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Advance GDP came in at 3.5%, better than expected

Top Day Rec

10.30.09

Personal Income and Spending along with the PCE price deflator come out at 8:30. To be followed by the Chicago Purchasing Managers Index at 9:45 which could have a 5 minute shelf life as the Michigan Consumer Sentiment Index comes out at 9:55 which in turn could surrender its own 5 minute shelf life to the 10:00 release of the Employment Cost Index.

Yesterday, Advance GDP comes in at 3.5%, better than expected and the first expansion since 4 quarterly loses and the market promptly reverses the losses seen on Wednesday. Exactly what is sustainable out of that 3.5% without government stimulus and sponsored programs remains the question. As usual, in these times, itís not the picture, itís the frame.  

 

Oct 27

09:00

CaseShiller Home Price Index

Aug

 

-13.0%

-11.90%

-13.30%

 

Oct 27

09:00

Consumer Confidence

Oct

 

52.6

53.5

53.1

 

Oct 28

08:30

Durable Orders

Sep

 

0.5%

1.0%

-2.4%

 

Oct 28

08:30

Durable Orders ex Transportation

Sep

 

0.1%

0.7%

0.0%

 

Oct 28

10:00

New Home Sales

Sep

 

450K

440K

429K

 

Oct 28

10:30

Crude Inventories

10/23

 

NA

NA

1.31M

 

Oct 29

08:30

Chain Deflator-Adv.

Q3

 

1.3%

1.3%

0.0%

 

Oct 29

08:30

GDP-Adv.

Q3

 

2.5%

3.2%

-0.7%

 

Oct 29

08:30

Initial Claims

10/24

 

520K

525K

531K

 

Oct 29

08:30

Continuing Claims

10/17

 

5890K

5915K

5923K

 

Oct 30

08:30

Personal Income

Sep

 

-0.2%

0.0%

0.2%

 

Oct 30

08:30

Personal Spending

Sep

 

-0.7%

-0.5%

1.3%

 

Oct 30

08:30

PCE Prices

Sep

 

-0.5%

-0.5%

-0.5%

 

Oct 30

08:30

Core PCE Prices

Sep

 

0.1%

0.2%

0.1%

 

Oct 30

09:45

Chicago PMI

Oct

 

51.0

48.7

46.1

 

Oct 30

09:55

Mich Sentiment-Rev

Oct

 

70.3

70.0

69.4

 

Oct 30

10:00

Employment Cost Index

Q3

 

0.2%

0.4%

0.4%

 

 

 

 

 

 

 

 

 

 

 

Current views, speculations and suggestions

(good till close of business today). These are technical in nature only.

 

Dec ES: neg with res at 1071

Dec NQ: neg with res at 1721 

Dec Mini Dow: neg with res at 9980

Dec Gold: neg with res at 1054

Dec Silver: neg with res at 1687      

Dec Copper: pos with support at 295 

Dec Yen: neg with res at 110.30       

Dec Swiss: neg with res at 98.60       

Dec EC: neg with res at 149.00

Dec Canadian: neg with res at 94.20  

Dec BP:  pos with support at 163.80

Dec Aussie: neg with res at 9200    

Dec Crude: pos with support at 77.80       

Jan Soybeans: neg with res at 9.97  

Dec Wheat: neg with res at 5.11   

Dec Ten Year:  neg with res at 118.08     

**************

International Markets

Dec Bund: pos with support of 120.85  

Dec Dax:  neg with res at 5650

Dec NKD neg with res at 101.35   

***********  

N.B.: if you initiate a trade using ANY of these numbers use a STOP at least equivalent to 2 Ĺ%. Repeat: use Stops.  Donít think about using Stops. Use Stops. Some find it appropriate to look at the margin requirement and use that as a stop or if itís a steep initial requirement, use half.

 

 Please feel free to visit www.vfmarkets.com.  For those without accts use 999999 and 1168 as a pin for access.  (pin changes monthly) 

********************************************

    

Futures trading entails considerable risk and is not for everyone. An account can lose more than its initial investment. Stops are not necessarily filled at the stop level. Past performance is not a guarantee of future results.

