November 9, 2011

Dan Shy

dan.shy@gmail.com

IN THIS ISSUE:
Welcome!

Money Management

Special Reference Issue: Money Management

Welcome to a special issue of Aileron Market Balance.
A newsletter that will approach the markets with reason and rationality. And as the aileron of an airplane provides stability and balance, this newsletter too aims to reflect a balanced approach to the capital markets. At the same time this newsletter will provide a 'look over my shoulder' as to my thoughts regarding the economy, as well as specific dividend investing and trading ideas for the upcoming week. However this particular issue of this newsletter will not include specific investing or trading ideas. Because this issue of Aileron Market Balance will serve as the introductory issue for all new subscribers to the newsletter from this point forward. If I am going to allow ones to 'look over my shoulder' to view my investment and trading ideas though this newsletter in a responsible manner, I first need to discuss the absolute basics ...

Money Management
No matter how many great market calls I may write within the pages of this newsletter, no matter how many fantastic trades, or wonderful hedges ... if an investor or trader does not not strictly adhere to money management principles; it is all for naught. Money management is the foundation cornerstone of all successful investing and trading. Money management is the foundation cornerstone of all successful investing and trading. Money management is the foundation cornerstone of all successful investing and trading.

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There. Hopefully I have now stressed its importance. But to what am I referring when I say the words money management? At times, ones believe that money management is a stop loss order. Or that money management is a only risking 2%. Or possible that money management is keeping track of all our you trades. The truth is that those are only various single aspects of the larger topic of 'money management'. Those solitary aspects will not help you to adhere to money management principles. One must apply all of the aspects of money simultaneously in order to successfully apply money management principles. Therefore, it should be understood that when I use the words 'money management' that I am discussing the aspects of Risk Analysis Reward Analysis Trade Management Drawdown Management Accuracy Metrics Performance Analysis You will often here professional traders say that risk control is job number one. So let me say that again ... You have to determine your risk. You have to devise ways to try to limit that risk. 'Determining' means you have to sit down, and at least plan out a reasonable worst case scenario. How much money would you lose? How much of your account would that loss represent? How would that impact your ability to trade further? You have to figure any methods at your disposal to limit the risk. For example, I recommend that no newcomer ever putting more than 3% of their total account size into one trade or investment. Some people will say 2%, but I raised it to 3% due to what I will talk about next. Reward. Regardless, the number has to be very low. When a trader begins to gain experience, some begin to raise that number to perhaps 5%, if such risk fits their own psychological build. Regardless, again, it must be low. Why? It helps mitigate your risk. Thus, you become someone engaged in business, rather than gambling on your money in one area. With only 3% of your account towards Ford? If Ford tanked and went out of business tomorrow, that would only represent a 3% loss to account size, which is your business. Your risk is mitigated. You are left to trade another day, and one disaster doesn't sink you. As I stated earlier, the 3% rule is a general rule that can work as a baseline. Some of this depends on psychological risk tolerance. Some traders as they gain experience risk more of their account on one trade. Others, such as myself, risk less than 2% on each trade, again, due to personal psychological risk tolerance. When one considers that they will only be risking approximately 2% per trade, the logic carries forward that any investor and trader must have an adequately funded account. An under-funded account is one of the FIRST no-no's, when it comes to trading. This is only logical. If you risk 2% of your account, then this must

as these aspects work together simultaneously. So let's examine the entire topic of money management, and how it applies to investing and trading; and thus have a better understanding of the application of the investments, trades and portfolio allocation that I will discuss throughout the future of this newsletter.

Risk Analysis
Every human on the planet, engages in risk analysis every day. Chrysler offered Joe a job. Should he take the job? Will he be outsourced next year? Will his job move to another country? Will he be unemployed? Will the union help lower that risk? Its the same in this business. You have to determine your risk. You have to try to devise ways to try to limit that risk.

