The Journey from the Basement

[qaza]

What I am talking about here is the following. Don't u get those moments when u r late for the trading session, u log in half way still jaded after last night "activities" - and even before u analyse the situation - U JUST KNOW what the market is gonna do into the close?

Has it ever happened that U JUST KNEW what it was going to do into the close and it did something else ?

 

[jimbo57]

Mate may I comment on this?

Of coz in mathematicians' sense of the word I DID NOT know, NOR cud anyone else, even the Brasilian goalie

What I am talking about here is the following. Don't u get those moments when u r late for the trading session, u log in half way still jaded after last night "activities" - and even before u analyse the situation - U JUST KNOW what the market is gonna do into the close?

Sorry, I cannot explain it better.

Agreed, I know what you mean

 

[SOCRATES]

Has it ever happened that U JUST KNEW what it was going to do into the close and it did something else ?

Qaza, please, don't be sillytonto about this, prodding a senior market mind in this way.

What has just been explained by China (as far as can be illustrated publicly ) is the phenomenon of Futurological Flash.

This arrives suddenly to those sufficiently tuned to receive it and it is always right.

I know that there are many who are less developed who are scepitcal of that which they do not understand, but I expect better from you, as you have had the benefit of having it demonstrated to you, by me, live, in advance of events developing, or do you not remember ?

 

[SOCRATES]

In the post that follows we are going to put our attention on what Jesse Livermore expressed in his own words and from his viewpoint about the inabilities to the HP and how they disable the very faculties an effective trader most needs.

 

[SOCRATES]

The HP and the Inabilities.

Now let us return and put our attention of the dilemma of the HP.
Let me illustrate how the HP struggles with that which it is not constructed to cope with.
Here are three quotes from Jesse Livermore, who struggled with these problems all his trading life, he even went to the extreme of attending evening classes on psychology to try to get to the root of what it is I am going to unravel and explain here as this thread unflolds over the days, weeks and months that follow.


ONE:~

The speculator's chief enemies are always boring from within. It is INSEPARABLE from HUMAN NATURE to HOPE and to FEAR. In speculation, when the market goes against you, you HOPE that every day will be the last day ~ and you lose more than you should HAD YOU NOT LISTENED TO HOPE ~ to the same PIONEERS, BIG AND LITTLE.

TWO:~

And when the market goes your way you BECOME FEARFUL that the next day WILL TAKE AWAY YOUR PROFIT, and YOU GET OUT ~ TOO SOON . FEAR keeps you from making as much MONEY as you ought to. (EM, see the trigger ?). The successful trader has to FIGHT these two deep seated instincts (EM, external view) He has to REVERSE what you might call his NATURAL IMPULSES. Instead of HOPING he must FEAR ; instead of FEARING he must HOPE. He must FEAR that his losses may develop into a bigger loss, and HOPE that his profits become a bigger profit. It is absolutely WRONG to gamble in stocks the way the average man does.........

THREE:~


"The unsuccesful investor, is best friends with HOPE ~ And HOPE skips along life's path hand ~in ~hand with GREED when it comes to the Stock Market. Once a stock trade is entered, HOPE springs to life. It is man's NATURE to be HOPEFUL, to be POSITIVE, to HOPE for the best.HOPE is an IMPORTANT SURVIVAL TECHNIQUE FOR THE RACE. But HOPE, like its Stock Market Cousins: IGNORANCE, GREED and FEAR all distort REASON".

The last paragraph is dedicated to my friend to whom last night I predicted the Dax Sept. would open and fall to the 3680 level this morning,and it has done just that , ( actually, it touched 3673), now to trickle up again. For everybody else these three quotations illustrate more clearly what I mean when I talk of the inabilities.
As we progress with this thread all this will become clearer, very clear indeed, to your benefit, and my satisfaction.

 

[SOCRATES]

And, by the way in case any of you find some excuse to criticise and accuse me of not posting predictions publicly in advance there are three reasons, one positive and the other two negative, they are:~

1. This is an excercise in Verinegation(meaning truth denial) from which only those proving to have the three qualities that I value which are Ability, Merit, and Conduct are exempt

2. So that I cannot be accused by anyone ever of giving investment advice.

3. So that the Windmill, specifically the Windmill cannot and wil not benefit.

That is all.

 

[barjon]

Socrates

Who was it who said it is better to travel hopefully than to arrive or something like that.

I suspect that HOPE in the human condition causes the HP to favour long positions - there's always much talk of waiting for the bounce or catching falling knives but never very much of the reverse. I'd have a small wager that SB companies take many more long bets than short, even in a falling market.

