Thursday, December 31, 2015

Trading is Not As Hard as You THINK

I love getting up in the middle of the night to find that the market is at an extreme for the week and it's been pausing for an hour or two; then continues on its way.  A low risk entry and potentially unlimited upside. 

In the last 2 weeks of December I cease my trading. Since markets are a "human behavior" phenomena, just about all the stupidity for the year has already been expended by mid-December, and everyone [rational] who trades has either booked their year's profits or accepted that they aren't going to recoup their losses until 2016.

The few irrational confirmed losers that feel the need to trade past the 15th are welcome to whatever profits I might miss from their passing my way. Trading statistics have proven it too, so feel free to avoid the anemic volatility and waste of time playing a lowered-edge environment.

And have an extra single malt or two over the two weeks. Preferably an 18 year old Macallan, recommended it to me by Barry Eisler- known for his John Rain series. Thanks Barry.

Trading is Not Hard

How you think about yourself, the markets and its other participants really helps you maintain an overwhelming edge.

In an interview Paul Tudor Jones was asked about his overall trading philosophy.

His reply:
I have very strong views of the long-run direction of all markets. I also have a very short-term horizon for pain. As a result, frequently, I may try repeated trades from the long side over a period of weeks in a market which continues to move lower.

When it was suggested that it sounded like he was performing a series of "probing trades" before he hit gold... 

He replied:
I consider myself a premier market opportunist. That means I develop an idea on the market and pursue it from a very-low-risk standpoint until I have repeatedly been proven wrong, or until I change my viewpoint.

The reason I mention this is due to his comment about pursuing the market from a very-low-risk-standpoint. Whether you do this from a trending standpoint (my preference) or a counter-trend point of view; the fact that you are doing it completely cognizant of the risk and make that part of your series of actions - is why your odds of success rise significantly over competitors who H-O-P-E that the market will go their way every time they put on a trade.

There are a lot of them - thankfully. Even governments get wrong minded. As large and as wrong as they can get; they represent Trillions in total profits-to-the-prepared when they're wrong.That's why trading is still a great feeding ground for prepared speculators who have their monkey under control.

Knowing without a doubt that you will act correctly when something big happens makes you the odds-on favorite in the race.

Over the next week, see if you can round up a copy of Zen in the Markets, by Edward Toppel. A perfect read this time of year, even if you've read it before. It'll get your mind right for the beginning of 2016.

ZITM is great not because it tells you the secret of making profits from the market. But because it lets you realize that you already know how and then facilitates you to do it.

Ed came up with some great TradeStation software that emulated what he wrote in the book for the E-mini S&P. I know that a few tried using it, but I doubt anyone does any longer. 

You have to have absolute faith in the concept that the market knows better than you where it is going.You turn it on and it buys the market if it goes up and turns around and shorts the market if it goes down, and then long..., and then short.... Until you either lose your account or make a ton of money.

If you do a tick-by-tick simulation over many years..., always-in-the-market; it is slightly profitable after commissions. But where it was REALLY profitable was when you are in a well-defined trend, the market is just paused-- and then it takes off again. What an idea to trade only at those times!!!!

If you haven't read Zen in the Markets; make a point of it.  Let me know if you can't get a copy.

We are at a serious juncture in the Forex markets. 

Oil prices are as low in real dollars as they've been for decades. Same with most commodities, and gold and silver. Countries (and currencies) that depend on commodity sales for their financial health are affected negatively. When commodities bottom and turn up, so do their respective currencies. We'll be watching the Aussie and Canadian Dollars closely this year.

Speaking of silver, the 1330 ounces of silver carried over from last year currently have a liquidation value of $18,526.90 (based on the 12/31/15 spot price of $13.93).

In the last few weeks I took some low risk breakouts in the AudUsd and the GbpJpy that I am holding over to the new year. And ONS has been treating us well this year.

I wish that I had been even more attentive to the Challenge account, as I'm sure I could have doubled the profits very easily. The forex side of the Challenge account from 2014 was $1,156.60, and we added an additional $619.78 this year.

