Your Trading and Investing Evolution

One of the great joys in life is to see your progression and evolution.  To see the accomplishments, revelations and epiphanies along the way.  People who have children can tell you of the joy they take in seeing their children grow up.

Similarly, there is joy in your trading and investing evolution.  To see yourself “grow up,” so to speak.

When you hit a certain roadblock, you search for new perspectives, new avenues to go on, to grow towards.  And as you look back years later you notice those roadblocks, those challenges, actually made you stronger, better, faster, more accurate intuition, etc.

One of the roadblocks I hit were the limitations of viewing the market from a pure technical analysis perspective.  I would read all these books, forums posts, blogs about technical analysis.  I would implement, but I was not getting anywhere.  I felt that I was spinning my wheels.  A horrible feeling where you feel you are wasting your life force, your heartbeats, your breaths in something that you feel is not making you any progress.  This is another clue about the people who desire to get ahead in life.  These people desire results.  And if they don’t have the results, then the next best thing is they desire feeling of progress towards those results.  Without that feeling of progress, then frustration can set in, unless the person has developed a system and habits to give them hope and retain that feeling of progress.

Back to my pure TA days.  Eventually I bought this expensive trading book.  I was filled with so much joyful anticipation waiting for it to come in the mail.  I felt that it would solve so many of my trading problems.  I opened it up and read it and I was so disappointed.  It just talked about various technical analysis interpretations of the chart, etc.  There didn’t seem to be much depth to the book.  No grand trading philosophy or strategies.  Just an elegant regurgitation of tired and worn out concepts and ideas.

I remember telling myself:  I KNOW THERE IS SO MUCH MORE TO THE MARKET, IF I CAN JUST FIGURE OUT WHAT THAT IS.

Have you ever gotten that feeling inside of you, that inner voice, the stirrings of your soul, that you just feel there is a whole other level you can take this trading thing?

The feeling that:  “I could take this to a higher level, if I could just figure out what that is.”

That led me on a path from TA to chart and price patterns, and eventually to the Order Flow Trading strategies.  From stop hunting and option barriers, to news trading, to global macro trading.  With global macro trading, I really, like REALLY found what I was looking for.  That inner voice inside of me really turned out to be true and pointing me to the right way in this area of life.

Not, everyone gets those kind of revelations.  Some people stay in the TA cycle forever.  Others only advance to the chart and price pattern and stay there.  Others only get to the stop hunting bubble and stay there.  Not everyone advances to the Global Macro Trading school of thought.

Some other famous traders and investors took a different path.

Warren Buffett talks about how he tried technical analysis for a bit, but he dropped it in favor of his value investing approach.  This has certainly served him well over the past many decades as the economy has grown and he has positioned his portfolio and company to benefit from it.  (more on the potential pitfalls of this approach a bit later).

Another “Market Wizard” – Edward Thorp, from the book Hedge Fund Market Wizards, talks about how:

“I decided to spend the summer learning about the stock market….  For example, Technical Analysis by Edwards and McGee was very helpful in the negative…  I didn’t believe it.  The book convinced me that technical analysis was a road not to go down.  In that sense, it saved me a lot of time….  All I can say is that I did not see enough substance there to pursue it.  I didn’t want to take time to try things unless I thought they were pretty good.”

Edward Thorp went on to implement some statistical arbitrage strategies in the markets.

So different people have different perspectives and journeys.

One person tries pure TA and stick with it.

Another tries pure TA and decides to do value investing.

Another person tries pure TA and decides to do statistical arbitrage.

And another person tries pure TA and decides to do Global Macro Trading.

Now, let me get into why you should choose Global Macro Trading.

Trading Philosophy

My life and trading philosophy has been to choose a flexible approach that allows me to make money in all sorts of different market conditions.  Whether wildly bullish filled with risk appetite, or wildly bearish filled with risk aversion.  Or even if the market is range bound, you can still make money some of the time.  Of course, you prefer trending and volatile markets, but even if the market is rangebound, sometimes money can still be made.

That is why I love Global Macro.  George Soros made money in both 2008 AND 2009.  In 2008 was the big financial crisis, and in 2009 was the year of the recovery.  Global macro strategy, implemented properly, allowed him to make billions in both market conditions.  In contrast, Warren Buffett did not make money in 2008, but he made a lot in 2009, as he likes to position his portfolio and companies for an economic recovery in almost every situation.  And with the better Federal Reserve policy and government policy through the years, this has been a good bet.  Fed policy is a heckuva lot better than it was back in the 1930’s Great Depression.  It’s not perfect, but it is better.  They know better how to moderate the economic ups and down.  Ben Bernanke called it the “Great Moderation.”  And govt policy, while still being very dysfunctional with waste, fraud, and abuse, etc, I would say is better than it was decades ago.

Now, if there is a period of, say a decade of low growth/stagnate growth or recession/depression, then Buffett’s company is in big trouble, especially if he has to pay out big claims with all the insurance companies that he owns.  That could really put pressure on the company he has painstakingly built for over 50 years.  Of course, this is an extreme scenario, and it would take some pretty incompetent people in government around the world to make it happen, so the likelihood is on the low side, but it is still theoretically possible.  And the one surer way you can protect yourself is through GLOBAL MACRO TRADING.

There is an inherent joy that can come to a global macro trader who knows that they can have the grand potential to make money in bull and bear markets across the financial instruments.

There is also the JOY that comes with developing what I like to call the “Scenario Analysis Mind.”  The joy of imagining different configurations of scenarios.  Extreme joy in that.

As Paul Tudor Jones talked about the joy in his trading:

“I love trading macro.  If trading is like chess, then macro is like three-dimensional chess.”

