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How it all began by Scott Whaley
 
 

 

      

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MTrader Class (C) copyright MTrader   August 1, 2003
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[09:26] <whale> Louis Bacon

 
[09:26] <whale> Moore Capital
 
[09:26] <whale> TT comment: Why post this article? Read comments about Bacon and price action along with differences between him and Robertson.
 
[09:26] <whale> Institutional Investor Magazine Excerpts
 
[09:26] <whale> Macro, Macro man
 
[09:26] <whale> By Riva Atlas
 
[09:26] <whale> No. 1 Source for Trend Following Worldwide
 
[09:26] <whale> Est. 1996 | Clients in 70 Countries
 
 
[09:27] <whale> Today [Louis] Bacon reigns over not only Moore Capital but over the most visible, most high-octane area of money management - macro investing. He gained the throne by default, and at a time when the future of the realm is increasingly in doubt. After sharp reversals, Julian Robertson in March shut down Tiger Management; in April it was George Soros' turn to slash the size and scope of his funds. With $9.4 billion under management - $7.
 
[09:27] <whale> Like his bigger, better-known rivals, Bacon has racked up a stunning long-term record. His flagship fund, Moore Global Investments - at $6 billion by far his largest - has returned 31 percent annually after fees since its inception in 1990. Last year the fund was up 26 percent.
 
[09:27] <whale> But Bacon's hallmark has been consistency: He delivered these returns with low volatility and relatively little correlation to the stock market. From 1995 through 1999, his annual returns ranged from 23 percent to 32 percent (see graph). By contrast, Soros' flagship Quantum Fund zigzagged between 39 percent and -1.5 percent, while Robertson's Jaguar Fund whipsawed from 57.2 percent to -18.1 percent. Moore's funds recorded a Sharpe rati
 
[09:27] <whale> If you look at Louis's long-term track record, there is probably no trader alive who has better risk control on an asset base his size, says Paul Tudor Jones, a close friend of Bacon's who runs Tudor Investment Corp. He wrote the book on capital preservation.
 
[09:27] <whale> Leveraging up and chasing any investment opportunity anywhere in the world - for a macro trader to be guilty of style drift, he would have to leave the planet - these swashbuckling bettors captured headlines and investors' imaginations and their funds. The most notorious exploit was Soros' $10 billion bet against the British pound, which earned him the sobriquet of the Man Who Broke the Bank of England. Always volatile, macro trading b
 
[09:27] <whale> Indeed, even before this year's woes, many famous players - Michael Steinhardt of Steinhardt Partners and Leon Levy and Jack Nash of Odyssey Partners among them - quit the business. A handful of practitioners remain. Besides Bacon the most prominent include Jones, Bruce Kovner of Caxton Associates and Monroe Trout of Trout Trading. And sources in the hedge fund community say that Druckenmiller will be coming off the sidelines in Septem
 
[09:27] <whale> For a man of his influence and wealth - perhaps $1 billion of his net worth is said to be tied up in his own hedge funds - Bacon maintains a remarkably low profile. No gala charity benefits à la Paul Tudor Jones, whose annual fundraisers for the Robin Hood Foundation regularly grace newspapers' society pages; no Sorosian campaigns to urge Eastern European political reforms or the legalization of marijuana for medicinal purposes. Bacon'
 
[09:27] <whale> As with life, so with trading: Few know what Bacon is doing at any given time, and he prefers it that way. At a time when hedge fund performance data is freely available on the Internet, Bacon tries to keep his results secret and is even wary of having historical returns for his funds published.
 
[09:27] <whale> Bacon grew up in Raleigh, North Carolina, and counts among his ancestors Nathaniel Bacon, a rogue colonist who, in 1676, launched an unauthorized attack on Indians that briefly led to his controlling most of Virginia. Bacon's father, Zachary Bacon Jr., ran the North Carolina real estate operations of both Prudential and later Merrill Lynch & Co. Bacon's mother died in 1983. When his father eventually remarried, it was to the sister of
 
[09:27] <whale> Bacon is the middle of three sons. His brothers, Zachary III and Bart, graduated from local public schools, but Louis, in his junior year, ventured out of town to Alexandria, Virginia, enrolling in preppy Episcopal High School, by coincidence Robertson's alma mater. Students at Episcopal were expected to work hard and had to sit in study hall during free periods and evenings. Only in the afternoon did they get a few hours outdoors, to
 
[09:27] <whale> For college, Bacon traveled north to Middlebury College, where he majored in American literature. A favorite professor, Horace Beck, says he saw no signs of the budding financial genius. I tried to get him interested in folklore, he recalls. But really, I had no idea what he was going to do.
 
