Down $700 so far on the day. I went against the S&P until finally I reversed my position. I’ve made back most but not all of the losses. Holding 15 contracts long June S&P futures, currently at 1421. I saw the runaway happening but wasn’t flexible enough to change course. But that voice, that inner voice knew, based on technicals. We passed a double top no problem, and the tape had plenty of strength. Once I was long I checked my position only occasionally.
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Some sloppy trading today. I spent most of the day down about $1000 or or maybe half that most of the time. A bad gold trade was the main culprit, holding a small gold short over the weekend that turned sour yesterday. Also, as usual these days, I was on the wrong side of the euro.
My winning S&P trades Russel 2K trades were mainly scalps in a directionless market. That kind of stuff is easy for me, although I was taking losses early and therefore keeping my positions small. I went bigger as I got more in sync with the market. Overall ending just barely up today…
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There was a nice clean W formation that cleared the way for a ride higher from today’s lows, and it was clearest on the 1min chart (though I’m using shitty charts.. I saw it and reversed, but got out too soon.
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I’m back to trading after an almost eight month hiatus. I’ve come to think of trading as an art, and not at all a science. Although scientific methods may be helpful, and quantitative methods may have their place, it remains true that price is a function of many potentially conflicting streams which cannot be understood by mathematics:
1) Objective reality of the world and people’s vision of it. (Philosophers like Richard Rorty, whom I’ve been reading lately, might insist that there is no such thing as objective reality. I prefer to operate with a skeptic’s epistemological perspective. None of us know what reality is or what the future will hold, because imperfect knowledge is our human condition. There may be much more to life that we don’t see. It’s so obvious to us that other animals can’t understand so much about the world that we can. And yet we rarely stop to think about how little we know, about how little *anyone* knows. We have no idea if we understand 5% of “reality” or 55% of “reality,” or what that would even mean. Rather than bring reality itself into question, when it comes to trading I must operate on the idea that any differences in realities (price) are arbitrage opportunities. That’s to say, our worlds correspond to each other at the level of the market, there’s an objective reality, but no one knows what it is. Economic numbers are skewed. Measured the wrong way and reported inaccurately. There’s an objective world, but we each are just looking through our own little periscopes, seeing black and white, fuzzy images whereas the real world remains ineffable. So our decisions are wrong and equilibrium breaks down, markets fails. Price is a human construct with eventual ties to the greater world. It is a sum of any moment’s countervailing perspectives as counted by money and in proportion to money.
2) Perception and expectation of the future (at several levels–>personal future, group future, world future, market future, etc) by beings who have partial knowledge of their worlds and themselves, and who may never know the future with certainty.
3) Emotional behavior. The pantheon of emotions playing with each other. For example a fear moves across a terrain of humans. It is by definition alive, this fear, just not usually thought of as its own being. But we could think of it this way, and for trading this is very useful.
4) Trading based on the market’s self-conscious reflections. Technical trading, or using market sentiment to judge the markets. When you do these you become the self-reflection of the market, instead of the market thinking about the world outside itself. Inter-market relationships and money flow are perhaps a halfway house between numbers one and four.
Price at any point contains all of these elements, and it will move because of all of them. It’s way too much for a machine, because a machine can’t yet understand human psychology. Areas like statistical arbitrage may provide exceptions. But as for trading where what matters is a market’s direction, trading is very much an art and not a science.
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I accidentally reset the papertrading software after being up I believe $2,800 (for the most part by shorting silver during the commodity break-down, which I felt had to happen before the Fed announcement) but started the account tabula rasa in what at first looked like a bad S&P trade along with good gold trades. But I stayed in the S&P trade, incurring a $7,000 drawdown. I was long, so I got the rally the next day, when the Dow moved up 200 points. I reversed at the last minutes of trading and held an S&P short through last night, mainly because it seemed clear that even if a stock rally were going to happen in earnest, the daily chart still wouldn’t let it go higher without a little pullback, because the markets need to breathe. Today I pulled in the rest by day trading S&P futures. I’ve been trading couterintuitively in euro, and losing in it. But I’ve managed to keep losses overall smaller than wins. I’m currently holding a losing short in gold, although I’ve made overall $900 in it. I’m short two gold mini futures and losing in them.
Here’s from ThinkorSwim.com so far, from the account I began this week:
| YEAR TO DATE PROFIT & LOSS | TOTAL P/L YTD: $14,289.89 | ||||||||||||||||||||||||||||
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Though sometimes just an excuse for high protectionist tariffs, the idea that food production is a national security issue has proven true for countries like the Philippines. Rising rice prices have resulted export controls by exporting nations, so being an importing nation becomes dangerous. So maybe there is a point behind *some* agricultural tariffs.
