Back January 7, 2008

I'll be away until around January 7, 2008.

HAPPY HOLIDAYS !

Copyright 2007 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
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Single greatest profit potential in the market

More on Secrets of the Trading Pros: Techniques & Tips that Pros Use to Beat the Markets (Wiley Trading)

Page 43, in reference to stocks being added to or deleted from indexes such as the S&P: “During the few times a year when we witness a rebalancing of the indexes, the opportunity for a high-percentage trade is never better…the logic is that hundreds of billions of dollars that are indexed against the S&P must make the changes so the portfolios under management don’t have any tracking errors. Many of the index funds must, by charter, make the changes on the close of business, as the rebalancing is complete…the profit potential in that situation is greater than that from any other single phenomenon in the market.”

...back next week...

Copyright 2007 Raymond T. Lee. All rights reserved.
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Asset re-allocation trade

Some examples of ideas to trade found in
Secrets of the Trading Pros: Techniques & Tips that Pros Use to Beat the Markets (Wiley Trading)

Page 38, in reference to large institutional asset re-allocation trades hitting the market:”Every half hour we would get the order to buy a large quantity of S&Ps, and as I would quietly place my orders into the equity pit, I would notice selling pressure in the bonds. The more I did those asset allocation orders, the more I realized that the opportunity existed for the sharp trader to capitalize on the aberrations created by the size….Often I’ll notice that the orders stop at approximately the same time that the European fund managers are leaving for the evening. Although they all have operations that run around the clock, a large portion of any such order is completed by the close of the European bourses (exchanges)…Identifying the source of the transaction is important because it gives the trader an indication of when the order might be complete. A European or Asian order is usually 75 percent complete by the time Europe closes, around 11 AM Chicago time. A domestic order, however, will ocntinue into the bond close at 2 PM US central time, and at times will continue electronically well past the closing bell.”

Page 39, in reference to asset re-allocation trades involving currency markets: “European fund managers will buy U.S. equities as the dollar weakens, hoping for two possible scenarios: a rising stock market with the dollar under control or a stagnant stock market coupled with a rally in the dollar.”

...continued tomorrow...

Copyright 2007 Raymond T. Lee. All rights reserved.
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Starting point for research

This is part of this week’s series of articles on
Secrets of the Trading Pros: Techniques & Tips that Pros Use to Beat the Markets (Wiley Trading)

With only 185 pages, not counting the Index or the Foreward, this book at first looked like it would be a disappointment. However, on reflection this book is full of ideas for further research.

For example...

...continued tomorrow...

Copyright 2007 Raymond T. Lee. All rights reserved.
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Jack Bouroudjian's book

This week’s series of articles will feature comments on
Secrets of the Trading Pros: Techniques & Tips that Pros Use to Beat the Markets (Wiley Trading)

...continued tomorrow...

Copyright 2007 Raymond T. Lee. All rights reserved.
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Check your tachometer

...continued from yesterday...

Here’s some helpful information to conclude this week’s series on Hedge Fund Masters: How Top Hedge Fund Traders Set Goals, Overcome Barriers, and Achieve Peak Performance (Wiley Trading)

According to information in that book, complex activities (e.g. trading and investing) are best performed with only a moderate amount of emotional arousal. Therefore, before you start any trading activity, observe your emotional state of arousal. The “zone” in which trading is best performed is around 6/10. Too much, as well as too little, arousal detracts from trading performance. Don’t go over 7/10 and don’t go under 5/10. Check your tachometer before and during trading activities.

...back next week...

Copyright 2007 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
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Being present

...continued from yesterday...

This is part of this week’s series of blog articles about Ari Kiev’s book Hedge Fund Masters: How Top Hedge Fund Traders Set Goals, Overcome Barriers, and Achieve Peak Performance (Wiley Trading)

Another theme prevalent throughout the book is the notion of “being in the present”. That’s “present” as distinguished from the past or the future. Ari mentions many benefits for trading when you stay “in the present” as distinguished from the past or the future. Some of these include, but are not limited to:

Freeing yourself from fear and anxiety;

Freeing yourself from greed and freeing yourself of stress from needing to achieve the profit/money goal that he says you ought to set for yourself; and

Enabling yourself to perceive things relevant to your trading decisions that you would otherwise miss.

In his book, Ari describes a few of the ways of learning how to maintain for lengthy periods of time the state of "be in the present". One of the ways is to focus on your breathing. Other ways are mentioned but will be omitted from this article as mention of them may be offensive to some religions.

...continued tomorrow...

Copyright 2007 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
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Select a number and become non-attached

...continued from yesterday...

This is further to my discussion of Hedge Fund Masters: How Top Hedge Fund Traders Set Goals, Overcome Barriers, and Achieve Peak Performance (Wiley Trading)

Throughout the book Ari returns again and again to his main point that a hedge fund manager must set as a goal the number of dollars he wants to make in a day, a week, a month, or a year.

Ari explains that the role of that money goal is to serve as a focal point for generating ideas as to what actions to take to achieve that money goal.

Ari also clarifies that after setting a money goal in terms of number of dollars profit in a specified period of time, a hedge fund manager then has to become non-attached to that dollar goal. Furthermore, a hedge fund manager should focus on performance of the actions relevant to attaining the money goal without regard for attaining or not attaining the goal.

...continued tomorrow...

Copyright 2007 Raymond T. Lee. All rights reserved.
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Dollar profit goals as a starting point

...continued from yesterday...This continues the discussion about Hedge Fund Masters: How Top Hedge Fund Traders Set Goals, Overcome Barriers, and Achieve Peak Performance (Wiley Trading)

Another salient characteristic of the hedge fund managers used as examples in the book is that they all set goals in terms of number of dollars profit they want to make in a day, or a week, or a month or a year. From that starting point, they work out subgoals about what they have to do on a shorter term basis so that they can attain that goal.

...continued tomorrow...

Copyright 2007 Raymond T. Lee. All rights reserved.
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Goal setting by Ari's Hedge Fund Masters

This week’s blog articles will feature a book on goal setting by Air Kiev entitled Hedge Fund Masters: How Top Hedge Fund Traders Set Goals, Overcome Barriers, and Achieve Peak Performance (Wiley Trading)

Almost all of the examples used in the book are about hedge fund managers managing hundreds of millions to billions of dollars. One of the salient characteristics of those hedge fund managers in the examples in the book is that they rely on other people (“analysts”) who use fundamental analysis to make predictions about price direction. That’s in stark contrast to the many independent individual traders I know who rely on their own analysis, usually of the technical analysis variety, to make decisions.

...continued tomorrow...

Copyright 2007 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
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Rickey's system with computer code

...continued from yesterday...

This concludes my discussion about The Trading Edge: How To Trade Like A Winner (Wiley Trading)

Rickey’s book is inspiring. He starts off with two chapters about his personal history and how he became a successful trader. Born into a middle class family in Hong Kong, he studied in the USA and graduated from University of Houston with an MBA. During that time, he worked very hard, dividing his time between various part-time jobs, student politics, and studying. After graduating, he held a “real” day-job while working on trading.

Rickey was a consistent winner when monitored by Future Truth magazine. In his book, he describes one of his system. Although he provides Tradestation computer code for that system, he warns that any coding of systems would not be precisely a replication of actual trading that the computer system attempts to describe because of limitations in computer language and limitations in the accuracy of communications between him and his computer programmer.

...back next week...

Copyright 2007 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
eMail me Comments