Ana_Idkit

Trader Linda Raschke: Tips On Day-Trading the S&P 500
by Jim Wyckoff on Jul 8, 2008

The S&P 500 futures market is a trading arena unto itself, which can accommodate many different trading styles, according to Linda Bradford Raschke, a well known trader, lecturer and president of LBR Group, Inc.

“Not only does this market display a different daily profile than the other futures markets, but it has a much longer “length of line” (intraday swings), which offers more trading opportunities, she said. “Additionally, there is a wealth of information provided by many internal indicators on the equities market that some professionals like to monitor.”

Below, the longtime trader provides some tips on trying to be a successful S&P 500 day trader. “However, let me also say that the majority of the professional S&P day traders I know tend to specialize in just one pattern or trade just one style. This is definitely a market where overtrading can be a temptation.”

“Swing Trading” Concepts

The principles of “swing-trading” involve applying basic technical analysis to the secondary fluctuations which occur in a market, said Raschke. “We can apply these principles to all timeframes and all markets, but they work particularly well with the S&Ps, so a brief summary is first in order.”

Swing trading is following the price action and learning to anticipate the market’s most probable course of action. “We learn to determine the immediate trend by observing whether upswings are greater or lesser than downswings. In a simplified model, we look to enter on retracements in the direction of the trend. An early sign of a trend reversal is a ‘test’ of a most recent extreme price level which usually forms a higher low (or lower high).”

A trend reversal is confirmed when the upswing leg exceeds the length of the downswing (or vice versa). If a trader enters a position on a “test” looking for a trend reversal, but does not get this confirmation, he should exit the trade or pull his stop up close to his entry price, said Raschke.

There are also periods of market rest, consolidation or low-volatility range contractions. These patterns provide an opportunity for traders who like to trade “volatility breakouts”–a methodology in which one waits for the market to tip its hand with a powerful thrust and then jumps on board in the direction of the movement. “This too, can be a form of swing trading, as we are playing only for the market’s next immediate move and not making any longer-term valuation judgments.”

“When a trader practices the principles of swing trading, he learns to develop a conceptual roadmap in his head. In the S&P market, it is particularly important to learn to think in terms of concepts because there can be so much distracting intraday noise.”

Some more examples of concepts, in S&P 500 trading, are: mid-morning trends tend to carry into 11 a.m. Central Time, plus or minus 15 minutes. The best average intraday trends tend to last 45 to 90 minutes before having a countertrend reaction. The earlier a trend starts, the earlier it “peters out.” There is often an opportunity to play off a reversal of the move into 9 a.m. Central Time, plus or minus 15 minutes. The markets tend to be more emotional at the beginning of the day, when a good move counter to the initial opening swing can occur.

“If you learn to think in terms of concepts, you can master the markets instead of becoming a slave to the charts,” said Raschke.

Time-of-Day Tips

On average, there are only two to three “great” S&P 500 intraday “legs” or swings, said Raschke. “Most professionals catch only three or four really great trades a week, if that. Most trades will often be very small wins and losses. So don’t be too harsh on yourself if you feel that you are missing the majority of the movement. Overtrading suckers one into seeing only the trees and missing the forest.”

Traders tend to be creatures of habit, and thus it is easy to compile market tendancy charts. There are several key patterns which have held constant over time, she said. “One common pattern might be the market rallies or sells off into noontime. At this point, a large percentage of the floor traders and brokers in New York go to lunch and a countertrend correction begins. When the late stragglers get back from lunch, the morning direction tries to reassert itself again.

“If the afternoon rally or sell-off starts too soon, it won’t be able to sustain itself through the end of the day. It will die out around the bond close. However, if there is an afternoon ‘shakeout’, usually between 1-1:30 p.m. Central Time, then the market can finish in a trend mode into the close.”

Raschke said not to fade a move into the last hour of the day, “for there is no time to exit gracefully if wrong. The odds suggest a better entry price the next day on the probable morning follow-through. Moves on Friday tend to end at 2 p.m., not 3 p.m. Central Time, as too many traders prefer to flatten out or even up before the weekend.

“On many days there occurs what I call the 2 o’clock jiggle. Right around the time the bonds close, there is a great 10-15 minute scalp trade. I believe it occurs as an emotional reaction to how the bonds go out. The trade usually lasts for no more than 10 to 20 minutes, but is fun to anticipate.”

