Amos joined. Amos Hi Mike hello Larry ge amos Mike_Gallager hi Gary_Fullett joined. Anna joined. Gary_Fullett Good morning amos Gary_Fullett , Larry , jil joined. Larry Gary Great work today in class today was spot on Larry Had my best day in a month Gary_Fullett Larry Amos Due to some emergency I have to leave soon, take a shower, pack and go to Jerusalem --So I have to shorten tonights session, Sorry Gary_Fullett wonderful I wa able to assit Gary_Fullett I mentioned it to the room amos Gary_Fullett do what you neeed to do Amos So I am going to share with you some of the recent material I have been preparing- hope it helps rich joined. Kurtiss joined. skylar joined. Amos I can assure you that there is NOWHERE in the world that this kind of charts and stories are being told-- simply because there aren't any more such old traders that have lived thru those real stories and very few people in the world have 40 year data Brian_O joined. Amos first example is the real story about Richard Dennis and Sugar Amos YOu can see the whole history of Sugar in the annual chart Amos from 1971, Sugar had en exlosion from 3 cents to 66 cents in the first 4 years of its apparition Amos then came back to 5 cents and then 2 hears later an explosion to 45 cents , The Fundamental aspect is not so important-- Saccarin was invented years ago and after some scare stories the other artificial seateners appeared such as Aspertame and others-- there were always some stories of physical damage and they went well into the 19990. in the 70s there was a story about failure of Sugar crops in Cuba and such Song joined. Amos the story here is that Richard Dennis-- the Father of the Turtles (any new traders here who do not know about the turtles-- google it) went short sugar around 45 cents and rode it all the way to about 15 cents--- that is 39 cents profit in a rather short time--- and his marvelous stories were the hit of the town in those days. EVERYONE knew about Dennis coup in SUgar Amos However, in an obscure article in Futures magazine (I am almost sure it was written by Susan Abbott at the time-- but when I contacted her-- she did NOT remember) around 1989 or so-- there was a short sotry from an INterview with Dennis , who wa GOD at the time Kurtiss left. Amos and he said the following sentence: "I lost more millions trying to go Sugar at 5 cents, than I made going short Sugar at 45" Amos I was a rather young trader at the time and even then I found it amazing. Amos How can you lose millions when you buy something that MAXIMUM can lose you 5 cents??? Amos It took a long time and finall I decided to show this on a chart-- and you get it tonight Amos So the first chart shows the whole history of sugar last 40 years and the arrow points to the point where he said that amazing sentence Amos Next chart has an ellipse than encapsulates that story Amos and I write a simple but painful sentence -- that may haunt a lot of peope in years to come-- when we face similar conditions (Equities!) Amos When sugar came down from 45 cents a pound and made all time lows0-- it went to as low as 2.37 cents. that was THE LOW Amos most likely Dennis , having banked a bundle on the short side-- felt rather cocky and sure of himself (like "I KNOW SUGAR"--this is MY turf, etc) and felt free to toy with the long side Amos He started to buy OTM calls-- not piggish-- not 20 or 30 cents-- that would have landed him a fortune had they expired IN THE MONEY - but say 10 cents calls Amos Not much to ask, is it? Amos Well-- this is the curse of buying "cheap" things thinking they MUST appreciate-- something that may well happen to a lot of people who are buying cheap houses in Detroit today-- thinking-- "heck , this was selling at 150,00- just 2 years ago and now it is selling for a Dollar== what can I lose?" Amos Last sentence is somewhat of a joke-- but in reality it is not-- if you buy a house on say 20 cents on the dollar-- and it may take 20 years before it starts apperciating-- you are NOT being so smart Amos Now when something is very cheap-- you have a tendency to do it in LARGE NUMBERS and if you buy millions of CHEAP Out of the MOney 10 cents calls on sugar and you keep ROLLING THEM OVER (no LEAPS in sugar-- you cannot buy LONG TERM CALLS-- you buy 3 to 6 months at most ahead of time) and they all expire WORTHLESS because SUGAR NEVER REACHES 10 cents for the next 3-4 years-- YOU CAN LOSE A LOT OF MONEY Amos because multiplying a large number (the quantity of OTM CALLS HE BOUGHT) by a small number ( THE PRICE OF THOSE CHEAP OPTIONS)== you still get a LARGE NUMBER!! Amos this is the curse of dealing with CHEAP STUFF-- like the PENNY STOCK MARKETS of Vancouver or Denver-- who cost traders a LOT OF MONEY even if they bought stocks for a few pennies-- they simply bought MILLIONS OF THEM Amos Next chart--What is tbe main problem? SIMPLE-- our BAD VISUAL CAPACITIES and our SHORT TERM MEMORY Amos when you look