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Dec 20, 2020

Secondary Offerings

Mr.  Seykota,

Thank you for your response. (Wants Guidance, below) As you may expect, not quite what I was hoping for.  Hope is a four letter.

So, let me re-frame my inquiry,

Regarding (4) secondary offerings in two weeks:

    Is a secondary offering a……………. “fundamental”?

    Similar events but from four  distinct and isolated companies (or their CFO’s).   Two may be a coincidence, but is four a pattern?

Wasn’t looking for specific recommendations.  Your chart server provides abundant potential opportunities to consider and in turn accept or reject.  Personally, have a preference for at least  200 days of trading history.  No problem with position sizing.  Strict 1% of capital divided by 4 ATR’s, but an initial stop at 2 ATR.  Combined results in a ½% initial risk until if and when an equity proves itself.  The art is a gracious exit well into a trend.   Generally stopped out, but occasionally pre-empt for what I consider a BETTER opportunity.  Quite used to a fair amount of volatility.  In fact, you’ve taught me to embrace it.

My dilemma is how to interpret a secondary offering.  More often than not entails  a material adverse price movement beyond “normal’ volatility.

Thanks again for any kind of response you may provide!
 
Thank you for raising this issue.

I suppose you can invent a metric for Secondary Offerings and then back test it to see it it has any value as an indicator.

If you come up with something useful, let me know.
Dec 15, 2020

Wants The Trading Tribe Book

Hi Ed,

I'm writing to ask if you have an additional copy of your book - The Trading Tribe for sale.

I'm a struggling trader and i believe with sheer will one day that I will be able to be a successful and profitable trader in future [Gods willing]

I was poor with my studies back in school and was always lacking behind my classmate and i sometimes accepted the fact that i was not brilliantly bright with my studies.

fast forward during my teenage years i came across trading from my peers and with that i thought having the right education with a university will bring me market knowledge and so i went on to taking night classes eventually i graduate and i found that part time university has not help me in any way other than looking for a job,

A few years later i realised that my trading improve and thus i was able to make some money on the market. Good times never last and i was back to square one again.

Now i am almost 40s, i realised that i have lost many opportunites in life such as finding a good job and stayed on. i was in fact still believing in myself that i could really make it in the market. I thought i found an edge and again i was making money of it but it didn't last.

Now when i came across your book and it was not print anymore and so humbling i am writing to you if you are able to sell me a copy of your book. I am not sure if i am going make it in trading but i am willing to give anything a try.

Looking forward to hearing from you.

Thank you for asking about The Trading Tribe book.

I sell it, exclusively on my website, for $125.

You can also find it on Amazon, from other parties for, lately, $196.99 to $311.00 (new).


Dec 15, 2020

Wants Guidance

Ed,

I try to avoid giving credence to fundamentals. 

Woefully lag price movement as well as smoke, mirrors, and BS that can only be gleaned from eventual financial statement footnotes.

However………………..in the last 2 weeks I’ve experienced (4) secondary offerings in equity positions.  CMBM, OCUL, GRWG, and NIO.  All generously provided by your chart server.   Combined, came with a cost in terms of re-tracing price movement as well as a current stagnant churn.   

To a fundamentalist, such events are dilutive to a given earnings stream.  To a mark maker, “he” has the alibi to gap the price down. 

Maybe to pick up inventory.  Maybe to cover his short.  Perhaps both.   In the case of the aforementioned tickers, all dropped, but 3 of the 4 remained in what I deem their “channel”.  55 day price high and 21 day relative to the S&P low.  Also use a 3 day slope of a 20 day moving average (which avoids a few whipsaws) as a filter.   200 day ROC is used for initial selection.

NIO fell enough that I practiced my emotional detachment and sold it (at a respectable profit but far from it’s highest high price).

Nothing to be back-tested, and in the ever evolving moment of now there is nothing to be forecast.  These offerings came out of the blue with no warning.

Not sure how to pose a question.  Is a concentration of offerings near simultaneously a matter of different companies’  management seeing the   opportunity of “getting while the getting’s good”?............................  Should I be passive OR proactive?

To reiterate, adhering strictly to price, still hold 3 of the 4.

Thanks in advance for any response  you may provide!

Thank you for raising this issue.

I provide charts of Strong and Weak stocks as examples of up and down trends.

These postings do not imply recommendations to buy, sell, hold, trade or stay out of any particular instruments. Nor do they offer guidance in the vital areas of position sizing, risk management and emotion management.

I do not make specific trading recommendations on FAQ.
Dec 12, 2020

Principles

Hi Ed,

Thanks for the link to George Coyle’s Trading Principles.

He did a very nice job with the quotations.  A person could be well on their way to designing their own trading program by applying many of these principles with a little optimization research.

