Trading RM, LLC.

In light of Dr. Brett's recent post I can offer you this. We recently received the following resume/letter. I think a psychic would make a great addition to any trading office:

Sent: Thursday, January 28, 2010 2:53 PM
To: info@tradingrm.com
Subject: Talented psychic seeking trading position

(Please note – I am offering a generous finder’s fee to the person who arranges an interview for me with a trading or investment firm, should I be hired. Click xxxx for more information.)

Greetings Trading RM,

I have an unusual gift that is perfectly suited for equities and commodities trading.

Some call it psychic, I hesitate to make this claim, but I have worked very hard to develop it the past ten years. Now it is honed into a system that generates amazingly accurate and reliable trade signals in a variety of markets.I need to find a trading or investment firm that can put my skills to work. To me there's no question - whoever hires me will be thankful they did. The profit potential here is very serious. People are skeptical about this, understandably. But if you explore my site you can see, this is a very real phenomenon, and a very real skill I have developed.As you might imagine, this field does not lend itself to a normal resume. I have included some basic information below. For a more complete picture, please refer to xxxxxxxx

Very truly yours, xxxxxxxxxx _________________________________________________________________________

Special Skills and Training:
The special skill I possess – the reception, recall, and interpretation of forward looking dreams – is best described as shamanism. Shamans have deeply explored their minds, and are able access the realm of dreams for information, where precognitive dreaming is a common occurrence. Regarding the financial markets, these can be a source of significant abundance.I have spent most of my life devoted to inner exploration: 34 years of meditation; 4 years at Esalen Institute (Big Sur, CA) immersed in yoga, group work, bodywork, and shamanism; 3 years in India deeply immersed in meditation and tantric training; and 25 years recording and studying my dreams, including 10 years of market dreams.For the past ten years I have studied and traded the markets. I have done extensive technical analysis of both equities and most commodities, having developed a system based on a convergence setup, mainly using Elliot Wave Theory, Fibonacci retracements, and pivots. While this system generated good signals, it did not compare with the accuracy of my dreams.

Other Work Experience:
Mountaineering instructor; carpenter; roofing contractor; massage therapist; meditation instructor; cook; science teacher; trader; columnist for xxxxxxx.com

I thought I would share this quote from The Kirk Report. This morning Mr. Kirk sent this tweet:

"Every morning in Africa, a Gazelle wakes up. It knows it must run faster than the fastest lion or it will be killed. Every morning a Lion wakes up. It knows it must outrun the slowest Gazelle or it will starve to death. It doesn't matter whether you are a Lion or a Gazelle...when the sun comes up, you'd better be running."

Many good traders have a game plan for a particular day, week, year, etc... One thing we have discussed at Trading RM is when to deviate from your game plan. It is great to have a game plan. But if the game plan is so rigid as to prevent you from a winning trade, then it is no good.

To take a step away from trading: say a particular football team has a plan to establish the run to open up the pass. It may come to be that the opposing team is running run blitzes on 60% of the downs to start the game. This may open up an opportunity to pass to the tight end. The coach will have to adjust to this and use the pass to set up the run.

Sometimes I catch my daily game plan being too rigid in the following examples:

• "I just got back from days off I am going to trade small." -the market does not care that you were on vacation, today may be a day to trade large
• "I am no going to trade the open, the first 10 minutes have been unprofitable." - again the market does not care about the past. Today may present a 8 out of 10 opportunity in the first 10 minutes of the day.
• "I am getting killed on shorts I'm only looking at longs." -It may be true that my short set ups have not paid, but today shorts may pay
• "I am not buying highs or selling lows." - Today chasing" may pay.

The key for me is to create an open ended game plan that uses positive language. So instead of "I am not going to..." I say I will short/trade the open/up my size when I see x, y and z characteristics.

The examples are endless. Even famous TV icons sometimes develop too rigid of a game plan. Ronnie from MTV's Jersey Shore once said:

"never fall in love at the Jersey Shore."