Sometimes a good selling opportunity occurs around 1 p.m. Central, she said. “In fact, it is amazing how many good turning points occur on hourly readings, for example, 9:00, 11:00, 12:00. It think this is because people are more conscious of time at these moments, creating a slightly sobering effect.”

http://tradingsuccess.com/blog/

Thu 30 Jul 2009
The Bubble that is China

Posted by ray under Miscellaneous (edit this)
No Comments, post comment

BarroMetrics Views: The Bubble that is China

Which economic theory has a solution to this crisis?

We have two main schools in play at the moment: Neo-Keynesian and the Friedmanites (monetarists). They both believe we can spend our way out of this recession/depression. The former says we’ll solve the problem by spending our way out of it; the latter says we’ll solve by printing (creating) more money.

I am not going to offer a critique of either school here. A far better job has been done that I ever could by W Bonner and A Wiggin in Financial Reckoning Day Fallout. What I will do is draw your attention to a country where the competing theories meet and hopefully resolve the dispute as to which one has the answer – that country is China.

The advantage that the Chinese have over the Western world for this issue is the fact that if the Government says ‘lend’, the banks will lend. Unlike say the USA where the FED can quantitatively ease as much as it likes but this does not mean that the money is hitting Main Street. Right now the deposits at the St. Louis FED Reserve are still near their record highs. What does this mean? It means the trillions of dollars created by the FED is sitting in banks’ deposits and has yet to hit the US economy.

Compare this with China where the banks have lent a reputed 7.4 Trillion yuan – more than the budgeted 5.6 trillion. Austrian economics says that if you inflate the money supply you will have:

1. (By definition) inflation
2. Mal-investment leading to bubbles
3. The inevitable correction (crash).

It seems to be the Shanghai Index can be labeled a bubble.

On Tuesday I read a report that suggested the Chinese government was concerned about the use to which the loans were being applied; on Wednesday, the Shanghai Index dropped 8.1% and the press suggested that rumour was the cause.

If you compare the rise of the Shanghai Index with the S&P, you’ll see the effects of the lending policies:

* The Shanghai Index has rallied 69% to the S&P’s 47%.
* More importantly, while the S&P has stalled in it’s rally (the momentum peaking in May 2009), the Shanghai Index continued unabated until yesterday.

I am watching, with interest, Chinese developments. The next step in the drama should be a rapid rise in the inflation numbers. I like the sentiment in Financial Reckoning: ‘governments and investors don’t get what they expect from the markets; they get what they deserve’.

2009-07-30-si.jpg

FIGURE 1 Shanghai Index and S&Phttp://tradingsuccess.com/blog/

HK Money Show revisited – 3 articles

Reproduced from

http://tradingsuccess.com/blog/hk-money-show-09-revisited-1085.html#comments

It has been brought to my attention that while my two personal websites were down, (due to my own fiddling with upgrading of softwares – www.awanginvest.com and www.anatrader.com) I did not post this article that was published in the Trader’s Journal in April 2009, either here or at my own websites.

I wrote this article based on my interviews with distinguished speakers and traders/investors at this first time HK Money Show hosted by Intershow of the United States.

I hear they would host this show again for next year: so stay tuned for more….

I am attaching all three articles I wrote related to the HK Show if you have missed any of them here as well:

traders-journal-apr-09.PDF

forex-journal-may-09.PDF

wealth-june-09-aw.PDF

IDkit aka Ana

Ag Moderator

wealth-june-09-aw.PDF

IDkit aka Ana

Ag Moderator

CNBC Videos on Dr Faber on Jul 17 09

http://www.cnbc.com/id/15840232?video=1185406112&play=1?__source=CNBC|newsnow|vid2|2009|

http://www.cnbc.com/id/15840232?video=1186056233&play=1?__source=CNBC|newsnow|vid3|2009|

Robert Kuok Hock Nien Message

Notes on the past sixty years

(On the occasion of Kuok Group’s 60th Anniversary 10 April 2009)

(1) My brothers and I owe our upbringing completely to Mother.
She was steeped in Ru-Jiao – the teachings of Confucius, Mencius,
Laozi and other Chinese sages. Ru-Jiao teaches the correct behaviour
for a human being on his life on earth. Mother gently, and sometimes
strongly, drummed into the minds of her three boys the values of
honesty, of never cheating, lying, stealing or envying other people
their material wealth or physical attributes.

