After losing $70k trading new highs (Investor Business Daily style) with 7% stops, I learned my first lesson.  If you have 7% stops, how many times in a row can you be wrong and still be able to trade (financially and/or psychologically)??  The answer is 17 times to get to below $30k.  It seems like a lot, but unfortunately, I was using full leverage on the advice of my greedy broker, so that reduces to 8 consecutive losing trades to get to $30k.

What would it take to recover back to $100k from the $30k level?  333%!  How often does one make 333% on 100% of their portfolio?  Not very often ;-)

Lesson:  Leverage and large stops are killers.

Moral:  The tortoise beats the hare.

Now of course, I did not learn this lesson all at that time because, as I have indicated, I am about the most persistent and stubborn guy you could possibly meet. So it took me a decade.  That didn’t keep me from making good on my losses though.  In fact, I made that loss many many times over.  Another thing that makes it tough to learn.  So there is another lesson.

Lesson:  You cannot correct your behavior as a trader unless you agree you are doing something wrong.

It is impossible to distinguish between luck and skill in most cases.

So, if I can impart any wisdom to you at all that will keep you in the game, the above would be it!

Because, you cannot win, if you are not in the game! Here, I will say it again.  You cannot win if you are not in the game.

Having said that, here is another tidbit of crazy inside knowledge.  Since you cannot distinguish between luck and skill a good portion of the time, the real truth of the matter is you are not responsible for your winning at all.  The market is.  Here, I will prove it (cause I know you are probably shaking your head right now).  Go try to extract a bunch of gains out of the market right now.  So you will say well….. this and well…. that.  Fact is, depending on your method, the market will deliver the conditions you need to make a bunch at the exact time it does it.  Not before, not after.  And, you will have to be there at that exact time in order to benefit.

I said before, you have to manage your risk and then, at some point (and here is the blaspemous statement that will make most traders cringe), a good accident happens.  Accident you say??  Yes.  I use that word, because it is the only one that is strong enough to remind me there is nothing personal about trading. It is all management of risk.  It is a disipline.

How does all this impact your personality as a trader?  You have to bring yourself in line with some sense of truth.  We all like to think we are exempt from the physical forces of the universe.  We like to watch Hollywood movies that confirm our invincibility may be real.  But, nothing shows you quicker that you are wrong than trading.  It is instantaneous feedback.  So, try to be humble and the way will open your way to success.

Past my initial starting days (of losing) as a trader I shared earlier, I began to study the market and develop computer models using my background in statistics and experimental design.  In Part III, I will try to cover a bit about how I became a systems developer.

After having a stellar run in late 2007 and early 2008, for whatever reason, the forecasts did struggle at taking out new equity highs from April through late August when we got back on track and produced some of our best forecasts ever.

EminiForecaster Equity Curve

The equity curve above is computed by following the forecasts long and short based on the date and time of the forecasted turns and exiting on Fridays.

EminiForecaster is a swing trading service based on market cycles that last around a week in length.  The cycles we trade attempt to identify weekly lows and highs in both time and price.  Most forecasting you will find out there is price based, focusing on only one of the two available axes.  Our method is time based.  Plus, we forecast prices in our weekly updates as a separate part of the service.  Therefore, it takes into consideration all dimensions of possible price action.

The service also gives daily updates each morning and as needed throughout the day so you have full support.  Support questions are typically answered by email in a short span of minutes.

Past performance is not necessarily indicative of future results.  There is risk of loss trading futures, stocks mutual funds and other financial instruments.

My mother passed in January of 1991 and left me about $100k.  She had
done well through the 80s investing in blue chip stocks and I knew of
her success.  Actually, noboby  in the family imagined she had amassed
a hidden fortune of about $650k even though we all knew she invested
in stocks while working at the phone company job she couldn’t stand to
be in.

When my grandfather passed in the mid 70s, he left me 500 bucks, which
my mother helped me to invest.  A number of shares of AT&T that began
to grow on her advice. I thought she had taught me something over the
years, so I could not begin to imagine that, when I told her, on her
deathbed, that I would do well with my inheritance, I did not have a
clue what I was talking about ;-).

I proudly opened a brokerage account with my new found fortune and
prepared to make it big!  Trading on full margin, using the infallible
principles of William O’Neil and his recommended 7% stops, I quickly
took that $100k down to around $30k.  Needless to say, I was
demoralized and also felt I had betrayed my own mother in my failure
(all this happened over only a few months time).  I felt bamboozeled!

I had two choices. One, I could fold and go back to my miserable life
licking my wounds, or, I could grab my own bootstraps and figure out
what on earth had just happened to me.  I grabbed my bootstraps, yes,
but I could not have ever imagined the incredible road it would take
me on.  An unforgettable journey of unconventional living…..

The first step in realizing you need to fix something, is in the
realization that you are the problem….

In my next post I will cover some of my background and how different
trading approaches have different statistics that impact your
personality and your ability to trade.

Hi there, have you ever put on a trade and said to yourself - “I don’t feel too good about this trade”. If you have you are not alone! let’s just face the facts most traders lose money, if you think otherwise, take a look at your account equity in the last 2 years.

Why knowing where market is going is so important? Let’s just say it is, OK? When you have all the psychology stuff figured out and you follow your rules and you trade your market and your account size is big enough and the market conditions are favorable to your trading style… you put on a trade and you have no idea what your odds are about making money! Did you know most traders’ performance is under 40% profitable trades.

Yes, you’ve heard a saying - ‘you cant go broke taking profits”. YES YOU CAN! If you understand the math and realize that if you are trading at 50% accuracy and your losers are, not even larger than your winners, but lets say they are the same - you will still LOSE a boatload of money. Why? Because your broker is smiling all the way to the bank*.

*Disclaimer: we are not broke-rs.

On to the service. Here at EminiForecaster we assist traders from around the world with guidance on where the market is going on the weekly bases -

- Accurate weekly forecasts

- Forecasts (G-Lines) never change

- Interactive platform with quotes

- Forecasting SP500, Nasdaq and Dow FUTURES and more symbols coming soon

- Weekly and daily updates

- Intensive video training

- too many to name…

Here is an image of our interactive platform -

As you can see the yellow line is called the G-line - is our forecast for the following week, that line does not move or change - it stays the same.

Now here is what happened by the end of the week…

Not bad, ha? Does this happen every week? WE WISH! But if you look at our history when we are wrong the week is either flat or we lose not as much as when we hit it right on.

Speaking of good forecasting, you have to realize that what we are attempting at doing is almost impossible and is of course unique.

Please sign up for our blog updates, we will be posting plenty of useful information to help you trade.

- “I live to trade another day”