Quick summary:

Silver value:        $18,526.90
Forex account:     $1,776.38
Total:                  $20,303.28

Still significantly above the $500 (40 times initial capital) we started with, but very significantly below the peak of over $50K a few years ago. Since big money is made in the fullness of a major trend I have no doubt the financial mistakes of numerous countries will provide some great opportunities and launch us into new equity highs.

I encourage you to take note of a quote by ― Sun Tzu, from The Art of War:

If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”

Knowing that there are things that can't be known-- is valuable too.

If I KNEW that silver would be at $13.93 today back in early 2010, I wouldn't have as much silver in the Challenge account. But I do know from history that when the rush into metal starts, it can be fast and furious and very difficult to accrue. And having actual physical silver, while currently a less-preferred investment globally, is part of a larger risk/reward scenario – for me.

Fortunately, even with imperfect knowledge of the future, knowing how and having the WILL to trade your specific assets precisely is more than enough for any success you could desire.

Best wishes to you in 2016.


PS: Check back in a week or so. I'll post some data that I think you'll find useful. JR

Wednesday, December 31, 2014

2014 Ends - The Dollar is Strong, But For How Long?

I thought I would post a year-end wrap-up in this "long in the tooth" blog to let those who still check it once in a while can see that I'm still alive and trading.  Most of my attention has been focused on my personal trading and supporting some up-and-coming niche hedge funds.  In both avenues my efforts have been successful.

It was a good year in most aspects.  No thanks to current politicians and anti-market types.  Socialism and other "high control" governments are trying to make it as difficult as possible for free markets to operate as they should.

Notwithstanding, we've got some real market trends in place.  The dollar is strong vs. almost any currency out there: AUD, NZD, JPY, EUR, CHF, GBP, CAD, MXN (Mexican Peso) and precious metals.

Trading OneNightStand and trailing a portion of the positions on strong follow-through trades after the beginning of July resulted in very reasonable gains.  At one point in mid-October, the account was at $1,289.21.  With a lot of back and forth towards year-end some reduction in  return was inevitable.  Currently, the forex side of the Challenge account is $1,156.60.

Not so good on the silver side of the Challenge account.  

The 1330 ounces of silver carried over from last year currently have a liquidation value of $20,841.10 (based on the 12/31/14 spot price of $15.67).  

Commodity prices, of which oil is a huge percentage, have all dropped significantly this year relative to the dollar.  Since May, Crude Oil prices have dropped in half.  Which didn't help silver and gold values at all.  It is really amazing that silver didn't fall more with the fallout in commodities.  Maybe it will.  Either way, I have no interest in liquidating any of the silver the Challenge account has accumulated.

Large shifts in value between asset classes and capital inflows into others (like the US stock market as of late) cause new trends to begin and existing trends to continue.  So keep selling that Euro for awhile yet.

Quick summary:

Silver value:         $20,841.10
Forex account:      $1,156.60
Total:                     $21,997.70

This year I may trade some additional breakout setups to increase returns on some of these trends we're seeing.  I'll post something if/when I start.

ONS is still working of course.  A number of hardy ONS and FirstStrike followers have been in steady contact with me and have also had a decent year.  It is pretty obvious that there are trends going when a currency is falling vs the dollar for 8 weeks like we saw in the Euro.  Still, many traders had a hard time believing the moves were just more than simple corrections.  

A person needs a method that has limited risk and open ended outlier potential to profit from markets primarily dictated by chaos theory.  Which forex and commodity markets most definitely are.

Best wishes on 2015.

I will be thinking of you.


Tuesday, December 31, 2013

2013 Ends and The Forex Markets are Back - With Silver In the Tank! Challenge Account at $26,382

It's been a long while since I've been regular here.  It's good to be back.  There are some great opportunities facing us this next year.

