Month: October 2021

交易成長第一步

交易成長第一步

只有小額的、持續的盈利才能造就長期的成功。

記住:止盈的另一面即止損,它在資金管理中也非常重要。

風險回報比例至少1:3

每一場交易投入小額資金,確定能接受的最大虧損金額,都可以將虧損控制在合理範圍,使你長期處於資金有利的境地。

1. 在市場漲勢中能找到回調位,在正確的回調位買入通常能讓你盈利。
2. 市場處於跌勢時,在阻力位做空。在市場的大動作後做空的動能對盈利很有利。

建立起以過程為導向的思維方式。這就是說,將注意力從盈利和虧損結果上移開,僅關注自己是否做了最佳決策,是否最好的執行了交易。

手機只平倉,不下單.

應避免的問題:

  • 0. 期望值太大,暴富心裡嚴重
  • 1. 重倉
  • 2. 頻繁交易
  • 3. 不設止損
  • 4. 沒有計劃,隨意入場
  • 5. 沒有控制力,事先的承諾無法堅持
  • 6. 沒有交易日記

交易不能感情用事,交易不能衝動,要明白什麼時候自己可以交易,什麼時候不能交易。如果你與愛人吵架、如果你心情不好、如果你喝酒上電腦、如果你有客人打擾等等,這些時候,你最好選擇遠離市場,交易一旦失敗,代價是極為慘重的。

交易應該心平氣和,交易應當無視盈虧。控制了虧損,就贏得了利潤。

交易需要隨機應變。留得資金在,不怕沒機會。交易中永遠有你想不到的事情會發生。一旦發現交易錯誤,第一反應就是平倉,平倉可以解決一切問題。猶豫、等待都可能是致命的錯誤。

順勢交易:絕不逆市買賣

交易對象:只做單邊市,不做盤整市——單邊市的陌生品種,好過盤整市的熟悉品種
保持盈利:如果短期賬戶資金盈利太大,要么用時間去磨,短時間不交易;要么另開賬戶或拿走盈利

止損:止損單不可撤銷

加碼:如果前面的單子不盈利,不能加碼;加碼應該放在突破盤整區之後進行

強調:  

①資金安全是第一位的,可持續發展比什麼都重要
③再次強調止損,擺下止損不要撤銷它; 
⑤在盈利後,要有貼近的止損單保護你的盈利;
⑥你只要做正確的事情,與市場保持一致,利潤自會滾滾而來;但如果你看錯了方向,別怕,你有止損保護;
⑦健康就是財富;

交易不能感情用事,交易不能衝動,要明白什麼時候自己可以交易,什麼時候不能交易。如果你與愛人吵架、如果你心情不好、如果你喝酒上電腦、如果你有客人打擾等等,這些時候,你最好選擇遠離市場,交易一旦失敗,代價是極為慘重的。

交易應該心平氣和,交易應當無視盈虧。控制了虧損,就贏得了利潤。

交易需要隨機應變。留得資金在,不怕沒機會。交易中永遠有你想不到的事情會發生。一旦發現交易錯誤,第一反應就是平倉,平倉可以解決一切問題。猶豫、等待都可能是致命的錯誤。

在遭逢重大虧損後,要減量交易,而更重要的是,在交易獲利之後,也要採取減量的策略。


Private Material 20211008

Okay this is for drivers try Vs an introduction to fort early morning work early morning provides training days trading plans live signals and various works system for twenty a currency fears we trade we focus on larger time frames and trans which can also use the system were trading a smaller time frames maybe during sunday trading if that market conditions while for that I cannot pointing toward the training。Okay this is a warning is tribe or this d introduction to forty morning for early morning provides ten days trading plans live signals and various alert systems for twenty a currency pairs we trade we focus on a larger time frames and transport you can also use the system were trading a smaller time frame that may be doing some day trading if de market conditions allow for that are not pointing toward the trading market。The star home page just if you want a brief summary of all of the things we do for quarterly warning just to read the home page for a carefully two important pages on a website of the thirty five lessons page in the videos page you wanna check out the information as much as possible show you how to。Get d information as much as possible show you how to set up a trend indicator that will show you every detail about our trading system and either too important pages were you to check out immediately and you can do most of this before you tried so if you go to the website scope to de thirty five lessons page and videos page third reading lessons are written illustrated lessons and watching videos and you have a very strong idea how we trade de force market before you can do most of us before you even subscribe。We prepare training plans everyday for twenty eight years we review the entire market but we do it in individual currency groups in a we re vu SD careers as in individual group that we revealed again pairs we do it as individual currency groups we do for eight different currency and then we prepare training plans using all of information c and following lessons we use lesson eight ten eleven thirty tu to prepare training plans plus if you want to know that the direction of the train and weather individual currency the stronger we can use our market analysis spreadsheet。

And go to home page in c record that market analysis spreadsheet dlink is right there is yet to set up your train indicated were trained a system so you can set up our expansion moving average is and you can set up for nine time frames and can be set up on met a traitor or basically any platform that will allow for moving average and time frames you can use the trend indicator to determine the。The resistance levels and also for setting price loans the daily trading plans we set price alert and you can just go into a trading platform set price alerts and monitor the market for movement and brake pads so Li work trend indicator link is on the home page and you would also want To Go to de videos which show you have to set up the trend indicator。

And then go check less than ten and the thirty five lessons for ur review support resistance levels how we calculator support resistance levels so right here on the home page dropped down paragraph heres the link to free train。

As far as alert systems we have various alert systems you can set price alerts for break UPS those can be deliver ti VIA email by a measure for platform are there your broker lot brokers have that we also have a mobile APP is free you can download it and it will send you really great alerts that tell you when the market is starting to move across the currency in almost any situation。

Desktop alerts to ever markets can scanner tool that flashes if he is the Google Chrome browser to issue a flashing notification on your desktop so with de for forturally morning trading system you always know when the market is moving weather its a main session or the Asian session Oliver alert systems are shown and lesson sixteen go check that out and then set up power your alerts however you want you can customize it anyway。

Next thing you wanna be very familiar with this is very important how to enter trades massively important year so in less than twenty five will give you some ideas for how to set a set of rules for entering trades you also want to learn to use how to use the four key map and you want to know what a good entry signal looks like okay。


How To Control Your Emotions When Trading Forex

Eliminate the impact of emotions on forex trading

Control your emotions

Control your emotions

Controlling and eliminating the effects of emotions when trading Forex can go a long way in determining the success or failure of a trade. Your mental state has a major impact on the decisions you make, especially for new traders in the market, and maintaining a calm demeanor is important for long-term survival in the market. Showing extreme confidence when you make a huge profit, or showing a lack of confidence in a trade when you are in a trading slump, can have a deadly negative effect on the next trade.

If you think that an excellent risk management strategy is enough to make you a successful forex trader, you are wrong. In fact, a very important factor in dealing with sound risk management, money management, and achieving success in the forex market is emotional intelligence. Emotional intelligence is one’s ability to identify and manage one’s emotions, which may adversely affect trading decisions.

Scientific studies have shown that our patterns for making decision strategies about a matter are developed during childhood. People as adults react to things in patterns that derive from this childhood pattern, applying their childhood experiences and perceptions to their lives. Simply put, it is the instinctive human response. Obviously, Forex traders are no exception to this rule. Many traders do not realize this when they trade and when they lose a trade, they always feel that the market is playing tricks on them and that the market has cheated them. So it has been suggested that as a trader who wants to succeed, one must take human instincts out of the equation and trade against human nature.

For example, a person who was never praised as a child will internalize the shame and see their trading failures as personal failures. However, the truth is that forex trading is like a random stroll through a minefield full of landmines, where the only certainty is its uncertainty. In fact, whether it is the Forex market, the stock market, or the futures market, one should concentrate on managing one’s emotions when trading and focus on whether the whole process makes sense and is in line with one’s trading plan, rather than on the specific amount of the trading result.

losing a trade can trigger unpleasant emotions and fears

Trading failure can lead to anxiety and fear
Taking appropriate risks and learning to let go are two essential abilities to become a real player in the world of Forex trading. In layman’s terms, this means taking and letting go. When you make a trade instead, you need to be certified to do it, and when you don’t have the opportunity, you need to wait patiently and never take a shot. While we have to admit that a losing trade brings unpleasant emotions and fear, it is very dangerous to let fear dictate your actions.

