1/2 today on spike to 2.30+ holding rest for $5.00

  • bdoone

    SPX: 4th narrowest trading range since 1982…yawn

  • http://evilspeculator.com molecool

    I remember 1982 – VERY good year for me – hehe :-)

  • Ronebadger

    so, what’s tomorrow gonna bring us….3rd narrowest?

  • BobbyLow

    It appears that you own the Bio-Tech Space. Good for you. :)

  • http://www.ProfitFromPatterns.com/ Ivan K

    Different to today … naturally!

  • http://www.ProfitFromPatterns.com/ Ivan K

    Yes it was … a mega low / buy!

  • ridingwaves

    here’s your number one billboard hit of 82.. I like TOTO at 14 though

    https://www.youtube.com/watch?v=vWz9VN40nCA

  • ridingwaves

    it’s an evil place to hang out but I have been using Ivan’s candles along with a little long term charting that seems to bring good odds to these long empty candle moves…

  • BobbyLow

    Just closed out all “Campaigns” for a small net gain. Don’t feel much like tip toeing through a minefield over the next couple of days with more thin trading tomorrow, American Bank Holiday Friday, and more thin trading on Sunday night. Too much luck involved.

    Time for a 4 Day R & R. Have a great holiday weekend everybody and catch up to y’all on Monday. :)

  • http://evilspeculator.com molecool

    NOT a highlight of the 1980s – yuk… Eye Of The Tiger was more my thing then.

  • BobbyLow

    Just think, back in July 1982, one could get a 30 Year home mortgage for only 16.82% plus 2.2 Points. Of course Home Values were probably about 400% Less in nominal values back then.

  • http://www.ProfitFromPatterns.com/ Ivan K

    Q: When and where do significant R movements start from …

    almost by definition … depending on the textbook?

  • http://www.ProfitFromPatterns.com/ Ivan K

    And the stats for what follows are ?

  • vladv

    Many questions indeed!

    Yes daily timeframe only in the case of this test.
    Break means trades above or below – gaps nothwithstanding.
    The ISL is based at the high/low before the IP
    the ISL remains unchanged.

    This test was just designed to get a general feel of the humble IP. Adding trailing stops, profit targets, trend filters etc can all work wonders in creating a curve-fitted beauty.

    What does stand out though is that many IPs when looked at a lower timeframe are usually small “consolidation” patterns that often represent a pause in market movement,

  • Billabong

    There were some serious equity up moves today and bonds are in sync to the downside. TLT broke 50 DMA support.

  • Scott Phillips

    Ivan is right about this. I have found it is a wonderful time to be at the screen when everyone else is on holidays. The ideal time for me to take my holidays is when financial blogs/media are calling for a top, since “topping” price action is very hard to trade and whipsaws everything in the FX markets around. Enjoy your holiday mate :)

  • mugabe

    COPX: incredible breakout.

  • mugabe

    good job!

  • mugabe

    So far the big v short term breakout in SPY is holding, which is in itself bullish. V short term we’ve worked off an oversold condition thro time rather than price- also bullish.

    Today’s action also (paradoxically) provides a v obvious entry for a short (break of short term support), but it would be a short into a massive bull.

    http://scharts.co/VeLKFz

  • mugabe

    OK, it was 1981, but this is / was a great track:

    http://www.youtube.com/watch?v=pOHTPtB37gU

  • mugabe

    Rocky was never the same without Burgess Meredith

  • mugabe

    pity he didn’t make it 18 … sorry

  • mugabe

    back then I had far more interesting things to think about:)

  • mugabe

    didn’t know you were in the business of predictions

  • mugabe
  • BobbyLow

    Thanks Scott.

    I had 3 trades on and 1 of them was beginning to deteriorate and looked less than marginal so I took a small loss on it. Another one was turning into a marginal trade but had a small gain so I took it. The last one had a decent gain and I could have held on to it but the only way I can take a few days off mentally is to be all in cash so it was an easy decision to close that one too.

    My system is holding up well. However, I made a couple of mistakes this past week that I shouldn’t have made. To help fix this, I made a check list of certain data that I have to physically record BEFORE each trade is made . This has been a great help.

