I’ve been asked over three decades to present to others just a few of the secrets of trading. I am not one to want my picture front and center. I am not one to want my name a household word. I am not one to face the 5%5 \% of those who would cry foul in giving to others what has been given to me. If I can save the grief of some of the trading torture to those who search out the knowledge of trading, then I am in a position to acknowledge my debt. 三十年來，我一直被要求向他人介紹一些交易秘訣。我並不希望我的照片出現在最前面和最中心的位置。我不希望自己的名字家喻戶曉。我不願意面對 5%5 \% 那些對我的付出大呼不值的人。如果我能讓那些尋找交易知識的人免受一些交易折磨的悲痛，那麼我就有能力承認我的債務。
Most traders think the important element in success is knowledge. In my trading career I have found that correct knowledge and the ability to change behavior are the most important parts of successful trading. Correct knowledge without behavior modification projects improper execution of an otherwise perfect trading plan. 大多數交易者認為成功的重要因素是知識。在我的交易生涯中，我發現正確的知識和改變行為的能力是成功交易最重要的部分。只有正確的知識而沒有行為上的改變，就會使原本完美的交易計畫得不到適當的執行。
In three decades of learning correct trading knowledge and behavior modification, I have included in my trading plans two rules that present me with the ability to change my thinking and behavior. Both rules are required for successful trading. Upon urging from a long-time trading friend, I shall share my insight on these rules. 在三十年學習正確交易知識和行為修正的過程中，我在我的交易計劃中加入了兩條規則，這兩條規則呈現了我改變思維和行為的能力。這兩條規則都是成功交易的必要條件。在一位長期交易朋友的敦促下，我將分享我對這些規則的見解。
By trade, I am not a writer nor is Art. We are both traders, but it is my desire to present insight into what is required in successful trading. This project was agreeable to me if we would do it on my terms. We came to an agreement on my terms of how it would be presented and that it would be presented as I wished. 就職業而言，我不是作家，Art 也不是。我們都是交易者，但我的願望是提出成功交易所需的洞察力。如果我們按照我的條款來做，我是可以同意這個專案的。我們達成協議，由我決定如何呈現，並按照我的意願呈現。
Our agreement was that I would remain in my own privacy. I would not give my name but only my approval in writings about my insights of trading. You may call me “Phantom of the Pits.” Your success in trading shall be at your own hand and direction. You shall know me as Phantom, a shadow in your success. That is how I wish it to be 我們的協定是，我將保持自己的隱私。我不會透露我的名字，只會在我的著作中透露我對交易的見解。您可以稱呼我為 「坑裡的魅影」。您在交易中的成功將由您自己掌握和指導。您應該知道我是 「魅影」，是您成功的影子。我希望如此
When Futures magazine started the “Futures Talk” forum on its web site in the middle of 1996, it attracted some good interest initially – nothing too spectacular but just traders talking to other traders about markets and comparing notes. But beginning in the Spring of 1997, it became increasingly clear that one participant had unusual trading wisdom and insight and experience, although he sometimes wrote in a vague, mystical way that forced other traders to really think to get his point. 期貨雜誌於 1996 年中在其網站上開設「期貨談」論壇時，一開始吸引了一些不錯的興趣 - 沒什麼太引人注目的，只是交易者與其他交易者討論市場並比較筆記。但從 1997 年春天開始，有一位參與者的交易智慧、洞察力和經驗越來越不尋常，儘管他有時會以模糊、神秘的方式撰寫文章，迫使其他交易者必須真正思考才能了解他的觀點。
His posts became so popular and attracted so many responses and followup questions that separate threads were set up just for his comments. He was willing to share what he knew about trading exclusively on the Futures magazine forum, yet he did not want his identity known under any circumstances and he did not want the money or accolades that he might have gotten from revealing his ideas. Thus was born the “Phantom of the Pits.” 他的文章非常受歡迎，吸引了許多回應和跟進問題，以至於有人為他的評論設立了單獨的主題。他願意在期貨雜誌論壇上分享他所知道的交易知識，但他在任何情況下都不想讓人知道他的身份，他也不希望因為透露自己的想法而得到金錢或榮譽。就這樣，「坑中魅影 」誕生了。
From his participation in the forum and the acceptance of his ideas by a growing number of loyal followers came this “book” summarizing some of his thoughts. “Phantom’s Gift” is not a print book in the traditional sense but is actually a work in a progress, continually being updated or added to online as a result of interchanges among the Phantom, associate Art Simpson and forum participants. A new chapter may be added to the middle of the book to expound on Rule 1 at any time, for example, so the “book” you see today may not be the same tomorrow. 從他在論壇上的參與，以及越來越多的忠實追隨者對他的想法的接受，這本總結了他的一些想法的「書」就出現了。「魅影的禮物 」不是一本傳統意義上的印刷書，它實際上是一本正在進行中的作品，由於魅影、Art Simpson 同事和論壇參與者之間的交流，它會不斷在線上更新或增加內容。例如，隨時都可能在書的中間加入新的章節來闡述規則 1，所以您今天看到的「書」明天可能就不一樣了。
The book is presented as a conversation between the Phantom and Art Simpson and is “printed” here essentially as it appeared over a period of weeks on the Futures Talk forum, with some comments from other forum participants included. The unique process for writing this “book” means thoughts or ideas may be restated, they may seem a little disorganized in places or they may even appear mysterious at times. Some chapters may be more rambling or personal than will appeal to many traders.