Using trailing stops can effectively help forex traders control their greed and reduce losses. On this basis, forex traders are advised to keep their position sizes consistent when trading, rather than blindly increasing the quantity when there is a profit and scaling back when there is a loss. Do everything according to the plan, do not over-trade and do not over-trade.

Another common mistake triggered by out-of-control decision making is cognitive bias, meaning that people tend to see only the information that supports their ideas. For example, an overconfident forex trader may ignore information and charts that are unrealistic to their ideas.


How to Trade on AGEA trading Platform

How to Trade on AGEA Trading Platform

Step by Step Guide

In this section, we wil show you how to trade Forex on trading broker AGEA International. How to buy a currency pair and sell it, and take profits…

Step 1: Login your trading account with AGEA by clicking one of the following WebTrader trading platforms:

Step 1: Login your trading account with AGEA by clicking one of the following URLs (WebTrader trading platform):

https://agea.trading Or: https://agea.trade

Step 2: Click “Commodities” as show on the image, then select “Currencies” on the dropdown list.

Step 3: Select a currencies pair, for example, EUR/USD. Click the price shows below “Buy” or “Sell“.

Step 4: Select proper desk type: Live Currencies is to trade with real money; Virtual Currencies is demo account, this is for practicing purpose.

Step 5: 

a) Then fill the quantities field with 100 (100,000 quantities = 1 standard lot);

b) Enter the position by clicking “Buy” or “Sell“.

Step 6: Check Opened Positions, you will see the profits, status, and other information about the positions.

Step 6: Edit or Close a position

a) You can edit a position when the status is “Open“, add or edit the Stop Loss price, Exit Target price, etc. then click “Save Changes“.

b) To close a position, you just need to click “Close Position” button shows on following image, then the position will finish it’s life in market.


Step by Step Guide – How to Open a Demo Trading Account

How to Open a Demo Trading Account

Step by Step Guide

In this section, we wil show you how to open a demo trading account with

Forex broker AGEA International. It will take about 2-3 minutes.

Step 1: Click one of the following URLs:

https://agea.trading Or: https://agea.trade

Step 2: Click “AGEA” as show on the image.

Step 3: Click “Open a new account” as show on following image.

Step 4: Fill the fields under “New Accouont”.

A: your account username,

B: your account password;

C: type the same password once again;

D: Your first name;

E:  Your last name (or family name);

F: Choose the name of your country;

G: Fill your email address;

H: Fill the text shows on the page;

I: Mark it as ticked;

J: Mark it as ticked;

K: Click the green Button “Open Account“.

Step 5: Congratulations

Your account is opened!

You can always edit your account or upgrade it to live from Account Center

Now, login into AEEA.Trade and start trading!


Develop good trading discipline

Develop Good Trading Discipline

1. Follow the trend: never plunge to the bottom, never touch the top.

  • (1) the best evidence that the market is going to start rising is that it is already rising; the best evidence that the market is going to start falling is that it is already falling.
  • (2) Only open positions in the direction of the medium-term trend, and only go long or short when the averages are aligned long, and only go short or short when the averages are aligned short. The market will never go up to the point where you can’t buy, nor will it go down to the point where you can’t sell.

2. The species.

  • (1) only participate in high volume, good liquidity varieties, do more on the strongest (do not feel that its price has risen very high and choose to fill up), short on the weakest (persimmon to pick the soft pinch
  • (2) at the same time hold a position of no more than three varieties.
  • (3) Do not have a variety of preferences, any variety is just a symbol. Profit potential is the only criterion for species selection.

Translated with www.DeepL.com/Translator (free version)

3. Timing.

The thing to do now is to do nothing

Only trade in markets that have been started and wait until the trend appears before entering the market. If the market is not moving for the time being, why should you enter it? The thing to do now is to do nothing. Why not wait until it has clearly started before entering.

4. Time.

Determine the time frame, time determines the space, time to generate profit and loss. Any single transaction, the time frame must be unique, not changeable throughout the transaction process. Do not look long to do short, nor short to do long. (Currently mainly do 30M candle and daily)

5. Capital management.

  • (1) the first time to open a position accounted for no more than 10% of the total funds. See the market and did not earn money is a common thing, one of the reasons is that the position is too heavy, the heart pressure, can not withstand the slight shock of the market and be cleaned out, another reason is the timing of the intervention point is not good.
  • (2) After a successful streak in the market (more than 50% profit), 40% of the profit will be withdrawn for emergency purposes. Losses of more than 5%, the first opening capital reduced by half.

6. Stop Loss.

Set the stop-loss point and stop-loss capital amount before entering the market for each transaction, and the loss of each transaction shall not be higher than 4% of the total capital. Time stop loss does not hesitate; space stop loss to prevent accidents; single stop loss is not a fluke.

7. Increase positions.

Always add code only on winning positions. To find the key points when adding code, strictly implement the pyramid type position increase, increase positions must set up a stop loss.

8. Closing positions.

(1) Hold only the correct positions. Daily before the close of any feeling suspicious, not confident, with a floating loss of the single, all clear. Only hold positions with a floating profit. Any position that does not produce the expected change (not proven correct) within a specified period of time should be exited.
(The average speculator holds a position not because the price change confirms his trade, but because the price does not “confirm” his stop-loss signal. After he opens a position, if the price moves sideways or slightly down, but does not hit his stop, he will still hold the position and then start expecting the market to move in the direction of their position. (Murphy’s Law tells us that the market will go in the opposite direction most of the time.)

(2) Do not stay in oscillation, and leave the market quickly by accident.

(3) never let the position held to turn a profit into a loss, after a considerable profit to move the stop-loss point to above the break-even point in a timely manner.

9. Physical and mental regulation.

(1) a day after a continuous loss of 2 single must stop trading, check the trading plan and implementation process. Trading losses can not retaliate against the order, the next single transaction interval of at least one hour before the loss of single. No more than 3 times a day.
(2) 10% retraction of funds, mandatory rest for a week. If the loss of more than 20%, stop trading for a month.
(3) when the body is not well, mood, or what other things interfere with the time, absolutely do not do transactions.

10. Wait and see, wait and give up.

Better to miss, not to do wrong. The environment is not clear not to do; the market does not understand not to do; the timing is not to do. Always do only the simplest, the easiest to figure out the section of the market transactions. Winning soldiers first win and then seek war, defeated soldiers first war and then seek victory. The first for the unbeatable, in order to wait for the enemy can win.

Just mentally predict the market, but be sure not to act rashly, but wait until you get a signal from the market that confirms your judgment is correct, and only then can you trade with your money.

Good speculators always wait, always have patience, for the market to confirm their judgments. Remember, don’t trust your judgment completely until the performance of the market itself confirms your opinion.


Trading Tips

Trading Tips (Forex Trading)

I am currently trade Forex only, and on AGEA.

Only small, consistent profits can lead to long-term success.

Remember: the other side of the Take-Proft is the Stop-Loss, which is also very important in money management.

Risk-reward ratio of at least 1:3

Putting a small amount of money into each trade and determining the maximum amount of loss that you can accept will keep losses within reasonable limits and put you in a favorable capital position for the long term.

  1. In an up market you can find retracement levels and buying at the correct retracement level will usually make you profitable.
  2. Shorting at resistance levels when the market is in a downtrend. The momentum of going short after a big market move is good for profits.

Develop a process-oriented mindset. This means taking the focus off of profitable and losing results and focusing only on whether you are making the best decisions and executing your trades best.

The phone only closes positions

The phone only closes positions, not places orders.

Problems to avoid:

  • expectations are too large, rich heart serious
  • heavy positions
  • frequent trading
  • do not set a stop loss
  • No plan, random entry
  • No control, can’t stick to prior commitments
  • no trading diary

Trading with the trend: never buy and sell against the market

Trading objects: only do single-sided market, not consolidation – unfamiliar varieties of single-sided market, better than familiar varieties of consolidation market
Keep profit: If the short-term account is too profitable, either use the time to grind, a short time not to trade; or open another account or take away the profit

Stop loss: stop-loss orders are irrevocable

Increase the size: If the previous single is not profitable, can not increase the size; increase the size should be placed after breaking the consolidation area to carry out


Translated with www.DeepL.com/Translator (free version)

Emphasize that:

  • 1. safety of funds is the first priority, sustainability is more important than anything else
  • 2. re-emphasize the stop-loss and place a stop-loss not to undo it. 
  • 3. to have close stop-loss orders to protect your profits after they have been made.
  • 4. you just have to do the right thing and stay with the market and the profits will roll in since; but if you look in the wrong direction, don’t be afraid, you have stop-loss protection.
  • 5. health is wealth.

