It has been some time since I last did an update here. I've been pouring all of my resources into my exclusive newsletter: Sequences and Breakdowns. I've published dozens of newsletters and published many webcasts, as well. I highly recommend that if you're serious about learning how I trade, and gain expert insight into how I view the market to sign up to my newsletter: Sequences and Breakdowns. See the post below this one for info on how to subscribe.

I do intend to start providing more value on the blog front soon. But honestly, most serious traders have subscribed to my newsletter, and it is and will continue to be my highest priority. If you subscribe then you will also be able to access the archive of all past webcast newsletters, and I plan to make an archive of all historical email newsletters available for subscribers soon.

I will be releasing an exciting new trading product soon... stay tuned

Update: The 48 webinar pricing special has ended. But I'm still offering a reduced rate on all my products for the next week.

Thanks to everyone for attending the webinar. The turnout was fantastic. If you missed the webinar, you can still get the pre-recorded version of "My Order Flow" seminar at the special reduced rate for 48 hours only -- after that the price will mean revert back to the standard pricing and stay there. I, also, wanted to introduce to the world-at-large my new "Sequences and Breakdown" newsletter.

"Sequences and Breakdowns" is a newsletter that will be sent out between 5x and up to 20x per month where I basically walk you through my trades, step-by-step. This is an amazing product that I'm excited to offer. Its basically expert mentoring at an unbelievable price. Subscribers will, also, receive bonus premium content such as pre-recorded presentations with audio/video breakdowns, market outlooks, etc. You get 5 historical bSequences and Breakdowns within 1 week of subscribing and then you'll get updates on an on-going basis.

Click one of the links below to order and take advantage of savings by using the bundled discount offerings:

Products + Newsletter Subscription
https://sites.fastspring.com/themarketpredictor/instant/sequencesandbreakdownsonly
Sequences & Breakdowns Newsletter BEST VALUE
$290 / month
What it is:  Newsletter with detailed and fully described breakdowns (reviews) of my daily trades and sequences.
5 Historical Breakdowns within 1 week
Between 5x-20x breakdowns per month (between1 and 5 per week depending on activity/etc)
The closest thing to 1-1 mentoring at the best price

When you order, you get savings on these products:
My Favorite Edges + $150
My Favorite Order Flow + $350
 

Products only
http://sites.fastspring.com/themarketpredictor/product/myfavoriteorderflowtapereadingtechniques
My Favorite Order Flow + $450
My Favorite Edges + $155
 

I'm excited to be able to present my first exclusive webinar. Are you interested in how I've achieved the impressive trading performance that has been audited by Collective2 in real time? Would you like to hear me talk about ALL of the content in my exclusive order flow & tape reading course for free? Would you like to get special discount pricing on all my products not available anywhere else? And get the first scoop about my new exciting Sequences & Breakdowns product?

My Favorite Order Flow and Tape Reading Techniques

My trading performance last year was exceptional, and I now have 2 of the top ranked futures systems at C2. Subscribers to my systems have made thousands of dollars by following my signals. A large part of my edge comes from my ability to correctly interpret the order flow and read the tape. Now, for the first time ever, I'm sharing my exclusive tape reading methods with over 2 1/2 hours of instruction. I've taken my tape reading ability to a whole new level over the most recent year and have gained deep insight into the order flow patterns that drive the market.

Topics covered in over 2 and 1/2 hour of clear concise instruction includes:

• What is tape reading and what is order flow?
• What drives the market?
• Supply/Demand
• Time/Volume Relationship
• What is taught in "traditional" tape reading courses.. what is really possible and what is not with those techniques
• A Completely New Way Of Reading The Tape
• How to Read and More Importantly INTERPRET the Order Flow
• Theoretical Concepts Underlie Volume Analysis
• Basics of Market Micro-structure
• Limit Orders Vs Market Orders, When to Use
• Volume Analysis
• What Really Drives Short Term Market Movements
• Special Patterns & How To Improve Your Entries
• Stop Strategies: 3 Specific Strategies Provided
• How To Maximize Profits
• Two Execution Strategies: My Bread & Butter Execution Strategy + Compliment
• Advanced Methods For Reading The Order Flow + List of FREE Software For Performing Such Analysis

For a very limited time and as part of the launch promotion, the entire course is available for $697 (normal $799). In addition, I'm offering an exclusive bundle option to purchase "My Favorite Edges" normally $179.99 at a special and limited-time reduced price. Order now to take advantage of this launch price. You will receive an instant download link that will contain the digital audio/video that can be played by clicking the included HTML file or by launching the video in your standard media player.