But most traders will find some real nuggets throughout these chapters. Accept the Phantom’s gift for what you can glean from it that will make you a better trader. And, better yet, participate in the Futures Talk forum yourself and share your questions and ideas so everyone can learn more about trading. 但大多數交易者都能在這些章節中找到一些真正的金塊。接受魅影的禮物，從中汲取能讓您成為更好交易者的東西。更棒的是，親自參與期貨論壇，分享您的問題和想法，讓每個人都能學到更多交易知識。
P.S. We still don’t know who the Phantom is. 附註： 我們仍不知道誰是 Phantom。
Phantom's Gift 魅影的禮物
By Art Simpson 作者：Art Simpson
Chapter 1: Phantom's Insight 第 1 章：幻影的洞察力
It had to happen, I thought to myself as I took a walk to the top of a small hill just behind my home. 我邊想邊走到我家後面的小山頂上。
There isn’t a single trader who wouldn’t give half his trade equity to know how the big guru did it! Knowing his thoughts could be worth thousands of dollars in a single trade. For decades traders have wondered what is so special about perhaps the best trader ever. 沒有一個交易員不會為了知道大師是怎麼做的而付出自己一半的交易權益！知道他的想法可以在單筆交易中獲得數千美元的價值。數十年來，交易者一直在想，這位可能是史上最好的交易者到底有什麼特別之處。
It was six months ago that we had talked about giving something back. And why shouldn’t he give something back? We’re talking knowledge, and you can’t put a value on knowledge or experience. 六個月前，我們談過要有所回饋。他為什麼不能有所回饋呢？我們談的是知識，而知識和經驗是無法估價的。
He had both. We agreed that, to give back, it would have to be without expectations of any recognition or rewards. He came up with a plan just as he always did. We would go on the “Futures Magazine Traders forum” and sneak information onto the forum and see how well the reception would be for the new knowledge. 他兩者都有。我們同意，要回饋社會，就不能期望得到任何表彰或獎勵。他像往常一樣想出了一個計劃。我們會上 「期貨雜誌交易者論壇」，把資訊偷偷放到論壇上，看看新知識的反應如何。
First, he called me every name he could think of calling me, other than my name, to be listed as the author of the information. I wasn’t happy with any of the names until he asked, “How about POP?” 首先，他把他能想到的所有名字都叫給我，除了我的名字之外，還要把我列為資訊的作者。我對任何一個名字都不滿意，直到他問：「民研計劃如何？」
His agreement to give back (knowledge) to other traders was really important to him at this stage of his life. I could hear it in each breath of his voiced words. I could see as his face mirrored the concern in his heart. I could see he was taller than usual that day in the spring. 他同意回饋（知識）給其他交易者，這對他現階段的人生來說真的很重要。我可以從他的每一句話中聽到這一點。我可以看到他的表情反映出他內心的憂慮。在春天的那一天，我看見他比平常更高了。
It was almost 30 years ago that I had first met him. I didn’t see him as a tall man until years later. Over the years he had grown taller than I had imagined possible – not in height but in his confidence, his manner of thought, his gestures, his speech and all the characteristics you would expect of a hero. I met him in the pits in Chicago on even ground. We were trading the same futures. I got the best of him that day but just one lesson he taught me by week’s end showed that the market is more than a day! 我第一次見到他已經快 30 年了。直到多年後，我才發現他是個高個子。這些年來，他的長高超出了我的想像 - 不是身高，而是他的自信、思考方式、手勢、說話，以及所有你所期望的英雄特徵。我和他在芝加哥的交易場偶遇。我們交易的是同一種期貨。那一天，我比他厲害，但到了週末，他給我上了一課，讓我知道市場不只是一天！
The name “POP” sounded like a setup for me. He stopped at the top of the hill and looked to the sky as he urged me to agree on always keeping his identity confidential. He said, “I will not accept the credit for my good fortune and do not want recognition for my insights on trading.” 民研計劃」這個名字聽起來像是為我設下的圈套。他在山頂停下來，望著天空，催促我同意永遠對他的身份保密。他說：「我不會接受我的好運氣的功勞，也不希望我對交易的見解得到認同」。
He looked me in the eye and said, “From now on, you may call me Phantom Of the Pits!” 他看著我的眼睛說 "從現在開始 你可以叫我「深坑魅影」！"
Yeah, “POP,” I thought to myself. 是的，「POP」，我心想。
As you progress from page to page, you’ll see the importance of Phantom’s insight on trading as I have over the years. Trading is not as we all thought. Few have ever approached is methods in trading. “How do you measure the worth of a man or woman?” I still ask myself after that short walk to the top of the hill. Here is a trader who is the best trader I have ever known and perhaps the best trader in the world. We will measure his worth by his deeds and insights into trading! 當你從一頁進到另一頁，你會發現 Phantom 對交易的洞察力的重要性，就像我多年來所做的一樣。交易並非我們所想的那樣。很少有人接觸過交易中的方法。「你如何衡量一個人或一個女人的價值？」在那短短的山頂漫步之後，我仍然會問自己。這位交易員是我所認識的最好的交易員，也可能是世界上最好的交易員。我們將以他的事跡和對交易的見解來衡量他的價值！
Yes, that’s how we will size up Phantom of the Pits. 是的，這就是我們將如何衡量 Phantom of the Pits。
Phantom is dedicated to giving knowledge to those who have open minds and a desire to learn. Your part is knowing that, in trading, you can do it, too! It is not an untraveled road . . . only a lonely one! Phantom 致力於為那些思想開放、渴望學習的人提供知識。您的角色是知道，在交易中，您也可以做到這一點！這不是一條遙不可及的路..只是一條孤獨的路！
Phantom's Gift 魅影的禮物
By Art Simpson 作者：Art Simpson
Chapter 2: Your Book 第二章：您的書籍
(Or "Why Give Everything Away?") (或「為什麼要把所有東西都送人？）
To reiterate the points I made in “Phantom’s Insights,” the following chapters in “Phantom’s Gift” are based on interviews with one of the most important and best traders I have ever known. His purpose in agreeing to these interviews is to help those who have the ability and desire to become the best traders they can possibly be. There is no claim to fame, so to speak, but only the honest effort to bring to other traders the insight of a very difficult business of trading for a living. 為了重申我在 "Phantom「s Insights 「中提出的觀點，」Phantom」s Gift "中的以下章節是基於對我所認識的最重要和最好的交易員之一的採訪。他同意接受這些訪談的目的，是要幫助那些有能力、有願望成為最佳交易員的人。可以說，他沒有沽名釣譽，只是誠實地努力為其他交易員帶來以交易為生這個非常艱難的行業的真知灼見。
Art Simpson (ALS): Phantom, why do we start this book without knowing who you are for others to admire and thank? Art Simpson (ALS)：Phantom，為什麼我們要在不知道您是誰的情況下開始這本書，讓其他人敬佩和感謝您？
Phantom Of the Pits (POP): I remember being on a train after one of my first trading days and thinking about how I had doubled my account in that one day. I looked around and was so proud of what I had done, but not one person on the train knew or would even care if they did know. Phantom Of the Pits (POP)：我還記得在我第一次交易日結束後的火車上，我在想我是如何在那一天把我的帳戶翻了一倍的。我環顧四周，為自己所做的事感到非常驕傲，但車上沒有一個人知道，即使他們知道也不會關心。
At that point my direction was self-driven in seeking out what was possible in trading. I know more now than I knew then. The markets have humbled me as a trader more times than I wish to remember. It’s always easier for an observer to put their finger on a problem than the one who is wrapped up in the situation.
That is who I am! I am the observer, and I wish to point out the line in the sand. I don’t know who puts the line in the sand, but I clearly see it. Who remembers who points out the line? You may call me Phantom of the Pits from here forward, and we shall remain as the shadow of your writings. 這就是我！我是觀察者，我希望指出沙灘上的界線。我不知道是誰在沙灘上劃出這條線，但我清楚地看到它。誰會記得是誰指出這條線？從此以後，你可以叫我 「坑洞魅影」，我們將繼續成為你著作中的影子。
ALS: After more than three decades of trading, why haven’t you written a book sooner?