Best,
Thank you  for sharing your opinion.
Dec 11, 2020

Backing Out

Dear Ed,

I continue to feel that I have let you down by backing out of the Dec 2019 workshop, and I will keep apologizing until I no longer feel it necessary. I mentally understand you may not care but the emotions are there and I choose to honor them.

I have read Jack D Schwager's books, "Market Wizards" and the "New Market Wizard" in doing so I learn a lot about different trading styles. I have read "How I made $2,000,000 Dollars in the Stock Market" By Nicolas Darvis where I learn about breakout systems and some patterns of solid performing stocks, I wish the author went into more detail about his stock selection process.

I have read "The reminiscent of a stock operator" By Edwin Lefévre where I learn the importance of waiting for the market to act in the way suitable for a certain style of trading, also patience in general. And some more.

Knowledge seems far from action.

Now I still feel really SAD, big SAD... I feel Sadness in me because I squandered my potential as a young child protesting against my parents who constantly tried to nag me and force me to study in school and learn things I didn't usually understand the purpose for knowing.

No point in wasting energy blaming them, but the Sad feelings are true and I want to acknowledge them. It doesn't matter how they got here, they just are here. To paraphrase Virginia Satir: No point in wasting energy blaming the past or getting Angry about it, just be glad I get the signal now.

Trading profitably and doing it using computer programs to aid in the analysis and or execution remains my dream.

Until then I acknowledge the Sadness I feel for how hard learning can be sometimes, the SCAREDNESS I feel for risking money, when I risk money I feel scared, the feelings of helplessness when the programming I'm learning gets harder and tougher. I feel Sad when things get tough.

I'm in the struggle.
Thank you for sharing your process.

I notice you can identify sadness and fear.

You might consider taking your feelings about <backing out> and <shame> to Tribe as an entry points.
Dec 09, 2020

Principles of Great Traders

Hi Ed,

After much work and many revisions, my book, Principles of Great Traders is finally complete.

Thank you again for your help along the way. Per our discussions, I would appreciate you sharing the work with FAQ in hopes others might learn and improve from the material.

Thank you,

Download PDF: Principles of Great Traders

Website: https://traderprinciples.com/ 
Thank you for sharing your process, for completing this work and for making it available to FAQ readers.
Dec 04, 2020

Govopoly in The 39-th Day

Mr. Seykota,

Are we currently in the 39th day right now according to your Govopoly model?

And do you think the government lies about the CPI / inflation numbers? 

Thank You
Thank you for raising this issue.

We currently have multiple symptoms of the late stages of Assimilation:

+ exponentially increasing debt
+ restriction of personal freedom
+ foreign participation in domestic politics
+ increasing regulations on business
+ shortages of staples
+ decrease in manufacturing

Inflation can have many meanings.  Monetary inflation refers to the creation of debt.  Price inflation refers to the increase in prices.

For the latter, you have various metrics depending on what prices you measure and the span over which you measure them.
Dec 03, 2020

Goals and Processes

Thank you for your update on your weight loss goal.( Nov 9-2020 ) and for reporting that instead of goals you are preferring to organize around purposes and processes.

I was thrown into that scenario , when my Dr, told me my cholesterol was too high, it was 243  My family and I are genetically predisposed to higher cholesterol  issues.   Statins are used by some family members.

Even though my ratios were in an acceptable range , I came back with the intention of lowering the number to below 200,  and a follow up measure was set for 4 months later. 

I investigated what I ate and found that I was consuming too much saturated fat, which my body uses to make cholesterol so I set about eliminating sat fat from my diet. 

I set off on eating better with  no way to measure short term whether it was working.  Was kinda frustrating to not know if progress was being made, but I thought I was on the right path.

4 months later a recheck showed my number to be 194 and the ratio was even better than before and actually lost a couple of pounds as a side benefit.

Now I stay on the path and if I want to get off and eat that hamburger or triple cheese pizza, I look at quantity and frequency and set limits.

Thank you for your work.
Thank you for sharing your process and insights.
Dec 02, 2020

Goals

Hi Ed,

I find your comments about goals interesting. You talk about organising your life around purposes and processes. What is your definition of purpose? Could you explain how a purpose differs from a goal?

thank you

Thank you for raising this issue.

I use "goal" to indicate an end point; I use "purpose" to indicate a process.

Goals (end points):
1.  Double your equity in one year.
2. Lose 40 Pounds in 6 months.

Purposes (processes)
1.  Follow a trend following system.
2.  Balance food and exercise.

Dec 01, 2020

Puerto Rico

Dear Ed Seykota,

You are always an inspiration to me.

Thank you for providing all of the information and resources on your website.

The epidemic lab is very interesting.

Thanks to you, I flew from California to Puerto Rico, where I am enjoying the beach with my family. Thank you for the ideas.

Sincerely,

Thank you for sharing your process and for acknowledging me and the work.
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