Disclaimer:
No performance is implied or guaranteed. This course is for instructional purposes only. I strongly endorse this product. However, I can not offer refunds given the fact the product is a digital download and the ease-of-use it would be for someone to download/study/and then return product after deriving all value. All sales final.

I'm currently working on a graybox. At this stage, it is more of a conceptual project. Remember, I built a clone that allowed me to historically optimize my discretionary trading. The building of a graybox is a natural development based on my goal of combining the best of my discretion with technology. A graybox is a trading interface that is partially automated but allows for human input. There is a great deal of freedom and creativity that one can explore when designing a graybox. There are some fundamental differences in approach, as well.

We need to distinguish between a genuine trading edge, and what I like to think of as automaton trader. In other words, we can build our graybox to trade in such a way that if given the correct direction that it would trade profitably: think buying pullbacks in an uptrend. Again, I think of this sort of notion as an automaton or mechatron. The system would only be profitable if given the correct direction or "an edge" from us.

The second way a graybox can be created is that we have a genuine system that has an edge. In other words, it would be profitable if traded automatically and it provides signals which we deny or allow.

We're basically thinking about the different ways that we can approach this topic. The last topic really provides the foundation where we should focusing on automating. Basically, we want to automate and systemize the aspects of our methodology that we're not doing good at. And for me, I'm very strong at calling direction. I'm extremely strong at predicting the direction of the market. I'm pretty strong in getting good entries but certainly that could be improved upon. I'm fairly good at getting exits. I'm very poor at finding a good stop out level.

And this is tangent but if you have an edge then a stop loss will almost always cost performance because you will have some false positives. Think about: you have an edge and that edge is worth 7 winners out of 10. If you have an edge then the more risk you take up to a certain level then the greater return you'll get. There are a few exceptions. First, if you're trading a single instrument, single position, then holding onto a loser for too long would hurt performance because you're not able to take the new profitable trades that come up.

Back to the topic, I bring up the stop loss because it is the most simple form of an automaton or automation. We choose a set dollar amount for our stop and now we've automated that process. We've freed our mind to focus on what we do best.

Why would we trade using an automatonic graybox versus an edge based graybox? Well, the edge based graybox may be somewhat of a limitation for a discretionary trader, like myself. You would only be able to take trades when the edge signaled. You'd be more of a filtering mechanism where you deny trades. The graybox I envision building: I'm the driver. I'm pushing it to take trades or lean on a direction. Its the mechanism that gets me into a trade and out of a trade.

Again, I want to get back to this "why". And the "why" is that the computer may be able to get a slightly better entry or take a better exit. It might take the form of combining the automaton with some genuine edge for a mixed model. This is an experimental project, and I don't know where its going. It could take the form of a scalping engine that scalps in the direction that I give it. I envision a somewhat rich experience with the graybox. I envision the following inputs:

Direction: The direction the box should trade.
Key levels: Key levels where the box should take profits or do something
Confidence: Trading size.
Urgency: Does it use limit or market? How close are the limits?

I do know that I want to be "driving" the trading versus "filtering" the trades. In other words, the way I envision this is that the graybox isn't providing suggestions to me but I'm providing suggestions to it. Of course, a more complex model would be a 2-way street with me driving it and then getting feedback and approving/denying its recommendations. Yet, I'm looking at this as a 1-way street. The way I'm envisioning it is that the box is micromanaging the trade entry and exit and taking the big picture information from me.

On a related note, I'm going to be working on a custom HUD for my discretionary trading. Most charting applications are not really suited to displaying information in the optimal form for my trading. Of course, charts are useful. Even so, I do not even use real-time charting for most of my performance this year (or years prior for that matter). Indeed, sometimes our limitations provide the mechanism for novel inspirations.

A novice trader recently expressed his desire to trade like a robot and wanted to know what aspects were discretionary among discretionary traders?

Really every aspect of a strategy, even an automated one, has a discretionary basis because a human had to program the strategy and ultimately choose to trade it. Clarity is gained when we understand that we're really talking about decisions and how we make decisions.

What types of decisions do we want to make on a routine basis and how much freedom do we want to make those decisions? What types of decisions do we want to automate or systematize?

There is no one answer to the question and traders, like myself, who trade multiple strategies will pursue those using different methodologies. There is something very important to be learned here, though. And, that important factor is that every decision we make requires energy. So, every decision has a cost. But, some types of decisions that we make aren't productive. They don't have a good return. We don't see a benefit to making those decisions on a routine basis or we're not good at making those decisions.