[09:27] <whale> An aficionado of Ernest Hemingway and Nathaniel Hawthorne, Bacon cultivated his love of the outdoors in the bucolic surroundings of Vermont. Southerners at Middlebury stuck out like sore thumbs, recalls classmate Christopher Brady, who heads money management and advisory firm Chart Group and is the son of former Treasury secretary Nicholas Brady. He hunted a lot, skiied incessantly and studied.
 
[09:27] <whale> Still, there were some early signs of the future financier: During the summers following his sophomore and junior years, Bacon worked as a clerk for New York Stock Exchange specialist Walter N. Frank & Co. The enterprising Bacon met Frank after working on his deep-sea charter fishing boat off Montauk, Long Island, during the summer of 1976.
 
[09:27] <whale> From college, Bacon headed to Wall Street, landing a job as a clerk on the New York Coffee, Cocoa and Sugar exchanges. A lot of the great traders on Wall Street are from the South, and many got their start in commodities, explains Brady.
 
[09:27] <whale> An early influence was Paul Tudor Jones, who was sharing an apartment with Charles Johnson, a former roommate of Zack Bacon's at the University of North Carolina. Jones, who had started out as a cotton trader, was then working as a commodities broker with E.F. Hutton.
 
[09:27] <whale> Bacon soon headed off to get his MBA at Columbia University, where he used his student loan as capital to continue to trade. To his chagrin, he lost it all - and had to work odd jobs to make up the difference.
 
[09:27] <whale> From this experience, he learned how to handle risk, explains Arpad Busson, who runs London-based EIM Group, a firm specializing in alternative asset management and fundraising and whose clients have had money with Bacon since 1990.
 
[09:27] <whale> Bacon landed at Shearson Lehman Hutton in 1983 as a futures broker, trading on behalf of some of the biggest names in the hedge fund world. For a 27-year-old, Bacon deployed a powerful Rolodex. Jones and brother Zack, who deployed landed at Soros Fund Management as head trader, threw plenty of business Bacon's way. He quickly became a top commission producer.
 
[09:27] <whale> Louis was very fortunate to be right in the middle of that network, notes Charles Stockley, president of Stockley Asset Management, a futures trading firm, and a childhood friend of Jones's. You can't say that his career is a story of someone starting at the bottom and clawing his wayup. But he took the ball and ran with it, and ultimately he surpassed them all.
 
[09:27] <whale> Bacon's gilt-edged client list had another advantage, in addition to the hefty commissions: By trading on behalf of Soros and Jones, Bacon learned their investing styles.
 
[09:27] <whale> By 1986 Bacon had acquired enough of a reputation to start managing other peoples' money. The following year, while still at Shearson, he set up a small fund called Remington Investment Strategies (it remains part of the Moore Capital family). Right off he hit a home run. He correctly anticipated the stock market crash, going short S&P futures and then shifting to a long position just as the market bottomed.
 
[09:27] <whale> By the end of the decade, Bacon had established a strong track record, and he decided to move to a bigger stage. When he set up Moore Capital in 1989 (the firm bears his mother's maiden name), he already had more than $100 million under management. He quickly raised $1.8 million more for an offshore fund, Moore Global Investments, which is today Bacon's biggest portfolio. Much of the sum came from Antoine Bernheim, whose Dome Capital M
 
[09:27] <whale> The early investors were quickly rewarded: That first year, Moore Global was up 86 percent, thanks largely to Bacon's decision to short the Nikkei index just before the Japanese markets collapsed. He also anticipated Saddam Hussein's invasion of Kuwait and went short stocks and long oil.
 
[09:27] <whale> As Bacon set out to raise more money, his task was made easier by his friendship with Jones, who had decided to close his funds to new money. In a letter to investors, Jones recommended they invest spare capital with Moore. Jones also introduced Bacon to Busson, who had helped him raise money in Europe. By the end of 1990, Bacon had $200 million under management and was up a healthy 29 percent.
 
[09:27] <whale> Bacon soon began refining his trading style. Though he studies charts and diagrams, he relies on an obsessive attention to detail - and ultimately instinct. He is like an animal in his ability to sense the market, says one longtime investor.
 
[09:27] <whale> Like any good macro trader, Bacon strives to identify long-running trends, or investment themes, such as euro convergence or structural interest rate moves. But unlike many others, Bacon can have an itchy trigger finger, and he will sometimes trade in and out and around his positions, even if they're moving in the predicted direction. If Louis thinks something is going from 70 to 100, he'll trade in and out 15 times before it gets ther
 
[09:27] <whale> Even today, with some 230 employees, Bacon keeps a firm hand on the tiller. Very few people at the firm are allowed to take serious risk, says one source. There's a lot of people there, but they are mostly in support, research or administrative positions.
 
