Chapter 16 - Your Comeback After a Big Drawdown

ALS – Is it true that you have saved the best until last in your insights?
POP – You will see as clearly as anyone can see that what I am going to tell you is the most exact
and best information you will ever get in your entire trading career. You can call it the best. If it
isn’t the best part of any book you ever read I will send back every thought to the cleaners.
There are great authors, great advisors, and great traders in the world of trading. There are great
editors, great reporters, and great teachers of trading. They all have a reputation. They carry that
reputation well. I could never carry a reputation for it would be such a burden I could never survive.
Great people have been able to deal with it like my friend John Denver, Don Gibson, Oprah and my
Brother. They have learned how to carry such heavy baggage in their lives.
Who I am is always going to be more important to myself than anyone else in the field of trading. It
must be that way in order not to interfere with my duties of success. It isn’t a selfish thing, it is just
that we must be in control first. You see trading must be the most important thing in your life in
order for it to be possible for you to become the trader you know you are capable of being. You will
take the blame and try to take the claim. But listen to me! You must never be so lost in your trading
to think that your success is because of you.
Art, you have dropped some hints along the way and with the events that have taken place. I can tell
you that my faith in the small trader is no whim. As I read your brother’s memorial to John, I realize
Harold said it as perfectly as anyone could say the true reason of what this is about. “Was I
somehow meant to be here? Was this moment just coincidentally mine for my imagination to make
it as I will or was I supposed to be a part of all this?”
I can figure theorems pretty well from the facts I am given and I can assure you that you and I have
learned a great deal from this project. We have learned more than we started out to give. We have
learned more than we could imagine in a lifetime. Do you know the mail and understanding I have
received over just the past two weeks? I know you have seen the response too. I have it calculated
that we could put no less than a 1024 page book together of those we can thank, for not our, but
their insights. It is overwhelming to think that we are alone. But being alone is what trading is about.
It is very lonely in the world of trading.
I can tell you that our experience has opened our eyes and unlocked our hearts because of what has
happened to us, by being a part of the Futures forum. What a step forward it has been to see the
speed of thought in our lives today. I believe because of the faster speed of communications that the
markets are quicker today and my rules are even more appropriate.
I don’t know why I say my rules anymore for I feel that they are suppose to be the small traders
rules now. I don’t mind or regret the route it took to give what I have to give. I am not capable of
carrying a burden. I have just lately learned what tears are about. I have been told, scolded and
directed to a different light in my life. It has all been for a good reason and I thank my new teachers
for all of the effort to let me be in their class.
You must accept my thanks and appreciation for your understanding of my weakness and loneliness
of trading. Only a trader can understand that darkness. I thought I was alone but find out that there
are many lights along the path. Those lights are our new-found friends who have walked the path
strategically placing their brilliance in order that we continue our walk.
What a JOY to received the oldest book of Shakespeare from New England. What a lesson to
received guidance form more countries than I have visited. It’s important to learn again the zip code
of every state in the U.S. It’s an important lesson to learn what I would never have imagined thirty
years ago of how thought and feelings could transit the world so quickly. This is my shock to new
learned knowledge.

Winston Churchill once stated that “This is not the end or the beginning of the end, but could very
well be the end of the beginning.” We’ll accept that. We have started! It gets better. There are more
of us now. I no longer shall have to walk around in a majority of one.
It is going to be difficult because there are those who would pull my mask off. But all I can ask is
for understanding. Understanding of why I do not want or mostly why I can not accept credit for my
insights. To answer your Brother, Harold, yes, I was meant to be here! As long as I know why I was
chosen to be here. Only others can me why I am here. I shall listen to them! They will give me joy
from their hearts and allow me to bow at their feet in appreciation, for they know more than I of
what need brings in my life.
Traders are a macho bunch but look at me, Art! Am I macho and the true image of what a trader
looks or acts to be in the world of finance? No, I am just a teddy bear in my own world of big
complications. I am a very simple man and a small image of God.
I no longer shall ask Harold’s question. I accept the idea that I truly am supposed to be here and I
have the responsibility to respond and give what I can give in order to satisfy my inner needs or my
boss. You and I know that it is the readers and the givers on the forums and all walks of life who are
the guides in our lives. We have learned behavior modification well and acknowledge that criteria
in our lives from here forward.