When I figured out Global Macro and developed the Scenario Analysis Mind, I was in awe of myself.  Eventually after a few years at it, I realized I had developed an interpretation advantage, an ability to read the mind of the market, an ability to read between the lines of the news and information flow.

I kind of felt like George Soros when he said in his book Soros on Soros:

“I remember looking at myself with awe, amazed at the speed with which I could react, the wealth of information I could draw on, and the analogies I could apply.  I was on top of every situation, I was able to establish connections that were not readily visible to others.”

You too, can attain that feeling of awe at your own trading progress and powers when you learn how to harness the power of the information flow via Global Macro Trading.

Eventually, after several years, I realized that I could apply this skill of interpretation advantage to other areas in life as well such as personal development, health, etc.  To say I was in further awe of myself would be an understatement.

All this would most certainly NOT have happened, unless I decided to become a global macro trader and STUCK WITH IT.

So I tend to carry around this joy of my scenario analysis mind inside of me.  With it, I have actually gotten pretty good at doing a bit of mind reading about someone else, if I decide to turn it on.  I get better at it every year with more  knowledge and experience.

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Debating the Skeptics

Despite all this, there are the Naysayers, the people that don’t believe.

How to respond to those?

Well, first you acknowledge that the chart, TA, etc, can potentially be useful.  We have modern technology nowadays.  So you should use the chart, should use multiple monitors, etc.  This can obviously aid you greatly.

And Paul Tudor Jones once said that technical analysis “made well over half the money” that he’s made in his lifetime, with fundamental analysis making the rest.  (Although I would more properly call it:  Global macro analysis rather than “fundamental analysis.”)

Then we can proceed to ask a series of questions to ourselves, such as:

Does such and such TA indicator, etc, actually move the market?  Why did the market really make that big move?

Does such and such TA, take into account what are the near future market conditions going to be, and why?

Does it take into consideration what I call the “Battle of Scenarios,” as taught in the Order Flow Mastery Course?  There are all these market participants placing trades every day.  They have to be placing a trade for a reason – for a scenario.  If you analyze the “Battle of Scenarios,” as I call it, then you can get to a more clearer interpretation of where the market is going to really move.

Why should the price make a large price movement, via  technical indicators, which are solely derive from mechanical interpretations of prices.  Does a trader not acknowledge the existence of “information that exists outside of the chart?”  If you want proof of the existence of information outside of the chart, one needs to look no further than the January 2015, removal of the SNB floor in EUR/CHF.  Lots of important information that existed outside of the price chart there.  At least one hedge fund did not realize this and lost close to a billion dollars, which was really quite unnecessary.

Also, do you ever think about why a certain currency pair may fall below the 200 daily SMA, and then quickly rally sharply several days and weeks later?  Or when in another chart, via a similar situation, the market falls through the 200 daily SMA, and then continues to plunge?  Do the people doing pure TA ever think about these scenarios?  Or do they just write it off as chance, and/or acceptable losses?

Or about the situation where a stock falls below the 200 daily SMA, and then rises sharply to make new highs, versus another stock that falls below the 200 daily SMA, and plunges another -50%.  Do the people doing pure TA every think of these scenarios and ask why?  Ask how can I be a better trader?

Thinking more deeply about such scenarios can unlock untold of amounts of mind power, trading strategies, trading profits and joy as you attain revelations that few people know about.

Jesse Livermore, the man whose account equity reached $100 million in 1929, once siad that at the end of the year, he would lock himself in a bank vault, with some food and his money in cash, and also his trading records.  He would go over his records and try to figure out why his trades succeeded and failed.  He also wanted to see his money in cash.  All those trades you place, all those numbers you see on the screen, all those direct deposits into your account, from time to time, you may want to see part of them in cold hard cash.  Otherwise, if you just keep it in cyberspace, you may not appreciate it as much.  I remember one person saying the first few thousand you make, you should withdraw it and carry it on you for a period of time.  I did do that for a period, and it was a good feeling.

Another reason is:  Why do you think hedge funds hire so much staff?  So they can SOLELY plot the moving averages, and MACD and Ichimoku?  Is that the ONLY REASON?  Really now?  There must be a more profound (and not necessarily complex) analysis that should be done and they know it.

Let’s approach this from a different perspective.  I went to a school playground one day to pick up my niece.  I noticed that the different aged children were playing at different sections of the playground.  Kids her age were in one area.  Kids a bit older were in another area.  And kids a few years older than that were in an entirely different, but adjacent area.  All depending on their age, but also their mind desires.

Well, just as the children and teenagers are playing their own areas in life, and just as they have their own delusions, traders have the same thing.

The beauty of life and trading is that, at any moment you desire, you can CHOOSE to operate at a higher level.  You don’t have to play with the bullies or stay with the people who criticize you or people you believe have less than stellar ideas.

Just recently, I got an email from one customer who realized that was I was teaching and saying was the real deal.  But that one of his friends seemed to be a bit skeptical because his friend is still in the pure TA stage.  This customer asked me some questions and I was very impressed with his rapid progress in just a few short weeks.  What took me years to learn, this trader was grasping in just a few weeks, albeit with still more progress and effort to go.  I told him I was very proud of him and I hope he makes the right decision in tuning out the delusional voices and continuing his evolution and growth as a trader in the global macro school.

Therefore, if you have this feeling inside of you, this hunger inside of you for something different, to BE DIFFERENT than the other 95% of traders out there caught in the rate race, then I invite you to invest in the Order Flow Mastery Course.  That is the one sure way to learn about global macro trading in the forex market or any other financial instrument, at warp speed.