After suffering a major loss, it is important to cut back on trading, and more importantly, after trading for profit, it is also important to adopt a strategy of cutting back.

Chapter 25 – Phantom’s Chat

Chapter 25 - Phantom's Chat

It’s always difficult to get a group of people together at a time and place and equally difficult to get
Phantom to be available to work on a specific project especially when he is working on so many
already.
We were able to set a time and discuss various aspects of questions on trading of interest to our
traders. It often times seems that much of Phantom’s insight is more general when specific questions
concerning his rules are presented. I asked him about some of his trading as it would pertain to long
term and short term trading both. His answers were that while you may travel 100, 1000 or several
thousand miles it is travel just the same as to whether you take a car, train or airplane.
Answers to your questions may not be as timely as you wish but we will try to elaborate on some of
Phantom’s aspects of trading as they refer to both long and short term trading.
ALS: Pop, give us some of your observations on your reflections of the reception of your trading
rules since you presented them to the traders.
Phantom of the Pits (POP): Many remarks have been made as to the rules being more for short term
traders than long term. I would like to dispel that notion. The big reason for that belief is that traders
are still OVERTRADING their account size. The rules work for both long term and short term if
over trading is not a problem.
I have seen a couple of posts, which are accurate in regard to, how large of a trade should be made.
I think most traders want to be short term traders or day traders. It is a fact that trading futures
requires prompt actions, which leave the trader to feel that all trading should be short term. Markets
swing and reverse back and forth often in moves, which can wipe out an account so fast if over
trading is a problem. Nothing will wipe out a trader faster.
The rules are a must in long term trading just as well as short term trading. If you have a signal to
enter a market and two weeks later the market is not doing what you expected and you are still in
the position you should have used rule one and not rule two. You will not have added to your
position because it didn’t prove you correct. By not overtrading you may have been able to hold the
position for two weeks without going to an extreme of losing on the trade by big time.
Still if you have a two-week position on because you are expecting the trend to continue or develop
you must approach the initial trade by not overtrading to a point of having to lose on minor
fluctuations. If you overtrade you will be forced somewhere to pull the trade off at an unfavorable
situation and with a loss you had not counted on taking.
By using rule one with long term trading you are far better off to under position with smaller
positions. It is rule two, which will make up for the smaller positions in long term trading. In long
term trading your window of the position proving to be correct would perhaps be a little wider and a
longer time frame. While this longer-term time frame and window may give you a greater chance of
losing, you still have a better position by not overtrading the position from the start.
Keep in mind that entry signals are not always good entry points. That alone says not to overtrade
the position. You must also be prepared to pick a range and not a price, which leads us back to not
overtrading the initial entry. This leads to rule two in allowing you the opportunity to get larger
once the position proves to be correct. We are talking a wider window than most traders think about
for rule two to work properly in the long run.
Much frustration develops in trading when the initial position is overtraded. Each trade should not
make a difference in your account. The problem with that statement is that each trade does make a
difference to almost all traders. If the trade makes a difference in your account then you are going to
allow the market to make decisions for you and that is always inconsistent with good trading. Keep
in mind too that the statement is not saying that each trade should not be important in your trading.

I have seen the smallest trade become significant to traders because they didn’t use rule one and
remove the position once it failed to prove a good position. The loss becomes larger and larger.
Believe me that it will make a difference if not protected properly. It is much easier to follow the
required rules if your plan has a plan for removal if not proven to be a good position when your
position is small and not larger upon initial entry.
I have had several email indications from traders telling me what works for them. Good for them as
they have a plan and can use it correctly. It must be a plan which you incorporate into your trading
and it must work for you. I can’t stand to sweat or to swear for that matter and that is what happens
if you don’t keep each initial entry insignificant position wise. Rule one can stretch from minutes to
weeks or months but the important part is to know you must remove the position and not leave it to
the market when not proven correct.
Don’t worry about not having a good size position on a big move because your plan has the other
side of the coin. Rule two always says to increase a proven position and to do it correctly. What is
correct for me may not be correct for you because you may be more removed from the market than
I am.
ALS: Pop, do you want to go into detail more on long term trading with your rules?
POP: Unfortunately I can’t narrow situations down for a specific plan for all situations. The correct
way to use the rules for long term trading is to always keep in mind that small is certainly a key to
success when used with proper rules.
I saw a post and please forgive me for not remembering who posted it that the position taken by that
person is always going to be smaller than most but at the end of the year they would have made
more money than the larger positioned trader. Yes, that statement is a correct one for several
reasons.
Up front is the behavior modification. A smaller position is kind to you in allowing the proper
response from yourself in protecting your account. Of course there are times when being aggressive
is required and that is where my rule two comes into play for myself. As I have said before a trader
on the CBOT with a single letter acronym continues to astonish me in his proper aggressive use of
rule two. Not that he uses my rule two specific but that he aggressively adds properly at the proven
points.
I have observed many posts over the past year and the “SMALL” secret is starting to get out. There
are ways of trading small. You certainly can trade MidAmerica contracts with good results and you
can with options into smaller exposure in markets as long as the markets are liquid. Any futures
contract, which has options, can downsize your position exposure on any exchange.
What I want the smaller trader to do is to be realistic about return expectations when becoming long
term traders. You won’t start with ten grand and make a million by being long term traders. Oh yes
it is possible but you are putting yourself at too much of a disadvantage to think you will do it
without making a full time effort and becoming more of a day or short term trader. Even then it is
remarkable if it can be done.
ALS: So mainly you are saying that long term trading with your rules require you to be small but
aggressive at the proper times?
POP: You aren’t wrong! It seems like a trick but it is not. You’ll have to pull that sack out of a sack
and see there is actually something to it. Small can always become larger but when you start larger
you are actually setting yourself up to have to become smaller somewhere in your career. It is the
sad truth.
I have watched posts from various traders and it’s easy to see that many traders are overtrading. I
think the only complaint I have against the experts, authors and researchers is that while they are
making the effort to help traders admirable, they must present the problem of overtrading more
clearly.

Since I have walked the road of trading and often observe various writers and experts I can say that
I believe they are usually on the right track but times change and they can not always predict that
change. It is not their blame but the small trader must be aware and on top of it. The small trader
can recognize that change better if they are not so large.
I watched a mutual fund trader come out of positions just yesterday as he believes the market is not
topping but that he is too large to get out when it does top. Recognition of the situation is very
important and to me that is a very smart mutual fund to be in with your funds. Now for the small
trader it isn’t always necessary to remove positions before the reversal because of being too large.
That to me is a very big advantage for the small trader provided they have their surprise side trade
plan always in place.
I want to point out another major problem I see with what I have observed over the past year of
observation of the small trader.
What is the one thing, which can most likely change your odds in trading? If someone could
actually give you M.J.’s shoes that now allow you to jump five feet higher, could you better play
basketball?
In trading we can have those shoes. First we must think about being small from initial entry because
the position has not been proven. The only thing we have upon entry is that we have a signal based
on what has happened. We know that the direction is pointing but not that the direction will
continue.
Because we are small we must have the plan to become larger (rule two) or we won’t ever exceed a
50/50 expectation in the long run.
Where do we get the pair of shoes? Secondly our efforts must be different than what we are
presently experiencing in expectations. Every trader who learns of trading is expecting to make
good sums of money. They also count on that outcome.
The expectation of making good sums of money is WRONG in trading. The CORRECT
EXPECTATION is that you will have a large amount of losses. It is a fact! It is up to the trader for
the large amount of losses to be kept small or they will certainly be large.
I am not saying that you can not expect to make large sums of money but that you should never
have that expectation in trading. The only expectation in trading is that you should expect to take a
large amount of losses.
Here comes your pair of shoes that help you jump five feet higher!
Your job as a trader is to have a good plan for entry, adding, exit and use of good rules for your
protection from being removed from the trading arena. You must not concentrate on how much
money you can make or expect to make in your trading. Your plan and objectives of your plan will
give you your proper signals and your rules will give you your proper protection.
(YOUR SHOES) You must concentrate at all times on keeping your losses small and never on what
you expect to make but on what you expect to lose. The five foot gains come when you don’t expect
them and they do come. They come when you are concentrating on keeping your losses small at all
times.
Keeping losses small is a full time job and takes action on your part. You may ask how do you keep
losses small at all times as you have taken positions and in minutes the position went massively
against you before you got the fill back. The answer to keep losses small in relation to the size of
your account is to expect the unexpected disaster and limit exposure from the start of an initial
position when the position has not proven to be correct.
I want to give you the best example of what I mean in keeping losses small. I listened to a trader
accurately state that he had 80% of his trades make money. I watched his trades and judged his