    Now I need a few days to recharge my batteries and I’ll be back at em Monday. :)

  • Scott Phillips

    I’m now doing the physical tick box check list as well :) At first I found it incredibly insulting to myself, but now I’m finding it very helpful. Mistake elimination is where it’s at!

  • Scott Phillips

    Vlad. *nothing* is an edge all the time. Also, even positive edges very rarely post good results with an exit after 1bar, 2bars, 3bars, etc.

    IP’s are a consistent but small edge in high volatility environments and a negative edge in low volatility and sideways markets. If you think about it, in a trading range, buying the high is like buying an attempted breakout of the range. Breakouts of trading ranges fail approximately 80% of the time, hence the shitty performance.

    Mole thinks (and I agree) that context is everything for IP’s. An IP which is also a retest of a low is a much better setup. An IP following an OP is a better setup. An IP shaped like a hammer or shooting star is a better setup.

  • Scott Phillips

    When every motherfucker is caught by surprise looking the other way

  • Scott Phillips

    Ordinarily that would be a big deal, but in context after the previous large up day it is to be expected. Odds favor upside continuation today, and the absence of participants means that whatever move (up or down) would be slightly larger than you would ordinarily expect

  • Scott Phillips

    One way (of many) to make IP’s work, is the following ruleset

    1) Lowest standard deviation (20) in 100 bars (same as bollinger bandwidth)
    2) An uptick in standard deviation
    3) Take all IP’s for the next X bars (25 is a good place to start testing) using Ivan’s Protect-R exit algo (detailed in cheat sheet above)

  • Scott Phillips

    A “good” is a lower timeframe trading range. Essentially its buying a breakout.

  • phylum

    Check out these puppy’s….

  • Scott Phillips

    This is fascinating! Your eye is drawn to the big winner, and not to the 4 losers that preceded it (marked)

  • phylum

    Excellent advice, ty

    Edit: DISCUS SUX!!!

  • Skynard

    AUD buy ST .9320

  • phylum

    Yep….

  • Skynard

    /ZW long

  • Skynard

    If she goes, short at .9370 (38)

  • Skynard

    See resistance at gap .9376

  • Skynard

    Huge shakeout to test lows, hourly extreme.

  • Skynard

    I’m Backkkkkkkkkkkkk:)

  • Skynard

    Waiting for ECB to get long /DX again. Ultimately, buy 25 hourly/lower BB.

  • phylum

    You all might enjoy this …

    Eleanor Learmonth – Conversations (Rpt)

  • phylum

    Welcome back …. take it easy

  • Scott Phillips

    Welcome :) You will see that phenomenon with all Ivan’s setups. Once they start to work they are a very significant edge, and then when they stop working they really suck for a while. Flows in waves

  • Skynard

    TY, updated my rules. There are times in this market that should not be traded under multiple circumstances. Especially when you are not in the proper state of mind, since they play a large role in your emotions. Physical or mental anguish are two big ones:) Have not been able to workout, see what the doc tells me today.

  • phylum

    Let’s try….the tide…..

  • newbfxtrader

    Waiting on this one. Currently long /ZO, /KC

  • http://www.ProfitFromPatterns.com/ Ivan K

    Should that read … ‘when every other …’ ?

  • http://www.ProfitFromPatterns.com/ Ivan K

    Translation: An excellent candidate for my trading the Equity Curve concept … however there are still traps in successfully harnessing that concept.

  • Scott Phillips

    yes

  • http://evilspeculator.com molecool

    Who are you again? 😉

    (my version of welcome back)

  • http://evilspeculator.com molecool

    Oh boy – I think we have been skynarded…

  • http://evilspeculator.com molecool

    I was mostly occupied with popping my cherry back then.

  • http://evilspeculator.com molecool

    Once the dust settles on Heisenberg and some other blog related initiatives I intend to spend some time to on exploring this further. Had some ideas and they will have to be tested extensively.

  • http://evilspeculator.com molecool

    Recency bias! 😉

  • http://evilspeculator.com molecool

    I’m telling you the re-entry is where it’s at. I wrote you an email about it but I think you missed that one.