POP: I have, but they have all seemed to become outdated because knowledge is quicker in coming than in writing. I always wanted to have it exact. I have made mistakes, and to give my mistakes to others seemed to be admitting I was wrong often. It has taken years to understand that being wrong is what trading is all about. POP：POP: 我有，但它們似乎都變得過時了，因為知識來得比寫得更快。我總是希望有準確的資料。我犯過錯誤，把我的錯誤告訴別人似乎就等於經常承認自己錯了。我花了很多年的時間才明白，做錯才是交易的真諦。
ALS: Surely there are those who know you and appreciate what you have accomplished in your trading career. Why don’t you accept their recognition? ALS：肯定會有人認識您，並欣賞您在交易生涯中所取得的成就。您為什麼不接受他們的肯定呢？
POP: I have always believed that there are two sides to a coin. In fact, I find there are times when you could argue a third. I won’t take credit for what I have accomplished. There are no guarantees, and I have been put on notice a few times. My success is nothing without putting a bucket full of water beside the pump to prime it for the next trader, the other side of the coin. There will always be those who drink the water from the bucket (the third side of the coin). Why shouldn’t the thirst of others be fulfilled when it can be done so easily? POP：我一直相信硬幣有兩面。事實上，我發現有時候你可以爭論第三面。我不會為自己的成就邀功。世上沒有保證，我也曾幾次被警告。如果不在泵旁放滿一桶水，為下一個交易者（即硬幣的另一面）打底，我的成功就毫無意義。總會有人喝桶裡的水（硬幣的第三面）。既然這麼容易就能做到，為什麼不能滿足他人的渴求呢？
ALS: To you, what is the most important aspect of trading? ALS：對您來說，交易最重要的是什麼？
POP: Behavior modification, without doubt, is the key to trading success – not only in how we think but also how we act in certain situations. We must adapt to changing situations over which we have no control. We must change the situations over which we do have control. 民研計劃：行為修正，毫無疑問是交易成功的關鍵 - 不僅在於我們如何思考，也在於我們在某些情況下如何行動。我們必須適應我們無法控制的不斷變化的情況。我們必須改變我們可以控制的情況。
ALS: Let’s start your writings and insights into successful trading from any background you can give us of your trading! Is there any important point you wish to make about your trading background. ALS：讓我們從您的交易背景開始，瞭解您的著作和對成功交易的見解！關於您的交易背景，您是否有任何重要的觀點想要提出？
POP: My only point is that I am no different than any of the traders who will read this. How I got started or who I am makes no difference in trading. Let us not dwell in such trivia, which has no significance in how your readers will succeed. What was is and what is was but a breath after the markets close. POP：我唯一想說的是，我和任何讀到這篇文章的交易者沒有什麼不同。我是如何開始交易的，或者我是誰，在交易中沒有任何區別。讓我們不要糾纏於這些瑣事，它們對您的讀者如何取得成功毫無意義。過去是什麼，現在是什麼，不過是市場收盤後的一息之間。
ALS: Okay with me if it is okay with you that we get started with our behavior modification for trading! ALS：ALS: 如果你同意的話，我可以開始我們的交易行為修正！
POP: Okay with me. But a little history on my first access to behavior modification as a child. My brother was on a tour of a blacksmith’s shop in his youth and watched the blacksmith take channel lock pliers, hold a horseshoe, hit it with a ballpin hammer a few times to shape it and then put it into a fire to temper the metal. Upon removing the horseshoe from the fire and dipping it into POP：我沒問題。但我要說說我小時候第一次接觸行為修正的歷史。我哥哥年輕時曾參觀過一家鐵匠店，看見鐵匠拿著溝道鉗，握著一個馬蹄鐵，用圓珠錘敲打幾下使其成形，然後將其放入火中淬火。從火中取出馬蹄鐵後，將其浸入
water, a tempering process, he laid it down. 水是一種淬火過程，他把它放了下來。
At that point, my brother picked it up and threw it down on the ground. The blacksmith looked at my brother and said, “Hot isn’t it, son?” 這時，我哥哥把它撿起來扔在地上。鐵匠看著我弟弟說：「很熱吧，兒子？」
Well, my brother said, “It don’t take me long to look at a horseshoe!” 我弟弟說 「我看馬蹄鐵不會花太多時間!」
That taught me more about trading than anything else: Trading is not taking long to look at a horseshoe. Don’t ever forget that! 這讓我學會了更多關於交易的知識：交易就是不用花很長的時間去看馬蹄鐵。永遠不要忘記這一點！
ALS: What do we call the next chapter? ALS：我們該如何稱呼下一章？
POP: It’s their (traders’) book. Why not ask them? POP：這是他們（交易商）的書。為什麼不問他們？
NOTE: Phantom has observed and participated in an internet forum sponsored by Futures Magazine in an effort to pay his debt, so to speak. Many sharp traders, as well as beginning traders, frequent the forum. Often in posting replies, Phantom uses a sort of firewall to protect his identity. Some of his remarks get posted through the author’s efforts. One remark of interest that other traders made Phantom aware of was how effective knowledge can travel today compared to the late 1960s and early 1970s. It is Phantom’s thought that those who have the most toys will not win but those who have the most knowledge and can change their behavior to what is needed will take it home. 注：Phantom 觀察並參與了期貨雜誌贊助的網路論壇，可以說是為了還債。很多精明的交易者和初學者都經常上這個論壇。在發表回覆時，Phantom 經常使用一種防火牆來保護自己的身份。在筆者的努力下，他的一些評論被張貼出來。其他交易者讓 Phantom 感興趣的一句話是，與 1960 年代末和 1970 年代初相比，今天的知識傳播有多有效。Phantom 認為，擁有最多玩具的人不會贏得勝利，但那些擁有最多知識，並能根據需要改變其行為的人，將會把玩具帶回家。
Phantom's Gift 魅影的禮物
By Art Simpson 作者：Art Simpson
Chapter 3: A Little History 第 3 章：一點歷史
Art Simpson (ALS): Let us get into a little of your background without breaking the rules here. How did you come upon the name of Phantom of the Pits? Art Simpson (ALS)：在不違反規則的情況下，讓我們了解一下你的背景。您是如何想到「Phantom of the Pits」這個名字的？
Phantom Of the Pits (POP): It all comes from the respect I have been given in the pits. I started pit trading in the early 1970s after some early off-floor introductions to commodity trading. Phantom Of the Pits (POP)：這一切都源於我在攤位交易中受到的尊重。我是在 1970 年代早期開始攤位交易的，當時我還在場外學習商品交易。
ALS: Why did you decide to trade on the floor instead of up above (off-floor with quote machine) as most traders do?