Just ask and you shall have the answer. But it is in your own thinking that the appropriate ration be
dealt. Consider your reasons and you shall change your destiny. It is Phantom’s duty to follow and
see that you don’t stumble for I have already walked the path. I do not lead and I do not follow. I
only walk your path in appreciation of knowing you shall grow and be the leader that is expected of
I need to show the starving how to take a bushel of rice and instead of eating, sowing instead and
learning the magnification of effort in prosperity. The starving are my traders who are my little
Phantoms in an overwhelming world of giants. My Phantoms shall become the leaders in the world
of traders. Not by my hand but by their own. You see they are the chosen ones to lead the New
World of finance. There are cycles and a new one shall surface. The little Phantom’s shall learn the
smile of trading in their lives. What more can you could you ever wish for them!
Art, I hope your wife isn’t getting tired of my stepping on her cats and it has been good to share
some of the sad times with you both and the traders who have helped us get beyond a period of
sadness in our lives. I know that someday your hill behind your house will be famous. I expect your
brother Harold has already re-named it. Take it to heart. It is not your hill. It’s only your walk,
which is yours. It is the same in trading. It is not our success it is theirs. Not by forfeiture but by
design that the student of a good teacher shall surpass the teacher.
I asked Alfredo if we could use his ideas on a post to convey more of what my intentions are. It
surprises me that others seem to pick up on what I am supposed to do than I do. Look at his post
and see what you think.
Can you forgive me for not sticking to the subject on this chapter?
ALS – I and the readers and traders understand where you are coming from and the importance of
what it is to walk alone. I know that you are pouring your heart out to us in an effort to show your
genuine appreciation of what has been given to you. I know that you are humbled again by what
others have presented to you. You have always prepared yourself for the possibilities as well as the
expected probabilities in your trading. When it comes to being an expert on everything, it just can’t
I know what a genius you are and how it sometimes robs you of simple happiness which most
people take for granted. To continuously move swiftly into the next step of life is true, as you have
stated thus far. Opposition to the unknown is high. You are no different than any other person or
trader. It is just that you have been given a different view on life, events and reactions of events,

which puts you where you are. You have been given a gift and you are the first one to accept that
you do not have a right to accept any credit for what you have been given. It is your time to give
So it takes us a little longer to get to our chapter theme? We have only shown what an ordinary
person the Phantom really is. You are no different from the inside out than any other trader. You
may see the line a little clearer as you said that you are the observer and you do see the line in the
sand. You have been patient enough to wait for others to see the line in the sand. And they will see
the line in the sand. It only needs to be pointed out to them that there really is such a line.
Phantom, I am not saying this because you are my long time friend but because it has been proven
to me. You are the light in the lighthouse for the future, current, expert, and novice traders, not just
in the U.S. but in the entire world. You are their hero because you dared to be great. And you are
great. Anyone who could teach Christine to sing surely must be worth something (said with a grin)
in somebody’s life! The fact of you Phantom is that you are a very simple man! That is what you
have always wanted to be! So Be IT!
POP – Do I have your wife sew my buttons back on? You have exposed me more than I could ever
have shown. I have to put it in the category of committing a random act of kindness! I do appreciate
what you are trying to do. Let’s just turn the tables a bit here so the readers know more about you
You see I know of your love for music and your first trip to Nashville in the 60’s and your collusion
with Floyd Cramer on your song. I know you didn’t make much on your first song and that trading
has been better to you. Maybe you should go back to your first love, no offense to your only wife
ever! After all what is important in life?
ALS – My brother is the singer and the musical part of our brain sides. It is funny how dare to be
great can change our lives. It is the same with traders. You hear! Go ahead and dare to be great!
Phantom knows it can be done and he is giving you the gift. Somewhere you will know how the
thank you will be directed.
I am impressed with the faith you have in the small trader. Just today on CNN I heard an expert say
just that same thing about the small trader leading the way. It is true you know that the word has
been written already. A small trader can and, Phantom if you are correct the small trader will make
a big difference in life. I use faith and not hope in your view.
You know Phantom if we keep this up we are going to have to pay the readers and the other traders
to pay attention to us!
POP – We know where we are going so what difference does it make if we can be real people like
everyone else. I think that for the first time in my life I have an outlook on life, which is a total
shock. I can’t get enough. I don’t care what my positions do tomorrow.
ALS – You never did! I guess that is why you are who you are. If the other traders who read your
insights can understand how simple it can be to not care because of your rules and just do it, – DO
IT! I mean as you say, it only matters what you do with your losers which determine your success.
I don’t mean to change the subject but the CD we are listening to now is Floyd’s “Losers –
Weepers.” Do you think that has any significance in this interview?