It has been 316 weeks since the Challenge account had its first trade.  Or 6 years, 24 days.  So the challenge of getting to $150K + in a shade less than 4 years is still on.  It would have helped tremendously if I had any idea what this socialist-leaning presidency had in mind for us traders, but ultimately, as long as the freedom to trade forex is not limited any further, the odds strongly favor hitting the mark and then some.  In fact, if silver hits $113 an ounce in the next four years, which wouldn't surprise me at all -- success will be automatic.

People forget that governments at best only approach being "useful", but Big Government is absolutely not necessary for human existence.  Traders tend to survive even awful governments.  They adapt as necessary.

And thanks for all the great emails sent to me by readers of prior posts here, most of which I didn't get to answer properly.  I was busy -- but I still would have preferred keeping up with those who are interested in the Challenge Account and the concepts we talk about here.  I have always maintained-- and have even more proof gathered in the last 3 years --  that profiting in the forex, futures, and even stock markets--  is primarily a function of premise.   More about this in the coming weeks.

Forex trading has been getting better throughout the last half of 2013 because money finally was forced to move.  Now we, as opportunistic traders, have much better potential than the previous years of stagnation because of Big Money's (governments and investment banks) willingness to commit.

Personally, I've been trading much smaller size since the contraction in trading volume that we've been dealing with since 2010.  And trading full size on only the best and highest value trades.

Does this mean that methods like FirstStrike and OneNightStand were relegated to the trash bin?  Far from it.  Half of my best trades in 2013 were FS or ONS trades levered up to full size positions.

One of the greatest developments in 2013 was the intense weakening of the Japanese Yen which still continues.  All you need(ed) to profit is to get long just about any currency originating above the equator vs. the Japanese Yen.  There was nothing better than the Chf/Jpy and Eur/Jpy OneNightStand trades taken by followers of that method.

When numerous forex markets start taking out weekly and monthly highs on a regular basis-- I KNOW that something is going on and it is time to get geared up to profit.  So I got seriously intrigued in late 2012, especially with increased profits coming in-- and started trading a bit bigger in February 2013.

I had a very decent year in my personal account by trading long positions in Euro/Jpy, Chf/Jpy, Gbp/Jpy, and Usd/Jpy.  Also by trading some great OneNightStand and FirstStrike entries with large size.  As I had a balance of $4,583 at the end of 2012 in the Challenge account, I did a few of these for it too, profiting $2,490.97 on just 18 trades.  I knew that we were in a massive rush into northern currencies vs. the yen and it was not likely to last forever at the pace it was setting.  Maybe it'll keep it up longer. Time will tell.

Anyway, on the second of December, 2013, on an intense one day dump in the silver market---I took $6,560.40 from the remaining balance of the Challenge account and bought 330 ounces of silver (3 - 100 oz. bars & 3 - 10 oz bars) at an average price of $19.88.  So the Challenge account now has a total of 1330 oz. which will be valued at spot for the duration.

This year the Challenge account will start back up with the remainder of $513.57 for fuel.  I also reserve the option to liquidate some silver for additional capital if the markets get particularly robust.

I intend to trade it with OneNightStand trades for the duration with higher leverage according to the concept of the Kelly Criterion.  Reference: Fortune's Formula by William Poundstone.   And you can follow along or just watch.   It should be a very interesting ride.
(WARNING!!!  If you've read the book, which I encourage you to do; or have done any research about trading via Kelly money management methods, you already know that extreme drawdowns are GUARANTEED - not just possible.  If you can't afford to literally light a match to your trading account, don't even consider following the risk percentages the Challenge account will be using.)

A method with a definable edge and the will to trade it can make a man with $500 a very dangerous entity.  More about this and the version of OneNightStand  that I'll be trading -- next week.

I am in close contact with a couple of dozen traders who keep putting in ONS and FS trades.  Among them 5 who made between $50K and $250K on the silver move which culminated in early 2011 - using a special trading system.  I informed a number of them about my choice to expand the account's silver position.  I got asked: Why did I consolidate almost all the available capital in the Challenge account in silver?