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by necessity mean that the amount risked is enough to put on a trade. When a trader has an adequately funded account, and keeps their risk per trade to that 2% region, it helps keep the rest of their account available for other trades. A trader won't miss business opportunities, because they had all of their money all in one area. There are other ways and strategies to mitigate risk. Options. Options at times can LOCK IN your total loss, at the price you paid for the option. Of course, Options come with their own risk that you have to consider. Part of the value of an option, is the time decay. As well as the volatility of the market. If your strike price is too far away, if the market isn't volatile enough? The market could slowly move in the direction you thought it would . . . but the option theta (time value) ticks away, and volatility remains low. Your option won't rise much in price. Again, it comes down to determining your total risk. And trying to figure out which of the many strategies that are available one will employ in order to mitigate that risk. Let's move on to the next aspect of money management . the market move close enough to 7.50 for that option to become worth anything? Honestly? So did the trader limit their risk? Yes. But they didn't sufficiently consider their reward, or analyze for a reasonable reward, for that limited risk. All they end up doing is throwing away money on cheap options, and nickle and diming themselves to death. Every human on the planet engages in reward analysis. Sound familiar? Well, it's true. We talked about Chrysler offering Joe a job. There were risks, ah, but what about the reward? The money in the form of a salary and benefits that Chrysler is offering Joe is very nice. So, what does Joe do? He balances the risks against the reward. That is key. That is fundamental to good trading. This is something that 99% of small speculators never consider. They never look at a trade, and look at the balance between the risk, and the reward. Which is ironic. Because any good businessman balances those two factors. You must plan out what a reasonable reward would be. A good rule of thumb, is that any reward should at the very least be twice as much as your risk. Why in the world would you become involved in any business where the risk was greater than the reward? You'd be guaranteeing yourself account-failure. Seriously. Do the math. Flip a coin, and for every time the coin comes up 'tails' take away $1.00, and every time the coin comes up 'heads', add $0.50. It sounds obvious when we speak about it thus, but I can't tell you how many traders I've seen consistently risk $3,000.00, seeking a $500.00 reward. Mathematically, they are bound to fail. It's a certainty, and is so obvious, it needs very little explanation although mathematically it has been proven again and again, such as in this linked example. What a trader needs to do, is consider what is termed the risk / reward ratio. 1 risk, to how much of a reward? The ratio should be at least 1:2, and preferably, rest around 1:4. Now there I do provide caution here. You must plan out a reasonable reward. This means that there should be market conditions, tools, and indicators that provide and seem to signify that the market can reasonably reach your goal. In the above example, we

Reward Analysis
At times, ones will become so concerned with risk control, that they give no thought to the reward. Which is somewhat strange, since we are in this business to make money. For example, what if a trader was so concerned with limiting risk, that they engaged in buying cheap, severely out of the money options? Is their risk limited? Yes. Let's say that Sugar is trading at $10.00 and we expect it to fall to at least $9.25. Instead of buying a $9.50 put option, what if they were to reason "Well, I can buy a 750 put option, for only $11.00 per option. That way, my risk is limited to $11.00." The question becomes, how reasonable is this? Will

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would like Sugar to go to $3.00. However, historic volatility in that market demonstrates that this is not a reasonable conclusion. So plan out something, that given historic volatility for the time period that you will be in the trade, the market can reasonably reach that will give you a reward two or three times greater, than your total risk. So what do we have to this point? A few principles that we can now summarize 1) Limit your risk. Determine ways to limit your risk. Do not risk more than 3% of your account on any one trade. That's your baseline. Risk 3% of your total capital on one trade. This leaves you alive to trade another day, in case something horrible happens on your one trade. 2) Also, plan out a reasonable reward given historical volatility that is at least twice as much as what you are risking. Preferably three or even four times. And this is where the oft-term phrase The Risk / Reward ratio is born. You will note that throughout future issues of this newsletter that I calculate my risk / reward ratio in terms of 'averages'. In other words, over the course of X trades, what is my average risk reward ratio. This allows a trader to examine his or her trades through the lens of a broad spectrum, rather than focusing too intently on one single trade, and thus basing all of ones metrics off of that single incident. We will continue with another aspect that needs desperate attention by most traders, and something that relates to our reward. Proper trade management. Because there is another caution. There is nothing saying that the market will make your reward goal once you have created your 'plan'. So what are you to do?