trades. When a trade went against him, he would hold that trade until it became a winner. The 20%
losers were large losses. Yes indeed he was correct in his statement of having 80% winning trades.
His net income was negative because of not understanding that trading has nothing to do with what
percentage of winners you have.
Trading has the most important statement in the end! It is that your income is based on not how
many winners or losers you have but on how small your losses are of those losers. How large your
winners are is second to how large your losses are.
I am a very poor percentage trader in that I lose more trades than I win. I would hate to tell you
exactly the percentage for I am sure you would not even want to read my input anymore. I am not a
good winner but I am the best loser I know. Losing well is what gives me my income.
MJ is good in scoring! It is not always how many shots you take or how high the percentage. It is
the score at the end that actually counts.
ALS: Ok you have a few raised eyebrows. I know your percentage and you are correct, as it would
shock most people. I won’t divulge it. What do you suggest traders do in order to use their new
shoes in trading?
POP: Frame of mind is what we are talking about from the start of a position. Let me say I have 5-
10 grand in an account. Am I to start out to make a fortune or to continue to survive forever in
trading? Of course the trader and I want both. But keep in mind that without long-term survival you
will never reach the goal of making a fortune. So survival is the more important of the two. Let us
devise a way to accomplish that.
We will use soybeans as an example. If I put a 5,000-bushel contract on I can expect to lose 3,000
on a limit move. Notice I said I can expect to lose and did not say I can expect to make. You see I
will not limit my gains as I will be able to hold gains longer than losers. Notice I also said expect to
lose 3,000 as a limit move is 30 cents but I use the limit to limit exposure rule. What I am saying to
myself is that I have an exposure upon entry of limit to limit.
By having a good entry plan I can reduce the expected loss and by having a good exit plan I can
reduce the loss also. I am not going to have a plan to put a position on at limit up or down in either
direction. Or am I? Perhaps at times with the use of rule two I will add at limits if I can but we are
talking about initial entry here.
With a possible worst-case loss expectation of 3,000 and an account of 5-10 grand we are looking at
30-60% possible loss from the start. Even so we want to trade the entry signal in beans.
What should we do? How should we trade? First reduce the exposure before putting the trade on
from the start. You can reduce it by trading smaller. You could trade a one contract of 1,000 on the
MidAm exchange. Another method is to look for an option with say 60 days to go before expiration
and a delta of 20%. In a break out and that is what your entry should be looking for in a trend, you
will have the opportunity to participate without the trade making a difference in your account. If
you are worst case loss in the first day you will lose 600 and not 3,000.
Ok so we have the exposure to less than 600 of a 5-10 grand account. Next let us reduce the
exposure further by knowing when the position has proven itself correct. Let us say you are only
able to look at the close in the newspaper at night and must work away from communications to the
floor during the trade part of the day. Your entry is now more important. If you position in the top
possible third of a market or the bottom third in that direction, you are allowing almost the entire
risk of 600. By having a good trade plan which does not allow you to position the top third of a
possible trade range you will reduce your risk by 1/3rd. In this case your allowed risk is now 400 at
most.
Yes you will miss some moves by not buying the top third or selling the bottom third of a days
possible range but the survival aspect is worth the lost trade. This also keeps you from chasing a

market, as we know markets have highs, lows and ranges each day. Use it to your advantage by not
chasing markets into the hole even if you miss the trade at the cost of long term survival.
The next part of your entry is to limit your loss possibility. There are positions that during a day
should be removed for the sake of protection of being limit locked into a larger possible loss the
next day. You are going to have to accept the fact often events can take a market limit one way or
the other and at times they will reverse from that limit. You must never allow yourself to be locked
limit against your position. The only way of doing that is to have a plan to remove the position
before it happens.
If you are long in beans and the market is in the bottom 5-10 cents of the possible range for the day,
you had better have a plan for removing the position even with the possibility of the market
recovering after you get out. Let us say you went long ten cents higher and now the market is 30
cents lower and only ten cents above limit down. Since your plan says not to sell the bottom third
for entry the only reason for selling is to limit your losses. At what point do you give up the
opportunity of recovery in a position now showing bad? When the market in beans has moved
within ten cents of limit you can pretty well accept the fact that any recovery is going to be a fluke
most of the times. We will consider the bottom ten cents too much risk against us so our plan could
be to exit on a stop when the market is in the top or bottom ten cents against us.
This ten cents on exit with a stop can reduce our risk now by another ten cents. So now we have a
total possible loss of 300. This is 1/10th of the original size contract risk. We are talking maximum
loss of 3-6% of our account size at this time. This we can live with.
By having several trades working and with much smaller size your odds of removal from the game
will diminish but you must have a plan for each position. Looks more like work doesn’t it? Yes it is
work but it pays off in the end.
Keep in mind the above example can be suited to your trading but keep your initial position small
enough so it won’t have a chance of affecting you emotionally or financially in your trading. Your
new shoes are your expectation of taking that loss many times but controlling your size of loss.
How much will you make? Who knows? Better yet who cares? It is when you don’t care how much
you can make that you will better serve the aspect of how much you can lose and how much will
you lose. Only then can you judge whether you can control your account properly.
Nothing precludes the importance of having trades that will give you the positive expectation of
outcome. You won’t take any trades unless you can have a positive expectation of being able to gain
more than you lose.
I am only pointing out to you that a high expectation of winning trades over losing trades will point
you in the direction of larger draw downs and worst of all holding trades for too long when not
good trades.
Limit your thinking on trades to limiting losses at all times. If you trade small enough and decide
you are going to try and lose 300 on every example of the bean trade but follow rules one and two
correctly, do you think you could do it? I mean lose 300 on every trade. Of course you couldn’t lose
300 on every trade unless you have a real bad trade program and entry signal.
Most traders think the other way of trying to make 300 on every trade and then the losses become
larger than any possible gain. Not only the larger losses but the failure to add to correct positions is
overlooked.
I challenge your thinking on trading as a game of limiting your losses! By properly knowing your
worst case loss you can actually do better than you think because your trade plan also has a criteria
of telling you when you have a proven correct position based on market conditions. This means that
often times you are taking even smaller losses than the worst case and sometimes removing
positions which don’t prove to be correct at a gain.

ALS: Phantom I know you wanted to bring up many points and I know you have given a time limit
on this. We will continue to drive down the road and look at the signs along the way from our
traders. It was great to be able to get together on this again. What are your plans forward?
POP: Art, I intend to watch the forums, the web sites, complete my other projects and when time
permits to continue what we started with our traders! No time limit but I do request patience from
the readers and our great traders.
I would like to change the image I gave our wonderful trader friends. I have learned so much from
them and what I hold highly from them is their loyalty. So much good input from all of them. I
don’t want to leave anyone out so I won’t name them. I know that seems like a cop out but it isn’t.
If only traders can imagine how important it is to being a good loser than we shall see many more
Phantom’s appear in the future. I am beginning to see a few already.
ALS: Thanks Pop, you have the rest of the day off.
For those of you worrying about the year 2000 problem, hexadecimal is a base 16 rather than base
10 number system that works in many situations. There are many solutions to the problem and I
hope this gives you a lead on 2000 thinking. 256 is a larger year base than 100 and with just a
conversion program in assembly will correct many software problems. They are talking billions on
this problem. Go get some of it and then trade big time!
” You must concentrate at all times on keeping your losses small and never on what you expect to
make but on what you expect to lose. “—POP
Editor’s Notes on Knowledge & Research
Phantom has asked one of the most admired and great editors of all time to give his hints to you on
knowledge gathering. His suggestions on research can save you one of the most precious
commodities – TIME.
There is nothing like putting someone on the line without their knowledge but Phantom felt it was
worth it just this one time.
TEXT FROM TOP EDITOR IN FINANCIAL MARKETS OVER PAST TWO DECADES GOES
HERE
There is a lot to be learned from one of the best editors of all times. His experience in research
and knowledge gathering is difficult to match in the financial field today“—POP

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.