Great question.

Here's some of the background.  Most of you already know about my interest in silver and the fact that it and gold represent 2 unique currencies with the same trading (actually better) characteristics of typical fiat currencies. And the fact that the metals are truly finite, while government greed is definitely infinite, typical fiat currencies are heading for a chaotic showdown on a number of fronts.  Also, I had some long term cycle lows due in the metals which gave me an added nudge.

Besides, I believe it is quite possible that my plan of using OneNightStand  trades with enhanced position sizing could by itself hit the $150K 10 year goal, with a "free" position in silver along for the ride.  I also think it will make the challenge a bit more intellectually accessible to newer traders than seeing some already "big" account just get bigger.   (There will be more discussion about this in the next week or two)

But before I go, a short discussion about something that, tangentially, also has precious metal implications.  I want to make a serious mention about a currency all traders have at least heard about, which trades 24/7 -365 days a year.


A Real Six Million Dollar Man.  

A single dollar invested in Bitcoin just a few years back at one point in 2013 was worth $124,000.

I know a guy in Minneapolis who bought 5,000 bitcoins  in early 2010 for $100 from a local "miner" (which back then meant anyone who had an extra PC with the time and the simple program it took to crank out the bitcoins)  back when they were just a couple of pennies each.  He stored them on his backup HP Pavillion laptop and didn't even think about it when the hard drive crashed a year later.  He just threw it away.  And the digital records for his 5,000 bitcoins.

Currently, he is beside himself.  Inconsolable.

I really do sympathize with him.

If he could only remember the 32 digit random password he used on his bitcoin wallet....  He even has gone to 3 different hypnotists to try to remember his original password.  I'm sure he is not alone.  Probably millions of bitcoins are lost or irretrievable never to surface.  Doesn't make him feel any better though.

Anyway, I just think it would be good for you to inform yourself a bit about these new currencies like Bitcoin.  They have absolutely no more intrinsic value than a dollar or a euro, but because they have the advantage of being transferred instantly with no nanny-state interference..., they have actual value because enough people have agreed it is so.  A very interesting development.

Precious metals share similar advantages of course, but large transactions with metals are almost always done face-to-face.  But then again, so are large transactions in Bitcoin.  Imagine if Bitcoin or a similar crypto-currency was intertwined somehow with precious metals.  Governments and their monetary controls would be shut out very quickly.  With astounding reprisals no doubt.  Just some thoughts.

As an aside -- I somehow don't think the guy in Minneapolis would have tossed out a few million dollars worth of silver..., or gold.  Or even $100 of precious metals.

The overall Bitcoin saga is interesting enough to give you food for thought about what will likely be a future with cryptocurrencies existing beside or even eliminating the current fiat offering from governments.

To see what a modern Bitcoin mine looks like, check out the short video below:

I currently have a (very) small percentage in a mining operation, have a little Bitcoin return every month.  Not a lot, but my growing contacts in the cryptocurrency community are giving me a good idea of what others in the business are doing.  It is turning into a serious business by serious people.  All I can say is do a little investigating.  It can only be advantageous to precious metals down the road.

Trading account equity: $ 513.57
Silver position value: $ 25,868.50
(Current XAG price: $19.45– 1330 unit position average: $14.40)
TOTAL  Equity: $ 26,382.07

Well, that's it for the end of the year summary.

I'll be back next week.

Joel Rensink

Monday, December 31, 2012

2012 Be Gone! Challenge account at $34,733--

In all my 30+ years of trading, 2012 is the one I am most glad to have behind me.  I have yet to hear of one of my trading contemporaries who feels differently.  If you feel differently, I'd appreciate your email.

I've gotten a variety of emails from earlier followers of this blog who wondered when I would post a follow-up.  I thank you for your contacts.

There is a good reason why I haven't been busy updating this site.  I will explain.

(more to come---)

Tuesday, December 20, 2011

2011 - A Nasty Trading Year for Forex Traders - Infiniteyield Forex Challenge Account:$34,183

I've had a very tumultuous year in trading, and so has the Challenge account.  Not bad, but tumultuous.