POP: I really liked the challenge and excitement of floor trading. The appeal of being in complete control at all times seemed to be a dream of all traders. I certainly felt I could do well on the floor by being in total control. I had a few friends who advised me to buy a membership and get on the floor. It happened so fast. POP：我非常喜歡場內交易的挑戰和刺激。在任何時候都能完全掌控市場的魅力似乎是所有交易員的夢想。我當然覺得在場內完全掌控一切，可以做得很好。有幾個朋友建議我購買會員資格，然後進入交易大廳。事情發生得太快了。
ALS: We both know you are Phantom at showing up on the floor over the last several years. Can we get into some of your experiences on the floor? ALS：我們都知道，過去幾年來，您在地板上的表現非常出色。我們可以談談您在地板上的一些經驗嗎？
POP: You know we all had so-called offices on the floor in the pits. Each day prior to the market open we would all go stand in our little 3 -foot by 3 -foot office. Every day there was this trader named Cindy who would make her office one tier in front of mine. I remember her name because her career start was as a math teacher. Her husband was a general manager at the FM radio station I always liked to listen to for easy music. I actually knew more about her than she ever knew. POP：你知道我們都有所謂的辦公室，就在攤位的地板上。每天開市前，我們都會站在自己三英尺乘三英尺的小辦公室裡。每天都有一個叫 Cindy 的交易員，她的辦公室就在我前面一層。我記得她的名字，因為她的職業生涯是從數學老師開始的。她的丈夫是一家調頻電台的總經理，我一直喜歡聽輕鬆的音樂。事實上，我比她更瞭解她。
Each day she would wait until she was sure where the market was headed and positon. It happened that I was strong into taking profits on the 3rd wave of buying or selling. It apparently was her breakout indicator. She would always take my offer below the last trade for selling, and before she carded it she would say, " I hate trading with you because I always lose when I take your trade." 每一天，她都會等到她確定市場的走向和位置。碰巧的是，我很喜歡在第三波買入或賣出時獲利。這顯然是她的突破指標。她總是在最後一次交易賣出時接受我的出價，在她兌現之前她會說：「我討厭和你交易，因為我接受你的交易時總是輸」。
I never forgot that statement she would make. Losing never stopped her from staying with her plan as she knew how to lose small and go with her program. I am sure she has made lots of money over the years. I sort of felt bad when she would say what she said, but it started me thinking about losing. Her mind was set correctly in trading. Funny how little incidents shape our belief in trading – some good and some bad. 我從來沒有忘記她的這句話。失敗從來沒有阻止她堅持她的計畫，因為她知道如何以小失大，並堅持她的計畫。我相信她這些年來一定賺了不少錢。她說這番話時，我有點難過，但這讓我開始思考虧損的問題。她對交易的想法是正確的。有趣的是，一些小事件塑造了我們對交易的信念 - 有些是好的，有些是壞的。
ALS: She was never afraid to take your trade, even though she felt she lost from it most of the time? ALS：她從不害怕接受你的交易，即使她覺得她大多數時候都是輸家？
POP: She had convictions. A lot of the other traders would shut up and back off whenever I would make an offer. I was starting to pick up a reputation for being correct, and the traders would start to follow me. It actually would hurt my execution, and that is where I discovered that EXECUTION is critical. If you can’t EXECUTE in getting in, you sure can’t execute to get out. It wasn’t a mental thing but a hindrance in my trading plan. POP：她有信念。每當我開價時，很多其他交易員都會閉嘴退縮。我開始以正確著稱，交易員也開始跟隨我。這實際上會損害我的執行力，這就是我發現執行力非常重要的地方。如果你不能執行進入，你肯定不能執行退出。這不是心理問題，而是我交易計劃中的障礙。
ALS: So what did you do to overcome this execution problem? ALS：那麼您是如何克服這個執行問題的？
POP: I started to play games with my trades. Actually the funds do it now. It is so artificial but they fall for it. It worked like this: If I had a position and I wanted to take profits, I would pretend I wanted to add to my positions. So I would bid the market instead of offer. I had enough people following me that they, too, would bid the market. Then I would turn and, instead, hit the bid and sell my positions.
ALS: Seems like a good strategy. Did it work most of the time for you?
POP: Well, I felt bad about getting the other traders out of position by using this little game so I decided to just hit the bids when I wanted to get out. If there weren’t enough bids at the last price, I would let the market work itself down to a point I was out.
Today the funds must use fades because they must go at the market to position. This is a problem if they don’t know the liquidity at the time. In the long run, it won’t make much difference as short-term influence isn’t what you would think. I also learned to not stakeit all on one price. A long-time friend taught me the range strategy. It works for me.
ALS: What did you usually trade at first?
POP: You know the only answer I am going to give you! Anything that moved! By that I mean movement has less risk. You wouldn’t think so ordinarily, but in a move you can have a smaller position and make a better return. In a dead market you tend to position too large and then, wham, a news story runs the market and you weren’t prepared.
ALS: But don’t moving markets chop you around more?
POP: There is integrity about the chop as trends that develop give you a good range to work with if you don’t get emotional about it.
ALS: Maybe we should elaborate on that statement in a later chapter. How did the other traders treat you when you first hit the pits?
POP: They would yell at me to take my profits and to step off of first base. I didn’t mind their remarks except for one. They would say, “Well, it is only money,” and that made me mad as I took it personally when I would throw money away. I started out with such a small amount of money, and I couldn’t stand to lose money at first.
I got even with the other traders for that remark. I would watch them, and when their shirts would expand and their ties were too tight and, finally, when their face would turn red, I would yell at them, “TAKE YOUR LOSSES!” It wasn’t long before we had an understanding.
I actually was doing them a favor in telling them to take their losses. To this day, I call this out to myself when the market isn’t working my position correctly – the big start of my behavior modification, I suppose.
ALS: How have your pit friends and your recent friends treated you over your trade life?
POP: You know, I have just really found out recently how loyal my friends can be. If you do something they remember, it is without fail that they will be loyal to you. They respect me more now than at first. That respect is not just out of trading but knowing that true friends look beyond your face into your heart and soul to find you. It is very touching.
ALS: You don’t seem to floor trade much anymore. Is there a reason?
POP: You look on the floor and you see it is a young person’s game out there. I am not saying that is the route to success now because it is more than youth in this business that makes you a successful trader. I trade upstairs because I understand the markets better at a distance and can trade more markets.
Being on the floor is limiting as a trader. A floor trader is more of a scalper than a position trader is. I like the latitude of being able to set up various criteria for different markets and not depend on my own execution in the pit to position.
ALS: Would you advise other traders to start on the floor?
POP: I am asked for advice often, but I don’t like to ever give advice. I only like to give guidance, as all traders must make their own bed. They must make their own efforts to learn. It is their decision as to how they will make their plan on trading. I can help guide them away from bad behavior, but it is their own determination that makes them a success.
ALS: Phantom, can you remember the first advice you ever heard from another trader?
POP: No, I can’t ever remember any advice. I don’t mean to be ungrateful to all my many friends and colleagues, but I really don’t remember any advice. In fact, that is part of the reason I want to pay a debt to other traders. I don’t think anyone ever gives much advice because they feel it is putting them at a disadvantage. Of course, it isn’t the case but most traders’ behavior is determined early in their lives. That is why I feel behavior modification is critical.
ALS: I can see the critics already starting to line up to point out your big point of trading is behavior modification! Are we going to write an entire book on behavior modification? If so, we will have to give this book away. Not only that but also what credibility does Phantom of the Pits have to anyone?
POP: Nothing would please me more than to give the books away. Or perhaps we could ask Futures Magazine to sponsor it for all the publicity they would receive. Accurate insight is what we are going to give every trader who reads this book. It isn’t enough to point out requirements. I want to give them guidelines so they can choose their own destiny.
