Derivatives- say what?

[Tallstock (Peter)]

Hi Bobby,
In Nov 2004 the market had rallied steadily from the March 2003 Low of some 2835 by 36%. Momentum was clearly in place. Why anybody would short that type of market and with 4500 contracts is beyond me. An exit at lower than 3920 would have been possible if a smaller (less greedy) number of contracts were held. Trading long with the underlying trend would have produced substantial profits -- by March 2005 the market had risen to around 4220 (another 357 points or +9%).
Elliott Wave theory is just one of 1000's of "experiments" used by investors. Some fail with it some don't. It is not the only system available.
Finding a methodology that is "profitable in all market conditions" is the "illusion". I wish you luck in your "daunting challenge".
Peter

[Bobbyoutback]

Originally Posted by Tallstock

Hi Bobby,
In Nov 2004 the market had rallied steadily from the March 2003 Low of some 2835 by 36%. Momentum was clearly in place. Why anybody would short that type of market and with 4500 contracts is beyond me. An exit at lower than 3920 would have been possible if a smaller (less greedy) number of contracts were held. Trading long with the underlying trend would have produced substantial profits -- by March 2005 the market had risen to around 4220 (another 357 points or +9%).
Elliott Wave theory is just one of 1000's of "experiments" used by investors. Some fail with it some don't. It is not the only system available.
Finding a methodology that is "profitable in all market conditions" is the "illusion". I wish you luck in your "daunting challenge".
Peter

Yes Peter the old greed & fear are guiding irrational probability , been guilty of this many times , one night I traded multiple future contracts naked ( no stops in place ) overnight with a belly full of beer , the result was complete destruction of a healthy account

The search for a formula for when to roll over a long into a short or vice versa is the grail I seek

Cheers Bobby.

[Tallstock (Peter)]

Hi Bobby,
In the inexpensive charting software I use there are numerous formula that are freely available to help you decide when to roll over a position. A clear set of rules is the starting point. Discretionery chopping and changing on a whim (or a belly full of beer) should not be an option. However, you have already stated you have "no faith" in Technical Analysis so I assume you have exhausted all these avenues to find your "grail".
Where you are now searching is a puzzle to me.
Peter

[Bobbyoutback]

Originally Posted by Tallstock

Hi Bobby,
In the inexpensive charting software I use there are numerous formula that are freely available to help you decide when to roll over a position. A clear set of rules is the starting point. Discretionery chopping and changing on a whim (or a belly full of beer) should not be an option. However, you have already stated you have "no faith" in Technical Analysis so I assume you have exhausted all these avenues to find your "grail".
Where you are now searching is a puzzle to me.
Peter

Hi Peter ,
Using charting software that has formulas that advise do this or that are mechanical systems , a well known American authority Linda Bradford Raschke said : I've known hundreds of professional traders throughout my career but I know of only two who were able to make a living with a mechanical system .
Its about perception , thats why I,m a discretionary explorer who now knows the belly full of beer disadvantage well

Try this test of observation , give yourself 15 minutes to get it .

Look at the equation 5 + 5 + 5 = 550 . Obviously it is not correct .
Write it down on a piece of paper . Now to make it correct you may add one straight line to the equation . It can be vertical , horizontal or angled . You cannot place a slash through the equal sign to indicate inequality .

Have a go then let me know how long it took you .
Bobby.

[Tallstock (Peter)]

Interesting that you should quote Raschke.
A Google turned this up;

"Linda Bradford Raschke is the lead trader at LBRGroup, Inc., where she has been actively trading futures and stocks for her own account for the past 20 years. Linda started her career as a member of the Pacific Coast Stock Exchange in 1981, and later became a member of the Philadelphia Stock Exchange where she became a registered market maker in equity options. In the early 1990's, Linda became a registered Commodity Trading Advisor and formed LBRGroup Inc., a professional money management and commercial hedge fund firm.
Linda has been featured in numerous publications, including Jack Schwager's The New Market Wizards, and Sue Herrera's book, Women of the Street. She has lectured in over 30 different countries for Dow Jones and has been actively involved with the Market Technician's Association. She co-authored the successful book, Street Smarts -- High Probability Short-Term Trading Strategies, and has written articles on classic technical analysis for numerous publications."

If you were a trader with a successful mechanical system why would you tell Raschke you had an edge over her and the rest of the market?