1. full of tumult or riotousness; marked by disturbance and uproar: a tumultuous celebration.
2. raising a great clatter and commotion; disorderly or noisy: a tumultuous crowd of students.
3. highly agitated, as the mind or emotions; distraught; turbulent.

Yes, it fits.

When I started out the year, silver was at the $29 - $30 level, same as it is now.  The Eur/Usd was at  the 1.3250 level and it got up to 1.4700 and now is back down  at the 1.3000 level --below the start of the year.

Of course silver had its big move up early in the year to the $49/oz. area.

How did the Challenge account do?  It depends on an individual's point of view who's interested, but from mine--  it did quite well.

We started out the year with $26,522.00 in the Challenge account.  We were holding 1000 ounces of on the Oanda platform, which made it possible to hold it with less than $1000 margin.  When silver got over $49/oz. at the end of April, the Challenge account had a total value of over $51,000.  I backed way off my trading size on FirstStrike and OneNightStand positions because the volatility of silver and the volatility of the currencies was parallel and there was no need to increase my risk.

I sold 500 ounces at 48.90.  WOW!  I just couldn't help it.  The volatility was insane, the market was ticking up and down 20 to 50 cents every few minutes.  I decided if silver decided to go above $50 I would put the 500 ounces back on.  It didn't happen.

To not describe in detail the ensuing 10 weeks of painful volatility is a bonus for you and me (I'm not interested in reliving it or reminding you of the nightmare you dealt with too), as I was trading much larger silver positions on Comex and the cash markets.  Equity swings of $100k a day, sometimes an hour - are not fun even if you have done it many times before.  My personal year has worked out fine, while most money managers are posting red ink.  This year reminds me of the famous Kenny Rogers song with the lyrics:

You've got to know when to hold 'em.
Know when to fold 'em.
Know when to walk away,

know when to run....

I ran from all my silver by the time silver dropped through $45/ounce.

Back to the Challenge account.  A couple weeks after the 500 ounce sale, I sold the other 500 remaining ounces at Oanda in the mid 30's, took a disbursement and bought 1000 ounces of silver in bar form. Why?

Thanks to the idiots who are behind the  Dodd–Frank Wall Street Reform and Consumer Protection Act.

This is the notice that Oanda account holders received:
Effective the end of Friday, July 15, 2011, Retail Foreign Exchange Dealers (RFEDs) registered with the Commodity Futures Trading Commission (CFTC) will be prohibited from offering leveraged retail trading in commodities, including precious metals such as gold and silver. This change in the U.S. law is being enforced by the CFTC as an outcome of The Dodd–Frank Wall Street Reform and Consumer Protection Act.

Yes, OANDA offers 1:1 non-leveraged Gold and Silver trading.  That defeats the whole purpose of a speculator like you or me using Oanda or other similar  firms for profiting via gold and/or silver -- we want the leverage.

Anyway, so now the Challenge account has 1000 REAL ounces of silver, valued momentarily at $29,600, and $4,583 left over to position in the forex markets if something great happens.   Maybe after the first of the year.  So, a  total current value of  $34,183.

Not bad performance in 4 years from a meager $500.  Only have to double the account a little over two more times within the next 6 years.  

I'll have to get the chart up above updated.  The spike over $50K and back down is the kind of thing that makes people (and wives) think you are crazy for trading.

 The question I always get after a drawdown, if I am stupid enough to even mention it to my non-trading friends, is: "Why didn't you sell when it topped...?"  As if you always miraculously know that the top they see after fact is obvious when it is happening. 

But the public thought process is why we have so much opportunity when we trade.  Others cannot or will not do what has to be done at the times the right trade has to be executed.

Looking forward to more updates.

Joel Rensink

Friday, December 31, 2010

The Infiniteyield Challenge account is now at $26,522.00

It has been an incredible year for the Infiniteyield Forex Challenge.