ALS: Sort of like change your thoughts and you change your destiny, huh?
POP: This is exactly where we want to be. No promises, no requirements, no false hopes and no undue influences. Exactly the way it should be. Traders must make their own millions. I only need to be responsible for keeping them in the game forever.
ALS: Phantom, I don’t make my money from writing so how about making it a little easier in writing this book for me? Guide me a little in what you want to convey to the traders in this book.
POP: I have an idea, which presented itself when I viewed some of the other traders’ questions on the forum I frequent. They don’t know the important questions other than from their own experiences in trading. Eventually they will come upon all of the situations I want to protect them from getting into.
However, I don’t want to give specific trading advice or any outdated information like the writings I wrote in the 1970s. So why don’t we call upon the traders from the forum to guide us in this book?
ALS: Great idea! I am rather impressed with this one trader and know he will respond. But we don’t want to exclude any of the others so I guess we kind of make them Phantom of the Pits, too!
POP: That certainly is okay with me. I like the idea. No loss to throw out is what I enjoy. POP：我當然沒問題。我喜歡這個想法。沒有損失扔掉是我喜歡的。
ALS: Okay again! You win! You are right! ALS：Okay again！你贏了你說得對！
POP: Funny, I have had years to hear what you just said. I really don’t hear that anymore. I mean the “You win and you’re right.” Trading is not those statements. A trained trader understands success as “You lose good and you’re wrong small.” Trading is called coming out on the small losers’ side and being rewarded with knowing how good you have been wrong. POP：有趣的是，我聽到你剛才說的話已經很多年了。我真的聽不到了。我是說 「你贏了，你是對的」。交易不是這些說法。訓練有素的交易員將成功理解為 「你輸得好，你錯得小」。交易叫做從小輸家的一方走出來，並獲得知道自己錯得有多好的獎勵。
It requires a balanced life to sustain the meanness of the markets. Traders never plan for the bad days, and there are bad days. It is when it affects their lives that they must make a new choice. Either change their behavior or go down in defeat. 這需要一種平衡的生活來維持市場的卑劣。交易員從來沒有計畫過壞日子，而壞日子總是有的。當它影響到他們的生活時，他們就必須做出新的選擇。要麼改變自己的行為，要麼敗下陣來。
ALS: There’s our subject again. Are we going to get tired of hearing the truth of trading? ALS：我們的主題又來了。我們會聽膩交易的真相嗎？
POP: Traders have a choice: Either face the truth of trading or look for the nearest exit. POP：交易者有一個選擇：要麼面對交易的真相，要麼尋找最近的出口。
ALS: Have any of your associates over the years given you a difficult time in your trading? ALS：這些年來，您的合作夥伴有沒有讓您在交易中遇到困難？
POP: Only through ignorance! I can forgive all that. Those who don’t learn are their own enemy. POP：只是因為無知！我可以原諒這一切。不學習的人是自己的敵人。
ALS: What must they learn? ALS：他們必須學習什麼？
POP: Most important, they must learn that they don’t have to make SELF-LEARNED mistakes. They are always better off to learn from OBSERVED MISTAKES. It can be pretty costly to make mistakes in this business. You cannot really tell someone what to do, but often if you guide him or her, they will be more receptive to making the right decision. POP：最重要的是，他們必須學習到，他們不一定要犯自學的錯誤。從觀察到的錯誤中學習總是比較好的。在這一行中，犯錯的代價可能相當高。您無法真正告訴別人該做什麼，但如果您能引導他或她，他們往往會更容易接受做出正確的決定。
ALS: How do you differentiate between self-learned mistakes and observed mistakes? ALS：您如何區分自學錯誤和觀察錯誤？
POP: Let us say you go to an eye doctor, and he asks you if you can see better out of lens A or lens B. You make a choice, and then he goes to the next step by asking you again if you can see better with lens CC or DD. This continues until you have the best lens criteria for your eyes. POP：比方說，你去看眼科醫生，他問你鏡片 A 或鏡片 B 能否讓你看得更清楚。你做出選擇後，他會進入下一步，再問你鏡片 CC 或 DD 能否讓你看得更清楚。這樣持續下去，直到您找到最適合您眼睛的鏡片標準為止。
Well, any mistake you make is a self-directed mistake, and it will hurt only you . No one can teach you not to make this selflearned mistake. 好吧，你所犯的任何錯誤都是自我導向的錯誤，它只會傷害到你自己。沒有人能教你不犯這種自學的錯誤。
Now, if you tell the eye doctor you are blind in your left eye when he says cover your left eye and he then says cover your right eye, then you have an observed mistake. You wouldn’t make that mistake, and because you were affected by that mistake, even though it wasn’t your mistake, you will remember better. 現在，如果您告訴眼科醫生您左眼失明，當他說遮住左眼時，他又說遮住右眼，那麼您就有一個觀察到的錯誤。你不會犯這個錯誤，而且因為你受到這個錯誤的影響，即使這不是你的錯誤，你也會記得更清楚。
It is better to learn from a mistake that affects you directly when it is made by someone else. You have to be mistake-aware in trading because there are so many lessons. 當別人犯的錯誤直接影響到自己時，最好從中學習。在交易中您必須要有錯誤意識，因為教訓太多了。
ALS: I see. I mean, it is clear what you mean on mistakes. Learn from others’ mistakes, and it is cheaper than learning from your own mistake? ALS：我明白了。我的意思是，你對錯誤的意思很清楚。從別人的錯誤中學習，比從自己的錯誤中學習更便宜？
POP: I think you have it. POP：I think you have it.