Good to see you firing on all four again.

 

[SOCRATES]

Thank you Barjon.Straight Twelve, actually. Hope is an emotion. Emotions in trading are very dangerous. They invairiably are destructive. The reason for this is as Jesse Livermore correctly states, they have the ability to disable reason. This is not only what they impair. As we progress with this thread you will be made aware of the extent to which opinions are destructive and corrosive to the ideal mindset an effective trader owes it to himself to cultivate.

 

[SOCRATES]

HarB when you next come down to visit PodG give me a tinkle and pop round for a mug of tea.

 

[qaza]

Qaza, please, don't be sillytonto about this, prodding a senior market mind in this way.

What has just been explained by China (as far as can be illustrated publicly ) is the phenomenon of Futurological Flash.

This arrives suddenly to those sufficiently tuned to receive it and it is always right.

I know that there are many who are less developed who are scepitcal of that which they do not understand, but I expect better from you, as you have had the benefit of having it demonstrated to you, by me, live, in advance of events developing, or do you not remember ?

Sillytonto ? I am not prodding him in any untoward way. I am very interested in how he reacts when he is wrong about a "certainty".

 

[SOCRATES]

No, Qaza what he is doing is recognising a glimpse through a window of opportunity, because he anticipates a flaw in the ability of the player to "hold his attitude" sufficiently steadily and calmly to enable him to "execute" as he should instead of reverting to the HP which is the wrong persona for the purpose, with all its concomitant problems and inabilities, you see ? But he did not expand on it, so I did.

 

[darktone]

No, Qaza what he is doing is recognising a glimpse through a window of opportunity, because he anticipates a flaw in the ability of the player to "hold his attitude" sufficiently steadily and calmly to enable him to "execute" as he should instead of reverting to the HP which is the wrong persona for the purpose, with all its concomitant problems and inabilities, you see ? But he did not expand on it, so I did.

socrates

To 'anticipate' the result of a future event is very far from 'knowing' the outcome of a future event, this makes it no different from my womens final example.

I agree with your 3points in post 826, and would say that they represent at least 90% of what is required to trade succesfully.


china

mate because the market was THAT thin! there were no other offers, so I had to buy whatever was offered! BTW another market illustration! This is EXACTLY what market covering large price range on miniscule volume IS!

btw - i actually did even worse - out of those 600 pesos I had to get 2 "muchachos" just as p1ssed up as meself - they had only 613 between the 2 of them!

i guess thats why i stick to FX single stocks freak me out let alone 2 'muchachos'

cheers for the replies
regards
dt

 

[Rognvald]

One of the best lessons available from Jessie Livermore is the story of his shorting of Union Pacific tand it applies across the board

"Every time I found the reason for a loss or the why and how of another mistake, I added a brand new Don't to my schedule of assets."

I am reading through the book again with the insight this thread has imparted and on the theme of China's recent posts would highlight this

"I asked myself why I should feel like that - I got a feeling that I should sell it - I couldn't find any reason whatever for going short of Union Pacific"

he did though - 1000, 1000, 1000,2000, 5000, 10000 (total 20k)

The outcome was a $250k profit (in 1906)

see

http://www.spytrdr.com/StockOperator.pdf
for a free adobe file of the book


for the full story - pages 72 to 83 - an essential read

Rogn

Edit - additionally page 93
"I was in such a hurry to try the new key that I did not notice that there was another lock on the door - a time lock! - there I was - right and busted"

 

[china white]

"knowing"

Sillytonto ? I am not prodding him in any untoward way. I am very interested in how he reacts when he is wrong about a "certainty".

matey - I cannot explain that as well as Socrates, but I will try

alright maybe the word "know" is not the best to describe it, I just do not happen to know a better verb.

Let me give u an example from footy world if I may We all know that ever since Maradona "left" in 1994, for TEN solid years Argentinian national team DID NOT WIN a SINGLE tournament, BEING CONSISTENTLY No 1 or No 2 team in the world? How come Maradona "knew" how to finish it off, and the plethora of brillian players (Batigol, Saviola etc.... the list of endless) do not seem to "know" that? (OK I know what u r gonna say - u r gonna mention Francescoli who also "knew" - but don't cheat, he is Uruguayo! :cheesy: )

that is the "window of opportunity" as Socrates calls it. Example - 2nd goal in 1986. He "knew" there is a window of opportunity to bury 3 uncoordinated English defense, and he took it. Another otherwise brilliant player wud start passing the ball around and wud never score that goal.