Trade Management:
Boy oh boy, if this isn't an area that receives total neglect on the part of even most guru's. It's very, very difficult to find information about it. At most you'll hear this: "Make sure you have a trading plan, once you are in the trade". Or you might hear "Ride out your profits, cut your losses" or "Always use a stop / loss order" or even perhaps Keep a trading journal And usually, that's about all you'll hear. Ok. What does that mean? I mean let's face it, those are all pretty much common sense factors. "Make sure you have a trading plan" while true? Is about as helpful as "Buy low, sell High" Well duh. The devil is in the details as the old expression goes. So yes. You need a trading plan, once you have pulled the trigger, and you are in the investment, or the trade. But what specific variables should such a plan contain? TIME: How long are you looking to be in this trade, or this investment. When dealing with the markets, timing is everything when it comes to your entrance right? Well it should be a big part of your exits as well. I'm a big one for considering seasonality into a market. This gives us not only an entrance clue (notice it's only a clue), but also a clue as to when we might want to start thinking about exiting the trade. Gann wrote that timing, for the individual investor, is the most important aspect. NOT price. Price is important, but of the two, I agree with him. TIMING is the more important. What about an investment? Well, perhaps your timing is more concerned with how to add to your position, since I very rarely sell any of my investment stocks or 'take profits'. But you still have to be concerned about time, once you have bought a piece of a company as an investment. Let's say I bought Ford at 6.55 (Which I did). It rises to $8.90 and I'm making dividends along the way, for

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each share. Great. Do I buy more Ford at $8.90 on July 20th? Seasonality is telling me that such timing may not be a great idea. That I may want to look for dips in Ford, and buy more of it (thus increasing my dividend income) come November, when the market typically bottoms out from the Autumn doldrums and weakness. PRICE: What is your profit goal? Now you must understand that sometimes, you won't make this goal. But it's very important to have a price goal in mind before, and once you are in the trade. RISK: What are you willing to risk? If you are trading, where is your stop / loss order? How does this risk equate to to your profit goal? EVOLVING MARKET FACTORS: Your plan must be flexible. And you can't be afraid to reward your winners, if the market calls for it. At the same time, you must realize when a trade has run it's course, and you may not reach your profit goal. For example. Let's say I'm short in Sugar #11 by going long an October 950 Put (Put options are for when you are expecting the market to DECREASE in price. They gain value as the price falls). For the sake of this example, let's say my risk is about $125.00. My profit goal is for the market to hit $9.40, which would mean that my option would be almost 4 times my risk. This particular seasonal weakness in Sugar #11 runs until about August 21st. Now after I initiated the trade, the market hit some support, and couldn't go any lower. So now what? I decided that if the market broke through a certain level of support - to add to my position and buy another put option. That's exactly what happened. The market broke below 9.97, and I bought a 925 October 925 Put for 8 ($87.00). Actually at that moment, that account was looking at two 950 puts, and one 925 put. The market conditions told me that 9.97 was some key support. I should reward my winners as much as possible, so an entry point was to add to my short position, and buy another put option if the market fell through that support. Now remember my goal? What happens if the volume starts to decrease around August 17th, the market sinks to 9.50, but not my goal - 9.40? Do I hold out until 9.40? No. I've made a profit. Seasonality is telling me that the market weakness would be ending on the twenty first. Sinking volume on sinking prices The market is technically starting to chop around, and has trouble sinking lower? The time and sales are showing that more buy orders come in as the price stagnates? It just might be time to take my profits as market conditions are telling me that while I was correct as to the markets direction - that direction has run it's course So those are the differing factors to keep in mind when performing good trade management. Time, price, risk and evolving market factors. Now let's move to the next aspect of money management ...

