Bob is a great example of one of these remarkable people.

In our first meeting, two years ago, I realized that Bob was someone who had a good chance of making it as a trader. It has been gratifying to watch Bob’s progress as a trader based on his intelligence, discipline and perseverance.

I am proud of being a part of Bob’s journey toward success over the past two years.

I value his friendship and I respect the person he is both professionally and personally.

Jeff Quinto
January 2009

Or if you ask yourself woud you go to a doctor that has only a quick 9 month education class?

This trader may not be bad in 9 months and it makes you think like that is achieveable to rest of us. Well, if you have all the right beliefs and trading attitudes from the beginnig, overall balance in life, you are healthy and have no money worries etc. and on top of that you get a great mentor, well, of course your path to trading success accelerates.

But if you don’t have those essentials in play you first need to make them and that takes time. So you realy cannot force a flower to grow… you can only provide what she need to grow and then… wait for a miracle that happens.

Now, if there is a hurricane or riot, I could make the decision to remain open and gouge people, hoping to make the big score under very uncertain times. However, by doing so, I run the risk of being looted or over-run. To me, that’s not a plan for long-term success.

Instead, I have “boarded up my store”, am doing not so many trades, not adjusting my already-tight risk-to-stop parameters and waiting for this storm to pass. I may be wrong, but then my downfall will be a slow burn rather than a big blowup, which at least gives me the time and opportunity to adjust things if I ultimately decide that is what I have to do. However, right now, I don’t think that’s the case.

Some believe that market movements are random; there is a bit of truth in the concept for no one can predict the next tick. Just what do we mean by random. A second grader knows that a coin toss exercise will produce an even distribution of heads and tails and that the next toss is unpredictable. It would be a fool’s errand to bet on such a contest. But what about a roll of the dice? The odds of rolling a seven are three times more likely than a twelve or a two; yet the next roll can not be predicted. Both exercises will have a random outcome but the former will yield a fifty percent success rate and the latter, seventy-five. These odds are precise but the markets are more subjective.

Market action can not be random because investors base there actions on the previous acts of other investors. If markets were random, there could be no successful investors, just as there can be no successful beneficiaries of our coin toss exercise.

This presents a dilemma. We must agree that the markets, by definition, are non-random phenomena yet they are comprised of a collection of random events which are individually unpredictable for their timing and magnitude. The answer may lie in statistical analysis and probability theory. We can observe that event “A” will be followed by event “B”, “X” percent of the times. If “X” is other than 50, we have found a tool with some predictive value.

This is a bit abstract. What about the markets. What do we know about them? How do they behave? Most notably, markets move. They seldom move in a straight line, but back and fill, as they tend to move with an overall bias in one direction or the other. They will respond to news event but often perversely. Sometimes they move for no discernable reason.

Market price action is caused by individual investors executing orders. They do this through “limit orders” and “market orders.” Market orders are often executed from a “stop”. We can postulate that limit orders exert a stabilizing influence on the market through negative feed back. They tend to preserve equilibrium, limit the market’s movement and nudge it back in the direction from whence it came. Market orders, particularly potential market orders ,entered as stops, tend to destabilize the price action, perpetuating moves through positive feed back in a kind of chain reaction. We can view the limit orders presented as the “book” but resting stop orders are not depicted on most charts.

Let’s imagine a market at equilibrium. There have been no trades for several minutes. We know the price of the last trade and we have the bid and the offer below and above the market. This dormant condition will prevail indefinitely until one side or the other makes a concession, by hitting the bid or taking the offer. This transaction may take place at the level of the last trade or at a new level above or below it depending on where the bid or offer was. When this new price level is obtained, several things can result. The market can go dormant again as the momentary imbalance was resolved. The new level can trigger a stop which introduces one or more new market orders. These new orders can be filled by the resting limit orders, if there are enough of them at that level, and no further move will result. If there are not sufficient limit orders to fill the demand at that level, the market must reach to the next level to fill the remaining market orders. This can hit more stops introducing more market orders unleashing a chain reaction resulting in a market run.