Chapter 24 – Your Trade Program

Chapter 24 - Your Trade Program

Phantom indicated that it was time to conclude the talk forum part of Phantom’s Gift and move to
the sidelines in order to complete the first book of his give back project. There were a few
hesitations on the forum but only because of not knowing the further plans that Phantom intends to
complete.
The project has been very successful and well received which pleased Phantom and exceeded his
projections. Several comments were made to the point of wishing for a never ending dialogue
between Phantom and the participants on the forum. Phantom felt it was time for him to stand on
the sidelines in order to see the results of his efforts.
Trading is an extremely difficult business and research is always a demanding part of each trading
day. While Phantom needs to complete a few other projects, none are as important to him as the
efforts he has given on seeing the small trader compete successfully with the big traders.
There are so many turns and new frontiers in trading and only a few have been covered up to this
point. For a trader to know what is required in order to stay in the trading game for a long period of
time is most important and above other aspects. But without the other aspects such as a trading plan
and a system to generate trades, trading can not be completed properly.
There are so many trading plans and systems and while one trader may be able to be successful with
a same system, another trader may have failed to master the same system due to different entry and
exit points. It can be a very fine line.
With Phantom’s rules it is a more even call with the same system. This is what Phantom intended to
see in presenting his trading rules. To more or less level the playing field and improve the standing
somewhat due to the quicker actions required by the rules than actions of the deep pocket traders is
an improvement for the small trader.
The small trader can not survive unless equity is preserved first and foremost in trading. It can be
done but must be done with the skill required. This requires following closely the rules and
knowing oneself. It is difficult to teach this method without a trader’s own experience pointing the
need for the rules which require the trader to run like a coward in order to survive in the long run.
It isn’t too much different from a professional basketball game in that if you missed your shot, you
are running in order to defend at the other end of the court. You know that you will have another
chance if you can continue to keep the opposing team (the market) from running up the score on
you.
It must be instinct and practice is required in order to make it a reaction trained by your practice.
Knowing the rules is just not enough. No one tells a good trader to make a trade, as it must by your
own thought in order to properly follow the correct rules. Same at getting out of positions which
don’t prove to be correct positions.
We proceed with a trading plan after we feel that our behavior and reaction to market conditions is
in our total control. As long as we are prepared for any outcome and adapt our behavior to all
possibilities can we start to follow a good system.
Phantom wanted to give the important step beyond the critical starting rules in order to give traders
a better outlook in their trading. We include some of his writings over the years of his trading on
such things as how to look for an entry and improve the edge upon entry. We shall look at ideas on
system entry and trade signals.
All traders feel there is a system, which is best. The best system is going to fail at one time or
another and that is why we need Phantom’s rules. Bad systems can turn some good trades and be
correct at opportune times. Many of these systems have drawbacks.

Many systems assume that you will have the funds to cover what the back testing indicates is
required to margin your trades. Phantom has studied these assumptions and has his own ideas as to
the difficulty with using back testing as the criteria of system creation.
Often system traders fail to see the entire requirement when emotion takes a seat on the team bench.
This absolutely will defeat the system. What system is best? Phantom has thoughts on which system
you might use to better survive. Which ones are they?
Most of the book has required a couple of readings in order to interpret a lot of what Phantom has
indicated in his insight. It was by no accident that his insight prompts your own questions and
searching. You are with us so far. That was the most important step.
You are doing your own thinking. From here forward it will be a little easier for you. It is
discouraging to have a market take funds away from you and your family. The more soul searching
you do about what the market is waiting to show you the better your outcome will be in using the
rules properly.
Take a break, have a favorite drink or refreshment and get your note pad ready to make your own
notes. You are going to draw your trade plan according to your goals. Phantom will have some
good suggestions about your trade plan.
Your trade plan will give you your entry signals. Phantom’s rules will give you your exits and
drawdown protection. What else is there? If you have the rules for protecting your funds in a losing
game and you have a good plan for putting on good trades which you exit if not proven good trades,
you have it pretty well covered.
It is easier to look greed and fear in the face with the proper frame of mind. You have to be your
own motivation expert in your trading. The motivation must be tilted toward the rewards of keeping
big losses out of your account. Not just today but every day you trade. You must look at a big loss
the same as you would a personal bad habit. It is undesirable to ever have a big loss show on your
statement.
Phantom is going to look at your statements. If he sees big losses in your account, you will have to
answer to him personally. It is his business when you have a big loss because he is going to see it in
your face. Your tie will be too tight, your face red and you will have a miserable day. POP wants
better treatment for you in your trading. He cares and you must care each minute your position is
against you.
Can you make that good fortune in trading? Only if you lose small and never let turn around
markets take you for a ride. It is your question to answer. Phantom has no one to answer to and
nothing to prove to anyone. You must prove to yourself. Let your performance speak for you. It
should not take you more than six weeks to know for sure.
You can expect to be on your way not because you made some money but because you don’t let
much money get away from you. We have known some big winners and winning was easy for them.
Only thing they forgot or never knew was that though it isn’t difficult to make money it is difficult
to keep it. There is only one way to keep it.
Ok if it isn’t difficult to make money, why don’t you understand before you make money that you
must keep all money at whatever cost you can create with the word small. The biggest loser I ever
saw was a trader who had a few outstanding months of trading in a trending market. You may have
heard of the Hunt silver slide. It can happen to anyone who does not respect the reward of a
SMALL LOSS! YOU MUST see the reward of a small loss. Don’t let it be your forgotten advice.
Let’s look at some of Phantom’s writings and his updated notes as to his ideas on your trading plan.
ALS: Phantom, I’ll transcribe these into our book and have you verify the points, which I don’t fully
understand. Though I have known you my entire trading career I still don’t know everything about

you. When you put thoughts on paper it seems different for me than when we talked answers back
and forth.
I am more like the readers now, as I must read what you wrote instead of what I wrote from your
spoken insight. Do you think this will make it easier for the readers by doing it this way?
Phantom of the Pits: You bet, Art! I am exact in my thought when it comes to making a trading plan
for our traders. You go ahead and put it in the book.
ALS: Okay, here we go!
POP’s (writings): In every trading plan there must be an element, which gives you the edge. It is
that edge which can change the outcome of your trading career. In the pits it is the edge the locals
get for putting on the trade which is their advantage that allows them to trade for a longer term than
if they had not gotten the edge.
My rules are not the plan but the rules are a must in order to have a plan to work. To me the rules
are the most important part of giving me the confidence I need to know that I can and will survive
in my trading. Survival is the most important point of any plan. If I know I can survive then my
plan can be much easier to design.
While my plan may seem advanced to others, there are only three ways for a market to go. I know
you are going to ask what is the third but none the less believe me! There is a situation coming up in
a few days and every trader off the trade floor is not thinking the trade. My writing points out a
third way the market can move
I didn’t want to put this on the talk forum because I didn’t want to confuse new traders with my
thoughts on this point. I am not going to ask you to interpret what I am trying to say. I am going to
tell you what I mean here.
A good trading plan must have the third way a market can move included in the plan. Is the third
way a market can move is the surprise side move. No not exactly!
The third way a market can move is the edge we want in our trade plan. A market that goes with the
trend and then breaks support or resistance, which also flags traders to get out or cause them to get
stopped out, will turn into your friend. The most powerful signals in a plan are the ones where the
market has moved both ways in a trend and are showing reversal to the big build up of trend
followers.
I know of a couple of funds that have been proven winners due to this one input of their plan. Sure
there were other criteria too.
Oh you say but you are the great trend follower of all time. What is wrong with throwing in the
towel early in a trend? I’ll tell you what is wrong! Not throwing in the towel early is what is wrong.
Big losses are the reward when you have convictions in a trend beyond support or resistance. You
got it, the market trips and you must take it. You need not only to take the profit but also to head the
other way. You need to make criteria for this situation in your trade program.
In your trade plan we now have two situations which can give you the edge. The first is the surprise
side and the second is the third way a market can move. The surprise side is an event, which takes
place during the day, and unfortunately seldom allows the public to benefit from on entries. Mainly
because they are already the other way when it takes place.
The public seldom reverses their position because they seldom get out at the right place in the first
place. You must use this knowledge to your advantage and not be caught up in the same situation.
I don’t care how bullish or bearish a position you have established appears to be, there is a place in
every day when it is going to be right to be out of that position. The odds are that you won’t hit that
place most days. You’ll find that it seldom happens when expected in trends. That is why you must