I've had a number of you call me recently and ask how well the account has been doing because you've been doing well yourselves -- thanks for the calls and interest.  I figured I better post the year's results before the coming of the new year in a few hours.

In the 159 weeks since I started the $500 Challenge account with Oanda it has grown through a combination of OneNightStand trades, the weekly FirstStrike trades, and a relatively small position in silver.  

Currently it has doubled 5 1/2 times.  From here, I only have to double the account less than 3 times to achieve my goal of $150,000 or more.  

With 7 years to go.  

(Completion of the post is in progress....)

Thursday, September 23, 2010

Now--- 2090 % increase since December 2007

A hearty hello to the most determined traders I've ever known. 

I have no doubt that some of you thought I would never post again.

I've been busy trading, traveling to Chicago and other cities for consulting with hedge funds..., but mostly trading.  

Because of the tremendous move in silver over the last month – we have again hit new equity highs. The Challenge account shows a 2090 % increase since December 2007 when I started the blog and the account with just $500. This is equivalent to a 761% annual average return.

Pretty incredible, but I still expect some hard, negative equity swings in the future. When silver dropped to $14.66 last February the account dropped to around $4300 – and I began to believe that I might have to dump some if it dropped another dollar. It didn't.

The Challenge Account 1000 oz. silver position has been a lifesaver over the last year. It definitely helps that silver has climbed over $21.00/oz. Now it seems that all you hear on the financial news networks is that gold and silver are being recommended by this bank or that analyst – if I didn't know that silver had a much larger distance to go long term..., I would be inclined to exit some just because of contrary opinion reasons.

And there has been a definite change in the attitude of the voting public about the”change” that has come to Washington. Not many are happy about – no jobs – lower prices for their homes – tough to get credit.  

Don't expect too much REAL “change” in the near future.  

Things might “appear” better soon – if just because people get tired of being afraid and start doing things, starting up more business, and because the banks will finally figure out a way to liberate (lend out) the Trillions of dollars put into their coffers.

Banks hate to have capital that is only making ½ % a year - lending it back to the same guys who gave it to them (who thought that up?).

Eventually people will begin to forget the recent financial unpleasantness just like they forgot the “Savings & Loan Crisis” of the late '80's. Some of the younger (and not so young) readers will be saying, “What was that?”

It can't be soon enough for me.

The forex markets have been very choppy.

I don't need to hammer that point too hard for those of you trading FirstStrike and One Night Stand along with me. ONS has done a little better overall than FS but that is what happens ever so many years. Trading systems go into drawdowns and we have to wait patiently until things get exciting again.  

Maybe that will be soon.  

This last year was very good to me, trading-wise.  

I've had the move in silver, of course, but had great moves (some of them historic!) in wheat, corn, cotton, coffee and sugar.  These markets made me 4 times what silver and the currencies did.

I've made no secret of the fact that I believe forex trading is a great place to start trading and learn to trade properly with a small amount of capital. After you get competent, it is ridiculous to miss the huge moves that are possible in the other derivative arena, the futures markets.

This week we have a few decent FirstStrike trades working.

Week of Sept. 20, 2010---FirststrikePlus trade executions:
eur/usd: Long @ 1.3183, currently profitable
gbp/jpy: Short @ 132.06, currently w/small loss
gbp/usd: Short @1.5557, stopped at 1.5709
usd/chf: Short @1.0042, currently profitable
usd/jpy: Short @ 84.77, currently profitable

(Current XAG price: $21.16– 1000 unit position average: $12.59)
TOTAL Equity: $ 10,966.54

Congratulations to all of you who have stuck to their trading and weathered the drawdowns that inevitably show up when you trade a long-term plan.

I know that feeling too.

Looking forward to more updates.

Joel Rensink 

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: and tell me to which address you would like it sent. Please do not use AOL, Hotmail or Yahoo addresses. They've been known to filter out more good mail than actual spam. Try a Gmail address. It's free, simple and perfect for traders!