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Yesterday I made a few paper trades on ThinkOrSwim.com “webBAsedTrading” a phrase capitalized, programmers will note, like code in a script. This makes sense because I think you can actually go into the code at Think or Swim. They have a pretty nice paper trading function. Charts are decent, there’s live CNBC should you want it, two radio stations so I guess you can hear economic indicator releases as well as earnings and so on. It’s all pretty nice. I got everything going in just a few minutes, the quotes I wanted and so on. There are only two charts ever up at a time, the main screen chart and a mini side frame chart.
I closed out all of my positions this morning. Up 2.8% on a fake $100,000 account, so overall a very good trade. Five wins and one loss. The loss was in euro/usd futures. The wins were in shorting s&p 500 futures and commodities: front month silver, corn, and to a lesser extent gold.
Why did I short commodities and the dollar at the same time? I don’t know. I was looking for the dollar to make a counterintuitive move ahead of the news events: non-farm payroll (employment) numbers and the Fed Committee meeting. It was a bad move. I knew it was a bad move. Another reason was that I wanted some kind of a hedge and there wasn’t a way to buy options. I thought I might wiggle my way out of the trade once I knew where things seemed headed. Of course this is not a good way to trade — to trade against yourself. But I was trying to use my intuition and trying to feel the market, with the idea that perceiving is faster than judging. When I perceive, it doesn’t mean that I’ve come to any conclusion. Instead what I’ve perceived is like a new <i>in</i>clusion . Whereas when I judge, I am making a final decision. Yes or no. Otherwise I have tried to judge but I have not judged. But because so often I judge that things are not able to be judged, I need to use perception and intuition. I need to sense developments as they’re just starting.
I felt that commodities would fall, that corn would fall. The hype was just so huge. Wheat had already fallen for a while, and now it was time for wheat’s rebound or for corn to fall as well. People would want out before the FOMC statement, especially people who were long. Likewise for the US stock market, so I shorted the S&P.
Everything hinged on my view that the Fed FOMC minutes would mention rising commodity prices, possibly use the word inflation (whether or not a more precise definition of that term were included) and also signal that this was the last 25bp cut. This was a pre-FOMC trade, the beginning of the wait. The inconsistency I allowed in the name of hedging was one of time frames. It seems to me that I bought euro because I wanted some kind of currency exposure, and the dollar had just bounced back five cents against the euro, and with opinion sounding so strongly in the dollar’s favor it seemed like there could be a snap back. But really I though that this might be after the Fed decision, so it was a trade for after the decision, and therefore it was the wrong trade for the occasion. But I held on to it. This was the real problem. I made the bad trade, I knew it was bad, but I had this “what if” in my head, and more, a repugnance toward taking a loss. So I had to take a bigger loss on my euro/usd trade, but ended up over all. (It turns out I was right.)
The problem with the euro trade wasn’t so much that I made it in the first place, but that I managed it poorly, not cutting losses despite telling myself to. This lack of trading discipline has been my greatest weakness. I’ve found it difficult to take losses, maybe because I’m so damn sensitive.
Another problem I have is letting my good ideas be warped by actual short-term trading so that I find myself in positions that are opposite my longer view of the markets. Then if I feel stuck in a position I may be contorted into something that’s opposite my market view. For example I’m now long S&P futures, and I’m down. I need 1391 to get out (near-month futures price) without a loss. I would cut but I think stocks should rise a bit after the Fed cut and some appearance of commodity price reversals, and because money coming out of housing still has to go somewhere. If the dollar appears to be bottoming this will also provide an incentive to be in US equities.
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$2.00 per euro is the symbol of America’s fall as the main global power or the main energizer. $1.00 per euro was set when American power was strong and generally admired, apart from in the Middle East perhaps.
Rolling past $1.50 per euro, the halfway line, means moving over the precipice, toward a probability of American demise, and I suspect that this notion lurks and lives, either consciously like you’re reading here, or else hidden behind the logical, self knowing thoughts of traders and non-traders alike. For that reason that $1.55 seems like a sufficient bottom for me for correcting global imbalances. Note that I’m speaking <i>normatively</i>, not in terms of a good trading point. $1.55 seems good for America and the world. It is enough to reorient America, to shift toward undoing the enormous global trade imbalances. $1.55 makes US exports strong.
A problem for the US here is that the Asian currencies remain so low.
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AME Info has a piece on why they think Marc Faber “Doctor Doom” is such a great market maven — because he’s been right so much!
Posted in Muslim Woild, finance, fx | 1 Comment »
Billy the Trip revealed yesterday a crude ability to merge Darwin, Hegel, Marx and anal erogeneity with his brilliant evolutionary insight.
He states that the anal cavity became an erogenous zone in order that it be kept clean by licking. And so this extended also then to social evolution, where it was only natural that the dominant have their ass licked by the subordinate, so that on society’s ladder each member should lick the ass above whilst being licked from below. There are exceptions. The member at the top rung is only licked but does not lick and therefore is called “King,” while the member at the bottom is licking but of necessity has an itchy, unlicked ass, and therefore must be kept under control so as not to rebel and is called “slave.”
He said he was going to make a statue.
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detach chart