(2) Father died on 25 December 1948 night without leaving a
will. Following the Japanese surrender, he had re-registered the firm
as a sole proprietorship. We went to court to get an appointment as
managers, permitting us to continue to manage Tong Seng & Co. The
judge said that, as there were two widows, the firm and the estate
should be wound up.

(3) We decide to establish Kuok Brothers Limited. In
mid-January 1949, five of us met at a small roundtable in our home in
Johore Bahru. Present were my MOTHER, cousin number five HOCK CHIN,
cousin number twelve HOCK SENG, my brother HOCK KHEE nicknamed Philip
(a.k.a. cousin number seventeen), and myself (a.k.a. cousin number
twenty). We sat down and Mother said, “Nien, would you like to start?”
I said, “Fine, yes I will start.” To cut the long story short, we got
started, and commenced business from a little shop house in Johore
Bharu on 1 April 1949.

(4) As a young man, I thought there was no substitute for hard
work and thinking up good, honest business plans and, without respite,
pushing them along. There will always be business on earth. Be humble;
be straight; don’t be crooked; don’t take advantage of people. To be a
successful businessman, I think you really need to brush all your
senses every morning, just as you brush your teeth. I coined the
phrase “honing your senses” in business: your vision, hearing, sense
of smell, touch and taste. All these senses come in very useful.

(5) Mother was the captain of our ship. She saw and sensed
everything, but being a wise person she didn’t interfere. Yet she was
the background influence, the glue that bound the Group together. She
taught my cousins and my brothers and me never to be greedy, and that
in making money one could practise high morality. She stressed that
whenever the firm does well it should make donations to the charities
operating in our societies. She always kept us focused on the big
picture in business. For example: avoid businesses that bring harm,
destruction or grief to people. This includes trades like gambling,
drugs, arms sales, loan-sharking and prostitution.

(6) We started as little fish swimming in a bathtub. From there
we went to a lake and now we are in the open seas. Today our
businesses cover many industries and our operations are worldwide but
this would not have been possible without the vision of the founding
members, the dedicated contributions and loyalty of our colleagues and
employees, and very importantly the strong moral principles espoused
by my mother.

(7) When I hire staff I look for honest, hardworking,
intelligent people. When I look candidates in the eye, they must
appear very honest to me. I do not look for MBAs or exceptional
students. You may hire a brilliant man, summa cum laude, first-class
honours, but if his mind is not a fair one or if he has a warped
attitude in life, does brilliance really matter?

(8) Among the first employees were Lau Teo Chin (Ee Wor), Kwok
Chin Luang (Ee Luang), Othman Samad (Kadir) and an Indian accountant
called Joachim who was a devout Roman Catholic and who travelled in
every day from Singapore where he lived.

(9) I would like on this special occasion to pay tribute to
them and in particular to those who were with us in the early days;
many of whom are no longer here. I have already mentioned Lau Teo Chin
(Ee Wor) and Kwok Chin Luang (Ee Luang) and Othman Samad (Kadir),
there are others like Lean Chye Huat, who is not here today due to
failing eyesight, and Yusuf Sharif who passed away in his home country
India about one and a half years ago and the late Lee Siew Wah, and
others who all gave solid and unstinting support and devotion to the
Company. It saddens me that in those early difficult years these
pioneers did not enjoy significant and substantial rewards but such is
the order of things and a most unfortunate aspect of capitalism.
However through our Group and employee Foundations, today we are able
to help their descendants whenever there is a

(10) I have learnt that the success of a company must depend on
the unity of all its employees. We are all in the same boat rowing
against the current and tide and every able person must pull the oars
to move the boat forward. Also, we must relentlessly endeavour to
maintain and practise the values of integrity and honesty, and eschew
and reject greed and arrogance.

(11) A few words of caution to all businessmen and women. I
recall the Chinese saying: shibai nai chenggong zhi mu (failure is the
mother of success). But in the last thirty years of my business life,
I have come to the conclusion that the reverse phrase is even truer of
today’s world: chenggong nai shibai zhi mu. Success often breeds
failure, because it makes you arrogant, complacent and, therefore,
lowers your guard.