Drawdown Management:
Unless you are God, it is impossible to predict what will happen in the markets tomorrow. We cannot predict accurately. The best thing we try to do, is what any business person does. Try to look and see what the current market is telling us, and what might be on the horizon in the future. Then identify low-risk, hireward possibilities. And sometimes. Sometimes we get it wrong. Our reaction to that can be very interesting. Often, we rail against it. Our ego is bruised. We begin to look for facts that confirms our pre-existing bias. We are convinced that we knew the direction the market was going to take. When in fact, nothing could be further from the truth. We don't know. We never did. Again, what is our business? Try to look and see what the current market is telling us, and what might be on the horizon in the future. Then identify low-risk, high reward possibilities. That's all. Now, if we have applied the above topics to our trading? Risk Analysis? Reward Analysis? Proper Trade / Investment management? Then our 'bruised' ego will be much less. We won't need that trade to win, because it only represents 3% of our total account. That's all. No biggie. It's only a big deal to the under-capitalized investor / trader that needs a particular trade to be a winner. Thus, when it's only

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3% - we can see the bigger picture. The bigger picture, is the systems performance, not the individual trade. Having a trade move against you? Or having a series of losing trades? That is what is known as drawdown, and it is a fact of life. Drawdown is a reduction in account equity from a single trade or series of trades. As I said, it's a fact of trading. Because none of us are God. We may not like the fact that we can't predict market direction correctly 100% of the time, that our trade plan may have been off, etc. But there it is. We're going to have the market turn against us at times while we are within the trade. And we're going to have the market stop us out of trades at times. Fact of life. So what do we do about it? DRAWDOWN TRACKING: It is vital that you track your drawdown. There are two types of drawdown we need to track. Inter-trade Drawdown - which means, when we are inside the trade, how much does the market move against us? And there is 'multi-trade drawdown', or 'consecutive trade drawdown'. How many losing trades do we have in a row? What's the maximum? Why keep track of this information? First of all . . . because we sometimes err. We make mistakes as to how much our 'total risk' is. When we keep track of both of these types of drawdown. We may have been fooling ourselves with our risk analysis.. We tend to 'drift' in use of certain standards without even realizing it. When we keep track of all our drawdown, it tells us how accurate our analysis of our risk actually is. Or if we are risking more than 3%. Secondly, it has to do with something else every trader must engage in. Something I'll mention later . . . performance analysis. In short - how well are we doing overall? Or perhaps our drawdown is so low and accuracy so high, that we mathematically figure that we might be able to increase our risk to 3.5% per trade. Or perhaps our drawdown is such that we need to decrease our risk to 2.8% per trade. Keeping track of such information provides the best look at how we can 'tweek' our trading for optimal results. So what types of drawdown to I personally keep track of? INTRA-TRADE DRAWDOWN: Let's say we enter a trade. We're going to short Sugar at 10.15. Ok. Let's say we're capitalized enough, to where we can enter an actual futures position, not an option. Ok. So we're short, and in the market at 10.15 October. Great. Sugar moves to 10. Fantastic. We're up 15, or $168.00. Great news. Then the market moves back to 10.15. No biggie. Then it moves up to 10.20. 10.25. 10.40. 10.50. That . . . is intra-trade drawdown. We're inside the trade. We have not exited the trade, but it is moving against us. In this case, our drawdown would be 35 points, or $392.00. We better have around $13,500.00 in our account, to handle this sort of drawdown. If so, great. If not, then a) we should have been stopped out earlier due to risk analysis, so that wherever our account is at - we should be stopped out or b) we're trading beyond our means, and are starting failure in the face. We're risking more, to make a little. Not a good risk / reward ratio. But let's say we're still in that trade. We're adequately funded, and we can withstand that sort of drawdown. Then what happens? Ah, Sugar starts to head lower. And lower. And lower. Now we're at 9.75, and quite happy. We're $1,000.00 up. Cool beans. Perhaps (if we are adequately funded) we have even added to our position, and are up more. Great! We have an opportunity to add even further to our position with trade management below 9.75! Great! More profit. But that doesn't change that we had inter-trade drawdown. And it is vital to understanding our systems performance, that we keep track of that drawdown. It's vital to our future risk analysis, that we keep trade of that inter-trade drawdown. MULTI-TRADE DRAWDOWN: Let's go back to the above example. Let's say our account is only $10,000.00. We can't stand drawdown (risk) of $392.00. Let's say we're stopped out with a $250.00 loss to our account. That's a fact of life, and it happens. This is what traders must understand. It is proper to lose from time to time. This doesn't mean you are a bad trader. It means our timing may have been off, or the market just did whatever the market was going to do. That's all. We can possibly short sugar still.