ALS: Do you ever go into the pits much anymore? ALS：你現在還常去車間嗎？
POP: To sharpen my thoughts on a market and to re-enforce the proper behavior, I often do go back. There is always something to learn from it. 民研計劃：為了銳化我對市場的想法，並重新強化正確的行為，我經常會回到過去。總能從中學到一些東西。
ALS: What happens when you walk into the pit? ALS：當你走入坑洞時會發生什麼事？
POP: At the end of the trading day there are those who come up to me an say, “I knew it, I knew you would be selling today. I should have known the market was going down.” 民研計劃：在交易日結束時，有些人會跑來跟我說：「我就知道，我就知道你今天會賣。我早該知道市場會下跌"。
ALS: So you move the market? ALS：所以你移動市場？
POP: It seems to be their thought, but it isn’t the case at all. You see, if I am selling to take profits, I am aggressive in doing just that. It is that I have a position to get out of, and it so happens there are others doing the same thing. Maybe they have a signal close to mine. It is inaccurate to think anyone moves the markets. If they could, I wouldn’t trade! The truth is that the BEST LOSER is the long-term winner. POP：這似乎是他們的想法，但事實並非如此。你看，如果我是為了獲利而賣出，我就會積極這樣做。就是說我有一個倉位要退出，而恰巧有其他人也在做同樣的事情。也許他們的信號與我的接近。認為任何人都能移動市場是不準確的。如果他們可以，我就不會交易了！事實上，最好的輸家就是長期的贏家。
ALS: One of the traders (on the Futures Talk forum) had some good suggestions on phases of this book. He calls step one “preparation.” Let us continue with that suggestion from the forum. ALS：一位交易員（在期貨論壇上）對這本書的各個階段提出了一些很好的建議。他把第一步稱為 「準備」。讓我們繼續討論論壇上的建議。
POP: Suits me fine. POP：很適合我
Phantom's Gift 魅影的禮物
By Art Simpson 作者：Art Simpson
Chapter 4: Preparation for Trading 第四章：交易準備
When several traders who use the Futures Magazine Talk forum learned there would be a book by Phantom of the Pits, they made suggestions. We are going to start this chapter with an anecdote from Ulrich Eckardt, a young trader who was born around the time Phantom was learning his first behavior modification about trading. 當幾位使用 Futures Magazine Talk 論壇的交易員得知將有一本由 Phantom of the Pits 撰寫的書時，他們提出了一些建議。我們將以 Ulrich Eckardt 的軼事開始本章，他是一位年輕的交易員，出生的時間與 Phantom 學習他第一次交易行為修正的時間相近。
When Ulrich was in the States as a youngster, his uncle wanted him to paint the staves on his roof. Excited as any child at a young age to earn money, he was eager to start. He grabbed the paint and a brush and decided to hurry onto the roof. His uncle stopped him and gave him his first lesson in trading – or life, for that matter. Ulrich 小時候在美國，他的叔叔希望他能為屋頂上的木條上色。他像所有年幼的孩子一樣，對於賺錢感到興奮，急著想要開始。他拿起油漆和刷子，決定趕快上屋頂。他的叔叔攔住了他，給他上了第一堂交易課 - 或者說是人生課。
His uncle proceeded to tell him the requirements for completing a job. First, you must be properly prepared. Second, you will do the work and, last, you will do the cleanup. It seems we can follow that train of thought just fine. First, we must be prepared! 他的叔叔接著告訴他完成工作的要求。首先，您必須做好適當的準備。其次，您要做工作，最後，您要做清理工作。看來我們可以很好地遵循這個思路。首先，我們必須做好準備！
It’s a step everyone must go through to get to where traders want to be in trading. To prepare oneself for trading is just as important as any aspect. Without it, a trader does not have the foundation to continue in trading. Where does a trader start to prepare to be a successful trader? 這是每個人都必須經過的步驟，才能達到交易者想要的交易境界。為交易做好準備與任何方面一樣重要。沒有這一點，交易者就沒有繼續交易的基礎。要成為一個成功的交易者，交易者應該從哪裡開始準備呢？
POP: Too many beginning traders – and established traders as well – take the easy route and expect the markets to be cut and dry of what is required of them in their trading careers. They will paper trade and have fairly good success. POP：太多的初學交易者（也包括資深的交易者）都會走捷徑，期望市場對他們交易生涯的要求是一刀切的。他們會紙上交易，並取得相當好的成功。
This in no way prepares them for trading. They must be prepared in every way. That means mentally as well as physically and emotionally. Priorities must be in the proper place including family, friends and environments. 這絕對無法讓他們為交易做好準備。他們必須在各方面做好準備。這意味著精神上、身體上和情緒上的準備。優先順序必須放在適當的位置，包括家庭、朋友和環境。
ALS: Where do you suggest they begin? ALS：您建議他們從哪裡開始？
POP: Get your office ready! Pick out your office where it is comfortable for you to have quiet time and a proper place to relax. Trading is going to be an all-out effort if they expect to climb the mountain in front of them. POP：準備好您的辦公室！挑選一個舒適的辦公室，讓您有安靜的時間和適當的地方放鬆。如果他們期望攀登眼前的高山，交易就要全力以赴。
The first thing is to get a comfortable chair. It must be a proper chair in order to start behavior modification immediately. 首先要準備一張舒適的椅子。它必須是一把合適的椅子，才能馬上開始行為修正。
ALS (laughing): I really have heard strange things but really? The readers are going to think this is a joke book! A chair? ALS (笑)：我真的聽過一些奇怪的事情，但真的嗎？讀者會以為這是一本笑話書！椅子？
POP: I’ll tell you the reason for the remark about the chair being so important. There is significance in what I am going to tell you about the proper chair. You see, some traders think the market is to position yourself and lean back and wait to get stopped out or take their winnings. POP：我會告訴你說椅子如此重要的原因。我要告訴你的關於合適的椅子的事情是有其意義的。你看，有些交易者認為市場就是要定位自己，靠在椅背上等著被止損或拿走他們的贏利。
It’s not. That is where your chair is going to save you more than it cost you. Don’t get one of the lean-back easy chairs as they will be too comfortable. As with the markets, you must be reminded daily that you can never let yourself get too comfortable in your market positions. 不是這樣的。這就是您的椅子能為您節省更多成本的地方。不要買靠背椅，因為它們太舒服了。就像在市場上一樣，您必須每天提醒自己，絕對不能讓自己在市場上的位置太舒服。
Don’t get a standard rocker, especially if you have a cat with a long tail, as it moves all over the place. What kind of chair do you think I am talking about? 不要買標準的搖椅，尤其是如果您有一隻長尾巴的貓咪，因為它會到處亂動。您認為我說的是哪一種椅子？
ALS: I’m supposed to ask the questions! I know your chairs so that is an easy one to answer. ALS：問題應該由我來問！我知道你的椅子，所以這個問題很容易回答。
POP: Okay, l’ll give you the answer anyway. You want to get what is known as a slider-rocker chair – one that rocks back and forth over its own base without moving over the floor. Even get yourself an ottoman. The big reasons are as follows: POP：好吧，我還是告訴你答案吧。你應該買一把滑動搖椅--它可以在自己的底座上來回搖晃，而不會在地板上移動。甚至可以為自己準備一個臥椅。主要原因如下：