[09:27] <whale> Still, Bacon is capable of holding positions when he thinks they have potential: A source close to Moore notes that the firm maintained a stake in European bonds, particularly Swedish and Italian securities, from 1995 to 1999. But typically, if an investment seems to be moving against him, Bacon will get out quickly.
 
[09:27] <whale> If a stock goes from 100 to 90, an investor who looks at fundamentals will think maybe it's a better buy, explains one source. But with Louis, he will figure he must have been wrong about something and get out. Contrast that, say, with Robertson, who, even after shutting down his firm, was doggedly holding on to massive positions in such stocks as US Airways Group and United Asset Management Corp.
 
[09:27] <whale> The difference between Louis and Julian is, Julian sees the mountain from afar and doesn't worry about the valley. Louis has a long-term macroeconomic vision on every position, but he won't let that stand in the way of making money over the next five minutes, says one former employee.
 
[09:27] <whale> Bacon's risk habits were formed in the futures arena. Interestingly, many of the macro funds that have disbanded or scaled back following losses - Steinhardt Partners, Odyssey Partners, Soros Fund Management and Tiger Management - were led by stock pickers. Meanwhile, most of the surviving macro players - Bacon, Jones, Kovner and Trout - come from the futures business. The only people who survive in the futures world are those who unde
 
[09:27] <whale> Agreed Bacon in a recent investor letter: Those traders with a futures background are more 'sensitive' to market action, whereas value-based equity traders are trained to react less to the market and focus much more on their assessment of a company's or situation's viability.
 
[09:27] <whale> TT comment: The last comment should more correctly have said Those traders with a technical background as that is the big difference between Bacon and Robertson.
 
09:59] <whale> very quickly :)
 
[10:00] <whale> i was the guy in college who already knew where he was going when he graduated
 
[10:00] <whale> in fact it was very hard for me to go to college....because i knew i didnt need to go
 
[10:00] <whale> but i went...on my Moms insistance...and turned down a job as a runner on the NYSE
 
[10:01] <whale> for 12K a year :)
 
[10:01] <whale> So i spent 4 years....getting As in econ and finance....and Ds in everything else
 
[10:01] <whale> and worked my summer internships...at MLCO , LEGG etc.....never once getting paid
 
[10:02] <whale> when i graduated there turned out to be a mini recession on wall street
 
[10:02] <whale> and i was amazed that i didnt get one "i told you so" from my mom
 
[10:02] <whale> dangit wavx
 
[10:02] <whale> so i hit the pavement with 500 resumes in my hand....went to as many trading desk as i could find
 
[10:03] <whale> even snuck intp the UBS desk ...around security.....to their trading desk....sat myself down...chatted...before being arrested
 
[10:04] <whale> when i walked into Lehamn brothers on that fateful day ....i bumped into a fraternity brother
 
[10:04] <whale> who was workin as a clerk on one of the smaller desks
 
[10:04] <whale> he snuck me into lehman and pointed out all the big traders....
 
[10:05] <whale> i remember the screaming...tickets flying...expletive...food being lofted...coffe being thrown ..from one particular desk
 
[10:05] <whale> so i wandered over...and tried to introduce myself....
 
[10:05] <whale> and all i heard was "who the f are you"
 
[10:06] <whale> but...that afternoon the SP was in a freefall.....and the traders were swamped
 
[10:06] <whale> they had no one too pick up the order tickets...and enter them into the computer...so Louis had no idea what his P&L looked like
 
[10:06] <whale> so i just started sorting them....
 
[10:07] <whale> and then i started to manually enter them into the ADP system they used
 
[10:07] <whale> about an hour....later....Louis storms outta his office....screaming...what are we up 5mil? 10?
 
[10:08] <whale> they all looked at each other waiting for the eruption....when no one could answer
 
[10:08] <phi1l> ya..
 