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While surfing one day, I noticed that a poster on a financial forum once made an interesting statement. He said: It can be hard at times, but you have to let those winners ride. It has been stated here that you can be profitable with only 30% wins. That is VERY true, but not if you don't let the winners ride much farther than the losers. 30% at a 1:1 risk to reward is NOT a winning system. I've been tempted at times to just close out a winning trade because it was up and I was unsure if it would continue on towards my profit target... but in all honesty, when are you ever completely sure it is going to continue towards profit? If you don't let those winners ride on, and always cut them short, you could very well fall into that scenario of 1:1 at 30%. Human natures is such that we do not like losing [this is] very true . . . and this makes it more of a reason why a high percentage of people that trade eventually fail. Human emotions can be very distracting and by having such emotions, they cut out their profits too early and start to mess up their odds in the long run. Keep to your risk analysis. What makes money, is not any individual trade. It's the whole thing together. Maybe you enter a short on Sugar #11 in a couple of days, when another timing tool tells you to enter it again. Then you're short from, say, 10.25, and the market heads down to 9.75. Great! Little drawdown, and you've got your profits. You can't let your ego get bruised to where you just ignore good signals, when the market is telling you to stay in the trade. Too many traders become disgusted with themselves, and would walk away from Sugar altogether, only to see that in a few days, the market headed in the direction they thought it would. Instead of entering the market as they should again they blame what? The stop / loss. I've seen many, many traders do this. And then what happens? They compound their problems, and stop trading with a stop loss order altogether. Then they begin to get margins calls, and before they know it, they're out of the markets. Then I've heard them rail on how there is a "them conspiracy" and the market is "out to get" the small trader. Anything. Anything but realizing the truth. Their ego was what got them in trouble, not the stop / loss order. I say the above, and wanted to take an emotional tack, when discussing multi-trade drawdown. You're going to have periods with losing trades. One after another. If your money management strategy is set correctly, if you have an adequately funded account, and engage in all of the above concepts? When this happens - it will be easier to handle. But if not? It can destroy a perfectly good system, and cause you to become an emotional basket-case when trading the markets. I've seen this happen more times than I can count. Keeping track of multi-trade drawdown can also expose weaknesses and strengths in the trading system overall. For example, lets say you're trading markets, and everything is going well. Little drawdown. Remember this - market conditions change. They change all the time. Not just what the markets are doing overall, but they go from nice trending markets, to extremely volatile ones. Some systems work great in trending markets, but horrible in volatile ones, and vice versa. Your periods of multi-trade drawdown, will give you indications as to what sort of markets you should be trading. You must keep track of those losses. For the same reasons that you must keep track of inter-trade drawdown. It helps you plan out your future risk analysis better, and is needed later, when analyzing your overall system performance. Let's move on to the next aspect of money management. The oft-toted and often misunderstood Accuracy Rate

Accuracy Metrics:
Accuracy describes just that. How accurate are you with your market calls? 30% accurate? 50% accurate? 80% accurate? I don't think I have ever seen a more over-hyped, yet necessary part of money management stressed. 'Systems' and knowing ones accuracy rates are vital for proper money management. And let's face it, we'd all like to be right 90% of the time, as to market calls.