  • http://evilspeculator.com molecool

    hence equity curve filters weed out the bad periods – a much improved way of trading Ivan’s setups.

  • http://www.ProfitFromPatterns.com/ Ivan K

    Freedom loss is a real issue with any filter / rule!

  • vladv

    i Agree that context is very important. The IP does seem more tradeable when you catch lows in short term volatility, within the context of an ongoing longer term trend.

    Additionally, as i have about 28k instances of IPs in the test data i am looking at, just focussing on the “really good” cases ignores the equally valuable exercise of examining when IPs perform really badly and then fading them.

  • http://www.ProfitFromPatterns.com/ Ivan K

    Both ‘context’ and clear and pedantic definition (such that a 10 year old can follow) … of ‘really good’ as well as ‘really badly’ … are part of the deal with all and any idea related to risk taking.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • mugabe

    All this talk (complaining?) about the low intra day range can give the utterly incorrect impression that the market has been directionless. Very far from it:

    http://scharts.co/1pZBtql

  • http://evilspeculator.com molecool

    I wasn’t complaining about it 😉

  • mugabe

    No, I imagine you’re sitting v pretty with that position:)

  • ridingwaves

    I read something recently with stats on how gold is always knocked down on NFarmPayrolls day…I think I’ll cross reference…but today it’s 1 for 1.. will post after I find it in my history files..

  • mugabe

    Looks like some markets didn’t get the message about this week being quiet:

    http://scharts.co/1pZDdjn

  • mugabe

    This excellent post might be pertinent in this regard:

    In the current stock market, there is a strong positive linear component (uptrend) and a strong low-frequency cycle superimposed on it. That regime has persisted for some time. In such a regime, my “edge”–short-term trades of 1-3 days based on backtested predictors–has not been a particularly good edge when traded real
    time. Why? In essence, I’m trading a short-term cycle, when a short-term cycle is not dominant. I’m trading my personality and my predilection, not what the market is giving me. To borrow a phrase from a savvy trading friend, short-term strategies “get run over” when lower frequency cycles and strong trend components are highly dominant.

    If I take what the market is giving me, I’d trade a helluva lot less often and align the trades with the most significant components of the present regime.

    http://traderfeed.blogspot.com.es/2014/07/hunter-s-thompson-madness-and-trading.html

  • http://evilspeculator.com molecool

    Just recently I wrote about volatility cycles which I received very little input on. I even wrote an indicator that visualized it – the ATRIP. The implications basically boil down to the same.

  • mugabe

    You’re right. It’s all about what you do when you’re not in the right environment for your strategy. Both you and Scott have discoursed at length on this. What you don’t do is whine!
    Btw, I manually calculate the ATRIP for a very simple volatility-adjusted momentum porttolio that I have.

  • ridingwaves

    it feels like this was expected….time to get ready for the unexpected…

  • mugabe

    dunno, I’d rather react than prepare in advance.

  • mugabe

    On a practical level, it all boils down to doing less of what isn’t working and more of what’s working, which is what your equity fit curve (or whatever it’s called) for Crazy Ivan is all about.

  • ridingwaves

    Check out volume moving into ABIO…small float bio that has buyers flooding in…news must be coming

  • Billabong

    we’ll see what Monday brings….

  • ridingwaves

    preparing is good…think food…:)

  • Billabong

    I use volatility … often appears in equities when change of direction is coming

  • http://evilspeculator.com molecool

    Actually there’s a lot to this and I have recently had a little epiphany after attempting to categorize cycles which continued to escape me. If a strategy stops working (i.e. exceeds your defined drawdown threshold) then it’s best to turn it off and wait until it shows signs of recovery. Trending strategies don’t do well in low volatility sideways markets and the reverse. But anything you use to measure those cycles inherently lags behind and it’s often difficult to quantify exactly what market conditions are beneficial and which are detrimental to your strategy. By simply listening to your equity curve those however can be identified faster than via complicated indicators – IMO.

  • mugabe

    pre-prepared food?:)

  • mugabe

    what? you mean you’ve programmed sound Effects into it? cool!

