Tuesday, December 31, 2019

As 2019 draws to a close we finally have some markets to work with....

The last two weeks of December reminded us demonstrably what trends are supposed to look like.

It's about time..., and very welcome.

About the year's end valuation of the Challenge account:

1330 oz. of silver @ $17.93    =  $23,846.90
Equity Challenge acct             =    $1,776.38
                                         Total    =  $25,623.28                 

For those of you who still have copies of FirstStrike / FirstStrike Plus, you might want to re-read them.  Their premise is timeless.

2020 promises to be a profitable year.


Monday, December 31, 2018

2018 Comes to an End. Great Moves Ahead....

This year has been momentous.  Traders have dropped by the thousands.

Get ready for some profitable moves next year.

(to be continued ---)

Sunday, December 31, 2017

524 Weeks in -- $24,412.98 Equity -- Up 6.3% For The Year

I still working on the 2017 recap of the 10 year anniversary of the Challenge account.

It's been a great year.  Good changes in the U.S.A. which speak well for potential market shifts and big opportunities earth-wide in the next few years.

Silver value:        $22,636.60  (Spot price 12/31/17 - $17.02/oz. Total: 1,330 troy oz.)
Forex account:      $1,776.38
Total:                   $24,412.98

Until a little later....

Joel Rensink

Saturday, December 31, 2016

472 Weeks in -- $22,963.28 Equity -- Up 13% For The Year...

Even though 13% gain in equity sounds OK, especially compared to the pitiful gains by CTAs this year - all of it was the gain in value of the 1330 oz.of silver being held over from last year.

It's been just over 9 years since I started this Infiniteyield Forex blog.  Of course, the bulk of posts were in the first couple of years.

I appreciate the feedback I still receive from traders that read it back then and actually tried out the concepts discussed here.  There is no substitute for proving your own edge and then trading it.  Only real, lasting, successful traders do that.

Only by the crucible of actually taking trades based on the faith of your proven convictions gets the success of having the correct (and large) positions on mammoth trends that others are too fearful of placing even token positions.

Most professional traders start being successful (and stay professional) by trading relatively simple trading systems/concepts.

Maybe they end up trading multiples of them and use sophisticated money-management, but their core trading systems tend to remain uncomplicated.

The best thing about simple systems is that they are not hard to test.

And one of the main reasons that systems like OneNightStand and FirstStrike keep generating profits for so many.  They're robust and SIMPLE.

I get emails every week from someone somewhere that's been trading ONS and/or FS for 5 years and they've been making $$$ in the Euro or Pound.  And then they've some questions about  whether it is OK to [fill in the blank...]

I don't really mind all that much, but the reason I bring it up is this:  Traders make money from taking opportunities that are only available for a very short period of time.  We must be opportunistic in how we expect to profit from those situations.  The textbook definition of opportunist is:

"Opportunists are people who see a chance to gain some advantage from a situation. An opportunist seizes every opportunity to improve things for himself."

That could mean taking ONS and finding "robust" ways to profit from it by changing the official rules of the system.  Very possible - if you have valid reasoning and proof behind your alterations.  Not just optimizing the parameters until your backtest shows a higher return.

Trading systems are just systems that profit from (human) behavioral tendencies.  If you are able to significantly "drill down" to an even more "telling" behavioral tendency..., so be it.  May the profits accrue.

I'll show you a great example.

Typically ONS is used for trading currencies like forex.  At least that is where it was discovered many years ago.

Using a little out-of-the-box thinking would get you thinking about how ONS might perform on the precious metals, because they were indeed the first official "currencies" used by humans.  To the point that there are millions of rational individuals, who right now think that gold and silver should be backing their country's currency.  Or actually be the currency that everything buy-able should be denominated in.

Trading Gold with ONS works great .   I've been trading it (along with my standard portfolio of currencies) according to the basic rules for over twenty years.  And with a deviation I'm going to show you today for the last 13.

ONS Example trades on Comex Gold in 2016:

Gold ONS Equity Curve (theoretical) 40+ years-- :

Gold tends to have 10 - 12 trades a year in ONS.  That's taking trades in both directions.

Pretty decent.  But there's another component that can bring even more edge to your profit equation.

Finite vs. Infinite

Even though a large amount of the easily obtained gold that exists on earth has been brought to the surface and is sitting in a vault somewhere, there is still plenty to be found.  Maybe deeper or in trace amounts. Nevertheless, there still is just a finite amount on this earth. No more, no less.

How about forex currencies?  

Since they are fiat currencies, they're absolutely designed to have infinite quantities created -- at will.  If the governing body of a central bank determines that they want more Euros, they push a button and BAM..., you've got more Euros.  Same with Dollars or Yen or British Pounds.

Precious metals are always priced in some currency like the USD or Euro, or Pound.  Since gold's total quantity is absolutely finite and all currencies it is denominated in are demonstrably infinite -- it is obvious that gold will be forced to rise vs currencies over any significant period of time.

Which should mean that Gold buy signals of via simple robust methods like ONS should have more potential reward vs. risk.

Gold ONS Equity Curve (theoretical) 40+ years--LONG TRADES ONLY:

For this reason I significantly increase my position size for my long ONS Gold trades.  I get greater profitability, better risk/reward and fewer trades per year (about 5 or 6 on average), reducing my exposure.

Trading doesn't have to be difficult.  Just  real data and statistics based on reliable human behavior.

Thinking helps too.

One question I've received numerous times over the last few years is,  "Why am I not keeping up the Challenge account and trading even a portion of it in Forex if the methods still work?"

Great question.

The methods (ONS and FS) still work and I actually think we are headed for some very exciting times with them starting with the conservative presidency of Donald Trump.  Money should finally start flowing to opportunity like we haven't seen in a decade.

I'm not trading the Infiniteyield Forex funds (and the subsequent reporting of said returns) because of regulations imposed since the account was started.  I was advised to back off by my attorney after similar websites received warnings from the CFTC since the Dodd-Frank Act was enacted thanks to everybody's buddy - Mr. O.

So, I've been trading my own funds -- as happy as one could in a severe environment that discouraged free trade for the last 6 - 7 years.  I know many of you understand exactly.

Best of wishes on the New Year - 2017.  May it be the best ever.


PS: Below I have the official summary of position equity for the end of 2016.  Cheers, everyone. JR

  Quick summary:

Silver value:        $21,186.90
Forex account:     $1,776.38
Total:                  $22,963.28

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