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Yet small time traders and speculators act as if accuracy rate is the end-all and be-all of trading. As if a person had an 85% accuracy rate, that would guarantee him to be profitable when trading and investing. Nothing could be further from the truth. SYSTEM A: TRADE 1: Loss - $1 TRADE 2: Profit - $3.2 TRADE 3: Loss - $1 TRADE 4: Profit - $3.2 TRADE 5: Loss - $1 TRADE 6: Loss - $1 TRADE 7: Profit - $3.2 TRADE 8: Loss - $1 TRADE 9: Profit - $3.2 TRADE 10: Profit - $3.2 5 Losses. 5 Wins. Total Lost: $5.00. Total Wins: $16.00. Now lets take the 80% accurate trader, who doesn't pay attention to money management principles or have a money management strategy. SYSTEM B: TRADE 1: Profit - $1 TRADE 2: Profit - $3.2 TRADE 3: Profit - $1 TRADE 4: Profit - $3.2 TRADE 5: Loss - $10 TRADE 6: Profit- $1 TRADE 7: Profit - $3.2 TRADE 8: Loss - $7 TRADE 9: Profit - $1 TRADE 10: Profit - $1 2 Losses. 8 Wins. Total Lost: $17.00. Total Wins: $14.60. System A was 50% accurate. System B was 80% accurate. But which system made money? Now do we see why risk / reward ratios, both projected and actual are so important? Why accuracy isn't as important as money management? Why it's important to have an adequately funded trading account, and only risk 3%? Now that I'm done debunking the "Accuracy" overhype? Let me stress how important Accuracy is to your money management strategy overall. Seriously. It's important to view your Money management strategy as a math equation. You need all of the

It's an idea which is wrong. False. Untrue. And downright dangerous to believe. The reason people focus on accuracy is due to the human desire to be right. They get trading and investing completely backwards. In addition, many new traders like to look to the 'system' or 'market triggers' or 'signals' first, and money management principles last. If they look to money management at all. Want proof? Do a Google Search for "Market Picks" or "Winning Signals". Then try to find one, just ONE of them that teaches about money management. The system for giving you signals comes second to your money management strategy, not the other way around! In fact, an investor and/or trader can be right only 50% of the time, and still be profitable if his money management strategy is set correctly. An investor? Can generally stand an even lower accuracy rate, and still be highly profitable. This is because it generally takes less capital, less leverage to invest in the stock market, than it does to trade stocks, or trade futures and commodities. Regardless, would you like further empirical proof? Simple test. Let's say we have a trader who is right 50% of the time. Let's say every trade he engages in, he risks 1 dollar, to try to make 4. That's his goal, but he actually averages a ratio in practice of 1 risk to 3.5 dollars. What does the math tell us? That he is a profitable trader.

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variables to work together, in order for you to be a success, right? Accuracy is one of those equations, and it is important to know both what your accuracy rate is, and how it fits in with the rest of your money management strategy. Let's face it, an 80% signal system would be good, as long as it doesn't call for large losses. Unfortunately, by the very nature of some systems and how they work? That's exactly what happens. When they lose, they lose big. Regardless, I won't digress into that speech again. One must keep track, and know ones accuracy rate, in order to know how to work the rest of your money management strategy. It's one of the variables. Mind you, it's only ONE of the variables, but a variable nonetheless. The accuracy rate needs married and tied to the risk reward ratio. In this way, you can find a profitable trading methodology. An 50% accuracy rate is without question acceptable as long as the risk reward ratio is high enough. A 75% accuracy rate with a 2 reward to 1 risk methodology is a money making machine. An 90% accuracy rate with an unacceptable risk reward ratio is a guaranteed way to blow up your account. Now let's tie it all together with the very last aspect of money management . What will be included in such a consolidated performance analysis? Let me show you how it reads. At one time I wrote a newsletter for a specific publisher. I ended that relationship, but let me show you what I included at the end of each newsletter. These statistics are taken from the November 8 th, 2010 issue of Airelon's Market Tactics. The data is comprised of trades that I took over the course of the history of that newsletter.