  • mugabe

    It’s a bit like manual backtesting vs computerised backtesting, I suppose

  • mugabe

    today’s action is bearing you out

  • ridingwaves

    no, prepping is what makes a meal….

  • Skynard

    Lol, amazing:)

  • http://evilspeculator.com molecool

    No it’s about not falling prey to indicator creep. I used to think that if I look long/hard enough that I am able to measure any type of market phase and adjust my systems accordingly. But that didn’t really pan out as expected – I repeatedly see systems rock and then get their ass kicked within similar market phases or even ones that should not work for them. I do see some hints as to why it is but categorizing those periods proved to be extremely difficult. Both Scott and I were spending months on this and then one day I simply decided to follow the equity curve. It’s working fine for CrazyIvan for instance and it has kept us out of two deep draw down periods recently. But I think the concept goes beyond just optimization of strategies – by simply using SQN of price or your system you are able to much more efficiently respond to various market phases. Yes, you need to lose in order to know that you’re in a bad period but frankly this works better than some indicator which promises to be forward looking but then misses out on great periods at the same time.

  • Billabong

    To Mole & company, thanks for all the great discourse over the last few weeks. Using Ivan’s RBT, my campaign is now going great guns (even closed out a 5R today). Yes it helps being in the right sectors and buying/selling in the right direction. But it’s the psychology of patience and discipline that make the difference. Along with trusting the RBT system and not making mistakes. Scott has often said, we need to work hard on reducing our mistakes and I believe this is very true. By increasing my discipline, my mistakes have come way down … And I shared my only mistake for June with you last week (it really pissed me off after working so hard on no mistakes for June; I can and will do better in July). l’m down to my last 30 transactions in my first 100 of the campaign. At this point, I will increase my discretionary trading. Again, thanks for all the discussions, contributions and support.

  • mugabe

    I seem to be relentlessly bullish but it’s da charts. Japan now breaking out:

    http://scharts.co/Vj9AA5

  • mugabe

    Btw, Happy 4th of July!

  • Scott Phillips

    We have a choice, to call it either
    a) A rigged game – evil market manipulation and a criminal act by the bankers
    b) A low volatility bull market

    Which one makes trading easier? By the very act of labelling the current situation as “bad” you are implicitly hoping that it ends, and ends badly. Once you hope that the current (whatever market type) ends, you lose confidence in trading what is in front of you, or worse, attract losing trades since you want to show how “unfair” the market is. Because you are looking for evidence that the current market type is about to change, you are constantly seeing patterns, even when none exist.

    We all get what we want out of the market, and if you want to show everyone how unfair things are, then that is the reality you create.

    You must know what market type your system works in, and know what market type it doesn’t. If we have a repeat of 2008 I have a mechanical system ready to slot in which performed with expectancy 1.4R in 2008 (but lost money in 2009).

    All of my short term systems including Heisenberg rely on trending markets, and catching a decent percentage of 4R+ winners. In sideways markets not only do I not have an edge, I have a NEGATIVE edge.

  • Scott Phillips

    I agree – the indicators we were using to measure volatility were unsatisfactory in major ways – the way you are doing it now is far superior

  • Scott Phillips

    Well my rules tell me to get out after 3 consecutive closes outside the daily bollinger, and even though this move looks to have more in it…. exit for 3.05R win.

  • Scott Phillips

    agree – for food and trading

  • Scott Phillips

    I still think we can make that idea work

  • Scott Phillips

    Probably – my head hasn’t been in the game the last few days with all my admin. I tell ya, its a pain in the ass setting up new corporate structures

  • Scott Phillips

    Agree

  • mugabe

    amazingly, sentiment is not especially bullish:

    http://stocktwits.com/message/24362586

  • http://www.ProfitFromPatterns.com/ Ivan K

    Jolly well done Billabong … congrats.

  • Scott Phillips

    One mistake in 30 is very very good. 1 in 20 is, IMO, a passing grade.

  • http://www.ProfitFromPatterns.com/ Ivan K

    The ‘tick this box’ routine provides an audit trail beyond simple/istic P&L … a great way to walk the walk.