at the chart ( in those days SUgar had only 15 years history and EVERY ONE remembered Sugar at 66 cents and then at 45 cents (which were HUGE appreciation from the LOW POINT-- and you CANNOT HELP but IMAGINNING The SAME thing happening AGAIN Amos and you are DETERMINED TO BE PART OF THE NEXT such FORTUNE MAKER!!! YOU WILL NOT miss the next wave. OH NO,. NOT ME-- I may have missed the first two waves-- but I WILL RIDE THE NEXT ONE Amos well== this is NOT how markets work option joined. Amos Once the chart shows something very obvious= and enough succers decide that the market MUST REPEAT the same way again-- because after all 'HISTORY REPEATS ITSELF"==== the chance that it will happen again -- just to satisfy the idiots who missed the first two occasions-- is SLIM to none Amos THe amazing piece in this story is that even a great trader as DENNIS-- FELL INTO THE SAME TRAP -- and he had the gust to admit it Amos I drew a fibo retracement on the chart and even if the market corrected only 50% of the last decline from 45 to 3--- it could reach 23 cents (which it practically did-- last few months!!!!) Amos so Looking at the chart declining so steadily and asking for 'ONLY A RALLY TO 10 cents" -- is NOT TOO GREEDY, Is it? Amos turned out-- that many people did the same thing-- and the CM KNEW IT and kept SELLING THOSE "cheap" OTM calls for years and years-- and MADE A FORTUNE Amos Next chart show a little bar by bar--- which I understand Gary is doing lately-- and I think this is one of the BEST WAYS TO LEARN TO TRADE-- if you do it HONESTLY Amos think of yourself at the RHS of this chart--- YOu look at the market goint down to 2.37 cents and you think to youself-- HOW CAN I GO WRONG BUYING THIS STUFF? Amos So you say-- I dont want go long futures and roll them over-- I would rather buy OTM calls and all I can lose is the premium YG joined. Amos The big mistake is that the TWIN PEAKS to the left-- are a CURSE-- they LURE YOU to go for broke! and then you lose a lot of money Amos The question is NOT if buying SUgar at 3 cents is a good bargain because MAX you can lost 3 cents (3300 dollars per contract) BUT HOW HIGH WILL IT GO???? and that is determined for you by the PICTURE-- it went to 66 then to 45, it is high time it goes to 20 soon Amos buying at 3 to go to 20 is ONE HECK OF A BARGAIN Amos NOT Amos Buying cheap can be very expensive-- mostly because PEOPLE LOSE THEIR PERSPECTIVE Amos notice that I dropped the chart from annual to semi annual jil left. Amos Next charty show a SEMI THRUST around 5 cents Amos If you decide to buy a Semi annual thrust-- I cannot argue with you-- the question is-- what do you expect? Amos Next chart is the next bar-- and sugar went to about 9.68 cents, Amos Think about it-- if you bougt sugar at 3 cents-- you TRIPPLED YOUR MONEY Amos If you bought the THRUST you almost DOUBLED YOUR MONEY Amos this is great-- but people do NOT think that way-- they become GREEDY because they "SEE" the past-- they see 45 cents and they "WANT AT LEAST HALF OF IT" Amos well-- this is what RIchard Dennis did- and he lost a lot of money Amos You let your imagination go wild because of the past behavior of the chart-- and the market will kill you -- becausse by then EVERYONE SEES IT Amos This happened in 1990 and the market was much less sophisticated than today and for sure Technology was nothing like it is today Amos Last sugar chart shows what happened after sugar retraced to 10 cents-- it spent another year going sidways Amos ALL THE OPTIONS BUYERS--WENT TO THE CLEANERS Amos This is an important lesson to all who think that market MUST REPLICATE ITSELF Amos the market is NOT A GIFT for latecomers Ory joined. Ory left. Amos THe second example for tonight is another true story that few know-- it is a story about George Soros and the yen Ory joined. Amos In September 1985 there was a "PLaza Accord that came with some statments that I coppied to the letter, not sure if you see them, but I marked in RED the 5th clause that dealt specifically with the yen which was trading at bout 250 yen per dollar at the time larryg joined. Amos I tried to read it and it said things like "FLEXIBLE MGMT of MONETARY POLICY with due attention fo the yen rate" and other vague statements Ory Hi Amos Amos Beats me if this is a very EARTH SHAKING change and decision-- but the MONDAY after the PLAZA ACCORD WAS ANNOUNCED- the yen GAPPED DOWN (UP ON THE FUTURES) and the rest is history Amos Next few charts show the INVERSE OF THE YEN-- CQG allows you this with the SHIFT key-- and you get the chart in YENS PER DOLLLAR * (the regular charts show DOLLARS PER YEN) Amos So the chart shows the monthly chart of september 1985 and it is a very wide bar which closed at the low and broke 3 years low Amos Next chart shows the WEEKLY Amos You can see it was the third week in September the market OPENED WITH A GAP and kept declining (again, RISING ON THE REGULAR YEN FUTURES) YG left. Amos