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Stocks and bonds are better on economic optimism

Top Day Rec

12.21.09

No data points today.

Our delay this morning was due to an unconscious diabetic on the 5

train. The quality of compassion is not strained? Hell hath no fury as a

group of inconvenienced commuters?

This morning, NY readjusts to the aftermath of a significant snow storm

and s short trading week. Stocks and bonds are both better on economic

optimism.

This Week's Calendar

Click on a "Release" for Insight

Date ET Release For ActualBriefing.com Consensus Prior

Revised

From

Dec 22 08:30GDP - Third Estimate Q3 2.8% 2.8% 2.8%

Dec 22 08:30GDP Prices - Third Estimate Q3 0.5% 0.5% 0.5%

Dec 22 10:00Existing Home Sales Nov 5.95M 6.25M 6.10M

Dec 23 08:30Personal Income Nov 0.6% 0.5% 0.2%

Dec 23 08:30Personal Spending Nov 0.8% 0.7% 0.7%

Dec 23 08:30PCE Prices Nov 1.7% 1.6% 0.2%

Dec 23 08:30PCE Prices - Core Nov 0.1% 0.1% 0.2%

Dec 23 09:55Mich Sentiment-Rev Dec 74.5 73.7 73.4

Dec 23 10:00New Home Sales Nov 420K 439K 430K

Dec 23 10:30Crude Inventories 12/18 NA NA -3.69M

Dec 24 08:30Initial Claims 12/19 465K 470K 480K

Dec 24 08:30Continuing Claims 12/12 5200K 5175K 5186K

Dec 24 08:30Durable Goods Orders Nov 1.2% 0.5% -0.6%

Dec 24 08:30

Durable Goods Orders ex

Auto

Nov 0.3% 1.0% -1.3

Current views, speculations and suggestions

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

only, not fundamental.

Mar ES: pos with support at 1096.50

Mar NQ: pos with support at 1799.50

Mar Mini Dow: neg with res at 10345

Feb Gold: neg with res at 1129.70

Mar Silver: pos with support at 17.15

Mar Copper: neg with res at 318.00

Mar Yen: neg with res at 112.14

Mar Swiss: neg with res at 96.40

Mar EC: neg with res at 144.00

Mar Canadian: neg with res at 94.56

Mar BP: neg with res at 162.20

Mar Aussie: neg with res at 88.60

Feb Crude: pos with support at 73.50

Feb Mini Nat Gas: pos with support at 5.61

Mar Soybeans: pos with support at 10.10

Mar Wheat: pos with support at 5.19

Mar Ten Year: neg with res at 117.25

Mar 30 Year : neg with res at 118.17

June Eurodollar: neg with res at 99.46

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

International Markets

Mar Bund: pos with support at 123.14

Mar Dax: neg with res at 5891

**********

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 1293 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.

When someone says ďBelieve me, itís different this timeĒ donít

believe it. Markets are expressions of hope, fear and greed, in

other words, human nature. Human nature doesnít change.

The fact that human nature doesnít change is why

Shakespeare is relevant, we read Plato and are in awe of

Sophocles. Technology changes, human nature doesnít.

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.

 

*The risk of loss exists in futures and commodity investing. Past performance is not indicative of future results or performance. Only risk capital should be used when making investments in the commodity markets.

 

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