  • mugabe

    Seem to be monopolizing the board but never mind. Another great article from the good Dr Brett:

    You
    know when you are in the presence of talent, because the originality of
    their efforts smacks you in the face and you have the unmistakeable
    impression of, “Why didn’t I think of that??!!” Looking at new
    information in new ways and assembling those data into fresh insights:
    that’s what creates a trading edge. There can be no question of greater importance to trading success than: “What makes me–and my trading–special?”

    http://traderfeed.blogspot.com.es/2014/07/values-innovation-strengths-and-trading.html

    Depending on my account, my trading answers would be:
    A momentum-based, mathematical, chart-free quantitative approach (2 accounts)
    Good chart set-ups (usually breakout from range) and patience for the trade to play out. (1 account)
    And in all three cases, risk control.

    Not sure if that qualifies as special.

  • http://evilspeculator.com molecool

    You forgot the most important part of trading. SELF CONTROL. To quote Van Tharp: Successful trading is 40% risk control and 60% self control. In turn the risk control portion is only half money management and one half market analysis. Yet most traders emphasize market analysis while avoiding self control and de-emphasizing risk control. To become successful traders need to invert their priorities.

  • mugabe

    ‘You forgot the most important part of trading. SELF CONTROL.’

    That is the unquestioned meme which is trotted out but not everyone would agree. In a a book I read a couple of months ago (The Universal Principles of Successful trading), the guy makes the (rather obvious) point that you can have all the psychology and risk control in the world, but it’ll do you no good if you haven’t got a positive expectancy model. That’s not to say the other two aren’t important, but they’re predicated on the first.

  • http://www.ProfitFromPatterns.com/ Ivan K

    Spot on.

    EDIT: An understanding of what the RBT is based on, and hence it’s Archille’s heel, are more vital than the actual expectancy … which my definition creates an expectation … hmmm.

  • mugabe

    Having said that, in the case of your compatriot, Rolf Harris, self-control or a lack thereof probably was the key:)

  • http://www.ProfitFromPatterns.com/ Ivan K

    Depends on whether one is long or short … all about perspective … in all things!

    For the record, RH is not a compatriot.

  • http://evilspeculator.com molecool

    “That is the unquestioned meme which is trotted out”

    I’m not trotting out any “memes” mate. Unlike both you and Ivan I have been dealing with literally thousands of retail traders in the past six years. And I assure you that very rarely do they lose their asses due to a bad system. Obviously you can’t trade without having a positive edge in the first place but I have seen a ton of traders who have been abandoning *winning* systems due to their inability to stick with it. If you want to debate that fact fine – every one has the right for an opinion.

  • http://evilspeculator.com molecool

    I don’t know why you continue to come here and question/criticize the work we do. It’s getting old mate and if you know so much better than start your own blog.

  • Scott Phillips

    Spot on indeed. The very best systems have drawdowns which would shake your faith if you didn’t have a deep understanding of the principles behind them.

  • Scott Phillips

    You are straight up wrong, and the guy who thinks it’s all down to positive expectancy systems is not a professional trader.

    Having a positive expectancy system faithfully followed and taking regular time to analyze results is a given. You can’t do anything without that. But positive expectancy systems are everywhere. There is one in the cheat sheet above this page. The turtles is a positive expectancy system, and I could name 10 others which are in the public domain. Google Linda Raschke or Ken Long. If you want personal instruction, Ivan can and will teach you many different positive expectancy systems over skype. Mole will sell you two that he and I designed together.

    As I keep telling people here you need to be working on your trading psychology EVERY SINGLE DAY to remain at peak performance. I’ve seen many traders with positive expectancy systems become disillusioned or worse, and experienced the feeling of being powerless to avoid breaking my own rules for reasons I don’t understand. It happens to me, and I don’t think I am exaggerating when I call myself the hardest working trader on this site, therefore it will happen to you.

    Most of you guys seem to think because you are a level above the competency of the slope that this doesn’t apply to you. Van talks about a particular type of trader who says “trading psychology is important. That’s why I read trading in the zone and made all those early mistakes and read these other books. Yep trading psychology is important and it’s lucky that I have great psychology. I’m not like those other losers”. This applied to 99% of the traders here.

