Tuesday, December 13, 2011


                             Not Quite What I Meant, But Close

There exists a concept in trading that you must master: the “free” trade. It will make life sooooooooo much easier and profitable. It is what makes good traders great traders and what allows a good income to mushroom into real wealth.

I spent about 10 years in various trading pits. No matter the market, or whether it was in a bull trend or bear trend, most traders fall prey to counting money. They enter a trade with the specific intention to make a predetermined amount of money. Why do traders do this?

“Oh hey Mr. Market, I need to make $389 on this gold trade to make a car payment tomorrow. I know you will understand and move my way so I got wheels to get to the exchange next month. Thanks in advance.”


“Look Mr. Market, it’s like this: that cute babe over there who is a clerk in the hog pit has the hots for me, OK? I need $500 for our date this weekend. I know you want this for me.”

                               What We Get = What We Want * 0

You had better plan on a monthly bus ticket and some cheap movie tickets!

While you are away from any market, you decide how much leverage to use in a trade. You don’t do this while you are involved in a market. You make the trade and stay with it as long as your parameters say the trade is good.

                                         Well, Not Usually

There is a famous scientific experiment done many years ago involving fleas. Scientists took new-born fleas, placed them in a jar and placed a piece of glass over the opening.

Fleas, as most people know are prolific jumpers. They immediately started jumping and hitting the glass at the top of the jar. Within a few days, they were still jumping, but none of them were hitting the glass. A few days later, scientists removed the glass and left the jar open. None of the fleas left the jar.

Why limit yourself to a predetermined amount of money when trading? Allow the market to give you what it has to offer!!

A “free trade” is one in which you are up money so that none of your original capital is at risk. When you find yourself in this position, which the algo puts you in most of the time, you are free to concentrate on when is the appropriate time to get out.

You don’t initiate the trade with the idea of a “I’m going to make a hundred bucks on this puppy” trading philosophy. You let the trade take you where it wants to go.

You have now freed yourself, and are a flea no more!!

Today’s Action & Wrap Up

We started the day in “sell mode”, but never got a sell signal as gold rallied mildly most of the Asian session into Europe. At 7:00 AM [Chicago time] the algo went into “buy mode” [as explained in the manual]. [For you Skeptic Cats out there, I emailed every algorithm trader and announced “buy mode” status at 7 AM (Chicago time), just to make sure they all understood the signals correctly.]

At 8:35 AM [Chicago time] we got our first buy signal at 1666. Within the hour we got a confirmation top [and liquidation of long position signal] at 1673. A very nice quick, net gain of $ 7 / oz. on the trade and for the day.

Time to live life! Go catch a movie or something. Spend some time with your family. Go tell your spouse what a genius trader you are: hey, you deserve it!!

Ka-Chinggggggggg [Again]

Now, I know many of the algo traders are having OMG moments here as I write this. For those of you who are trading on Hope & Change, discover what everybody here knows: the algorithm works baby!

Have a nice day everyone.


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