First, in your trading career you will find that the markets go back and forth without going anywhere a lot of the time. Your slider rocker chair will remind you of this every time you use it. That step is important to drill into your thinking. Your chair will not move around the room but will rock back and forth. 首先，在您的交易生涯中，您會發現市場在很多時候都是來回走動的。您的滑動搖椅每次使用時都會提醒您這一點。這一步對你的思考是很重要的。您的椅子不會在房間裡移動，但會前後搖晃。
Second, in your trading you will find you do not ever control the market but only your position. Your chair is the same way as you can stop your position wherever you wish. I want you to drill that into your thinking also. 其次，在您的交易中，您會發現您永遠無法控制市場，而只能控制您的倉位。您的椅子也是一樣，您可以隨意停止您的倉位。我希望您也能將這一點貫徹到您的思維中。
I will repeat what I just said because it is important. You can stop your position wherever YOU want! You wouldn’t think of letting the chair oscillate if you didn’t want it to. Same in trading. You can stop the market’s oscillation any time you wish. Simply stop (remove) your position. 我要重複我剛才說的話，因為這很重要。您可以隨意停止您的位置！如果您不想讓椅子擺動，您就不會想讓它擺動。交易也是一樣。您可以隨時停止市場的震盪。只需停止（移除）您的倉位。
ALS: I knew you had a good reason for the proper chair. Do you really believe this helps? ALS：我就知道你有很好的理由要坐這張合適的椅子。你真的相信這會有幫助嗎？
POP: How much easier can it be? No one has to remind you to stop your chair from rocking back and forth. You will do it without thinking. Your trading position will oftentimes need to be stopped. It must become second nature to automatically do it at times. This simple symbolic gesture for your office will save you lots of distress in your trading. POP：還有比這更簡單的嗎？沒有人需要提醒您停止椅子前後搖晃。您會不假思索地去做。您的交易頭寸經常需要停止。有時自動這樣做必須成為您的第二天性。在您的辦公室裡，這個簡單的象徵性動作，將為您的交易省去很多麻煩。
ALS: Okay, we are now prepared with an office and a chair. What next? ALS：好了，我們現在準備好了辦公室和椅子。接下來呢？
POP: Next, we want a clock with accurate time – a battery -operated clock so you don’t have to reset it often. The most important part about the clock is to get one that actually talks to you and gives you a reminder of the time by talking. Instead of looking at the clock for time, it will remind you what time it is. POP：接下來，我們需要一個時間準確的時鐘 - 一個用電池運作的時鐘，這樣您就不必經常重新設定。時鐘最重要的部分是要有一個真正會跟您說話的時鐘，透過說話來提醒您時間。它會提醒您現在是什麼時候，而不是看著鐘看時間。
It’s another symbolic point to start behavior modification. You see, we remember things well when we associate them with something else. Memory experts will tell you this also. When the time announces itself, you must realize you are required to work with your positions and not let the market work on your positions. You must always act promptly and deliberately within your plan. The clock can be used to reinforce your thinking and behavior. 這是開始行為修正的另一個象徵點。你看，當我們將東西聯想到其他東西時，我們就會記得很清楚。記憶專家也會告訴您這一點。當時機公布時，您必須意識到您需要與您的倉位配合，而不是讓市場在您的倉位上做文章。您必須始終在您的計劃內迅速而謹慎地行動。時鐘可以用來強化您的思考和行為。
ALS: Aren’t you making an assumption that traders are going to be free while the markets are open? Doesn’t this leave out the poor trader who works two jobs and seldom has time to kiss his wife, let alone trade your way? ALS：你不是在假設交易員在市場開放時都會很自由嗎？這不是把打兩份工、很少有時間親吻妻子的可憐交易員排除在外，更不用說按你的方式進行交易了嗎？
POP: So it seems. But, no, I am not making that assumption. My concern in preparing a trader to trade is to make behavior modification immediate from the beginning. The chair is to be used whenever any trading plan is developed and thought is given to what the market possibilities on your position might be. The clock is to be there to remind you of promptness every time it announces. POP：看起來是這樣。但是，不，我沒有做這樣的假設。我所關心的是如何讓交易者從一開始就能立即修正自己的行為。每當制定任何交易計劃，並考慮您的倉位在市場上的可能性時，都會使用這張椅子。時鐘會在每次報價時提醒您要準時。
The office setup is to give the trader the message of importance to be in control of their positions and not delegate it to the markets. Your office is important because you must be in control. Remember, we used to have our small space in the pit and what did we call it? 辦公室的設置是要給交易者一個重要的訊息，就是要控制自己的倉位，而不是把它委派給市場。您的辦公室很重要，因為您必須掌控一切。還記得，我們以前在坑裡有自己的小空間，我們怎麼稱呼它呢？
ALS: Your office. ALS：你的辦公室
ALS: We have our office with a chair and a clock. What’s next? ALS：我們的辦公室裡有一把椅子和一個鐘。接下來呢？
POP: You must establish a routine to set up the environment of each trading day. Allow at least one hour prior to the opening of your market. In this hour you should exercise from 10 to 20 minutes. This really does keep your mind sharper. POP：您必須建立慣例，設定每個交易日的環境。在開市前至少預留一小時。在這一小時內，您應該做 10 到 20 分鐘的運動。這確實可以讓您的頭腦更靈敏。
The next thing after your shower you should spend one or two minutes giving thanks to your higher power and explain what you are going to do with the funds you earn. Don’t be selfish about it. This actually gives your subconscious a reason for being a successful trader. 洗完澡之後的下一件事，您應該花一、兩分鐘的時間感謝您的上主，並說明您要如何運用賺來的資金。不要太自私。這實際上給了您的潛意識一個成為成功交易者的理由。
Last of all, face the north and acknowledge you actually know which way is up. This gives you a better sense of well-being by confirming to yourself that you are in total control. You will need that total control when you follow your trading plan. 最後，面朝北方，並承認自己確實知道哪條路是向上的。這會讓您更有幸福感，因為您可以向自己確認，您可以完全掌控一切。當您遵循您的交易計劃時，您將需要這種完全的控制。
ALS: Not everyone can do or would want to do as you suggested! ALS：不是每個人都能做或想做您建議的事！
POP: I know! Some will be at work or on their way to their work, but they can still do those things as they commute. It is important to acknowledge the reason for trading, regardless of your situation or reason. Thirty years ago I would have thought it very strange to take these steps. POP：我知道！有些人會在上班或上班途中，但他們仍然可以在上下班途中做這些事情。無論您的情況或原因如何，都必須承認交易的原因。三十年前，我會覺得採取這些步驟非常奇怪。
ALS: Do you do these things? ALS：你做這些事情嗎？
POP: Yes, in my own way I do. Every trader, whether beginner or established, should set up a routine to follow as I suggested. There is more benefit from it than can be seen at first thought. POP：是的，以我自己的方式，我是這樣做的。每一位交易者，無論是初學者還是資深交易者，都應該按照我的建議建立一套慣例。它所帶來的好處，遠超過初學者的想像。
ALS: It all seems like a lot of work, and we haven’t started our learning process yet. ALS：這一切看起來都很辛苦，而且我們還沒有開始學習的過程。
POP: The most important person in your trading is yourself. Take care of the minor details early, and you will have your routine. It is more of a positive reinforcement of what you are expecting from trading. POP：在您的交易中，最重要的人就是您自己。及早處理一些小細節，你就會有你的例行公事。它更像是一種正面的強化，讓您對交易有所期待。
ALS: Are we ready to start yet? ALS：我們準備好開始了嗎？