POP – Yes, Keep emotion out of it. If you do the right thing in trading, never be a weeper. Hey, that
is pretty good don’t you think?
ALS – 12:15 a.m. and I have your attention and tomorrow is Friday. I know you have big positions
on in the stocks. It is a long drive to Chicago! How do you think you will trade tomorrow?

POP – The same as always. I will sell more corn on the rally and cover when I am wrong. That will
be at 9:30 a.m. but first I will run the stocks. Lucky I covered on the close today. It has been down
and then up. I like it. More opportunity for us tomorrow, don’t you think?
ALS – Why don’t you just take tomorrow off?
POP – Ok, I will get out at the open or perhaps we can do it before tomorrow’s open with the night
ALS – How far do you think the corn will move if you get out tonight?
POP – You don’t even want to know! At least I am on the right side. We could see by going at the
market heavy. I can’t for I know better. Ok we’ll just have to look for a Saturday and Sunday walk
back to the top of the hill.
I notice that song you wrote in the 60’s is now playing on your CD. Are you ever sad you sold it for
such a miser of a penny?
ALS – You may not know how much I got for that song. It is the best price anyone could ever get
for a song. I have the greatest memories. I don’t make many of them anymore. Nor do you I bet!
POP – I’m pretty simple! My memories are no different that our traders or our little Phantoms I
mean. I hope Phantoms can grow up faster than children. I don’t want to watch from the sidelines. I
want to pass the ball once in a while.
ALS – Phantom, we are losing out here. I think this is all going to be cut from the book. Maybe we
had better call it a night until we get back on the subject.
POP – Ok, we can cut our losses. We will start over again. I just want you to do one thing for me
tonight before I head back. Put this on the Futures forum and let the other traders know I am one of
them. I’m no different. I’m just a bigger size!
ALS – Ok you win again. I will be up until you get home. See you for the true part of our trading
after the big DD.
POP – I’m going to take that bushel of rice to starving you now! First I would like to go to Lake
Tahoe for the best Chateau Brian. See you beyond!
ALS – We will get to the point soon!
Note: Alfredo posted the following in reference to his parallel of Phantom’s rules with his loved
game of Chess as it relates from his view.
[top] [post reply] Date: 30.Oct.1997 (Thu) – 06:03 Author: Alfredo A. email: mailto:
I consider myself a weak amateur of the game of chess. But an amateur (in the sense of lover)
nevertheless. There are some fundamentals that even beginning players know that they must
execute properly in order to stand a chance of at least forcing a draw against a better player, or
checkmating a weaker one.
1. The opening is critical. You have to be both aggressive as well defensive and work your pawns
looking ten or twelve moves down the road. Some games are won during the first five or six moves.
(Phantom’s Rule 1 ??? )
2. Next comes the consolidation. You develop your horses, bishops and towers and protect your
king. You are preparing your pieces in such manner as to later on permit you to launch a successful
attack. You explore the weaknesses demonstrated by your opponent. You try to tire him as much as
possible. (Phantom 2 — press your winners ???)
3. If possible, the final attacks, and checkmate. Against a stronger player, a draw will do. (Phantom
3 — this one he owes us — when to liquidate and take your profits ???)

Battles are battles, be they on the air, sea, land, chessboard, or the PITS. Is this a very futile
Any chess players out there to correct/improve my reasoning?
Good trading
ALS – Phantom, I think Alfredo has you pegged pretty good! Did you ever play chess?
POP – In my younger days I would pride myself in chess but as I grew older, I never felt I had much
time for the game. I should play more chess to relax but there are so many things to do now.
ALS – We’ll cover your chess matches someday but for now let’s go to “trading after the big
drawdown.” Why do want to put this part in?
POP – First it was a question that one of the forum followers posted and I want to answer their
questions. It is a good question. Second, most traders wouldn’t be reading this if they had never
been faced in a similar situation as a big drawdown. It can happen in so many ways.
I am not going to judge why a trader would have a big drawdown because it has searched each of us
out at one time or another. A big drawdown is what will stop you from trading. I am going to
approach the reason for the big drawdown as if a trader had fifteen losers in a row! I am not going
to judge any other reason of character as to why the big drawdown. I want you to also forget the
reason for you misfortune from here forward.
ALS – We both know that holding a loser too long is the biggest cause of the big drawdown! Why
are you so kind?
