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.hours is about 80 percent of the time the soybean market is open)Actually, I just used the first examples I could find over the lastis 31 1/4 cents, and 31 1/4 cents from the opening of 6.98 onfew months.May 25 would give us a goal of 6.66 identical toYes, I did look first at the most likely suspect to find exam-the 6.66 low reached the next day on May 26 (B).bull market in grains that was full of volatility andAn open to the down occurred on June 9 in the July beansunsophisticated traders.But all I can say is that these techniques(C).The low of the day was made on the opening at 6.70.Basedwork more often than not in any primary market.Try it yourselfon the previous close of 6.67 3/4 and the previous day's rangeon many different markets.You'll wonder how you traded be-of prices of 12 1/2 that would give a three-hour objectivefore you knew about these opening techniques.of 6.77 3/4 near the high of that day.The opening is the most important price of the day.That'sTwo days later, the market attempted to close the gap cre-why those floor traders could take a break after it occurred.Theyated by the open to the down at 6.70.It opened at 6.71 (D) andknew what was probably going to happen the rest of the day.made a low of and then sprang up straight.The three-dayThey already had made their money (or at the very least hadrule would give us an objective of 6.90 1/4 (22 cent range plus thetaken a minimum amount of losses).previous gap close of 6.67 3/4).When this level was decisivelybroken on June 15 (E), the three-week objective was 7.18 (6.67 So apply the same opening techniques the floor traders useand take a break, like they do, from the screen.In my3/4 plus the 50 1/2 cent range of the last three weeks).freedom from the tyranny of always having to watch the screenThat's not quite the high of the move of 7.15 made thatis worth just as much to you as any technique I write about.but it was one more piece of evidence to add to the failure of theInitial-Maintenance Opening Rule that this soybean move wasalmost over.When an open to the down or an open to the up is filled(that is, the market goes lower than the open to the down orXhigher than the open to the up), there is almost always a sharpreversal right after this happens.The 6.76 open to the up on April 4 was finally filled whenthe May beans went to 6.78 on April 29 (Figure 5-2, D).Imme-diately May beans fell, eventually reaching 6.56 1/4 on May 5(Figure 5-2, E).The open to the up at 6.98 of the July beans on May 25 wasfilled when July beans opened at 7.04 on June 1.That was thehigh of that day, and July beans fell to 6.92 the next day.The open to the down of June 6 at 6.70 in the July beanswas filled on June 21, when July beans made a low of 6.69 (FigureDespite the powerful bear market that would carry soy-beans a dollar lower a month later, the July beans never lookedback and rallied straight to 6.80 1/2 the next day.7574Chapter SixThe Routineof the MarketIf you went to college, perhaps you were forced like I was to sitthrough some required Psych 101 class.To this day, I am suspi-cious of what passes for psychology.But I do remember oneclassic experiment.A number of people are put into a room with a psychologist.All but one are "ringers" put there by the psychologist.Theunsuspecting individual is seated last away from the psycholo-gist.In this room is a film screen.A picture is flashed on thescreen of two sticks.One is slightly, but clearly, longer than theother.The psychologist then asks the ringers: "Are these sticks thesame size?" All around the room each of the ringers say "Yes."What do you think the poor slob who wasn't in on the trick said?Most of the time he or she said, too! Testing showed thisphenomena became quite strong after eight ringers had an-swered and leveled out after 12 ringers had said their lyingI often think of the public futures trader as that poor slob.always being confused into thinking 2 + 2 = 5.It's not thathe is being lied to all the time.It's just that his ignorance ofI77Chapter SixThe Routine of the Marketmarket realities and his constant emotions of greed and fear Figureblind him to the profit opportunities that are all around him.The floor trader and other professional futures traders arelike that rare but brave soul in the psychology experiment, OCTOBER 94 LIVE CATTLEContract 40000 9:05-1:00 CTmight say "No.I don't care what the rest are saying.One stick 2 unitOpt 5is longer than the other." They trust their own experience andjudgment.Ninety percent are losing because they are looking forsomething simple that will turn a "tiny into a trillion," as one ofmy friends likes to say.The pros are quite content to make a littleat a time consistently as the old floor trader adage puts it,"Nickels turn into millions if you are picking them up all thetime."Floor traders and other professionals primarily feast on twomarket conditions: the opportunities and trading direction theyfind on the opening, and the routine of the market.By routineof the market, I mean trading conditions that repeat themselvesover and over again at predictable intervals.One routine is fairly well-known: seasonal patterns, or sure-thing trading, as it is called in some circles.Most people haveseen the ads or read the books buy February bellies at the closeon X date and sell them on Y Date, because this has worked 100percent of the time since the winter of 1966," etc.Titles like "sure-thing trading" turn me off, but that doesn'tmean seasonal trading is not a powerful tool.Nine years out of10, corn and beans are going to fall in price during July.Thereis a February break that occurs in late winter among grain prices.Bonds tend to rally during the first two weeks of June, etc.Now that daily seasonal probabilities are everywhere (seeFigure 6-1), this tool may be losing its punch.By all means, youBERNSTEIN INDEXshould consider seasonal tendencies when you make your trad-ing decisions.But remember, any technique that everybodyknows can be ruined by too many people trying to use it.Floor traders and commercials are well aware of seasonal 7 14 21 28 4 11 18 25 2 9 16 23 30 6 13 20 27 4 11 25 1 8 22 29 12 19 26 3 10factors [ Pobierz całość w formacie PDF ]