Random Rants and All the Other Goodies

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I don't write about the market. I don't really write my analysis on here. I don't explain my methodologies too much, even though I've written enough to give you a good idea of my style. Why? Simply because for people reading this journal(if there are any... don't bother with the "I do" posts.... :D ) it doesn't matter.

I have my own style of trading and you most likely do too, or should have one. So technically, no matter how much those vendors try, it doesn't really matter. It all comes down to how you think.

Here's an example. Based on cycle analysis, when the shorter time framed MA crossing over the longer time framed MA represents a top for the actual chart. (Short = 1/2 time of cycle and long being time of full cycle). Depending on the market situation, I would interpret it as a reversal signal. But generally, crossing up of a shorter MA trend confirmation.

This is technical interpretation of the MA based on the cycle analysis' standpoint. Knowledge from study and research alters interpretation.


Another example. I've created a adaptive MACD system a while back. It had great system performance, I traded it without picking signals out and it worked better than my volatility breakout system. Still, once I started picking signals out, I under-performed both the system itself but also the general performance under the previous signals or system. System itself was good but it didn't help me get in sync with the market. Generally, a better system should be traded but because of my discretional style I let it aside.

Personal style and psychological and mental characteristics does alters interpretation.
 
Ignore, don't ask me what this is... I'm just crapping out crappy numbers.

NASDAQ Composite: U-40/D-60.

Numbers: 1469(Top), 1447(Top), 1409.50(Center), 1399.50(Closing A/B), 1374.50(Low), 1357.50(Low), 1334.50(Bottom), 1329(+- 1.0, Bottom)
 
I have large moral dilemma with this business. After finding a core style of trading, I've decided and found myself desperate to get into the business. During that time, I've applied for every job possible that was related to trading. Living in LA at that time, the financial job market is very slim there and I actually go accepted to a few of them.

While going to interviews and working for some of them for a day to a week. I've found myself in middle of the evil side of the business. The struggle caused me to hate the brokers, vendors and financial consultants of the world. I still do hate most of them. Being referred to a professional in the financial industry along with them makes me sick. So... today's journal is about the dirty part of the business.

Ken Roberts Trading Mentor School.
I was going through the ads for a job in the LA Times. There was a ad seeking for traders. It didn't explain what it was but I called. Well, first calls for appointments for a job are all the same. They get brief information about you like, "Have you traded" or "We are seeking for professional in Technical Analysis, are you familiar with this?" Well, I got the address and it was in Encino, somewhere in the valley. I didn't know where that was so I asked them some detail about the area, they told me it was close to West Hollywood. I checked the map confused how Encino and West Hollywood relates but I just decided to follow they're driving instruction.

When I was driving there, I was really confused. I get off the freeway and all I see is Mexican Ghetto. I'm sure most of you know this but it's full of Corona, Car Insurance, and Immigration Billboards in Spanish. Look, it's Ken Roberts, he's like a large trading vendor franchise. You expect him to be working in a Tall Building somewhere in the good part of town. Still, I don't see any tall buildings and when I get to the address, I see Aged Latinas hanging out front of the warehouse of some factory and buying lunch at the Deli Vans.

I go into the factory complex and there it was. A large warehouse in the middle of the ghetto. I get off the car and goto they're office. Well, the office was nice, it was like a office you see in a Auto Repair Garage. The office had a lot of phones and and around the wall you see who sold how much and all the other crap in sales office.

I was told to wait and fill out their forms. I finished filling it out and started talking to few of the guys. Overall, they weren't trading. They wanted to help new traders but they're thinking about trading soon. Still, they had an eye of a losing trader. I guess I had an eye for those things even before I got into a firm. It's that type of eye of a guy who just wiped his account. It's that un-emotional dead eye... sorta sad, sorta I hate my life kinda eye.

Well, the manager came out and we talked about trading and what I knew and all the other crap. Funny thing is on the interview, the manager asked me if I was profitable. I said I've been doing fairly well but I needed capital. Then he said, "Hey, let's get serious. You wouldn't be here if you can make money in the market." Funny and interesting...

Luckily, I didn't get the job. Well, the next job was about brokers, continued in next post....
 
