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A Trader’s Guide (Introduction)

A Trader’s Guide (Introduction)

by MoleOctober 31, 2009

This is Michael Davey from Centrifugal Deforest. Regrettably (for you dear reader), the rumors circulating are indeed true. An apparently desperate Molehost had invited me aboard his Evil Spectre, in order to fill-or-kill a little empty space and comment on the event horizon. My purpose is simple – I’ll be holding rat hands while bobbing flotsam tides and jetsam streams, trading together in this ever amazing, shall we say special, marketplace.


In your face, frothing tough love perhaps (and you deserve it!), but my hand shakes something awful, while my palms are humid, flippant and mercurial. You’re on your own Einstein. Kudos to the human race.

If you’re (still!) reading this, you’re probably a trader (the rest of you nut-cases can leave now as this is where it gets boring). I know your kind. Heartless, wretched opportunists looking to profit from a gambling-house market economy – all for the sake personal gain, growth and a general swell being. Cynical is too nice a term for you.

You have my respect.

Assuming I’m not fired already, among other things here I’m going to run a quasi (moto) weekly series: A Trader’s Guide; which for the most part will entrail the psychological do’s and don’ts of (wait for it…) trading markets.

So while I can’t hold any hands, I can at least illustrate some of the myriad failure-traps a trader beds-down with, as well as the more opportunistic mindset aimed at maximizing gains (something you manage harmoniously to generally avoid).

Trading and investing mistakes will be made and losses are a certainty (for experienced and newer trader’s alike). None of us are above that. And while many of you tend to blame losses on manipulative market makers, Goldman shenanigans, POMO f-me pumps, etc. (I know because I read the pathetic transcripts), I’m a huge proponent of actually learning from trading mistakes and losses; adapting and getting stronger because of them. Spit sour grapes if you must, but complaining of outside forces instead of examining your own otherwise brilliant strategy is only limiting your net-performance – it’s as simple as that. If we want to actually (de)generate greater profit, we need to be honest, accountable and focused in the present. By limiting mistakes (eliminating repeat-mistakes and mitigating new ones which prop-up) you’ve conquered half the battle of trading success. In fact, by simply containing losses and pyramiding gains a trader does not even need to be right half the time to rake a decent year. You can be the worst coin-flip player on the board and come out ahead. Conspiracy theories of a rigged market should not interest you as much as your own little conspiracies, which are sabotaging gains. I do not expect to outlast Goldman’s super-computer, but as long as the market is volatile I can glean a good living (in a market with very little volatility the computer will kick my ass every time; I make money when I can, while I can, and I try to find some other pup seal to club when I have no edge. The victim-attitude serves no purpose but to lay down and declare I am owned (we’re only really yelling at ourselves, no?). There are plenty of other professionals who behave worse than these programs and they are still throwing a decent chunk of (other people’s) money around – let those guys be the chumps. My job is to eat that guy’s lunch, send him on his bike with head hanging low – for the sake of evolution if nothing else. This is a red-meat business. I don’t know what kind of dreamland world you might live in, but I don’t want to be part of the fool trough where a human mind (and computer program for that matter) can so eloquently self-destruct. Don’t sabotage the goal of something we (as a heartfelt community) seek to achieve – don’t sabotage the profit!

As I was drafting this, PCLN, as stock I went short as of the late minutes of trading Thursday, spiked higher in the after-market on news they will be added to the S&P 500.

So rigged.

Cliff Notes: Learn from the lumps and prosper because of them. Make them a positive. Appraise losses honestly, as well as gains (since you are constantly leaving the the meat of those on the table!). Seek to eliminate repeating mistakes and to maximize gains, from every point forward. You are always always working to get better (why not excel?).That is what this series will typically address.

You see now that I’m really an inspirational guide (Fire Walking – The Other 12 Steps!). The otherwise nasty, chewing-on about it all veneer is just a bit of tread-wear perhaps.

Re-tread wear, more like it.

Question: WTF is Centrifugal Deforest?

Yeah, that. No one ever asks, so I guess it’s working as a title. The name is coined from an unknown (to my memory) bogus-scientist’s theory that the Earth’s axis is actaully accelerating as the planet’s larger, old-growth trees are harvested – similar to how an ice skater speeds-up her spin upon crouching and bringing in the arms. Hopefully that makes as little sense to you as to me, but I really like the theory (if anyone can bring me the name of this guy I’d love to buy him  a beer and a trading account; just so I could view the trades). As far as my style of trading, the name plays well enough. I am ramping-up (accelerating exposure), as things are going well and I am shrinking in reverse fashion when going poorly. The idea is to have maximum exposure when winning and progressively lessen the blows otherwise). The ‘deforest’ part is also apt, I suppose. By participating and making a living in this industry I am contributing to the greater downfall of everyone and everything.

Copy that.

If I cannot answer your comments right now, it is because I’m boarding my flight in a few moments and I don’t know yet if there will be Internet on this plane [not!]. With this ES merger in hand, I’m off to spend some of Mole’s hard yearned money.

Homework: Yes, this course series will come with homework. For now the only assignment is merely to catch up with the previous two installments…

A Trader’s Guide to Chasing Ambulances
A Trader’s Guide to Exhaustion

[no internet on the flight – what kind of world do we live in?]

Good weekend!

About The Author
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.