POP – Really, this is the best part and to go forward is what we are after here. We don’t look back
except to learn from what has happened in this case. Another reason I want to approach the
drawdown as you having a series of fifteen losses in a row is because that is an event every once in
a while.
We are going to recover and I shall show you how to recover after the big drawdown. I am pretty
intent on not giving you specific trading plans or signals from my programs but I do need to give
you the way to recover. To do it correctly I will have to give you a good suggestion to take in your
recovery. I want you to research on your own and take the suggestion only after you have
understood the suggestion correctly and can approve of what I say to you on your own. In the end it
will be you who make the decision to make the trades. Therefore, please verify your data. It leaves
some interpretation to you the trader in your trading program.
To start we are going to make sure we have enough funds to continue to trade. If you don’t really
have enough funds then you should postpone until a later date. Notice I did not say you had to quit
trading! We all quit trading for some reason. It is just that your reason is different at this time. Ok
we proceed now that you are satisfied you have enough money to continue to recover from your
past misfortune.
I want you to go into the next stage of your trading by accepting an assumption. I want you to
accept an assumption that you have made fifteen trades in a row, which have all made money.
ALS – I thought you said we were going to assume the big drawdown was caused by fifteen losing
trades in a row. What do you mean now that you say assume you have fifteen trades in a row, which
have made money?
POP – Frame of mind is what I am changing for you by asking you to make an assumption that you
have fifteen winners in a row. The reason I am asking you to do this is because you will be more
careful if you have had fifteen winners in a row. If you assume you had fifteen losers in a row, you
will be sort of careless in your thinking by expecting that surely you won’t have many more losers
in a row.

Your frame of mind with fifteen winners in a row will put you on the edge of caution. I want you to
be on the edge of caution. Or we could call it being alert to quick market changes. You can no
longer afford to make a bad trade and now that puts you at a disadvantage. We will turn that table
from here forward by doing the following suggestions.
First you must know what your risk to the dollar is going to be on each trade from here forward
until you get to a point of recovering from your big drawdown. How many ways can you know your
true risk to the dollar on your trades? Actually with options you can but only if you are a buyer.
There are other ways to do this too by using butterflies in future positions by using three contract
months but this is too advanced for you at this time so we will stick to options.
I don’t like to give trading advise but it is imperative at this time that you understand at this point,
we are talking about an exception. You do need some advise as to where you can find the correct
road. You know what you want and I am only giving you directions on which road has what you
want along the way. I am not going to give you specific advise but a method of turns and directions
to you in order that you get on the road and headed in the correct direction.
Second I am going to tell you that you can and will recover after the drawdown if you do not take a
side road along the way. You can get to where you are going but you only have enough gas (money)
to get you to that point. Don’t take any detours. Sometimes it is not as much fun to head straight
down the road with one purpose in mind. That is your only handicap. You have a good choice to
make. Knowing you can do it by following correct the road is a good choice. Should you decide
differently, you are putting the recovery in your own hands differently.
Take out your chart book and study it. Tell yourself the nature of the market you are studying! Pick
your best eight markets only. Try to diversify to a point that they don’t all tend to trend together or
that they are all related in their behavior. Pick out the existing trends of the eight markets. Write
them down and notice how many are in up trends and how many are in down trends. You’ll most
likely see that most are not in trends at all. At this point it makes no difference. You are not in a
hurry except to make the right trades at the right time.
What you are going to do in your recovery is to put as many aspects of trading in your favor as you
can in order to change the law of probabilities of recovery in your favor. By knowing the trends of
your chosen markets you are to classify them as bullish, bearish or non-trending. Seems simple
enough doesn’t it?
Place the bearish and non-trending market charts aside for this day and pick them up again
tomorrow to see if any changes have been noticed in behavior. You are going to concentrate on the
bullish established trends at this time.
The main reason we need eight of your favorite markets is because we are only making the highest
probable trades and we need to diversify. You are also going to put advantages on our side. You
have a better chance to predict a bull trend than a bear or tired trend. Or do You? Sometimes a tired
or bear trend is easier to see. Bear markets tend to move down quicker than Bull markets move up.
Or do they? You don’t really know do you?
Ok do your research and look at the market behavior from today backwards a few years at least.
Learn from this research. It won’t do you any good for me to tell you since each market can react a
little differently. Any rate I want you to know not me.
You are going to use options for your recovery because we can limit your exact known loss. Futures
tend to not be an exact known loss when you enter due to the variable factors you have no control
over. You can also get other benefits from options, which we can’t get from futures.