[10:08] <whale> instead ...loius walked over to the adp maching...and said ..wow....up 8 mil....nice
 
[10:08] <whale> when he walked away the head trader.....said...."that better be f'in right"
 
[10:08] <whale> and go get your coat off an sit down
 
[10:09] <whale> that is how i ended up...in perhaps the best situation to learn trading...you could ever imagine
 
[10:09] <whale> for the next 18 months i worked 20 hours a day
 
[10:09] <whale> maybe 16 most...i dunno
 
[10:09] <whale> 6 in the morning till very late at nith
 
[10:09] <whale> nite
 
[10:10] <whale> it was an amazing expereince
 
[10:10] <whale> meeting guys like Georege Soros...and Tuder jones
 
[10:10] <whale> the limos home...the whole shegang
 
10:10] <whale> had clients flying us all over the country...to sporting events.....trips to paris
 
[10:11] <whale> and i made more money my first year out of college then my father did his whole life
 
[10:11] <whale> but all was not well in the jungle :)
 
[10:12] <whale> I soon really started to be bothered by the excess....believe or not.....the pace...the dirty city.....the apparent relationship between wealth and UNhappiness
 
[10:12] <whale> at that point ...i was kinda co-head of the desk
 
[10:13] <whale> i ahd one boss betwween Louis and I ....and Louis and I had become pretty good friends
 
[10:13] <whale> well as good as anyone was with the mysterious master
 
[10:13] <whale> when the first Iraqi war broke
 
[10:13] <whale> we had hire 2 senior traders to man the desks all night long
 
[10:14] <whale> anyone still listening?
 
[10:14] <gregm> yes :)
 
[10:14] <Lisa> yep
 
[10:14] <jerry> yes!
 
[10:14] <spar> ya
 
[10:14] <phi1l> of course !!!
 
[10:14] <whale> lemme know if it gets a little boring
 
[10:14] <docneuro> yes
 
[10:14] <jbeever> yep
 
[10:14] <jbeever> no, this is interesting
 
[10:14] <tom> yes
 
[10:15] <whale> the first guy we hired... a slick.....trader from ....gSCO i think....was caught front running trades ...on his second night
 
[10:15] <whale> so gone he was...and thar was me to fill in
 
[10:15] <whale> so i was workin 630 am ...to...say 7pm...takin a dinner break and working till 1 am
 
[10:15] <whale> when the ohter traders arrived
 
[10:16] <whale> well ...on the night the war broke
 
[10:16] <whale> it had been like 30 days...of watching and waiting
 
[10:16] <whale> almost everyone had given up the wait....abandoned there desks at night...
 
[10:16] <whale> so there i was at Lehman.....when the news hit.....
 
[10:17] <whale> the one i remember...is...."AP news reports Israel recieving incoming scuds"
 
[10:17] <whale> not sure that was the first....but its what is in my memory for some reason
 
[10:18] <whale> well Louis in Paris....fresh off his renounceiation of US citicenship in order....to avoid all US income taxes
 
[10:18] <whale> (he had to only have offshore funds too i bleive)
 
[10:18] <whale> so i start dialing his hotel frantically....4410..1.1.F!.....4410...34242....dangit
 
[10:19] <whale> finally got it right
 
[10:19] <whale> seemed like it took me 5 minutes to dial
 
[10:19] <whale> when he answered...i said "Louis its scott"
 
[10:19] <whale> he said..."scott"?
 
[10:19] <whale> my nephew?
 
[10:20] <whale> i said..."the war has started ...and im pretty sure we are the only ones that know about it right now"
 
[10:20] <whale> he calmy said..."oh scooooooot"...in a long southern drawl....and said...son this is about to be the greatest day of your life"
 
[10:20] <whale> not an ounce of emotion
 
[10:21] <whale> he said....get on the phone...we need bonds...we need to short SP...we need to buy gold...and oil
 
[10:21] <whale> i went into the midam market...late session ...and bought every bond offered...for a full 10 minutes
 
[10:22] <whale> shorted about 20 mil in SP futures.....and vbought 100 mil worth of gold
 
[10:22] <whale> unimpeded...over about 20 minutes
 
[10:22] <whale> andi was frazzled...tickets everywhere...i said "Loius i have no idea what we have"
 
[10:22] <whale> position wise
 
[10:23] <whale> he said...."dont worry...heres the plan....when they lights pop on ...and the traders are runing to there desks.....panicked...i want you to unwind it all...i wont them to cover there shorts with us"
 
[10:23] <whale> 10 minutes later they poured in...like an african stamped
 
[10:24] <whale> there i was coffes stained...exhausted
 
[10:24] <whale> and when the first guy jumped up ...accrooss the floor...and yelled..."I need gold....40 bid"
 
[10:25] <whale> he made 30 mil that night....and a 70 mil port
 
[10:25] <whale> now hes mannaging over 7 bil.,..i think
 
[10:25] <whale> owns three private island
 
[10:25] <whale> and considered one of the best that ever lived
 
[10:26] <jbeever> far out brussel sprout!
 