The story goes that Soros was running then a large trading room and he has many traders working for him. Turns out that most of them were long the yen ( short the DOLLAR YEN) into the move and as the market opened with a gap-- all of them had something like 8% appreciation in their trading accounts on the OPENING--- ALL THOSE YOUNG (albeit well trained by one the best traders in the world) traders RUSHED TO SELL THEIR YEN CONTRACTS-- FEELING ELATED AT THEIR LUCK of making such a KIILLING in ONE MORNING Amos Soros HEARD THAT-- BOLTED FROM HIS ROOM INTO THE TRADING ROOM where all of them sat and shouted: "I AM BUYING ANY YEN CONTRACT YOU ARE SELLING-!!" Amos This is a true story-- I don't temember where I wrote it-- but it was an authentic story Amos The young traders RUSHED TO TAKE HUGE PROFITS-- and SOROS realised that this is an UNUSUAL GAP and wanted to LET PROFITS RUN. SOunds simple but HARD AS HELL Amos you have such windfall profits coming from "NOWHERE"-- again the Plaza statement is NOT so OBVIOUS! and YOU WANT TO RING THE CASH REGISTER Amos Wrong Amos Next chart shows what happened next few weeks Amos yen dropped from 240 to 200 yens per dollar in straght line Amos I write on the chart about the UTTER SIGNIFICANCE of a LARGE bar--- the one your call here VSB or VDB Vertical Supply or Demand Bar Amos this is very important Amos Next chart shows what actually happend-- yen kept going down down until 80cents per dollar (interestingly enough 15 years later-- we are at the same place!!!) Amos ONE BAR ONE MONDAY MORNING-- resutled in a drop from 240 to 80. Amos Could you know? ABSOLUTELY NOT Amos Could you have ridden the whole move? SILLY QUESTION--OF COURSE NOT Amos BUT what should you have done in reality? Amos EASY IN HINDSIGHT-- BUT a very important statment-- THE THING TO DO was to FOLLOW WITH A TRAILING STOP! Amos Easier said than done-- but when the market goes your way )the break in 9/1985 was ALREADY WITH THE TREND!-- it is smart to let it run Amos next chart is the annual chart and it shows that actually on the yearly chart after dropping from 360 yen per dollar (arond 1968) to 175-- the yen came back to 275 and then dropped to 80 Amos Btw-- the last move from 125 to 80 cost George Soros a billion dollars-- because he decided that the drop was ENOUGH and he wanted to ride the next rally. Amos well he built a huge short yen position (the chart is still ithe inverse-- yens per dollar-- the next chart shows the futures) and the last drop to 80=== (rally from 100 to 125 on the futures) cost him a billion according to his OWN ADMISSION Amos so the genius who made a fotune by riding the move WITH THE TREND-- also LOST a lot by trying to GUESS THE TURNING POINT! Amos Important message Amos When you go with the trend-- the goddess of foturne is behind you Amos when you try to buck the trend (not waiting for a SELLING CLIMAX at least)-- you are going to get hurt Amos Even a good trader like Soros-- makes those mistakes Amos Last chart shows the chart they way we are used to-- DOllars per hen and I marked the two points Amos At the bottom - Soros rode the trend Amos At the top he TRIED to BUCK the trend Amos Made money on the right move Amos Lost money on the worng move Amos I think this is an important story for all of us Amos This is it. Amos Sorry I must run --have an emergency trip to Jerusalem and must leave early to beat the traffic Amos hope it was not a waste of your time Brian_O great stuff, thanx Amos see you next time folks Amos gn Randy very good points, some that we all tend to forget and need to be reminded of frequently! Song thanks for the story Amos left. carnac ty Brian_O left. carnac left. larryg left. Gary_Fullett TREND Gary_Fullett is the most importan info u have Gary_Fullett amos is one of the top wyckoff people in the world imho skylar left. Ory long with David Song the problem is I am always against the trend. ha ha Ory along Song left. Song joined. Gary_Fullett NO NO NO wiht trend Gary_Fullett i try to tell clients of thsi when they trade Gary_Fullett david is right as well Gary_Fullett Any q? Gary_Fullett I am about to do charts Ory i know Gary,,,,,,,,,,no comparisos made,,,,,,,its niche Song Gary, have not received the artical you mentioned yesterday. have you sent them out already? Gary_Fullett and sepak wiht clients Gary_Fullett which article? Gary_Fullett right ory Song you said you have a great artical yesterday, have to keep Ory Thanks Gary Song everybody should keep it Gary_Fullett ahh yes i sent it to newsltter folks Gary_Fullett the last 2 article about wyckoff in 1910 Song ok, thanks. Gary_Fullett and ast nights Ory the ones i got were great Gary_Fullett they should kee it Gary_Fullett keep it along with david weis material Ory i dont have any David materials work yet Gary_Fullett i sent it with the newsltter Ory i,m not in that group yet,,,,, Gary_Fullett okay time for chast see u all tomorow Gary_Fullett left.