Traders Goals

I was watching a surfing show last night, and when they were describing surfing it seemed very similar to trading.

A lot of times, surfers wait just for the right conditions before venturing in.

To not wipe out, you need to be intune with the wave. Its very similar. Sometimes altered states of being are experienced when you have your best moments.

Dont force the trade.
 
Quote from Spectre2007:

The principle of 'the markets stop-loss'. Most people place stop loss related to their account not the market. 1% stop loss on account means something totally different then 1% stop loss on price.

The market gyrations with the trend imply a 'market stop-loss', if the cyclical waves are 30 points on average, with deviations from this average being minimal. Then you have found the 'markets stop-loss', if deviations exceed the average, then the market is doing something that it hasnt in the past, and a trend reversal may be upon us.

That is the principle of 'market stop-loss', where the market itself implies what it takes to alter its course. Once you have the market stop-loss then you work backwards to figure out what you can trade in relation to account size.
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Spectra

Thanks a lot for your comments in this forum. I must confess sometimes I look on your posts for references as well as Jack's and some other excellent traders in this site.

I follow this thread with interest 'cause you guys are talking about market dynamics. Personally as a trader is exactly how I see the markets. On the light of dynamics is how I adjust constantly my profit target/stop-loss and risk. As to me, this is the real challenge for every trader.

Spectra, would you care expand a little more your concept on stop-loss market? I would like to see how other traders are doing on this matter and compare what I use, I believe is always healthy

Thanks
 
Money that makes money controls the market ultimately. The vast amount of money or profits is based on long term positions by some large speculators or trading houses.

These long term positions have inherent targets or signals they look for, to scale out of a position or exit out of a position. If you look at a derivatives chart, and the daily action oscillates around 20-30 points but once in awhile you get 100 point retracement against the trend. You can infer that any loss or retracement greater then the cyclical average is the markets stop loss.

Its a implied quantity based on past price action on a long term chart. Since market participants need some type of risk management or have some type of risk management. After all they didnt get to the point of trading 10,000 lot positions without risk management. So the price action or chart pattern itself infers a market stop loss. Just look through the charts on the daily and look for what it took for the market to sell off. Thats why always be suspect when the market retraces minorly against the major trend such as the spoos did. Imagine if you held on to the end of the day. A large profit would have evaporated into a loss. Thats why its important to have as many things going in your favor in terms of the trade your placing.

If you dont then just do something else with your time, and analyze a different market. Maybe something else is eyepopping. Look up Colin Faith's link about 'turtle methodology', they pretty much do something similar, they reduce the dollar volatility of any position to a percent of the account. If the dollar volatility moves against them, they scale out. So when a market slides and continues to slide past the cyclical average, then some large speculators stops are being hit and they are being forced to exit. The long term players ultimately control any market, since they are the ones who have pyramided into a large position with a large paper profit. So when you see the market crashing or spiking in large amounts, it means a large spec is either entering or exiting based on what the market just did.

PS I think Spectra is someone else here at ET. The usernames are similar.

Chris
 
I am so sorry I meant Spectre... a typo here

Well you just confirmed what I look on the market in terms of volatility. I keep a record on some figures especially how long/short the market moved and retraced on a daily basis.. I keep an eye on that and look for any changes. whether significant one's or not. Every 15 days I do a check up on how things are going and if is necessary to make any adjustments. I don't not necessary hold 15 days for the check up as soon as I notice a change on market's behavior I check for the validity of that change and act upon. This measure has helped me as a trader tremendously.

I's important for traders to know that a constant adjustment is necessary to keep up with the markets. I agree with you that , depending on price, new/old participants are coming in and out frequently.
 
The loss in value in US assets relative to the rest of the world, is worriesome.

Or the worlds assets were undervalued and are being revalued. Looking at various charts.

1) Industrial Metals: upswing
2) Bonds: downswing
3) Global Equities: upswing
4) Domestic Equities: lagging upswing
5) Precious Metals: upswing
6) Forex: Carry Trades: Upswing
7) Oil: Upswing

Money is chasing accelerated gains globally. Its shunning lagging derivatives. Is the US being left behind?

I was reading through Market Wizards: Paul Tudor Jones, one of the thing he cites is reagonomics, Bushonomics is pretty much something similar. If asset inflation doesnt keep pace domestically, money will flee US allocation, and will seek other pastures. The mountain of debt, devalue the dollar will be the only way out. Just because dollar/yen is at relative highs doesnt mean the dollar as whole is doing well.

http://futures.tradingcharts.com/chart/US/M

You can bet a lot of hedgies are biding their time, till when warning signs start appearing. Before March 2000 crash, the market kept on ignoring the FED, as the FED kept on raising rates, the market kept on moving higher.

I picked up the danger pretty quickly.

http://boards.fool.com/Messages.asp?mid=12331296&bid=113741&sort=postdate

We are not quite there yet.
 
less chaos globally means less need for dollars too. When the troops get called back home, you might see a reflexive rally then the domestic issues cant be ignored or diverted then collapse of dollar and us markets.
 
Looking at everything, US is the Achilles heel of the global system. If you want to bring down the system, you aim for the weakest point.

These ripples across the globe will be devastating. Stagflation at unprecedented levels. Localized imbalances globally will be contained events. But a US event will hit everyone else.

What can be a inciting event?

Housing Related
1) housing
2) bank sector
3) escalation in bond yields
4) arms readjusted higher
5) consumer spending hits lows
6) recession

War Related
1) democrats bring troops home
2) defense spending plummets
3) GDP readjusted
4) focus shifts to domestic issues
5) security premium in US assets removed
6) US markets plummet.

1) Iran
2) Oil hits 100 plus
3) supply shock
4) long lines at pump
5) inflation
6) bond yields spike
7) liquidity driven inflation
8) ARMs readjusted
9) consumer hit both at the pump and on the home
10 recession

Asian Related
1) Japan announces its removing liquidity
2) Japan escalates interest rate increases unbalancing the carry trade expectations(unlikely)
3) Asian markets plummet
4) US markets follow asian markets
5) Europe enjoys inflows vs US as safehaven.
6) Asian demand for US debt plummets

1) India announces capital gains tax revision
(localized collapse)
2) Tensions increase between India/Pakistan
(localized collapse)
3) Terrorists cause a border conflict in Kashmir
--easiest bubble to pop. I imagine something like this is in the works.

Russian Related
1) Russian enjoying black gold increase
2) Manipulates Iran to become more vocal
3) Conflict starts with US/Iran
4) Oil spikes to 100 +
5) Supply shock
see above........

Some scenarios.

Health Related
1) Global plague is engineered
2) Bird Flu/ other virus
3) Spreads globally becomes airborne
4) incubation period greater and then cascade
5) global health costs increase dramatically
6) consumer avoids public places
7) world markets plummet
 
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