have that exit planned during every day. You must be prepared within your trade plan to use the exit
if needed.
How do we put this into our plan? If you are using Point and Figure charts, you can often see the
45-degree line of support and resistance. A good trend will give you several attempts at the support
and resistance lines. After several attempts a reversal day will break through the line. At that point
you will have stops and the stops can generate more orders coming into the pits. As the price moves
through it will generate more orders to exit.
You don’t want to stay around long after the first move through the line. Even if it does reverse back
again, you usually will have a good clue that you did the right thing by offsetting as consolidation
starts to take place if the line holds.
Some of your biggest trends and moves come from the breaking of support and resistance of a
strong established trend. Put these criteria in your trade program. Even if you were to only trade this
edge, you would be making the best moves of your program.
Let me qualify this for you a little more. This is the third way a market can move. The market must
have moved in the direction of the trend and then broken support or resistance. It is not the same as
the surprise side moves.
The surprise side move is different in that it can be caused by a reversal of a market after going the
way of a report and then failing. The surprise side also can be when opinion is one way and the
market has no more traders to re-enforce the opinion with positions so the market fades the other
way.
You must have a surprise side plan in your trade program at all times also. The surprise side over
the years of research for me has always been the opposite way the market opened in all markets
except one. It is up to you to search that one market out. It tells you something about taking a
diversified trade plan by spreading your trades over several contracts. If you trade five different
futures and you see that only one can be the one, which I expect to be a surprise side in the direction
of the open, you have the odds in your favor in your thinking.
I don’t want to mislead you on the surprise side. What I mean is that if the market opens higher and
closes higher for the day but lower than the open, it is what I call the surprise side. It is the same on
a lower open and it closes higher than the open then it is the surprise side. Go do your research on
the open and closes but not in respect to higher or lower on the close but in reference to the open
only.
The big money is made on the surprise side. Why do you think that is? It is because the
professionals are not only getting out before most but also going the other way when the rest of the
trade starts getting out on stops.
You should make yourself a data chart and research this knowledge to confirm it before you put it
in your trade program knowledge.
First the market opens and last the market closes in reference to the open. This is your data research
required for this input. What do you find over the last six months? What do you find in a trend and
when not in a trend? Chart it or data scale the information and use that in your program.
You see opening prices are good indicators of where the market will close in relation to the open in
certain market conditions. It seems to have certain creditability due to the way the market
information is reported in newspapers to off floor traders. Some traders only get the open, high, low
and close most of the time.
Opening prices are bad news most of the time. There are times when opens and gaps are with high
creditability in predicting the close direction. Learn them from your technical research and use them
in your trade program.

During a surprise open there is little you can do if you are already the wrong way but to protect your
position. If you are right by mistake of the surprise open, consider yourself lucky but listen to your
plan just the same. If your program said to offset after a higher open and you get a surprise higher
open, do it and then re-enter your trade when you have the criteria met of your program met.
Many times an extreme open will give you support at the opening range as the gap indicates to the
professional trader an invitation to continue to move in the same direction as new orders to follow
continue to come into the market in waves. You must consider this phenomenon in your trading
plan and input it carefully in your program.
It is just as important to not make a mistake about good gaps on the open. Watch them and research
what happens with them. There will be a two-sided market in those situations but only because
there are always many traders willing to take a profit. Use that as we have said in the past to your
advantage. These profit takers are your friends in these situations.
Gaps are certainly a study needed since they are your opening indicators and can change most
trading plans immediately. Use the information you gather on gaps to implement good trading plans
with the gaps being a possibility for each day.
Getting back to the third way a market can move is not as many think in picking tops and bottoms.
It is not picking tops and bottoms. Third way moves are your acknowledgments of what the market
is telling you about the existing trend. It is finding lack of continuance and is going to reverse
somewhere along the trend. It is usually after the support or resistance of the trend has been flirted
with and broken. Be aware of your support and resistance points in your plan each day.
Always take into consideration the possibility that the third way moves in trends are of the most
powerful moves in markets. If you have missed the existing trend for some reason you can always
be ready for the third way move out of existing trends. Don’t ever force the trade until the resistance
or support has been violated depending on which way the trend established is moving. Have your
points in your daily trading plan.
Most systems will not give you criteria other than expected entry points and exit points. Thus must
be further establishment of your trading plan. It is good to have a system, which you can have
confidence in, but you must complete the total trade plan in addition to it.
Seldom is a trade system a complete trade plan but there are some which are. On selection of a
system to trade I feel it is best to have an additional trading plan along with the system. Mainly I
feel this way because there are times when your system can generate a period of losing trades. You
must be able to filter as well as protect with my rules when this happens.
Look for a system, which allows you the opportunity to complete a trading plan along with the
system. You should be able to find the needed criteria to allow the dual situation in your trading.
Many systems writers say that you must follow them exactly at all times. What happens when an
unpredictable event total changes a market from technical to chaos? How can you continue to
follow a system on that event? This is why I like a trading program in addition to the system. And
above all else the rules of survival take priority over all.
So we are saying that the best system is one which allows you the best lateral movement in your
determination of trading throughout the day. We are also saying that rules of survival are much
more important than the system. But without the system you will have no positions established.
Many call money management the same as we call the survival rules. Don’t rule out either
explanation of survival. You can only succeed if you trade in the long run. This is not the same as
saying long term trades. Long run trading allows you the opportunity to be around for good moves
in both the present and the future. If you trade just for today you had better just buy a lottery ticket.
When you select a system there are drawbacks to each one. Look for a system that back tests data
currently. What I mean by this is that it must be current in the last six months or so. What good is

the system if it takes the past 50 years into consideration but not the current six months, which
reflect our current market conditions best. I like to see a system back tested in two stages, one for
lots of data and one for the past six month data.
If you design your own system compare both sets of data from the long term and six-month data. If
they conflict you must refine the system somewhat to a better signal generator. If you can’t refine it
better then use both sets of signals and throw them out when they conflict. This can be a good filter
for you in your trade signals. Who is to say that times don’t change in cycles just as do market
swings? Use it to your advantage.
More times than not when you have conflicting signals you will be better to disregard them. Your
powerful moves come when all your signals tend to agree. Don’t make the mistake of having too
many indicators as the more you have the wider the road must be and the more difficult it will be
for you and you may over stay the market because you entered too late.
Too many indicators will cause you to enter too late many times. This also leads to staying in
beyond the proper time. Most systems will not give you a good intra-day reversal signal, as they
tend to be more day to day signals. You need your trade program to flag you on third way moves in
trends at reversals.
Don’t be a hero and don’t use a system, which requires you to be a hero by holding on the extra day.
If you do you will find yourself missing the reversal signals and catching the bounce instead. This
will change your outcome and sometimes invalidate your ability for the particular system you chose.
This is another good reason you should have a trade plan along with the system chosen.
I have covered the most important aspects of what you should include in your trade plan but this is
now way complete. There are unique inputs from each market you want in your system like
seasonal tendency, volume, open interest and other factors which are unique to each future contract
you trade.
Your plan can be generic with minor specifics of each future. Keep in mind that you still need a
fairly simple program. The system is what will be complicated. It may include several moving
averages or other indicators. Try to not use too many lagging indicators. You are talking about
future and not past. Stay closer to leading and forecasting in your system choice. The reason I say
this is because quick and extreme moves take place in trading.
What kind of signals do you want to trade? Mostly you should use a trade plan to keep you from
chasing markets. Your system may require you to buy strength and sell weakness or buy the open. I
don’t like this type of trading anymore. You must have a filter but keep execution as part of the
trade plan. You can have two possibilities set as long as one of them guarantees that you do indeed
follow your signals. It will only change and moderate your entry places.
A system can not know what the market is doing after entry. Your trade plan can. That is your edge.
It is not second-guessing but intelligent gathering upon entry. Systems may be giving you a signal
again and again. Does this mean to add at every signal? Your trade plan must address that. I have
liked the three add on points. Use your own ideas.
I hope this helps you with your trade plan. The ideas are unlimited but you must narrow them down
and keep your plan relative simple.
–Phantom of the Pits–
Let’s look at some of Phantom’s writings and his updated notes as to his ideas on your trading
plan “—ALS


Chapter 23 – My Order Was Filled – Where?

Chapter 23 - My Order Was Filled - Where?