The best advantage we are looking for in options is the fact that in bull markets, options pick up and
increase in volatility most of the time. In a bear market options tend to lose volatility. Because of
our limited required risk, we can use the bull markets to our advantage due to the increased
volatility tendency. Since you don’t want to sell options and have open-ended risk, we rule out the

bear markets for your recover. Also bull markets tend to spend more time going up than bear
markets do going down. Markets, which go up, give us more time to increase volatility while open
interest builds and interest increases. Bear markets tend to lose trader’s interest. Or do they? Do
your research!
I am not going to give you a lesson in options as there are experts in software, programs and about
any other aspect you could want to learn. If you are interested during your recover to learn more by
all means do it. You are however, going to use the best part of options for your recovery. You are
going to put increased volatility on your side as a part of your plan.
Now that you have your vehicle for recovery we now need to get a friendly trend working for us
with some information standing in your corner which also helps from the charts and from research.
Isn’t it a good assumption that in bull markets that volume and open interest tend to increase? Isn’t it
a good assumption that increased volume and open interest increase volatility? Isn’t it a good
assumption that markets tend to have three major waves of buying in a bull wave? Again, please do
your research in order that you have the confidence that those statements are true and good
After looking at all of the charts to determine if any bull market is established, you are ready to
make a trade when the parameters are correct. Just what are the correct parameters? First you must
find a bull trend in one of your markets. Next you must learn which phase it is in. Is it in the first
wave up, the second or the third? How do you tell? The answer can be several possibilities. You are
going to research our own possibilities! You will have to make your own assumptions. When you
are convinced a bull trend has started, look now for a four-day reversal. At that point you shall call
that wave one of buying. Look further and see if you have any other four-day counter trends. If you
can point out another, let us call that wave two. And then look for a third. You may have to look
backwards in your research to find some examples.
On your current charts, look for a market that is established as a bull market. What you want to find
is a possible four-day counter trend starting to develop. We want it to be in the first wave of buying
in the established bull market. You could look at the second four-day counter trend development but
we want the most powerful opportunity.
You will want to take a position on the first four-day counter trend in the direction of the bull trend.
You can make it one of two ways. You can do it on the break out of the forth day’s highs when it
breaks above the previous four days or you can position when the move is above the high of the
established bull move. The best way in your case is the first. You want to establish your position
prior to the increase in volatility. This will be your entry of the fourth day when the market breaks
above the prior four-day’s highs.
You have a pretty good idea of what you want to do and how you want to enter your trade. You are
looking for limited risk trade when you have an established bull trend. You are expecting to be
wrong but with limited risk by buying calls, you can make the trade. You want to either place a call
bull spread or purchase the next higher strike call, depending on your capital available for trading.
You must decide what amount of risk you can afford to take based on your account size at this time.
It is your decision. A rule of thumb is ten percent of your capital on the trade. If the bull spread
costs you 5 and you have 5,000 in your account, we can go along with it. After you put the trade on
you will be looking to get out when it is half value or your position has met the criteria to press, get
out, or reverse.
You want to trade the option with at least 40-60 days of time remaining. An option with less than
40 days remaining will leave you too little time to participate in a good trend without losing too
much time value. You can position an option with time upwards of 120-180 days with little problem
but in a good bull move, the closest contract will be the faster volatility mover. You are after the
fast volatility move in this position.

Your trade can benefit from any increase volatility in the established bull market and the fact you
have entered at the first phase of a bull market. Your entry point is a critical point in that you are
going to see either a continuing of the trend or a failure of the continuation. You have used rule one
by limiting your exposure and risk. You have set your limit on your risk and you are expecting to
only lose half of your risk by placing an order to get out of the position once you have lost half of
the value of the option. It the option reduces in value by one half, you surely are not in the trend
anymore at that time or you have moved too close to expiration. You move to the next trade!
The other criteria of removal of the position is failure of the four-day counter trend to re-establish
the continuation of the existing trend. A failure is confirmed when you have moved below the prior
four-day lows during the next trading day. You could have a very fast trade if wrong and a long
rides if correct. Be prepared to recognize the failure or the continuation. With your option position,
you are protected in the amount of drawdown but be swift in preserving your funds when not
proven to be correct.
You can take the second four day counter trend to establish an added position by using rule two but
only if you were able to properly establish the first four day counter trend position. Be under the
assumption that you may be too late on the third to establish positions. The third four day counter
trend can lead to some pretty wild swings if it fails to continue the trend but still be in a trend. This
is the part of the bull trend you will want to think about taking profits. Since you are in a recovery
stage, you must decide to take your money on this move rather than trying to force another trade.