[10:26] <whale> Three weeks later he gave me a 25K check....for a "market increase in salary"
 
[10:26] <whale> i was just 25 at the time..
 
[10:26] <Lisa> cheapskate
 
[10:26] <whale> 6 weeks later i quit
 
[10:26] <kenwolff> cheapskate
 
[10:26] <whale> lol
 
[10:26] <catman> lol
 
[10:26] <whale> it wasnt the money
 
[10:27] <jdb> ingrate
 
[10:27] <phi1l> yeah
 
[10:27] <whale> and they were all his calls
 
[10:27] <Lisa> yeah but you did all the work
 
[10:27] <whale> i quit...because i realized...THAT was teh pinacle
 
[10:27] <whale> and it didnt make me happy
 
[10:27] <Lisa> he could have been a bit more generous
 
[10:27] <docneuro> only 25K?
 
[10:27] <whale> lol
 
[10:27] <jbeever> yeah, maybe given you one of his ISlands...
 
[10:28] <whale> so i left...no plan....a terrible pain in my stomach....
 
[10:28] <docneuro> 25% of a single brain surgery
 
[10:28] <whale> lol doc
 
[10:28] <whale> we had nice christmas bonuses
 
[10:28] <whale> and he wasnt managing much money...as that goes
 
[10:28] <whale> he didint have all that much
 
[10:28] <whale> it was considered big...to a recent college grad...when teh expereicnced guys got nothing
 
[10:28] <whale> it was alot of money for me
 
[10:29] <Gimmie> so what did you do after you quit ?
 
[10:29] <whale> my dad was a cop his whole life...barely made ends meet
 
[10:29] <whale> hey GIm
 
[10:29] <kenwolff> Hey gimmie.. welcome
 
[10:29] <counselor> hello!
 
[10:29] <Gimmie> :-)
 
[10:29] <catman> Gimmie!!
 
[10:29] <whale> well thats another story :)
 
[10:29] <whale> I paper traded for 6 months....while my stomach healed....got my life back to sanity
 
[10:30] <Gimmie> wow
 
[10:30] <whale> then i started to consider med school belive or not
 
[10:30] <gregm> hi gimmie :)
 
[10:30] <whale> took about 60 credits of science at univ of maryland....then took the GREs and applied to Vet school
 
[10:30] <whale> :)
 
[10:30] <catman> docwhale doesn't cut it as a nick
 
[10:30] <whale> yes K
 
[10:30] <kflaig> lol
 
[10:30] <Gimmie> no way
 
[10:31] <whale> got accepted....summer of ..hmmmlike 1993 or something
 
[10:31] <whale> and then....by fate....i was on a trip to san diego...in like August of 1193
 
[10:31] <whale> 1993
 
[10:31] <whale> not that old
 
[10:31] <whale> I was actually selling an old collection of comic books from the 40s i had put away as a kid
 
[10:32] <whale> to use for vet school
 
[10:32] <gregm> LOL
 
[10:32] <whale> andi was sad
 
[10:32] <whale> cause i loved them...reallyu
 
[10:32] <whale> really
 
[10:32] <whale> and i was ambivalent about vet school anyway
 
[10:32] <whale> it was just the only other thing that really interested me...and i was a bit burnt on trading
 
[10:33] <whale> how can i walk awayu from that....and then try to figure it out on my own?
 
[10:33] <whale> but met a guy on the plane.....who had just made like 100K on a stock trade...an inside tip...as it came out later
 
10:33] <whale> oiy
 
[10:33] <whale> who talked with me for 3 hours...
 
[10:33] <whale> fired up my laptop..
 
[10:34] <whale> and talked about how badly i wanted to find away to reduce the risk of short term trading
 
[10:34] <whale> and all the paper trading id done
 
[10:34] <whale> we had a nice conversation....we exchanged #s...and parted ways
 
[10:35] <whale> when i got back.....after selling my dang books
 
[10:35] <whale> he called about a week before school started....said...."take 50K and give it a shot....postpone vet school if you can"
 
[10:36] <whale> after his third call...i agreed
 
[10:36] <whale> and thats what led here
 
[10:36] <whale> with lotsa ripples on the way
 
[10:36] <whale> so thats it
 
[10:36] <phi1l> ;)
 
[10:36] <kenwolff> cool story
 
[10:36] <whale> yeah
 
[10:36] <gregm> awesome
 
[10:36] <actorguy> whale...this is hollywood material...let's do the movie
 
[10:36] <jbeever> great story whale
 
[10:37] <actorguy> i'll play you as an old man
 
[10:37] <whale> :)
 
[10:37] <catman> great story whale!! better than ...........well better than a James Bond movie!!
 