The benefit of a well written mechanical system is that it helps to control emotions such as "perception" and a host of other feelings. When a trader uses derivatives such as CFD's with high leverage the pressure to be financially successful is immense and emotions like "hope" can have a devastating affect on the bank balance. However, a trader who has taken the time to write software code for a (mechanical or discretionery) system that they have traded profitably has developed a high level of confidence.
Peter

[Bobbyoutback]

Originally Posted by Tallstock

If you were a trader with a successful mechanical system why would you tell Raschke you had an edge over her and the rest of the market?

The benefit of a well written mechanical system is that it helps to control emotions such as "perception" and a host of other feelings. When a trader uses derivatives such as CFD's with high leverage the pressure to be financially successful is immense and emotions like "hope" can have a devastating affect on the bank balance. However, a trader who has taken the time to write software code for a (mechanical or discretionery) system that they have traded profitably has developed a high level of confidence.
Peter

Hello Peter ,

In regard to telling Linda , my guess is ego

Yes mechanical systems seem to eliminate emotions & the fear of loss & failure are postponed , a mechanical system is great for identifying whats already happened .
I do see your point about trading systems that have proved profitable , But change always happens , alter all a price chart is an intra-spatial after image , the expired time frame inside the after time dimension .

Did you have a go at correcting the 5 + 5 + 5 = 550 equation ?

Have Fun
Bobby.

[Tallstock (Peter)]

Hi Bobby,
Don't you think that Linda, as a trader/fund manager/market maker is in it for the money? Sure she probably has an "ego" but at the end of the day she wants to make a living whatever way she can. Her "grail" appears to be a mix of money making solutions.

Successful traders don't blab their secrets to every Tom, Dick or Harry. Why should they?
They keep their edge (whether mechanical or discretionery) to themselves. They have worked hard to establish their confidence, normally starting from a low bank balance, and through experience and numerous profitable trades developed a system, often restricted to a specific type of company, sector or market. The history of successful trades can be confidently repeated time after time because the market has a history that is repeated. Nothing complicated, rather basic really --- certainly not rocket science. Just plain hard work. The more hard work, the luckier you get. Well, that's my experience.......

Sorry, I am not smart enough to crack your equation. How you use "perception" to trade Index CFD's derivatives remains a puzzle to me.
Peter

[AndrewJ]

Did you have a go at correcting the 5 + 5 + 5 = 550 equation ?

545 + 5 = 550

Oldie but a goodie

Andrew

[Bobbyoutback]

Originally Posted by AndrewJ

545 + 5 = 550

Oldie but a goodie

Andrew

Well done Andrew

Yep just add a line to the + sign to make it a 4 , when first shown this I looked at it for 2 minutes & just could not see how , then 10 minutes later I was doing something else when it hit me !

[Bobbyoutback]

Originally Posted by Tallstock

How you use "perception" to trade Index CFD's derivatives remains a puzzle to me.
Peter

I think Linda now makes enough money by just mentoring others ,no need to trade anymore .

Some years back A mate & I booked a 10 day luxury holiday in QLD , our interests were womanizing , boozing & fishing . Whilst there I was going to have a chat with a real trading guru but his fee was $395 per hour for a one on one consultation , I thought it a bit steep for a two hour yak yak & spend the money on indulgences.
You can just imagine Linda's fee .

The use of perception when trading Index CFDs is not just about being on the right side of the trade , you need to survive what the provider may throw at you , they control the bid/offer , they know were your stops are , & your playing against them .

Have Fun
Bobby.

[Tallstock (Peter)]

Hi Bobby,
If, for whatever reason, Linda doesn't trade anymore then that tells me she probably didn't work hard enough as a trader. Much easier to mentor, advise, teach than trade.
What about finding a market where you have more control?
If your CFD provider has so many obvious advantages then why do you bother risking your hard earned money?
Is it because of the thrill of using leverage?
Is it because you are making buckets of money?
Is it because you are happy giving the CFD provider your cash in the "hope" that one day you might find your "grail"?
Maybe if you had spent the $395-00 per hour with the "guru" then you might have already established a profitable trading system and be laughing all the way to the bank. Might have been money well spent.
Peter

[Bobbyoutback]

Peter , the number of successful individual traders who sell their secret is nil .
Whats available is the same rehashed stuff offered again as new re- birthed rhetoric .
Gees even Gann theory courses are still sold to the gullible !

Trading software are a fixed set of instructions unable to adapt to changing conditions , you can make the appropriate decision better to those unfolding conditions .

The CFDs I trade suit me with there flexibility & I can trap the trapper using appropriate brackets after placement

But still I search for that magical solution that will allow me to always milk the flow when ever it changes .

Have Fun
Bobby.