Brokers...
I was a naive in the industry. It was all about trading and doing that well. I actually didn't know about churning and luckily got in. I had the Series 3 so I was hired immediately. They had a desk for me and they told me to sit down and write notes about how they do sales to customers.

This one day experience was extremely morally devastating. I'm listening to what they do and at first I was amazed with what they were doing. Seriously, sales is a respectable skill. The way they turn the conversation around, manipulating the whole conversation towards making them open an account.... sheez scary in a way. Well, with all that positive impression, I heard a guy talking on the phone. He too was a newbie like me still waiting to open his first account.

Well, from the conversation, the guy on the other side of the phone was a old man from Mid West. He was a barber of 40 years and had retired 15 years ago. His wife has gone to a better place and now living alone and single in this small town. He managed to save up about $50,000 through his 40 years as a barber.

Now these brokers just slams this poor old guy. The broker was new like me so then veteran sales manager just tells him what to say. It's exactly like the movie Boiler Room. On the speaker phone, everyone telling the new guy what to say... damn... Slamming him down... a little pause... Slam! a little time... Final slam and down the old guy goes.

Well, the conversation after that was shocking for me. The sales manager was goes on cheery to the new guy with something like, "Hey Josh! Just f*ck the guy with some options. And that's an easy 5 Gran" Then they cut his necktie....

... What??? Huh??? Damn... Boiler Rooms do exist... shit...

Well, I quit that job. It lasted for one day and proud that I quit. Until, I found myself in the prop. firm trading, morally I had doubts with who I was going to trade against. Personally, it's something I shouldn't have seen. Still, when I got started with actual trading it all went away.
 
Finally the financial planners.

Well, finally before the Prop. I got into a financial planning scheme. I don't know if you've heard of them but it's a company called WFG, World Financial Group. They're supposed to be a subsidiary of some large insurance company. They're also known as WMA, World Marketing Alliance, or something like that. They're just Primamerica with all the pyramiding marketing. Again, naive I just got in.

Funny thing is no one actually recruited me. They got hold of my resume and called me up. Simply, they weren't financial planners. They were just a pyramid insurance vendors that manipulated members with an illusion of being rich and being a financial planner. It's like Aphie calling himself a trader. They're not but they seem to enjoy calling themselves that.

Overall, it was a nice experience looking back. I got to see a lot of what the financial industry was for the general public. It's dirty, full of scams and manipulation.

Ironically, we do have to appreciate them too. The Zero-Sum factor and their naiveness gives me an edge. I don't trade against them or try to screw them but eventually I do the same thing as a the brokers or the vendors. Brokers and vendors screw them with commission and sales, Traders screw them with actual trades they make.

Now... am I being sentimental? LOL... C'mon it's reality. Eventually, regardless of the manipulation, the individual picks to trade. It's eventually the individual decision to open an account. It's their decision to listen to the brokers or buy the books. It's they're decision to take a position in the market just like how every trader trades. They are just making bad trades and I have no sympathy for that fact.

I know I'm getting screwed when I'm buying my cigarettes. I don't feel angry about Phillip Morris screwing me because I choose to buy it.
 
I'd really like to take sometime and write about a man whom I greatly respect. His handle name is Aphexcoil.

We had a very slow morning and lunch today. I didn't have a large position and a signal so was lurking around the Internet. Well, while lurking... I started reading a thread in here. Well, read this:

http://www.elitetrader.com/vb/showthread.php?threadid=10568

This thread just made my day. Seriously, this is too funny for me... so with all due respect, Aphie I congratulate you for your humour.

Still, I write my thoughts and opinion in this journal so I'd like to give a few thoughts about this character, Aphie.

Seriously, I really don't know if he's making up this character or if he's really what he writes about. Is he manipulating us to think that he is just a Hoodoo? Or is he really a great trader who finds it entertaining by making the ET traders frustrated. Seriously, I don't know.

From what he writes, he's probably the most incompatible character to be trading.