[10:37] <jerry> unbelievable!
 
[10:37] <whale> lets talk quickly about the early trading
 
[10:37] <Gimmie> did you save any of the comic books ?
 
[10:37] <whale> i actually continued to paper trade....even though i had the money there...ready to go...no risk
 
[10:37] <whale> i have some ;)
 
[10:38] <Gimmie> :-)
 
[10:38] <whale> i actually startig buying and selling them with my profits later on :)
 
[10:38] <actorguy> hey fred and jgross you guys picked a good time to trial here
 
[10:38] <whale> i dont have any real memory of the early...blind...ignorant trades
 
[10:37] <whale> lets talk quickly about the early trading
 
[10:37] <Gimmie> did you save any of the comic books ?
 
[10:37] <whale> i actually continued to paper trade....even though i had the money there...ready to go...no risk
 
[10:37] <whale> i have some ;)
 
[10:38] <Gimmie> :-)
 
[10:38] <whale> i actually startig buying and selling them with my profits later on :)
 
[10:38] <actorguy> hey fred and jgross you guys picked a good time to trial here
 
[10:38] <whale> i dont have any real memory of the early...blind...ignorant trades
 
[10:38] <whale> i just remember ...i was always on the wrong side...not wrong..just late
 
[10:39] <whale> whenever id make money...id lose it right back
 
[10:39] <whale> it was clear that there was something there...i was always...as i say...sniffin around the right areas :)
 
[10:39] <actorguy> you dawg
 
[10:40] <whale> i just couldnt seem to add order....get focused...and some scientific means.....to the tradding
 
[10:40] <whale> i was comnfident....but all the books on random markets...were starting to sound logical
 
[10:40] <whale> and as corny as it sounds....it wasnt until i joined this room in like 97...or 98
 
[10:41] <whale> that i started to realize that it isnt about just pickin trades
 
[10:41] <whale> its about the entry...the exit...the probabilities.....
 
[10:41] <whale> and it opened all kinds of doors for me
 
[10:42] <whale> so much of the burden is taken off when you realize there is something ..you are supposed to do
 
[10:42] <whale> your supposed to take profits at whole numbers...your supposed keep stops at important levels
 
[10:42] <whale> its amazingly freeeing....to have that burden off
 
[10:42] <whale> and once that started for me...i started to make money
 
[10:43] <whale> about 6 months in mtrader....and i started to make decent money consistantly
 
[10:43] <whale> with only greed.....and lack of dicipline....as temporary setbacks
 
[10:43] <whale> and i still have them today
 
[10:44] <whale> trading is very emotional and its very difficult to keep yourself in check for long periods of time
 
[10:44] <whale> and i dont think you need to
 
[10:45] <whale> but what you learn ...is that you are human....and you recognize your weakenessess..and in this game thats a huge tool
 
[10:45] <whale> you learn when you are grappling with the discipline....that you had mastered just 2 sessions ago
 
[10:45] <whale> its mind boggling at time
 
[10:45] <whale> but with experience...you just ...get up...and walk away
 
[10:46] <whale> clean the slate
 
[10:46] <whale> if you ever see me say..."im takin my chips off the table"
 
[10:46] <whale> its because ive just had a nice run...but its slipping
 
[10:46] <whale> things have stopped workin...im pressing...my head hurts
 
[10:47] <whale> im primed for an error...that will lose the whole days...or weeks profits...in an instance
 
[10:47] <whale> it happens ...and it can be devastating
 
[10:47] <whale> to your confidence
 
[10:47] <whale> if iv learned anything...best....its how to trade...with who i am
 
[10:47] <whale> what my skills are
 
[10:47] <whale> what im good at
 
[10:48] <whale> i recognize patterns im slipin into...a loss of control
 
[10:48] <whale> and i walk
 
[10:48] <whale> cash in the chips
 
[10:48] <whale> because the next day ..it starts again
 
[10:48] <whale> all over.
 