I will go even further - and I know I am gonna be slapped for that Even his first goal - "mano de Dios" - in a split second he "knew" the referee was not looking and the goalie was too confident Maradona was to short to score with his head so the goalie was "lollabyed" by his HP into thinking that he is safe - bang! I AM NOT ENCOURAGING PPL TO CHEAT HERE - don't take me wrong - I am just addressing the issue of "knowing" 9for right or wrong reasons).

 

[SOCRATES]

What we seem to be establishing here is that the HP can be used for certain tasks.
We also establish that the TP can also be used for certain other tasks.
Each of these is better at chosen tasks than the other.
Which leads us back to trading. The TP can carry out tasks with which the HP could carry out, but via the TP the trading tasks are carried out without a struggle, that is efficiently without question.

 

[qaza]

China,

SOCRATES maintains that futurological flash is responsible for your insight and that it is NEVER wrong. I am unconvinced.

My question to you was ....... what happens when your "knowing" turns out wrong. Or are you always right ?

 

[china white]

Qaza,

ok - i am really gonna sound like a biz school freak - but this is the best how I can explain it.

R u familiar with the concept of "continuity" where the next moment set-up evolves CONTINOUSLY out of the previous ones with exponentially decaying memory - that is the further in the past is a particular moment is the less impact it has?

Opposite to "continuity" is an abrupt effect kicking in and messing up all the cards, creating the chaotic move that shakes out into a new "continuity".

Is such a "discontinuity" a rare thing u can neglect? NO!!!!! Every night when u have the markets shut u have a discontinuity (to a lesser or bigger extent). Every Fed interest rate announcement is a discontinuity kicking in that needs to shake out into a new "continuity".

The "futurological flash" (I have to steal words from Socrates coz I do not have any better ones) is a perception of the continuity u r currently in extending into the future (which u "know" how it is going to extend).

U may be Maradona but if a sudden blow of wind kicks into a precisely angled ball - it'll hit the bar.

Battlefield example: remember some time after 9/11 there was a plane that took of JFK with mostly Dominicans on board heading for Dominican Republic that crashed into East New York? I remember that day so clear as if it was yesterday. I had exactly that flash (long) prior to the event - BUT DISCIPLINE FIRST - when it happened I jumped out at exactly my level of pain. When I realised it was a MINOR discontinuity (apologies for that, that was 150 human lives - but what I mean it was MINOR to what market perceived as a POSSIBLE discontinuity, i.e. a new terrorist attack) I got back at exactly where I'd been stopped out and played my long.

Is it more clear now? Thx

 

[Quercus]

Maybe what we're talking about here is perception at it's highest level.

It's clear to me that the more experience, knowledge, understanding and "feeling" that we glean by being involved with a financial instrument - the more that you can just feel what is about to happen. (acting on it is a different matter entirely, and is what separates the pros from us retail boys. )

I believe that this is development in the form of motor skills, similar to the complex task of driving. The more knowledge we gain in the form of price pattern generation, volume interpretation, bar closing positions, support/resistance levels etc. - then the more these previously recognised events begin to form part of a deeper understanding.

It is these motor skills which I believe can lead to the apparently subconscious feeling of being able to anticipate what is to come!

 

[china white]

I believe that this is development in the form of motor skills, similar to the complex task of driving. The more knowledge we gain in the form of price pattern generation, volume interpretation, bar closing positions, support/resistance levels etc. - then the more these previously recognised events begin to form part of a deeper understanding.

It is these motor skills which I believe can lead to the apparently subconscious feeling of being able to anticipate what is to come!

Q - may i raise one point here?

I think it is actually quite a good analogy - the development of am MP (Motoring Persona ) as compared to the PP (Pedestrian persona).

There is time for MP and time for PP - exactly as in the case of TP and HP.

One thing that I feel uneasy about though. Did u notice that often the so called pros who r supposed to be the best drivers (taxi drivers e.g.) r actually the most awkward thing on the road? It probably boils down to the question that was raised here - what sorts Maradona from other technically brilliant footy players? I think the answer is being able to seize on the "window of opportunity". A taxi driver (like an average pro OTC trader) DOES NOT NEED to be that sharp - he will get there and will get paid. WE DO NEED TO BE THAT SHARP THOUGH - I am still struggling with the proper wording for my thought - but do u see what I mean?

 

[SOCRATES]

I do not embarrass myself at all, but what I do succeed in doing is irritating people like you, because I do it in a way that prevents people like you from deriving benefit. It is my prerogative to choose, not yours to choose for me. As for what it takes to be a successful trader, you would not know and I am not telling you for the same reason as above, but from your general attitude is already clear you cannot and will never succeed, now go and contemplate your navel, or go and make a nuisance of yourself somwhere else.