1. He doesn't know what he's writing about.

2. He doesn't know what he's reading about.

3. He can't do what he writes about.

4. He seems to have an vision of what a trader should but it's very unrealistic.

5. He seems to be in here all the time or posting something somewhere in the Internet like Yahoo! or Newsgroups like misc.invest.stocks. How does he support himself? 25 years old... in the Internet all the time.... trading some capital... Or does he live with his parents or in his parent's house garage? Is he Bud Bundy???

6. He seems to be concentrating on trading softwares than the actual trading. Is he a freelance software programmer? Seriously, if he has time to program Jasper, he should be thinking more about his trading.

7. He comes out strong most of the time with all the CAPPED WORDS and F!@#$@#$%@#$ swearing. But he just breaks down and act like a 4 year old kid using age as an excuse for a rude posts.... wait... even my 7 year old cousin doesn't use age as an excuse...

8. He denies the importances of mental and psychological understanding and control. Still, he manages to participate frequently in Psychology Forum threads with his *deep?* insights.

9. He's got a rap song, a Personal Classified, pictures and collages... who really is this character? Maybe he's a big local celebrity.

Seriously, this character's profile and his personality he expresses and portrays in here is too unreal. Well, there's a Japanese saying about Genius knows a Genius best. Maybe he's a Genius and I just can't understand him. But there's also a Japanese saying where there's only a thin line between a Genius and a Psycho.

I've met bad traders, I've recognized bad traits for a trader to have but Aphie is just in a whole different level.

(This is a serious post)
 
Journal #2.

I use Gann a lot and use trendlines even more. The LINES are my discretionary basis as a trader and cycles and/or Law of Vibration is my basis as a analyst.

Horizontal, Vertical, Diagonal, 2nd and 3rd dimentional outlook, you name it, I do most of them.

Still, these take time. So I can't utilize most of them during the day. To make things faster and easier, I only draw trendline. Still, trendline doesn't give me enough to trade. It's a good tool to confirm trends and rational relationship within the chart but there were a few things missing.

That's where my system comes in. I have a set of rules where it tells me when the momentum, volatility, ROC is tradable. It's something that I can't quite pull off with trendlines so they cover my weaknesses as a discretionary trader.

Well, I never intended to have it like that. Along the course, it just became the way it is.
 
Again, I'm out of ideas. While thinking about trading, I'm just going to start typing yaks about what ever comes up in my mind. I'm thinking about what I do in trading and it sums up to:

I view the charts passively and I just put the trendlines in. Determine my strategy relating the trendlines and the market action. When the market confirms my opinion and the signal comes out, I go in. When I'm wrong, I go out, when I'm right I stay until the system or my analysis tells me to.


Maybe I should explain the simple process.

1. I look the charts as a blank chart. There's usually some kind of line that I previously placed but they don't actually affect my views. From there, I see a chart pattern forming and predict what may happen if the pattern sustains. To confirm that I put trendlines on the chart. For example, When the overall market is trending up and the price is retracing down, I would place a trendline based on the two bottoms.

2. I would simulate what I would do on different situations. Example, If the market touches the line and bounces back it's a ready to buy. If the market follows through below the line, it's a ready to sell. This all depends on the overall market condition and other analysis.

3. Let's say the price just bounced back and started moving up from the line. Then I wait for the system to confirm my analysis. If I'm right it gives me a signal. I go in when the signal confirms.

4. Let's say the market goes against. First, I have 100% control over a losing trade before the exit signal comes out. My style allows me to get out anytime before the system tells me to exit. I never overthrow a exit signal. I usually try to get out before the exit signal. It's my last resort and my view of having the system telling me exit is a bad sign.

5. Now let's say, I'm extremely out of sync. Then I just replace the current system with my complete system. The system when I use discretion is a bit different in nature. First, it's a bunch of alerts and also I don't have my all my filters and setup criterias inside. It gives me more alerts. My complete system includes more filters and setups. It's closer to me than the alerting one. It's less trades and higher expectancy.

So in another words, the alert system tells only what I need for my discretion confirmation. The complete system is the full package which I can trade follow blindly. There is a reason to this. It actually helps me get back in sync with the market. I would continue analyzing charts but I wouldn't over-throw the system back to the alert until I start making better calls consistantly.
 
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