[10:48] <whale> like it never happened
 
[10:48] <whale> you cant even remember the symbols
 
[10:48] <whale> its amazing
 
[10:49] <whale> During the last few year ...with the market so rough on daytraders
 
[10:49] <whale> it has been one mental battle after another
 
[10:49] <whale> anyone who doesnt say they are workin on a small portion of profits..now than in 1998 is a lar
 
[10:50] <whale> well lately its reallly improving
 
[10:50] <whale> so keep your fingers crossed
 
[10:50] <actorguy> eyes, toes and feet too
 
[10:50] <whale> i think...the absolute discipline ..required to make money the last few years....has helped me al;ot
 
[10:50] <whale> yeah actor :)
 
[10:51] <whale> you absolutly had to take profits...like a machine....during the bear market
 
[10:51] <whale> and they were often small
 
[10:51] <whale> i had days where id be happy with 4 trades...with and average gain of a few hudnred a trade
 
[10:51] <whale> it take great discipline to trade that tight
 
[10:51] <whale> and probably why i cant seem to looosen up now
 
10:52] <whale> and days....where i wouldnt even trade...wouldnt eve try
 
[10:52] <Lisa> I'm with ya there
 
[10:52] <whale> market would dry up by 945 am
 
[10:52] <whale> and i knew...."this is where my strenth is"
 
[10:52] <whale> this market wants me to lose money
 
[10:52] <whale> b/c thats what most folks need...to lose....before doing the right thing
 
[10:53] <whale> so i took immense pride...in even suriving....paying the bills...while other pressed...and got crushed
 
[10:53] <whale> and its true..the adage...."what doesnt kill you makes you stronger"
 
[10:54] <whale> because now the market is loosening up...and ill be honest..it seems easy at times
 
[10:54] <whale> but still discipline....slips...will punsih you
 
[10:54] <whale> anyone wanta talk about particular trades?
 
[10:54] <whale> this has got to be gettting old
 
[10:55] <docneuro> nice class whale. i missed the first part though
 
[10:55] <whale> i really could go on an on about the mental battles ive fought to get where i am...and where i still need to go
 
[10:55] <spar> awesome whale, thanks very much!
 
[10:55] <whale> Do you want me to talk about my trades...my routine? what i look for..what catches my eye etc?
 
[10:56] <whale> or have you guys had it
 
[10:56] <docneuro> GREAT
 
[10:56] <gregm> actually helping me whale,,,sounds like my trading,,,discipline slips,,having it one day,,,only to lose it the next,,,but you know you're onto something,,,etc
 
[10:56] <kflaig> anything you want to talk about is great
 
[10:56] <docneuro> whenever you have time
 
[10:56] <jbeever> please continue
 
[10:56] <charley> What catches your eye
 
[10:56] <whale> its the battle gregm..its the whole game
 
[10:56] <spar> anything else you want to talk about, whale...
 
[10:56] <gregm> right,,
 
[10:56] <whale> im gonna start ....with the morning
 
[10:56] <gregm> just seeing that after 3 years,,
 
[10:56] <whale> up everyday at 6
 
[10:56] <whale> same thing
 
[10:56] <whale> sit with the kids....the Wiggles on one tv
 
[10:57] <whale> CNBC in the backround
 
[10:57] <whale> gettting a fell for overseas market....how the futures are
 
[10:57] <whale> any new news
 
[10:57] <whale> news i traded 24 hours ago that they are callin "breaking"
 
[10:57] <whale> so i get a fell
 
[10:58] <whale> i am starting now...to get a feel...for what side of the trade..has the best chacne of success
 
[10:58] <whale> but its early
 
[10:58] <whale> by 730...my wife is showered..takes the kids...so im sittin down
 
[10:58] <whale> scanning the news
 
[10:58] <whale> looking for similiar patterns as the day before.....
 
[10:58] <whale> wow ISPH sounds an aweful lot like OXGN
 
[10:58] <whale> hm
 
[10:59] <whale> lets have a look
 
[10:59] <whale> how did MBRS hold up on day 2....that earnings blowout...hmmm KOSP day 2 now
 
[10:59] <whale> wonder if thats holding up
 
[10:59] <whale> stuff like that
 
[10:59] <whale> finding patterns
 
[10:59] <whale> limpin it in my head
 
[10:59] <whale> getting a feel for where i wanta act..when the time comes
 
[11:00] <whale> and then the news starts to hit
 
[11:00] <whale> and its early in the am
 
[11:00] <whale> so you see a company blows out earnings.....and you know what happened yesterday...
 
[11:01] <whale> so you scramble..look at the daily ..is it extended? what kinda volume?
 
[11:01] <whale> whats my downside...
 
[11:01] <whale> its up 50 cents here...hmmm..i seriously doubt its goin negative on such good news...how the overall market?
 