Phantom has always been anxious to address what the traders questioned in trading. It was with
great hesitation that the subjects of order placement and fill prices were finally addressed. He felt
more research on his part was necessary. There are so many different situations for traders when
they put in orders for their trading.
Some of the questions appeared over the months on the Trader’s forum. Many traders would get
what they felt were bad fills for one reason or another. Phantom knew it was mostly
misunderstanding of how a market works in volatile situations. This lack of understanding due to
little known knowledge on the subject disturbed him in these situations.
It seems there is a vast opinion by most traders that the brokers are to blame on most of their bad
fills. This misunderstanding is a great handicap to traders unless they are aware of what causes bad
fills in volatile markets. We shall present some of those situations with the explanation in order to
improve order placement by traders.
Little research is done individually by most traders and Phantom felt this is a big mistake. Phantom
has always done his own trace of order placement, execution and reporting of orders to and from
brokers in order to know the integrity of his placement. It gives him the ability to know what the
edge can or can not be upon an order placement.
Logging and tracing placed orders early in a trader’s career affords the opportunity of knowing just
how exact an order must be placed. An order placement for market orders, price orders, and stop
orders will have different urgency and slippage at various times due to current volatility at
execution. Understanding changes in volatility is critical in knowing when and how to place each
type of order.
I asked Phantom to give some insight on order placement before we got into particular experiences
and results of traders. His insight is based on experience and knowledge of his many orders in his
career. Phantom is the only trader I know to have been stopped out limit up and limit down in the
same day. It was early in his career and he takes full blame for not knowing early in his career the
situations, which can cause such slippage and fills.
Some of the important points on order placement and price fills are seldom talked about or
considered. Phantom felt many misconceptions were important to address as well.
ART SIMPSON (ALS): Can you tell us some of the most important insight you have observed in
your trading career on order placement and market prices.
PHANTOM OF THE PITS (POP): Let’s just start with a normal day and look at an opening, daily
range and closing. Regardless of what your order is to be, you will find that there are times during a
day that liquidity will be better than at other times. That is really the reason for different ranges
each day.
I remember in the early 70’s watching a trader bid the high of the day consistently at each new high.
I asked that trader why he would buy the high of the day. His answer was that there would be many
highs during a day but at the end of a day only one true high of the day.
If you think about that answer you’ll realize that it is true. Each time you buy a high, it is possible
that there will sooner or later be another new high for the day. To use his method of buying new
highs you would have to be a floor trader in order to use my rules but it has merits.
A reason I say it has merit is because the thin part of markets is at highs and lows. You’ll see this if
you look back on volume at the end of the day. When the markets are thin, they can be pushed
further until liquidity once again enters the markets. Even though markets are thin at the high and
low of a day, during the day there will be many new highs or lows which are not the high or low
showing at the end of the day. We can never know for sure which high or low during the day is the
true high or low for that day.

I got a kick out of some posts on a forum as one was headlined something to the effect that the
locals were gunning for the stops. There are some misconceptions in that thought. Locals don’t gun
for stops it is just how they trade. If you knew the market was thin at highs and lows and were
positioned the wrong way, What would you do if you were a floor trader? It is the traders who are
wrong which push the stops before the stops are hit. In other words you don’t want to have to buy
many ticks higher if you are wrong and approaching the high of the day. That is what the public
tends to do by putting their stops above the high for the day.
I certainly don’t think the forum participants were wrong in their thinking but only having fun with
the way the markets tend to act on their positions at times. They have really hit the nail on the head
and it just takes some understanding as to why it seems to be that the locals are gunning for the
stops. Locals are good at taking the smallest loss possible and going with the flow. It is an
advantage over the public traders.
To understand why markets act as a system which tends to prove the most people wrong in any one
day is a good start in correcting bad entries when trading. Traders are correct in thinking that the
stops will get them out and then the market will just turn around and go the way they had thought
previous to being stopped out. The fact that it happens is reason enough to devise your trading plan
accordingly. This idea is especially useful upon planning entries.
I never really liked stops but trading off floor creates a problem for the public because they
certainly need protection from being hurt from extreme moves. Stops do not protect well in choppy
markets. Trading plans can be improved by knowing how stops work and what far too often
happens.
If I get my signals of what I want to do, often I can see a new high for the day in the last hour of the
day. If I have my signals telling me to sell, it often times will say to sell the new high in the last
hour with the requirement of proving that position correct being that the market must spend little
time at or above that new high. This is not saying to take a loss on a stop but saying that the new
high is a move created by day traders, locals getting out or bad buying creating the stop run toward
the end of the trade day. For the position to be proven correct, the market must prove that the reason
for the new high is just as I previously described.
Markets slip through stops on the bottom toward the end of the trading day also because of the day
traders, locals and bad selling that push the stops which build up below the markets. This is natural
in trading and is not recognized often enough by traders, especially new traders.
Another big disadvantage of stops as I see them is the feeling by traders that they are protected from
adverse moves. When the market is liquid stops work fairly well. To often when an important report
comes out like the monthly unemployment report, markets such as bonds and currencies will do the
long jump. There is no liquidity for sometimes as much as several support or resistance points. This
means huge losses in a matter of minutes until the stop order can be executed.
Keep in mind a stop order is a market order whenever the price is hit. Most traders blame the broker
for not getting the stop order filled at the stop price. How can they if the market has no bid at your
sell stop price? How is the broker to fill your order on a stop when every order he has is the same
stop order price and there are no traders or orders willing to take the other side? Everyone sees the
same chart. Stops are grouped in the same place.
After a big report, the stops are free game for anyone who wants to squeeze as much profit as they
can. If I am correct, I know that it will often take three waves of effort before I have to worry about
the market reversing and taking my profit back. Why shouldn’t I bid the lowest price possible after a
report my way? If the market didn’t fall substantial on a big report I would be adding to my position
until I see the bad selling. The bad selling is the stop selling after a report. Same on bad buying as
the bad buying will be the stops buying at the market.

By understanding the drawbacks of stops you can come up with a better suited trading plan to
protect yourself. Rule one does just that. Your criteria must include getting out if you don’t want a
flip of the coin at times. Big reports are those times.
Another aspect of getting your order filled way out here is when you go at the market on the open.
Order fills look bad to some traders just by the way some of the quotes get reported. Some quote
machines show the open price the price, which was the night trading open price. The next day the
open may not be anywhere close to the night trading open.
Many trade systems signal a position to take after the previous days close is used as data in the
program and position on the open. This alone can skew the opening price by good margins of price
difference. If you are buying and you are on one side of the pit, you may get a good fill but a large
order may bid above your order in another part of the pit. The broker’s job is to buy the offer when
it is a market order on the open. They don’t have time to look for the cheapest price when there are
numbers to do. They take what is offered.
If you wanted to buy a computer and you did, you bought at the offer price. Why didn’t you wait six
months until the price was half as much? It is because you wanted it now! It is the same in trading.
Your market order on the open is saying that you want it bought now. Not after it went down or
went limit up or tomorrow after a sell off.
Just because the opening call was four cents lower and you put a market order in on the opening are
you going to get the low of the day. You might get the high of the day but most likely never the low.
You may even be filled five to ten cents higher on the day if news changes quickly enough. Or in
Orange Juice, you might have no sellers at all on the open for several minutes.
Orders are entered poorly more due to lack of understanding of how the market works at certain
times in getting orders filled. It is seldom because of a mistake on the order placement by the broker
or executing broker that you got filled way over there.
Another misconception of being filled in left field on an order is that the thought is that the broker is
trading for himself. I watch this myself and can attest that what I see has never been beyond
providing liquidity by a broker in poorly liquid times. Brokers are position traders. They can not
attend to being day traders or scalpers. It is their primary job to fill your order first. The brokers I
have seen do just that! They fill your order first.
One more aspect of being filled at what looks like a huge slippage is the delay in quote prices and
the delay in getting your brokerage runner to get the order into the pit in timely manner. They are
allowed a certain amount of time in getting your orders into the pit as it takes time to go to the desk,
take the order to the pit and hand it to the broker who is filling other orders already. Repeat the
process again as the runner looks for your order in order to report your fill price back to you.
Sometimes you don’t know that you were filled because the runner can’t find the filled order before
he has to run another order to the pit. Let me give some insight on this situation. If you must know
if your were filled, CANCEL the order! This way the runner must require the broker to pull the
order from the deck. If it was indeed filled it won’t be there and the runner will have to look for it.
Sometimes new runners don’t know to look over in that pile for the filled order. Every runner starts
a new career and is not good at it until experience becomes the teacher.
There are times when runners are seeing so much volume that the floor managers will tell them to
do the most important aspect of their customer business. That is getting the orders into the pits and
worrying about the fills later.
Often confidence in the way orders are routed and filled by customers and a new trader is never
above a one on a ten scale. You owe it to yourself to see the flow of orders and understand the strict
method, which must and is followed by the commission houses and the brokers. Believe me
integrity is as good as it has ever been.