    Your great trading psychology lasts exactly and precisely one day. I can trade amazingly one day and if I don’t do the things I need to do I will reliably suck the next day. Reliably.

    There was a trader here called Dudeplunger – Ivan worked with him for two years every day, and he was an *outstanding* technical trader. In terms of the mechanics of trading he was several levels up from me, and I know this because we collaborated trading bitcoin according to one of Ivan’s rulesets on 6hr charts, doing 2 rollovers each a day. He never missed a rollover, got his trade setups and logs right every single time. Perhaps not at system design which is my forte, but at the actual mechanics of trading he was really really superb, because Ivan had spent several thousand hours drilling him in it.

    He borrowed some money off family and friends and started trading a ruleset of his own design, which he did a very extensive backtest on. He went something like 100 trades without making a single mistake, which is quite remarkable, but in the process had a near breakdown at the first drawdown. He stopped trading, handed all the money back to his investors and never traded again. I offered him a job trading and he isn’t interested. The experience traumatized him.

    Trading for a living involves taking emotional punches to the face. When you have a string of 5 losers in a row the temptation to skip the next trade or cheer on the winner like it was a football team is huge. When you are not trading well the idea of filling out trade logs and reviewing your losing trades seems very hard. When you are in drawdown the idea of tinkering with the system is magnetic. When you have an open winner which reverses wiping out your profit it feels like you are a little kid being bullied by the market.

  • Scott Phillips

    I went back to that in June – the same routine as you showed me in 2002, and although I found it a little insulting at first it is very good. Especially with my RBT’s with some discretion in, documenting the use of that discretion is excellent. Also makes the weekly review much easier with much more content.

  • mugabe

    I certainly can’t argue with your experience over the last 6 years.

  • BobbyLow

    Wow! This is another one I had to copy, paste and print. And I probably need to read the last paragraph every single day. :)

    I also remember “Dudeplunger”. It’s too bad things turned out badly for him but I can understand some the emotional pain of what he went through especially if he was trading OPM.

  • BobbyLow

    Not being able to stick with winning systems has been my “achilles heel” Mole. It is also something that I’ve worked hard to overcome and realize that it is a continuous process.

  • mugabe

    I dunno, I suspect it all depends on 1) who you are and 2) what kind of systems you’re using. Not everyone is going to react in the same way. I’m not saying I don’t have any emotional ups and downs, but they’re not as strong as the ones you’re describing (yet, at least…). Apart from any individual personality traits, this may be due to the fact that 2 of the systems are 100% quant / automatic with a fixed investment universe to choose from. There’s literally no thinking to do except for the placing of stops. Eveything else is maths. It may also be due to the fact that in the other system most of my positions last multiples of months so action on a daily basis is often not big in terms of account movements. Perhaps I need to wait for a 10+% drawdown and then see how I feel. I might speak differently then.

  • Scott Phillips

    Come back after you’ve either made your first million or blown up your account and tell me everything I said above isn’t true.

    Take it from someone who has been there and back. You aren’t different. Your systems are going to be in a “range of legit systems” which all perform roughly the same.

    As someone who has traded and does trade both pure mechanical, automated, and discretionary systems, the emotions involved are identical

  • Scott Phillips

    You aren’t the first trader to think that pure mechanical trading is a panacea for not having to work on trading psychology. I used to think that myself, as a matter of fact.

  • saltwaterdog

    Very strange how comments that are posted for nearly 24hrs suddenly are lost, it just brings the integrity of the entire forum into question. Where is the Ivan comment on the substance of an RBT, and the follow up by Mole telling him to pound sand? Happens way too often to be simply a coincidence…

  • Skynard

    Placed small short on the /YM, div in play 4 h.

  • Skynard

    AUD pump and dump still long, see if that 100 hourly gets tagged. short at 9370.

  • Scott Phillips

    I think you have the wrong thread. I checked it several times yesterday and today, haven’t noticed anything missing

  • SS_JJ
  • phylum

    …. and the main political event?

  • http://evilspeculator.com molecool

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