[11:01] <whale> maybe 20 cents downside...best guess
 
[11:02] <whale> whats the upside...well i dunni....XYZ went up 5 bucks yesterday on the kinda news
 
[11:02] <whale> ok,,lets cal the upside $2....conservativly
 
[11:02] <whale> risk /reward works for me
 
[11:02] <whale> i can be wrong 2 out of 3 times and still be ok
 
[11:03] <whale> thats the morning type plays....both shorts and longs
 
[11:03] <whale> whats the news
 
[11:03] <whale> whats the pattern
 
[11:03] <whale> whats the risk/reward
 
11:03] <whale> how my gettin out if im worng
 
[11:03] <whale> just do it
 
[11:03] <whale> very quickly
 
[11:04] <whale> then add the discipline to actually get out
 
[11:04] <whale> and you make money
 
[11:04] <whale> all you end up with is a headache...from exiting too soon
 
[11:04] <jdb> LOL
 
[11:04] <whale> then you have the earnins plays
 
[11:04] <whale> and thats a function of homework.
 
[11:05] <whale> and of cours...payin attention to how the others are reacting too
 
[11:05] <whale> you see the estimates..and hopefully you see teh whispers
 
[11:05] <whale> and the news hits...and your able to make a judgement
 
[11:05] <whale> these are far riskier though...
 
[11:06] <whale> often better to use teh guidance.....and wait out the intial reaction
 
[11:06] <whale> in the mornings...you can underestimate the power of being early
 
[11:06] <whale> as long as you dont chase beyond reason...theres almost always someone willing to pay more than you '
 
[11:07] <whale> especially if you watch the level 2...and can see the interest brewing...and your scanning news...getting more info
 
[11:07] <whale> all leading to a higher prob of success
 
[11:08] <whale> these are just the trades though
 
[11:08] <whale> you will learn to recognize them over time ..and even come up with better ones
 
[11:08] <whale> what you have to focus on is money managemetn
 
[11:09] <whale> if you make $500 in the morning.....+250 is your stop
 
[11:09] <whale> that kinda stugg
 
[11:09] <whale> stuff
 
[11:09] <whale> stay profitable...and let it build confidence
 
[11:10] <whale> you risk only what you are will to lose...and you should not be willing to lose early...higher percentage profit....b/c $500 doesnt cut it
 
[11:10] <whale> more money will come when your skill level gets there
 
[11:10] <whale> many of good traders have failed...because they didnt know how to manage teh money
 
[11:10] <whale> every trade is 1000 shares?
 
[11:11] <whale> so a 80% trade...gets the same risk as a 60% trade
 
[11:11] <whale> you will by the law of odds
 
[11:11] <whale> like a casino
 
[11:11] <whale> thats how a casino wins
 
[11:11] <whale> the law of odds gets you
 
[11:11] <whale> and it will in trading too...unless the define risk/reward as your number one goal
 
[11:12] <whale> without a doubt
 
[11:12] <whale> i think thats all i can type..
 
[11:12] <whale> but you get the idea..and i will try to slam home examples all day long real time
 
[11:12] <whale> its really the best way
 
[11:13] <whale> after a while your just preaching
 
[11:13] <whale> the RIMM short Chirs made was fabulous
 
[11:13] <whale> think about it
 
[11:13] <whale> it topped at 29.10 ish
 
[11:13] <whale> pulled back...and was strigging at 27.80
 
[11:13] <whale> 28.80
 
[11:14] <whale> instantly you define your risk....a new high
 
[11:14] <whale> a new high and your wrong right?
 
[11:14] <whale> well its not the top..so you must be
 
[11:14] <whale> so you risk 30 cents
 
[11:14] <whale> well how much money am i interested in risking
 
[11:14] <whale> ?
 
[11:14] <whale> time of day isnt great
 
[11:14] <whale> drifty market
 
[11:14] <whale> better reduce to 1/2
 
[11:14] <whale> whats the downside
 
11:15] <whale> looks like just another bogus buyout rumor to me
 
[11:15] <whale> what do you think whale.....
 
[11:15] <whale> i say 28 first support
 
[11:15] <whale> done...3 to 1
 
[11:15] <whale> risk reward
 
[11:15] <whale> pressures off
 
[11:15] <whale> now just execute
 
[11:15] <whale> and when it gets to 28...you cover
 
[11:16] <whale> and feel like the man (or wonam)
 
[11:16] <whale> woman
 
[11:16] <whale> for a moment
 
[11:16] <whale> then it falls further
 
[11:16] <whale> and you feel ill
 
[11:16] <whale> but its the rules
 
[11:16] <whale> youdefined the trade and executed
 
[11:16] <whale> you took the uncertainty out of your own mind
 
[11:17] <whale> that was your best guess at the time...and you just made $500 or $1000 or whatever

       

     

 

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