(12) The way forward for this world is through capitalism. Even
China has come to realise it. But it’s equally true that capitalism,
if allowed to snowball along unchecked, can in many ways become
destructive. Capitalism needs to be inspected under a magnifying glass
once a day, a super-magnifying glass once a week, and put through the
cleaning machine once a month.

In capitalism, man needs elements of ambition and greed to
drive him. But where does ambition end and greed take over? That’s why
I say that capitalism, if left to its own devices, will snowball
along, roll down the hill and cause a lot of damage. So a sound
capitalist system requires very strongly led, enlightened, wise
governments. That means politician-statesmen willing to sacrifice
their lives for the sake of their people. I don’t mean politicians who
are there for fame, glory and to line their pockets.

(13) To my mind the two great challenges facing China are the
restoration of education in morals and the establishment of a rule of
law. You must begin from the root up, imbuing and infusing moral
lessons and morality into youth, both at home and from kindergarten
and primary school upward through university. Every Chinese needs to
accept the principle of rule of law; then you have to train upright
judges and lawyers to uphold the legal system.

(14) Wealth should be used for two main purposes. One: for the
generation of greater wealth; in other words, you continue to invest,
creating prosperity and jobs in the country. Two: part of your wealth
should be applied to the betterment of mankind, either by acts of pure
philanthropy or by investment in research and development along the
frontiers of science, space, health care and so forth.

Tan Sri Robert Kuok Hock Nien (born 6 October 1923, in Johor Bahru,
Johor), is an influential Malaysian Chinese businessman. According to
Forbes his net worth is estimated to be around $10 billion on May
2008, making him the richest person in Southeast Asia. He is media shy
and discreet; most of his businesses are privately held by him or his
family. Apart from a multitude of enterprises in Malaysia , his
companies have investments in many countries throughout Asia . His
business interests range from sugarcane plantations (Perlis
Plantations Bhd), sugar refinery, flour milling, animal feed, oil and
mining to finance, hotels, properties, trading and freight and
publishing.

http://en.wikipedia.org/wiki/Perlis_Plantations_Bhd
http://en.wikipedia.org/wiki/Robert_Kuok

Market updates for Wednesday:
Quote:
Specifically, the Fed identified New York, Cleveland, Kansas City, and San Francisco as showing ’signs of stabilization’. Chicago and St. Louis reported that economic declines were ‘moderating’. On the negative end of the spectrum, economic activity in Boston, Philadelphia, Richmond, Atlanta, as well as in Dallas was described as either ’slow,’ ’subdued’, or ‘weak.’ Finally, in Minneapolis, indicators showed that the slide in economic activity had actually worsened.

In other economic news released today, US factory orders for big-ticket durable goods were off strongly in June (down 2.5%; economists had been expecting a 0.6% decline). This was the largest decline seen in five months and appears to have been a reflection of the fallout from the troubles in the auto industry. It is however also seen as a result of slackening demand for commercial jets (in fact, orders for commercial aircraft tumbled 38.5%).

Despite the current high degree of investor enthusiasm, there are skeptics warning that ‘under the hood’, so to speak, fundamental economic weakness is (re)appearing, creating weak spots that are not necessarily apparent to those watching only the major stock indexes. Examples include banks cutting back on their loan books in the second quarter, presently contracting bank credit, and weakness in several transportation indexes (including the Baltic Dry Index, and in an index maintained by the American Trucking Association). Furthermore, consumer confidence surveys have not truly confirmed the market’s strong rally.

Numbers shown are consensus estimates (market anticipates this value) and prior value.
Thursday:
8:30 CONTINUING CLAIMS Jul-18: n.a. / 6225K INITIAL CLAIMS Jul-25 (H) 588K / 554K

Friday:
8:30 AM GDP (annualized) (Q2 A): -1.5% / -5.5%

GDP DEFLATOR (annualized) (Q2): 1.0% / 2.8%

EMPLOYMENT COST INDEX (Q2): 0.3% / 0.3%

9:45 AM CHICAGO PMI (Jul): 42.0 / 39.9

Due to technical problems, I have to suspend my posts at http://www.anatrader.com and post at www.awanginvest.com

Until further notice, please check www.awanginvest.com for new posts.