 

 

The Tractatus of Trade

                   Or

Aphorisms from a Trading Life

          Copyright 2008 Charles Kespert

    

Trading isnít about winning or losing, itís about self discovery.

You only learn from losing trades.

Along with the probability that your trade will be profitable, there's probably a greater probability that it won't be.  Think about the trade you'll make if things don't work out.

Donít be afraid to go where the market wants to take you.

Moving averages are very important. The steeper the slope, the better the trade.

Markets tend to overshoot.

Never meet a margin call. Liquidate. The margin clerk is your best friend.

In trading, he who has the best rules wins.  Your innate, intuitive brilliance only talks to you occasionally.

To panic is human.

The market will all too soon locate, expose and exploit your weaknesses. All strategies have a weakness.  Know yours, Achilles.

When you put a trade on, it should work almost immediately. If it doesnít, seriously consider bagging the idea and look for a new setup.

At the same time, take trades. The only way you are going to make money is by taking trades.

Donít worry about winning or losing on a particular trade. Thereís only one concern: does the trade help to grow your bottom line.  

Hope is not an action. 

The more efficient a market is, the more random it is. If a market is inefficient, the more that market will trend. The efficiency of a market is inversely correlated to its liquidity.   

Do you look at your positions as assets or liabilities? Liquidate the liabilities with extreme prejudice.

If you are in a position and you are losing more in that position than you can reasonably expect to make, get out. 

It is far easier to lose money trading than to make it. It is far easier to make money trading than to keep it.

A margin call argues for your continuing status as an amateur.

If the market prints your price and doesnít fill you, go to the market. 

If your trading begins to resemble an exercise in madness, at least take a break for a day.

A market trades to try and fill all orders: limits, buy stops, sell stops, everything. If there arenít any orders, thereís no reason for the market to move.

If your indicators are lagging but your data is high frequency, you should be okay.

If your data is low frequency, your indicators are useless.

Your ability to discriminate, to successfully think critically, is inversely proportionate to the profitability of your positions.

You can go broke taking profits, very small profits. This type of trading behavior will also convince you that you're performing better at the buy/sell game than you really are. 

When the pundits start talking about a barrel of crude oil and a bushel of wheat as not really a barrel of oil or a bushel of wheat but an asset class and you are long, get nervous.

Your next trade could be your last trade for a very long time. Be aware of this and donít let it happen.  Use stops.  

Markets are challenging: when illiquidity meets volatility parallel lines converge, divergences converge, convergences diverge and mathematical certainty is forced to embrace new theorems.

If you are down a certain, predetermined percentage of your equity (for some this could be as little as 2.5 and for others this could be as much as 15%) and you have open positions, liquidate and go to cash. You and the market arenít on the same schedule. (No one ever does this).  Hitting the reset button is a psychological palliative.

When all your trades are going incredibly well, when youíre seeing the market as if youíve already read tomorrowís papers and youíre just about ready to thicken the callous that resides just below your left shoulder with your right hand, get out Websterís and reread the definition of coincidence.

 

Markets are thematic. In fact, those flashing numbers are always trying to tell or sell a story. Become a better reader.

 

Donít think of the market as an opponent to be bulled, bloodied, battered and beaten. Its resources are far greater than yours. Itís better to concede the conceit of market as ocean in all its obvious metaphoric diversity.

The Myth of Sisyphus resonates in the experience of trading.     

Remember that irony is alive, well and constantly at work in the universe; irony, the cornerstone to the construct of the divine comedy.

Trading isnít about winning or losing, itís about building equity. Taking strategic losses is a key to building equity.

 

Winning or losing on any one particular trade is meaningless.

A market is a market. It can do anything it wants. It doesnít have to make sense. A market is only obliged to itself. In fact, exploiting this fact will lead to your best profits. 

