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Wednesday, November 16, 2016


“Welcome to trading!”

From the blog post a couple of days ago, you know I instituted with Bert [my mentor] a crude algorithm dealing with “risk models” for customer positions; I literally spent 90 minutes explaining to Bert how probability theory in trading can severely limit the chances of Mr. Market coming for you with “your bullet”. I took my work and over the next few days did the necessary research form his stockpile of data, and put the “plan” [as Bert called it] into action in lumber, cotton, & corn, the three markets he almost exclusively traded.
As far as I was concerned, putting the “plan” together was simply a trip down mathematical logic and simple probability; the main focus of me doing it in silver at the time [the market I traded very heavily way back in those days] was simply to state unequivocally to Mr. Market, “hey, people tell me you got a bullet with my name on it … just so ya know … fuck off, cuz I ain’t interested … there is no way on God’s green earth you can defeat me and force me from the ‘game’ … and even if you plan on trying to take that magic bullet you got for me and do me some harm … well … you’re gonna need a lot of bullets my friend!”
In essence, all I did for Bert back then was give him the probability breakdown of how much a market had to be profitable before you would carry it overnight; with the one steadfast rule that you never, ever take home a position overnight or over the weekend if it was showing a loss at the close; and I MEAN FUCKING NEVER. I told Bert during that infamous meeting all those years ago, “I don’t give a shit who you are; I don’t care if the Moon’s North Mode is making love to Mercury with its signals; when you take a losing position home overnight or into the weekend, the probability of that position ultimately being a loser SKY ROCKETS!” [Basically, in the markets he traded it broke down to about 70% ± a few percentage points in each individual market.]
Over the course of the last 6 months, just in Lumber, I told Bert, “Looking at the trades you lost money in; a total of 9 trades. If my plan had been in place, you would have lost 2, and 1 of those was basically a scratch trade, AND THE OTHER LOSER WAS THE SMALLEST OF THE NINE! You tell me Master, do you adopt this ‘plan’ or what’?” You know the rest.
So, fast forward to today; unlike back then when all markets closed for the day and then reopened the next business day morning, we got 24/5 markets in practically everything [excluding European stock indices] traded on the MT4 with nothing more than a brief 1 hour or less interlude between the New York session and the open of the Asian session, where everything settles and rollover occurs.
Even when I was on the floor and had millions of Dollars in my trading account, if I was in a 1 lot, and it was down $1.98, I was not liking it one damn bit, and more than likely I’d cut the trade loose and start over. “Understand me … I hate being down in a position … it pisses me off … and I have a very short leash for it or else it’s gone. I never, ever am like most traders who are comfortable in losses and scared to death of profits.”
In other words, every single day, the thought of Mr. Market looking for me with his sniper rifle crosses my mind; I know, cuz I developed it, the algorithm’s rules, signals, and procedures will shield me from his scope … but that doesn’t mean I can’t get nicked … and I don’t wanna get nicked, I want to make money …as a professional trader I got to perform day-in day-out … the only thing the Mrs. wants to know is “how much did you make today and when can I spend it? … “oh wait, did Mr. Market ruin your day? Poor baby NOT! You get your ass in there and give Mr. MARKET the ‘what’s what’ and point out to him ‘I got needs’!”
And that’s how that story goes, so now you know that when I “ring the register” on a trade, why I don’t really care where it goes from there; there’s always going to be opportunity … and I know following liquidation rules most of the time [vast majority] I’ll be getting close to max profit potential. And if I run into a situation where further trades could have made me more money, I don’t care about that either cuz I know the probabilities for signal success deteriorate in the later half of the day. In other words, my entire approach is one of telling Mr. Market to go find somebody else for their bullet!
I want you to THINK about what I’m going to say next: 1) you have the same profit goal as me which is $3 per Oz. per day, 2) you trade a 3 lot, and finally 3) you hit that average on a 3 lot over the course of the year. How much did you make that year? Well, 300*220*3 = $ 198,000.
“How many of you made 200K last year cash? Let me see the hands in the air. Hmmm, I’m not seein’ a hell of a lot of hands now am I? And this is with a 3 lot; if you did 1.5 lots it would still be 100K; and finally, even if you could only afford to start trading with 50 Oz. [1/2 lot], you’d still make about 33K [5K in your account to start your own business and within a very short time being making more money than you ever dreamed.]”
And this is capturing $3 per Oz. per day on average. So don’t sit there and be thinkin’, “$3, what’s 3 bucks? Hell man, I wanna make some money here.” MY RESPONSE: “Yea well, that measly $3 through all kinds of market conditions will make your ass rich; and in this market you can easily parlay your volume up to about 20-50 lots without upsetting the market and moving price. It simply doesn’t pay to look for every last penny of every move; it will cost you more than you know. That’s not to say your profit goal can’t be $4 or $5 or even $2; I just wouldn’t make it unrealistic with something like $15, which you won’t be able to hit without giving up plenty of money with the smaller winners to try and achieve. If you’re in your 20’s or 30’s, you got a lifetime of trading ahead of you; you got multiple millions waiting for you to pick up cuz it’s yours!!”
And it all starts with the premise of keeping Mr. Market occupied with somebody else; the very premise of the algorithm!

Turning to gold today … Oyyyyyy … F-ing Chuckleheads Asians, what can you really say for yourself? … you rally it up to the highs from the close about $6, and here we are lower on the day coming into New York trading … how many times do you hit a donkey in the head with a board before he figures out what you want him to do? Apparently, you don’t seem to understand this analogy.
Ok, first trade directly below.

Out on the spike up cuz I don’t believe they can carry this thing up much higher; need the spike to get a good price. Captured a little over $1 for the trade.
Second trade directly below.

Not liking the trading action here one bit; way to choppy and uneven to go higher tight now. Out with a few pennies profit.
Well, that was quick; trade #3 directly below.

Out on the spike up almost to exhaustion, not quite; anybody see a pattern here besides me? At first, I’m not liking the acceleration off the signal; everything is a “struggle”… and I’m risking earlier profits … but equities weakness is helping here … caught the chart a little late after the trade cuz the lovely Christina [my latest and last protégé] is on chat with me telling me how she sold the spike up to this orange arrow high. “Way to go Christina!!! You are my fucking hero!!!!!!”
Captured about $2.30 on that trade and that puts me well over my profit goal of $3 for the day, and given the action I’m seeing on my screen, I doubt gold sees me again today. [Well actually, no way I’m back in this stuff no matter where they take it.]
Ok, dog is antsy, I need Vitamin C therapy, the water beckons, and most importantly to me … Christina made money and sold that high spike right along with me [independently, I didn’t tell her] and rang the register as well“It’s a good day to be a trader!” I’m soooo outta here … until tomorrow.
Have a great day everybody!

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