Performance Tracking:
I believe human beings are very visual creatures. We need things in front of our eyes, (or our minds eye, for the visually impaired). And sometimes, we need to consolidate everything in front of us, in one neat package, so it's easier for our mind to see the big picture. Basically, what I mean here, is a consolidation of all of the above facts - that I have been reviewing in this special reference issue. At the end of each issue of this newsletter, you will note that I will break down the trades that I have taken based off of my comments from this newsletter and display the resultant performance analysis.

I will also include such metrics at the end of each issue of Aileron Market Balance. Regardless, why have this information in front of you? It teaches you something. It shows you exactly where you are in your trading career. Performance Analysis consolidates your trading history, and can very well demonstrate to you where you are doing well, and where you need to improve. As they say, 'the proof is in the pudding'. And Performance Analysis will help show you exactly what the pudding consists of. You will note throughout the history of Aileron Market Balance that I will refer to the metrics from my performance analysis, and note where I need to improve. And in my experience, with the exception of 'trade

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management', 'performance analysis' is the most oftignored aspects of money management. At times, traders will ask me what I believe their problem with trading to be. My first question is always the same: What do your performance statistics look like? I have yet to have one person give me their statistics, because they haven't been keeping track. management. Risk Analysis Reward Analysis Trade Management Drawdown Management Accuracy Metrics Performance Analysis

Conclusion
So there we have it. My take on the topic of 'money management. And again to drive home the point. All six of these preceding aspects, are as a composite feature that work with one another; money

These aspects will be the foundation cornerstone of this newsletter, as I discuss specific investments, trades, and portfolio allocations. Until next time, stay safe trade well, and remember that loving other people doesn't cost a dime.

Note: The above statements should not be construed as an investment or trading recommendation. Aileron Market Balance is a newsletter that allows subscribers to look 'over my shoulder' as it were, for my own personal specific trading and investing ideas and thoughts for the next week. But they are only thoughts as of the moment of publication, and are subject to

change. Any trades or investments that I discuss within this newsletter are simply my own thoughts regarding my own investing and trading outlook. Remember that entering any market is an individual decision. There is no guarantee that I will enter, or have entered any of the trading or investing ideas that I discuss in this newsletter; as larger or smaller accounts may require a different strategy as the ones presented here. This newsletter simply contains my trading and investing thoughts for the next week. I, the author do not grant this work for wide distribution beyond any single individual subscriber as this publication is protected by U.S. And International Copyright laws. All rights reserved. No license is granted to the user except for the user's personal use. No part of this publication or its contents may be copied, downloaded, stored in a retrieval system, further transmitted or otherwise reproduced, stored, disseminated, transferred, or used, in any form or by any means except as permitted under the original subscription agreement or with prior written permission. I personally only enter any market after watching and reading the tape and I trade using money management principles. The losses in trading can be very real, and depending on the investment vehicle and market, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 15 years of experience in trading and investing in these markets. The Model Portfolio accounts are hypothetical accounts, with all of the inherent problems therein, which are used within this newsletter in an attempt to track and benchmark the results of this newsletter, and is run for the education of other traders who should make their own decisions based off their own research, due diligence, and tolerance for risk. Any pictures used within this newsletter are believed to be public domain. Any charts that are displayed using the ThinkorSwim platform, and other pictures were obtained through Wikipedia's public domain policy.

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