As the market rises, propelled by stops, some will view the market as overbought and sell against it, others will see more to come and will buy. Who is right and who is wrong, only the future knows for sure.

The significant lesson here is that a significant move resulted from one trivial event; our investor’s hitting the bid or taking the offer. Do investors respond to significant news events, absolutely, and sometimes dramatically, but most market action is the result of the inherent instability within occasioned by human folly, heard mentality, excesses, greed, etc. Something is created from nothing and that is can be a beautiful thing if we are in tune with it.

“Last week, crude oil hit an all-time high of $146, and the skyrocketing cost of fuel is impacting our customers, our employees, the communities we serve, and the economy as a whole. United, and the majority of other major U.S. airlines, are asking our most loyal customers to join us in pushing for legislation to add more transparency and disclosure in the oil markets. Please see the attached open letter from the leaders of the U.S. airline industry.

“An Open letter to All Airline Customers:

“Our country is facing a possible sharp economic downturn because of skyrocketing oil and fuel prices, but by pulling together, we can all do something to help now.

“For airlines, ultra-expensive fuel means thousands of lost jobs and severe reductions in air service to both large and small communities. To the broader economy, oil prices mean slower activity and widespread economic pain. This pain can be alleviated, and that is why we are taking the extraordinary step of writing this joint letter to our customers. Since high oil prices are partly a response to normal market forces, the nation needs to focus on increased energy supplies and conservation. However, there is another side to this story because normal market forces are being dangerously amplified by poorly regulated market speculation.

“Twenty years ago, 21 percent of oil contracts were purchased by speculators who trade oil on paper with no intention of ever taking delivery. Today, oil speculators purchase 66 percent of all oil futures contracts, and that reflects just the transactions that are known. Speculators buy up large amounts of oil and then sell it to each other again and again. A barrel of oil may trade 20-plus times before it is delivered and used; the price goes up with each trade and consumers pick up the final tab. Some market experts estimate that current prices reflect as much as $30 to $60 per barrel in unnecessary speculative costs.

“Over seventy years ago, Congress established regulations to control excessive, largely unchecked market speculation and manipulation. However, over the past two decades, these regulatory limits have been weakened or removed. We believe that restoring and enforcing these limits, along with several other modest measures, will provide more disclosure, transparency and sound market oversight. Together, these reforms will help cool the over-heated oil market and permit the economy to prosper.

“The nation needs to pull together to reform the oil markets and solve this growing problem.

“We need your help. Get more information and contact Congress by visiting http://www.StopOilSpeculationNow.com.”

YES, INDEED, I DID use that Link to contact all three of my congressional representatives with a letter decidedly different than United Airlines wants.

I also enclosed a copy of the following article by LA Times columnist Jonah Goldberg on the subject:
http://www.latimes.com/news/opinion/la-oe-goldberg15-2008jul15,0,24212.column

Hasn’t our government ever heard of this thing called SOLAR ENERGY?? Renewable resources? Independence from foreign oil — a phrase used by every President since Richard Nixon??? AAARGH!!!

This is utterly ridiculous scapegoating much like the current “tax the rich” mentality that just provides our government with an excuse for not doing its job. CONTACT YOUR CONGRESSIONAL REPRESENTATIVES.

What I found in scalping because of the fast timeframe, every time I tried to do more than one strategy (i.e. retracement and counter trend) I didn’t do either well. I’m finally at the point that if I don’t have a set-up in my plan and can measure its performance I won’t trade it. I’ve lost too much time and money every time I’ve gotten off my plan.

I’ve also been impatient and hard on myself because the brass ring seems so close to my grasp. I’ve learned to be easier on myself because it will take as long as it takes for me to be successful so I may as well enjoy the journey. Learning PATIENCE is my cross to bear.

From reading you posts, I have no doubt you will be successful.