As we see below he adjusted his game plan.

A couple baseball players have been in the news lately. Mark Mcgwire finally admitted to using steroids for the bulk of his career. This news overshadowed the Cubs signing long time pitcher Greg Maddux as an assistant to the GM.

Greg Maddux will surely go down as one of the greatest pitchers of all time. But he did not have over powering speed (like Nolan Ryan or Randy Johnson), a wicked curve ball or the physical attributes of many great pitchers. What he did have was great control and a great mental game.

Greg Maddux recently had this to say of pitching in the "steroid" era:

"If the guy was skinnier in the on deck circle, you realized you had to talk your chances with him."

Maddux was not a macho guy who had to prove himself against everyone. He put himself in situations with the best odds. If the guy on deck presented a better opportunity for an out than Mark Mcgwire, then Maddux pitched around Mcgwire.

Often in my daily and weekly goals I write to my self "be ready for the next best trade."

• A trader can not worry about a past loss
• A trader can not worry about a "missed" winner
• A trader can not worry about last week, month, year

BUT, a trader can worry about the next best trade. Is it in the batter's box right now? On deck? What does it look like? What characteristics does it have? Will I know it when I see it?

Once again today we saw more action to the downside in rambus, as previously reported there was a "fat finger" trade which was busted and rolled back. Why? I wonder that myself because it is clear there is selling pressure in RMBS, today the selling spikes were probably from the same firm or fund or whatever. Someone clearly wanted to get out of the trade because they felt that the outcome of the trial will be negative in regards to the PPS. To me all of the macro news means nothing, i just read the price action. I have no opinion or position in RMBS for the long term, if i start formulating an opinion chances are i will be wrong because i cannot control what happens over night. What i can control is my risk intra day and apply my tape/price action reading skill to help my profits. You to can apply the same skill set by understand the "signals".



The first signal yesterday in RMBS was the large downside volume of over 100k shares a few minutes after the open. This right away told me to keep RMBS on my radar, so i pulled up some OTM puts and watched, no position yet. I begin to realize people are betting on a large fall, because offers were being aggresively taken in the 20 puts with size. This was signal #2. Signal #3 was someone showed up with large size .15c above the next best bid on the 20 puts, this was a signal get in front of him and buy. I take the offers for 37c next thing you know RMBS falls a point on 400k shares, i sell out the calls for a 1 and 1.29. After the initial drop i took my profits and waited for more signals, eventually the signals came. Large bidders in the options followed by massive volume on the downside. The trading gods gave you three chances to capture the volatility in RMBS yesterday, most of the time you only get one move like this and its over.


Wham bam thank you ma'am. I let the gorilla show me where she was gonna trade, someone smarter than me and more in the know than me was pushing. i follow "gorillas", in my experience you never trade against the size or "gorilla".


Hopefully now you can understand how interpreting the tape and price action correctly greatly increases your profits. Scenario recognition comes into play also, you can use last weeks RMBS trading as a prior scenario. You can apply these principles to any stock, you just have to understand where the buyers and sellers are. If you do not understand that you can contact me and i will be more than happy to explain. I could even do another blog post on this topic.

A few weeks ago I pointed out that bullish patterns where forming across the airline sector. Today many of the airlines were showing great strength and made big moves. Below are a few examples of airlines that were on the move today.

CAL found support on its 20MA and gapped up and opened near the top of its range.


UAUA broke out of its range then had a bullish pullback.

ALK pulled back to its 20MA where it found support and was a tag and go.

• We all have targets/ goals. These are important. But how do we get to these goals? We pick a target: this can be one profitable trade, learning to trade a new product, limiting losses, working on timing, using a new indicator, etc...

• What weapons will help us reach this target? Our front end, our co workers, our trading coach/mentor, our morning game plan, our after hours review, etc...

• What movements do we take? Our weapons will dictate our movement. A trader may read about a new indicator, back test some data, seek out a mentor, write in and review a journal, etc...