Thank you

Cross ref www.tradingsuccess.com/blog
Mon 6 Jul 2009
Why ALL The Habits of Success are Critical

Posted by ray under Psychology
No Comments, post comment

BarroMetrics Views: ALL Why The Habits of Success are Critical

I call the three essential elements for long-term trading achievement “Habits of Success”:

Winning, Psychology (60%) x Effective Risk Management (30%) x Written Trading Methodology (that has an edge, 10%) = $UCCE$$

I received a post challenging my view. The author took the position that all that was needed was a Method with a high win rate (above 70%) that was profitable.

Readers of this blog know I take a diametrically opposite view.

I believe that while all three elements are essential, the least important is the method. The reason for my belief is found in the nature of the markets. At some point all methods encounter a period when market conditions do not suit the plan – what I call the Ebb State. During this phase it’s not a question of ‘if we’ll take a loss’ but ‘how much that loss will be’.

The effectiveness of our psychology and risk management will determine how large the losses will be. If we can keep them small during this phase, then we encounter the phase where we can do no wrong (Flow State), we’ll have a great bottom line; if our losses are large we may lose all our capital before we encounter the Flow or the profits from Flow may be enough to make up the losses.

I believe that the implementation of all the habits is so important that I hold the Habits of Success seminar at a nominal cost. At least it does not cost participants an arm and a leg if they decide that the habits are beyond them.

In answer to my correspondent, I could point to most trading catastrophes: Long-Term Capital Management, Sumitomo, Orange County (for a complete list of losses over US$10,000.00 go to: http://en.wikipedia.org/wiki/List_of_trading_losses): the failures occurred because of a failure to contain losses. But I can point to an even more interesting experiment.

With the help of a broker friend and 23 willing volunteers I began an experiment June 1 2009 to test my ideas about the importance of the Habits of Success. The volunteers had accounts ranging from U$10k to US$175k; none of them had shown a consistent profitable trading record. I agreed to provide entry, exit (stops, profit exits etc) and position sizing based on their account sizes. (The smaller accounts had to trade CFDs on futures). In return they agreed to execute only in accordance with my instructions. The experiment terminated on June 30.

In the testing period the recommendations showed a small profit in the two entries for the DX and a scratch result for the ES trades. Since the method was proven (and if all that is needed to succeed is a robust method), then the attendees ought to have shown similar results. Nothing could be further from the truth.

* One trader lost over 30% of his account. The only profit he made was on the first DX entry at 79.97. Thereafter his ES and DX trades bore no resemblance to the advice.
* The others all broke discipline(i.e. they more or less followed my instructions but did not follow the advice to the letter) and the breaches all resulted in greater losses than otherwise would have been the case.

The experiment is the best counter argument to focusing only on method. The point I am making is if you believe that all you need to succeed is a robust plan, tuck your money in your pocket and walk away from trading. Over the long-term your most likely result will be failure.

Ana –

This weekend, our family will join millions of others in celebrating America. We will enjoy the glow of fireworks, the taste of barbeque, and the company of good friends. As we all celebrate this weekend, let’s also remember the remarkable story that led to this day.

Two hundred and thirty-three years ago, our nation was born when a courageous group of patriots pledged their lives, fortunes, and sacred honor to the proposition that all of us were created equal.

Our country began as a unique experiment in liberty — a bold, evolving quest to achieve a more perfect union. And in every generation, another courageous group of patriots has taken us one step closer to fully realizing the dream our founders enshrined on that great day.

Today, all Americans have a hard-fought birthright to a freedom which enables each of us, no matter our views or background, to help set our nation’s course. America’s greatness has always depended on her citizens embracing that freedom — and fulfilling the duty that comes with it.

As free people, we must each take the challenges and opportunities that face this nation as our own. As long as some Americans still must struggle, none of us can be fully content. And as America comes ever closer to achieving the perfect Union our founders dreamed, that triumph — that pride — belongs to all of us.

So today is a day to reflect on our independence, and the sacrifice of our troops standing in harm’s way to preserve and protect it. It is a day to celebrate all that America is. And today is a time to aspire toward all we can still become.

With very best wishes,

President Barack Obama

July 4th, 2009

P.S. — Our nation’s birthday is also an ideal time to consider serving in your local community. You can find many great ideas for service opportunities near you at http://www.serve.gov

.