Just as persistence allows mediocrity to soar, a persistent, rule driven trading approach seasoned with just the right touch of intuition can turn your sowís ear into a silk purse.

What you want to have happen in a market often prevents you from doing what you should be doing in a market.     

That which is true, never changes. A market, a dynamic revaluating, discounting mechanism, always changes. Thereís very little thatís true about a market.

Beware of the new paradigm; it may not be wearing any clothes.

If you donít crave profit, profit may be attracted to you. If you donít fear loss, loss may not be attracted to you.

If you want to be condemned, keep doing what youíve always done.

Worst positions leave last.

Trading is like procreation; if youíre nervous it just isnít going to work that well. 

The market is an imperfect game. Chess is a perfect game. All information is transparent. Either you are a smart player and can see the board or you are a challenged player. There is no luck. Poker is an imperfect game. You donít know all variables and bluff by itself can win the day.

You only learn from losing trades. A winning trade is simply a confirmation of your current infallibility.

Do everything you can to keep a losing trade an annoyance rather than a memorable event.

If you are in a winning position, remain aware that just as the sea reclaims land, the market wants its money back. 

Never disrespect the possible (especially option expirations).

A trade is a trade. It is a financial event. It is not a justification or repudiation of your geopolitical or eco-political model.   

Donít convince yourself that youíve figured out the puzzle. The puzzle keeps changing. Eventually the puzzle just disappears.

 

You have to be willing to give back, to fold, to square your position to cash. If you donít give something back they will end up taking it back. 

Markets spend as much time going up as they do going down, the only difference is amplitude.

As the futures market is a zero sum game and the instruments of trade expire continually, regression to the mean should be a frequent event. The stock market is totally different; for every buyer there doesnít have to be a seller and the life of a stock is theoretically, potentially, infinite. Regression to the mean should be a ďless frequentĒ event at Wall and Broad.

Good trades are often counter intuitive.

Thereís far greater skill in trading well when youíre behind than in trading well when youíre ahead. 

Ascertaining the correct value for 6 variables before making a trading decision is not better than ascertaining the correct value for 3 variables. When it comes to heuristics, kiss.

All your answers have questions.

Markets are mechanisms that foster irrational behavior.

Donít let your trading be held hostage to the need for discernment.

As soon as market action can be explained and generally understood, expect the market to change.  

Before entering a trade, mentally understand and accept all potential loses.

If you have to win youíll lose.

If you have to lose, you will.

The seeds of doubt are self sown.

On initial order placement, never be impetuous. Wait for your price.

Look for ways to take action. Idle brilliance addles.

Good trades usually set up with a sense of inevitability and unfold in slow motion.

Remembrance may be the inability to let go.

In trading, feeling comfortable should be an uncomfortable feeling.

You canít continue to court disaster without eventually landing a date.

Youíre only as young as your last winning trade.

People feel more comfortable with losing positions and more nervous with winning positions.

If you have a position in a market and the average true range of that market is 128 points and the market has only had a range of 28 points so far, start figuring out which side of the market is going to deliver the next 100 points.    

When asked to play a game, then stopped mid game and asked how they are doing, people invariably state that they are performing at better levels than they actually are. 

Work on four things: fear, anger, frustration and judgment; itís all derived from fear.

Anger is the clash of desires.

Whatever you believe is undoubtedly correct until the passage of time offers another suggestion. 

Simplify. If you are using 4 indicators to trade, use three. If you are trading 5 markets, trade 4, then reexamine the number of indicators youíre using.

Markets generally lack conviction, especially post 9/11. Thatís why trend traders have a low incidence of winning. Take advantage of that.

What funds buy, they sell. No fund is ever going to take delivery of a barrel of oil or a bag of coffee. Take advantage of that.

You manifest the world through interpretation.

Life is, at least, the non-annihilating coexistence of opposites.

Ultimate sorrow is to love as gravity is to mass.

 

Charles Kespert

 

***********************     

 

 

HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM.

ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, AL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETIOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS.

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