I remember when beans had gone above 4.44 for the first time in history and I fed orders to the
floor to sell out my longs as they hit 4.44. My fill was at 4.32. I did my research and checked all
time and sales and price quotes that day. I know when I get a bad fill why today and everyday. It
has never been because of the broker not being alert. It has always been because I was not in the pit
and did not know what was going on for anywhere from two to ten minutes before my order was
filled.
Art, I know we want feedback on this so we can address the input from the Futures Talk forum. I
never really had my heart into this chapter as it seems so cut and dry for me but I know it is
important to the traders. They must understand their fate when blame is quicker than answers in
difficult market times.
ALS: Ok traders, Phantoms, paper traders, brokers, newcomers and us old folks alike, let us have it!
Your questions and observations please!
Note: We had some good feedback from R.H. and it seems fitting to put it in this writing. Below are
R.H’s comments.
Phantom… thanks for another insightful chapter. Unless you’ve been there or had much experience,
you tend to follow the notion that the little guy always gets the short end of the stick. This chapter
explains the process of the markets for better understanding.
No specific comments other than paraphrasing my understanding of your words.
On tracing orders, is there other info or stats that one can request other than time and sales and price?
On “gunning for stops” it’s my paradigm and others that running the stops creates a quick bounce
and once hit and expanded, the locals offset and is done as a tactic in itself. Your explanation
seemed to be that it was not necessarily a concentrated effort to run the stops but rather floor traders
positioned wrong and as they offset near the thin areas, the market pushes thru the stops.
On markets proving most people wrong and hitting their stop and heading in the way they had
thought. Rule 1 was made for this action. If you position and the market goes against you, rule 1
offsets the position allowing for re-entry (in the last hour, in this instance) rather than positioning
once with a stop just beyond the daily extreme. So rule 1 allows us to use these areas to re-enter
again or enter (i.e.. day & 1/2) rather than lose the position and see it go our way shortly afterward.
On stops and a big report. Any other ways to see the bad buying or selling other than the looking at
the same chart everyone else looks at?
Thanks again for providing us clarity of the true workings of a market . . . RH
ALS: Phantom a couple of questions from Randy we should answer. His question on tracing orders,
is there other info or stats that one can request other than time and sales and price?
POP: The best way to trace an order is to know the phone clerk by name who takes your order and
to identify the runner who takes your order into the pit. For me this is pretty easy to know because I
am pretty well known for requesting all the information I need to keep the integrity of my orders
going into the pit.
I like to have the information because I like to prove to myself that the myths of what happened to
an order are just that – myths. Most of the time other traders who put orders into the pit are not
aware of what has happened because of fast markets or newly reported information. They only
know that they got a bad fill.
Well bad fills all have a good reason. Every time I check to see the reason for my bad fill, I have
verified the circumstance that it has indeed been at my own hand that I got a bad fill. I didn’t know
at the time when I placed my order that I didn’t have the timely news or what the liquidity was at the
time. How can we always know the situation at all times? We can’t!

You see it is easy to use a crutch in blaming some reason other than a fact, which we don’t know at
the time. It is wasted energy to think or fill was other than with the highest integrity. Even though I
could fill all of my own orders, I know I can do a better job giving the order to the professional
broker. Now most traders don’t know that.
On tracing orders most of the time, you can get time and sales but the true event is that your order if
a market order can be filled anywhere within a time limit of say two minutes. Now have you ever
seen a market move in two minutes? Of coarse you have!
A market can move quite a lot in two minutes. How do you win the game? If you put enough orders
in you will find that it tends to even out. If you put few orders in you will find that you tend to get
the short end of the stick as Randy suggested. The short end of the stick is that you will put your
orders in just as the market is changing direction and starting to go against you.
You know what the market is going to do and it has already done it by the time your order reaches
the floor and you got the slippage from the market reaction. The quotes you receive are not the
same as the bid and offer in the pit when you put the order in. There is always a lag. I can stand in
the pit and watch the tape and be behind as much as minutes at times. I bid and offer according to
what is going on around me in the pit. The public can not do that. At times you are better off with
resting orders but execution is always the most important part of order placement if you don’t trade
large amounts.
Ok, time and sales is it and the rest of your research is on your shoulders to check your broker,
runner an phone clerk. A good commission house will do this for you but not always when the
market is open. Do it when the market is closed and keep your own records. I consider it as if I am
hiring the people who work my orders both into the pit and in the pit.
ALS: What do you think of Randy’s ideas on his interpretation of running the stops ideas?
POP: I don’t mean to remark lightly but Randy has a good handle on the correct interpretation of
what I meant. I can’t really add anything to his correct ideas.
ALS: Another question for you on stops and a big report. Any other ways to see the bad buying or
selling other than the looking at the same chart everyone else looks at?
POP: I see the reason for Randy’s question on the bad buying and selling. In the pits it is pretty easy
to see what is going on. Off the floor it is a sense that we have to be alerted to in our thinking. We
must know the possibilities of why things happen the way they do in markets. People will trade like
herds at times and when the herds are finished in their positioning the market takes a breath and the
move start to fade.
It is the lack of follow through that tells us when we have seen bad order placement. When we are
away from the floor we must be aware of lack of follow through. It happens at the highs and lows
because of momentum trading which causes the moves to be quick and sometimes cause artificial
moves.
My suggestion is to be alerted as to how quick a move happens and then to watch for the follow
through in a proper amount of time. Each market is going to take a little different reaction to such
conditions.
Randy has my idea on rule one and the way I trade correct. It is the criteria of follow through with
the combined knowledge of what day traders have done up to the last hour which I use to help
generate a trade during the last hour or two. It is more powerful for me to get the bounce in
positioning.
In fact I have a chapter or two or even a book on the systems I use in trading. Of coarse I would not
give all of the inputs but enough to help most traders establish a game plan that would match mine.
ALS: Do you want to address any other situations on order fills?

POP: No, I don’t as I think it is research that each trader must make on their own and I can not give
them the results of their ideas of bad fills. They must slay that situation themselves in order to have
the confidence of putting it behind them.
ALS: You’ve been generous in helping me write Phantom’s Gift. I know the traders do appreciate it
and wonder what are the plans from here?
POP: You know I have been rewarded and as I watch posts of forums I see the affect this project
has had.
Art, I think it is time to see how Robbie does in his trading. We must step back and be the observers
again.
ALS: Does this mean this project is completed?
POP: Art, you know that the project is not completed. I see the CD on your desk and I see
Phantom’s Gift in red on the cover. I also know we have the best for last. Now who wouldn’t suspect
that? We want our traders to make it big. So far they have had lots of insight to interpret on their
own. You know the respect and expectation I have in the small trader. It shall happen that they are
the winners. For how long I don’t know but they will be the unexpected winners.
The next step is to point out where the pot of gold is. I recommend a good book on technical trading
to add to your library. It is called “The Handbook of Technical Analysis” and written by Darrell
Jobman. Unless you have seen Darrell Jobman’s new internet video I would suggest you take a look
at it too.
ALS: I see you can get the tape with Darrell’s book free. I haven’t seen it what do you think of it?
POP: First class just like Darrell!
ALS: Do we go ahead with Phantom’s Gift on CD with the rest of the story chapters? If so what will
it cost?
POP: Only if our traders want it! Production and distribution will have a cost. It’s up to our traders
as to what they think it is worth to them. That will be the cost. It has to meet cost of production and
distribution. It is all up to our traders!
ALS: What’s is next?
POP: I am a good observer. I know our traders. Some know me already! It shall get better for the
small trader. To keep my mask on makes me pretty obvious but the small trader has the best
advantage this way. Let’s keep it that way. Offers are offers but I want to see my little Phantom’s
grow up.
ALS: So Be It!
To keep my mask on makes me pretty obvious but the small trader has the best advantage this way.
Let’s keep it that way. “—POP