You make the next trade with the same criteria.
The importance of this type of positioning in your recovery is that you will make a much better
return than what you risk when you catch both a bull trend and the increased volatility of the move.
You want to make the most amount of money with the least amount of risk. You want as many
factors working for you as you can possible have. You will be tempted to take the four-day counter
trends in a bear market but you have an additional drawback. That drawback is that volatility most
likely will fall and your expectations are reduced rather quickly on what is possible in the move.
Therefore, it is recommended that you stay with only bull trending markets and the first four-day
counter trend.
You’ll find many advantages in this style of trading but patience is rewarded in the long run by good
gains only from waiting with the correct trend. On the other had running away from failures of
continuation of a trend still leave you with small losses. This is less fun than most trading done by
you over the past when you had the drawdown.
There will be times you won’t have positions on, in fact many times but don’t let that be your
downfall as you are not trading to trade but to recover from the big drawdown. The best benefit
from this type trading is that you will learn a lot about markets and options this way too.
ALS – Let me review a little here. You are suggesting that after a big drawdown that traders take at
least eight markets, study and determine which are in established bull trends. Next you are saying
that you must see a four-day counter trend to use for entering an option position. You establish
either a bull spread or bull call position in the direction of original trend when the market takes out
the prior four days high.
For protection you suggested that a continuing trend failure is reason to get out on the next day if it
goes below the prior four days low. Also if the option loses one half value that it is time to get out.
You want at least 40-60 days of time left minimum on the options. Have I left anything out.
POP – Yes, you want the first position on the first four-day counter trend and to press on the second
four-day counter trend but use the third to take profits rather than add again. You only add on the
second four-day counter trend and it is best to establish on the first four-day counter trend of a bull
move. You are looking for volatility to be your friend in a bull move and you are expecting to have
bigger profits in a bull move than your risk by at least a ratio of four to one.
ALS – Will this work everytime?

POP – Of course not but there are good merits presented here. As I have said before, I really have a
lot of faith in the small trader. The large trader has all of the data to establish the good trades and
has the funds to back up big drawdowns. I am not giving advise but presenting a situation which
can lead to recovery from adverse market affects on drawdowns. I want the small trader to become
the leaders I know they can be. It has to start somewhere and I think it is going to start from a big
drawdown for many of them. No one is immune from market exposure. To control that exposure
first, we must trade with extra advantages on our side. We are doing that with this type trading. We
are trading with an established trend and we are adding but only correctly. We also are protecting in
two ways our position. Both rules one and two come through again.
ALS – I have been meaning to say something about that. Your two rules as Alfredo mentioned in his
chess parallel, he says you owe the readers a third rule of when to liquidate and take profits. What
about rule three.
POP – I have said on the forum what I feel about taking profits and when to liquidate. I did include
it in the recovery. I am a believer in taking profits in the third phase or wave and within three or
four days of high volume days. Most markets I like to take profits within three days in most cases. I
hope that gives some answers and makes a few traders alert to functions of profit taking. I am not
going into the detail at this time. I really have given more than I intended to give in this book on
profit taking.
I see as the most important aspect of Phantom trading at this time the understanding of rules one
and two. As far as giving a rule three, not yet!
ALS – There are a lot of questions about rule two yet. Most traders are still uncomfortable with it.
They have taken to rule one pretty good. We surely can explain rule two a little better.
POP – Maybe we should do a follow up on rule two. Let’s ask what questions are foremost in
trader’s minds on the forum. If we don’t get it into this part of the book we will do it in a later
ALS – Ok that sounds good to me. It also sounds like you might have another rule yet.
POP – Time will tell on whether there is to be a rule three.
ALS – Are you giving a hint here?
POP – Have you notice how sometimes things don’t get written correctly or interpreted correctly? I
don’t care about errors about me or my career as I am in the background by my own asking but I
don’t like to see data wrong. I shall challenge when the data is wrong which affects a trader’s
interpretation or their ability to correctly trade. How can I know unless I get feedback. I must get
that feedback before I can move on to other points. I don’t mean to take so long in rules one and two,
but there is no other way.
ALS – Should we cover some detail into recovery after the big drawdown a little more?
POP – NO, let us wait and see the reflections coming back first.
” You want to establish your position prior to the increase in volatility. This will be your entry of the
fourth day when the market breaks above the prior four-day’s highs “—POP