Before you continue reading this New Year's edition, I'd like you to read an article that someone recently sent me. Once you read the article, think about it, and then continue reading below:
http://www.zerohedge.com/
Now that you've read the article there's several things I'd like to point out.
In my family growing up, if you instantly wanted to not get your dessert, all you had to do was, ask ,"Well, so what?". Evidently that question was
so antagonizing to my parents, that, rather than get an answer, you'd just lose your dessert and be sent to your room. So, at the risk of being sent to my room without dessert, now that you've read the article, I'd like to ask, "Well, so what?"
In the article, the author points out the differences between trading during the day... and, trading during the night session, and that since all the recent market gains have
been during the night session, that there's a big conspiracy going on. There's a couple of interesting charts, and this is what the author wants you to focus on. Obviously, from the chart, the market gains have been from the overnight session, and created by these evil things called Dark Pools. These evil Dark Pools (huge pools of money that you can't see), are manipulating the markets. Now, here's my first series of ,"Well, so what?":
1. If you can't SEE these Dark Pools, how do you know that they are "HUGE"?
2. If you can't SEE these Dark Pools, how do you know that they are "DARK"?
3. If you can't SEE these Dark Pools, how can you know that it's "THEM," that are doing this insidious evil upon the markets?
But, there's something further that I want you to think about (one of the few times, I'll ever ask you to do that to that this coming year!). The chart compares
two sets of data:
1. Opening price -------> Closing price
2. Closing price---------> Opening price
In the article, the author tells us that you are trying to make money between the Opening Price and the Closing Price, while the evil Dark Pools
are making money from the Closing Price to the Opening Price. And, these evil Pools are keeping you from making money during the day. Now, here's my
second series of ,"Well, so what?":
OK, who really trades from Open to Close to Open?
Well, it's certainly not the Pit Traders. We trade from the EDGE. In Two Day Trading, yes, we take a
trade at the Closing Price, but then tomorrow, we exit at THE EDGE, because that's where the money is. In simplest terms, we exit at the safest places in the market,
allowing our Pit Trader friends to take the market first one way then the other after the Open, towards these edges. So, who trades from the Open to the Close? It's the
Public. And, the last thing I'd ever want to do, is to take a trade along side what those guys are doing because they eventually lose their money. Even if they are right in the direction, I'd rather use Mis/Direction to knock them out of their trade, so that I can get a better price, making them chase the market.
But, there's something much deeper here.
In Two Day Trading, you can break it down into two types of trades:
#1: a trade from the Close to tomorrow's EDGE.
#2: a trade from tomorrow's EDGE to another EDGE (called an ATTK), which usually ends up near the high or
low for the day.
Because Two Day Trading is made up of BOTH of these trades, it really doesn't matter if you make all the money during the day, or during the night,
because one of the two type trades will be the big winner, and the other will be a small loser. And, rather than having to "predict" which will make money tomorrow and the next month,we just take the two types trades. Granted, there were periods that one made money, and the other didn't, but how can you predict when it
will change to the other one? If you use BOTH types of trading, you never have to play the prediction game, and when the change comes, you will have adapted.
Whether the money is made during the day, or during the night, it doesn't matter because we're taking BOTH trades.
So, now that I've lost my dessert, and been sent to my room, let's talk about what I call The Big CON.
The Big CON is not some evil, horrible dark pool of money that's controlling the market. The Big CON, or Big Conspiracy, is something much more evil
than that.
The Big Con is ANYONE that will get you to have a BIAS. Once you have a bias, you've effectively let someone else pull the wool over your own eyes, and now you are trading from a BIAS, not what's happening in front of you on the screen. The article that you read is really trying to get you to be biased, first, by having you focused on Open to Close type trades, and then, by telling you that it's something evil under your bed that's going to get you. If you fall for that Big CON, then, suddenly you've got a bias. Once you have a bias that overnight trades are the way to go, you won't take the other type trades, and now, that you have a bias controlling your trades, well, why not just use a big stop, too. And, you might as well get a tattoo that says. PUBLIC across your forehead, too. Personally, I'd rather keep my eyes open and trade from the Edge.
As we approach the New Year, it's easy to develop biases. I spent part of my holiday with a Volvo executive that told me that unless they started selling more trucks
by the end of the first quarter, that the lay-offs would start again. Evidently, they haven't sold any trucks this past year, and, they can only keep their employees if things turn around. Understand this: if that statement about Volvo gave you a bias,and you trade from that bias, you'll take one direction of trade, and not take the other. That's when you've fallen for the Big CON.
The last thing that you want to do this coming year, is to be biased as you begin the year. I assure you, you will want to keep your eyes open. At the bottom of this email are a couple of quotes, one from the Mad Max movie, where Mel Gibson got his start. If you want to be a fortune teller, get a bias, and hang up a sign. That's about the only way you can make a buck from having a bias. The second quote is from Kendo, and leaving pronunciation aside, it simply means, "mind of no mind." This is the state of mind that the Samurai wanted when going into combat, where they had no bias or prediction on what their attacker would do, rather simply instantly reacted to any opening, based on all their practice. When their opponent's blade flashed, the Samurai would use whatever opening was available to quickly end the fight.
When you did the lessons in the Practice Software, you took the trades without bias. And, you did really well. And, some of you, once you moved to trading in Real Time, didn't do as well. Why? I hate to be the one to tell you, but it's because you had a bias. Maybe you watched the news, maybe you read the blogs, maybe you thought the Gold Bugs were right, either way you developed a bias, and would only take one type of trade. Face it, you fell for the Big Con, and let someone pull the wool over your eyes.
Tear up your Big CON bias, and open your eyes, so that you can react to the first flash of the swords in the coming New Year.
OK, go ahead, send me to my room without dessert. After all, in my family, I was the one that told everyone there were monsters in the dark, hiding under my bed. I'd keep telling them stories around the dinner table about these awful monsters, their big eyes,and scary teeth, until no one would ever dare look under my bed. That way, when I'd ask, ,"Well, so what?", I was ready to go to my room.
I couldn't wait to get to my room, After all, under the bed was where I hid the dessert.
I hope each and every one of you has a Happy and Profitable New Year with many desserts. Oh yeah, and don't fall for the Big CON, instead
KEEP YOUR EYES OPEN!