[Tallstock (Peter)]

Hi Bobby,

Trading software are a fixed set of instructions unable to adapt to changing conditions

Having a fixed set of instructions that are profitable is the "secret"!
Well written software that adapts to changing conditions is the "solution".
It's out there.
Without the right tools then, I think, trading derivatives such as highly leveraged CFD's are a recipe for financial disaster.
Peter

[Bobbyoutback]

Originally Posted by Tallstock

Hi Bobby,

Having a fixed set of instructions that are profitable is the "secret"!
Well written software that adapts to changing conditions is the "solution".
It's out there.
Without the right tools then, I think, trading derivatives such as highly leveraged CFD's are a recipe for financial disaster.
Peter

Greetings Peter ,
If such software exists try it before the inevitable happens .
Are you familiar with the Law of Unintended Consequences ,
its that actions of people always have effects that are unanticipated or unintended .
I don't think you need spoon feeding to get the point

And your right about trading highly leveraged CFDs without the tools , best one is a clear mindset !

Cheers Bobby.

[Tallstock (Peter)]

The software certainly exists.
Some formula are better than others. They have been around for years and are tried and tested. Investors don't need to spend thousands of $'s on "black box" systems that might not suit them. Most software vendors offer a free trial period.

Better yet find a local mentor through an Investor Group. A mentor will probably get you to chart some historical prices on a piece of cheap Graph paper. Trends and their reversals soon start to become apparent. For something more fancy you might progress to an Excel Spreadsheet/Chart. Most On-line Brokers have free charting with multiple indicators (formula). Later, move up to a software program.

I enjoy writing my own code for the adaptable software I use. Very satisfying. Like Edison I had to wade through 1,000's of lines of code to find the system that works for me to produce consistent profits. That's the fun part.

Sorry, I am not familar with the Law of Unintended Consequences.

Peter

[Bobbyoutback]

Originally Posted by Tallstock

The software certainly exists.
Some formula are better than others. They have been around for years and are tried and tested. Investors don't need to spend thousands of $'s on "black box" systems that might not suit them. Most software vendors offer a free trial period.

Better yet find a local mentor through an Investor Group. A mentor will probably get you to chart some historical prices on a piece of cheap Graph paper. Trends and their reversals soon start to become apparent. For something more fancy you might progress to an Excel Spreadsheet/Chart. Most On-line Brokers have free charting with multiple indicators (formula). Later, move up to a software program.

I enjoy writing my own code for the adaptable software I use. Very satisfying. Like Edison I had to wade through 1,000's of lines of code to find the system that works for me to produce consistent profits. That's the fun part.

Sorry, I am not familar with the Law of Unintended Consequences.

Peter

Peter we are not trading the same animals , your doing what I used to do ~ trading individual stocks .
Index CFDs like the Aussie 200 Cash are based on the XJO & the SPI , also the providers spread plus there spike play crap .
No software will ever cover those parameters .

Congratulations on being able to work out the interpretation of those codes that suit , hat off to you Sir

An example of Unintended Consequences : Alcohol was banned at football matches to stop fights , result was inebriated fans arriving , creating more fights then before .

Regards Bobby.

[Bobbyoutback]

Hi Peter,
Thought I'd let you know I'm still trading live at 4AM + in the morning , being at it now for almost 19 hours , only way to survive when playing this game , need to be able to control play as the market dictates .

Love to go to bed

Bobby.

[Tallstock (Peter)]

Hi Bobby,
At 4:00a.m. after a 19 hour shift you are still trying to "survive" and "control"?
"Unintended Consequences"?
Beats me. . . . . .

I sleep well at night with peace of mind and money in the bank.
Peter
P.S.
Parameters can and have been written into trading software to take account of the variables that elude you. Just takes time and a bit of hard work. It's all been done before but then nobody's going to tell you are they?
Peter

[Nesti (Mark)]

Originally Posted by Bobbyoutback

Hi Peter,
Thought I'd let you know I'm still trading live at 4AM + in the morning , being at it now for almost 19 hours , only way to survive when playing this game , need to be able to control play as the market dictates .

Love to go to bed

Bobby.

Hey, that's exactly what Catherine talks about...chasing the game...here look
http://www.youtube.com/watch?v=oJDZV...eature=related

[Bobbyoutback]

Originally Posted by Tallstock

I sleep well at night with peace of mind and money in the bank.
Peter
P.S.
Parameters can and have been written into trading software to take account of the variables that elude you. Just takes time and a bit of hard work. It's all been done before but then nobody's going to tell you are they?
Peter

Hello Peter , I'm all excited about the software that will tell me how to scalp , its eluding me
Where is this scalping software ?

Mark thanks for that UTube link , most interesting .

Have Fun
Bobby.