What I do in my discretionary trading is that I focus on making the decisions that I'm best at and that produce the best return for me. I try to eliminate, automate, and free myself from making decisions where I'm not producing a great value.

And, when you approach and you see it clearly then you reframe the notion into one of a more precise and useful construct for performance development. The questions you should ask are:

1. What decisions in my trading am I making that aren't producing a benefit? For me, I've found stop placement requires a lot of my energy. Basically, trying to figure out where I can put stop. And it hurts my performance because I'm wasting my energy. I've found that using a predefined risk limit or automating that aspect of my trading to improve my performance.

2. What decisions am I really getting benefit from and how I can I focus and enhance that process?

I wanted to provide an update on my systems performance. My Predictor Systematic system has returned over 70% since being tracked in real-time at Collective2. The live trades performance is provided for those who have auto-traded the system.

Click the link to view performance graphs, statistics, and subscribe.

predictorday.collective2.com

What about my discretionary performance? Overall, I've returned over 99% since inception. My signals this year were worth over 55% according to the independent tracking/real-time auditing by C2. Again, live trades are provided when available.

Click the link to view performance graphs, statistics, and subscribe.

predictor.collective2.com

-----------------

All returns are hypothetical. Past performance is not indicative of future performance. No returns are guaranteed or implied. Futures trading is inherently risky. Please read all disclaimers at C2 carefully. I've boosted my goals and hence risk in my discretionary trading. I would not be surprised to see some larger swings going forward.

Remember, I started this journal and this idea of combining the best of technology with the best of my expert experience in trading.

I've had this idea that wouldn't it be great if I could trade in "3 ways" at once. I mean wouldn't be it be great if I could trade 3 styles at one time and learn which style was really working the best or best suited me. In other words, for every trade I could trade it in several ways that might make sense. I could let my winners run and cut my losers while at the same time taking profits fast. I could use a big stop and a small stop on every trade. The idea is that it would help me to learn better how I should be trading better for myself. But, I realized that it wouldn't be possible for me to enter all of those trades and that I'd need a machine to shadow me and multiple systems. A worthwhile project but it would be very complex and wouldn't tell me anything today.

I started to think well wouldn't it be even better if I could run these simulations over my historical trades? In essence, I could backtest myself! And, I had experimented with this with a limited degree in Excel. But, now for the first time I am able to view my trading statistics, run hypothetical scenarios, and view my historical trades with the full power of Tradestation. I can optimize myself. I've already learned new and important aspects about my trading from the backtest that I will share in a future post.

The easylanguage script is very basic. It can import a list of entry date/times and exit date/times from an Excel spreadsheet at the minute accuracy and produce a backtest based on those trades. I can then change the script to experiment with various stop, target, entry, and exit adjustments. Furthermore, I can optimize these parameters using Tradestation. It can import a list of trades in a format similar to what Collective2 provides.

If you would like to use this script for your own personal backtesting then I can make the full open source available. You will need some Easylanguage skill and examples will be provided. I am offering this on a request-only basis for $299. Email me at predictor@themarketpredictor.com if you'd like to order a copy.

This is really exciting, and I'll have more to share about my discoveries soon.

Most traders when they hear that I predict the market are extremely displeased. They are very much against this notion. They really do not like what I do. And, I like that because most traders lose. Why are so many against this idea which seems to me fundamental and undeniable? One word: failure.

You see a prediction is something that can be proven true or false. If a trader is following the trend and loses money then he's not responsible for that. He was just riding the wave. If a trader believes the market can be predicted then he becomes responsible. People don't want to fail. And, the unknown is scary. I'd estimate that more people lose money in the market because they won't accept responsibility for their losses then any other reason.

Most methods bandied about in popular literature are designed to alleviate the trader of that responsibility. Almost no commentators, no experts, are willing to actually makes predictive statement about the market and even fewer are willing to bet on it. In essence, the great sea of information that comes from the financial services community is without meaning, without purpose, and without any value.

Again, I feel there are 2 fundamental truths to trading: the future is uncertain and a trader must predict the market. These two truths are extremely unappealing to most people. People do not like uncertainty and certainly don't like the notion that they have to make a call, a decision, that they are ultimately responsible for when they don't have all the information and that's trading.

These two notions are at diametrical odds. The notion that one must make a certain bet on an uncertain outcome. Every trade is either a win or loss. The fundamental reality of the market has important implications and ramifications in the type of psychology that one needs to foster in order to be successful. That will be the topic of the next post.