US 10 Year T-Note yield broke trendline

October 31, 2010

Even with the trendline break big trend still remains to lower yields environment. Several closes above 40 WMA will make me change my view to higher yields until then stay with trend !!!


More Seykota Wisdom

October 28, 2010

– Aggressive pyramiding, and other forms of accumulating monster positions are good ways to lose big money, even in a bull market. 

– Maintaining a commitment is particularly important when it comes up for a test.

Somewhere along the line of keeping your commitment you may get a feeling that you don’t like.

If you are willing to experience the feeling, it can transform into an AHA that supports your commitment.

If you are unwilling to experience the feeling, you might abandon your commitment to try to make the feeling go away.

That only results in having to feel the feeling after all.

– Rules of Thumb: Speculate with less than 10% of your liquid net worth. Risk less than 1 % of your speculative account on a trade. This tends to keep the fluctuations in the trading account small, relative to net worth. This is essential as large fluctuations can engage Fred and lead to feeling-justifying drama.

– The more you are willing to experience the feeling of bumping into walls, the less you have to bump into walls.

– Right Livelihood is not your job – it’s what you bring to your job.

– Trading requires skill at reading the markets and at managing your own anxieties.

– Betting more boldly produces more volatility. Good traders are familiar with both and keep their trading well within their tolerances.

– Day Trading is an exercise in limiting profits while continuing to pay normal transaction costs. Day trading may provide a way to cover up deep feelings that the trader does not wish to face.

– My comments aim to stimulate traders to think carefully about risk control before they start trading.

– People have a Conscious Mind and Fred. Fred wants to communicate feelings to CM so CM can experience them and gain experience and share it with Fred so Fred can learn how to react.

This is how we manufacture wisdom. When we don’t like our feelings we tie them in k-nots and do not experience them. This interrupts the wisdom manufacture process, and draws drama into our lives.

– The truth we seek is the knowledge of how to apply ourselves toward right livelihood.

K-nots, protect us from truth and keep our lives in drama.

To untie k-nots, fully experience whatever appears in the moment.

– For Trend Traders, understanding the markets is typically optional, often counter-productive.

– When an up-trend happens, the price is moving up.

– A computer can follow a system and place orders without making predictions or feeling anticipation.

Predictions and anticipations are objects you create. These objects may interfere with sticking to your system.

– A trading system is an agreement you make between yourself and the markets.

– Trend Traders get a signal and pull the trigger without regard to the result of any individual trade.

– When you keep your eye on the prize and are willing to experience all the feelings that arise, the prize soon becomes yours.

– Trading Systems don’t eliminate whipsaws. They just include them as part of the process

– The positive intention of fear is risk control.

People who are unwilling to experience fear tend to take big risks and wind up in big drama in which the risk materializes.

– People with poor risk control tend to bet heavy. So they tend to outperform others in good markets, and under-perform them in poor ones.

– Reliance on Fundamentals indicates lack of faith in trend following.

– Playing for comfort and searching for meanings are both counterproductive to Trend Following.

– Trend Following systems do not speak about entry and exit prices.

– Trading at price levels is a methodology that goes with fundamental analysis and/or trend fading systems.

– The way you do things is your system.

– Risk is the uncertain possibility of loss. If you could quantify risk exactly, it would no longer be risk.

Risk control has to do with your willingness to allow your stop to do its job.

– One of my primary concerns is that you and your friends do not risk more than you can afford to lose.

I want to make sure that you do not have to reduce your standard of living on account of losing money in a speculative account.

I use a rule of thumb that you place less than 10% of your liquid net worth at risk and that you stop your losses at 50% of that – so you have net exposure of 5% of your liquid net worth.

If you have a net worth of 1.5 million, you might have liquid net worth (cash, stocks, bonds, etc) of, say, about 500,000 (a wild guess). Then you might place $50,000 of that at risk and cut your loss if you lose $25,000.

If you are young and have another source of income, or if have higher liquid assets, you might be able to risk more.

The idea is to keep the venture below your threshold of financial importance, so nominal ups and downs do not trigger your emotional uncle point and motivate you to abandon the venture during drawdowns.

– Getting back in is an essential part of trend following.

– In general, long-term simulations on Trend Following systems tend to show better results on the long side.

This correlates with the observation that volatility is proportional to price, so when you play from the long side you are starting with lower volatility and therefore a better reward / risk possibility.

– Trend systems do not intend to pick tops or bottoms. They ride sides.

– Short Term Trading is one good way to realize your intention of reducing account equity.

– I don’t implement momentum; I notice it and align my trading with it.

– Trading is no substitute to the steady income of a steady job.

– There is no such thing as THE trend. Some of the shorter indicators are down while some of the longer ones are still up.

This post has special permission to reprint  from ED SEYKOTA – for more please visit ED’s site http://www.seykota.com


Discipline

October 27, 2010

Just as courage is not the absence of fear, but the mastery of fear,
discipline is not the absence of emotion, but the mastery of emotion.

People who have courage feel the fear, but they nevertheless push on
in spite of their fear. Our emotions always feature in our trading,
but a disciplined trader is one who does what his rules or strategy
dictates that he should do regardless of his emotions.

Emotionless traders are not human. Successful traders are not
emotionless traders. They are disciplined traders.

Disciplined traders have mastery of their emotions.


CDS Targets – Bulgaria & Romania

October 14, 2010

EM Credit Default Swaps  tightens recently. Here are two eastern european CDS (Bulgarian 5Y USD and Romanian 5Y USD)

Bulgarian CDS technical target 200 with possible test of march lows at 175

Target of Romanian CDS is 250

CAUGHT ТHEM ALL!!!!

GOOD TRADES TO ALL OF YOU

ILIAN