POP: A couple of more items. You need to acknowledge your reason for trading each day. If you can’t afford to buy the chair and the clock, then you should postpone trading until you can, the reason being that you need every aspect of trading in your favor. If you do it all right, there will be better times ahead. POP：還有幾個項目。你需要承認你每天交易的原因。如果你買不起椅子和時鐘，那麼你應該延遲交易，直到你買得起為止，原因是你需要交易的每個方面都對你有利。如果你都做得很好，將來會有更好的日子。
The next thing I suggest is to get a favorite book to read. 接下來我建議您找一本喜歡的書來閱讀。
The last thing I suggest is to pick out a person you admire most in your life for their accomplishments. 最後一點我的建議是，挑出一個您在生活中最欽佩的人，看看他們的成就。
ALS: What would your favorite book be? ALS：您最喜歡的書是什麼？
POP: I shall tell you of a suggestion from a very brilliant trader. His suggestion is “The Art of Warship” (the U.S. title might be totally different) by Sun Tzu. The book was written about 2,500 years ago and forgotten for a long time. Because it was in Chinese, there are different translations. POP：我要告訴你一個非常傑出的交易員的建議。他的建議是《孫子兵法》（美國的書名可能完全不同）。這本書寫於大約 2,500 年前，後來被遺忘了很久。因為是中文，所以有不同的翻譯。
The best one is with a word from James Clavell. He based his noble house saga characteristics on that book. The book discusses rules for war in ancient times but can be translated into business -life, private relations and even trading. Sun Tzu’s rules have been alive for 2,500 years now and still fit perfectly. 最棒的是有 James Clavell 的一句話。他的貴族世家傳奇特徵就是根據那本書寫成的。這本書討論的是古代的戰爭規則，但也可以轉化為商業生活、私人關係，甚至是貿易。孫子的規則至今已有 2,500 年的歷史，仍然非常適用。
ALS: Why is a book important? ALS：為什麼書籍很重要？
POP: On bad days, instead of coulda-woulda-shoulda, you must expel your feelings of defeat as soon as possible because, if you don’t, it will affect your next day’s trading. Read that book if just for 10 minutes. Make it a routine. POP：在糟糕的日子裡，您必須儘快驅逐您的失敗感，而不是本來就可以-本來就應該-本來就不應該，因為，如果您不這樣做，它會影響您第二天的交易。閱讀那本書，哪怕只有 10 分鐘。讓它成為例行公事。
(Sidenote: Phantom and I have taken note, thanks to Futures Magazine Online, that Dean Lundell has re-authored "The Art of Warship"and titled it “Sun Tzu’s Art of War for Traders and Investors.” Both Phantom and I actually feel this is the best book on Sun Tzu to date, especially as it refers to trading. (附註：Phantom 和我注意到，感謝 Futures Magazine Online，Dean Lundell 重新撰寫了 "The Art of Warship「，並將其命名為 」Sun Tzu's Art of War for Traders and Investors"。我和 Phantom 都覺得這是迄今為止最好的一本關於孫子的書，尤其是在交易方面。
Futures Magazine insert note: This 220-page hard-cover book is available from Futures Learning Center for $19.95\$ 19.95. Order No. B2085. Call toll-free 1-800-601-8907 or fax 802-864-7626.) 期貨雜誌插頁說明：這本220頁的精裝書可從期貨研習中心購買，訂價為 $19.95\$ 19.95 。訂購編號 B2085。請撥打免費電話 1-800-601-8907 或傳真 802-864-7626)。
ALS: I guess I have a few things to learn myself. You said to pick out the one person you admire most. Why? Whom do you admire most? ALS：我想我自己也有一些東西需要學習。您說要挑出一個您最欽佩的人。為什麼？您最崇拜的人是誰？
POP: There is a great deal to be learned from the person you admire most. You will need to understand your ability to become an admired person if only in your own mind. I have changed my most-admired over the years, and now that person is younger than I am. POP：從你最欽佩的人身上可以學到很多東西。你要了解自己的能力，如果只是在你自己的心目中，你就會成為一個受人敬佩的人。這些年來，我已經改變了我最崇拜的人，現在那個人比我還年輕。
There are many reasons I admire my choice. I’ll give you the most important reasons. She gives and gives of herself each and every day. She is not selfish, and she truly cares about her fellow men, women, children and all life on this planet. I admire that so much. I hold her responsible for showing me the light. She is the only Oprah I know. 我欽佩自己的選擇有許多原因。我會告訴您最重要的原因。她每一天都在付出和奉獻。她不自私，她真正關心她的同胞、男人、女人、小孩和這個星球上的所有生命。我非常敬佩這一點。我認為她有責任讓我看到光明。她是我唯一認識的奧普拉。
ALS: Does she know you feel that way? ALS：她知道你有這種感覺嗎？
POP: No, but it is important to let your most admired person in your life know they are indeed most admired. It goes right to the positive example you need in your trading life. Do it! Let them know, even if there is no time for their acknowledgement. You have done your part at that point. It is good mental food. POP：沒有，但重要的是要讓你生命中最敬佩的人知道他們確實是最敬佩的人。這正好是您在交易生活中需要的正面榜樣。做到這一點！即使沒有時間讓他們確認，也要讓他們知道。在這一點上，您已經盡了自己的責任。這是很好的精神食粮。
ALS: Are we ready to start learning to trade yet? ALS：我們準備好開始學習交易了嗎？
POP: I would say that for me I am prepared now for the job. 民研計劃：我想說，對我來說，我現在已經為工作做好了準備。
ALS: I guess preparation for trading is a different process than most imagine. I really thought we were going to get into the learning process of how to trade and setting up a program to trade. Are we going to get into the specific ways to trade? ALS：我想交易的準備過程與大多數人想像的不同。我真的以為我們會進入如何交易的學習過程，以及設定交易程式。我們會談到具體的交易方法嗎？
POP: Keep in mind we want to guide and not give specific advice on trading. There are basic requirements that determine a winner from a loser, and that is what I am after in this insight. There are as many ways to trade as there are traders, but the basic fundamentals required are seldom presented to the trader. It is important to present a plan that keeps the trader in the game over their lifetime. POP：請記住，我們只想引導而非提供具體的交易建議。有一些基本要求決定了贏家和輸家，這就是我在這篇見解中所追求的。有多少交易者就有多少種交易方法，但很少有人會向交易者介紹所需的基本要素。提出一個能讓交易者終生保持在遊戲中的計劃是非常重要的。
Let us expound on that subject in your book. We can address trading methods in detail in later writtings. I have been trying to give 讓我們在您的書中詳細說明這個主題。我們可以在以後的著作中詳細討論交易方法。我一直試著給
some examples on the fourm to help traders understand where I am coming from in my rules of Phantom trading. 在網站上提供一些範例，幫助交易者瞭解我的 Phantom 交易規則。
We will answer some of their specific questions on trading later. I read a short book called “Notes to Myself” several years ago; it was but a self-diary that had been published. It was a small book, but it really had great insight. I like the idea. We can all learn from other people’s insight on subjects that we are investigating. It in no way is advice, but we can make up our own minds by knowing those thoughts. 我們稍後會回答他們一些關於交易的具體問題。幾年前，我讀了一本名為《Notes to Myself》的小書，它不過是一本已出版的自我日記。雖然是一本小書，但確實很有見地。我喜歡這個想法。我們都可以從其他人對我們正在研究的主題的見解中學習。這絕對不是建議，但我們可以藉由了解這些想法來決定自己的想法。
This is more of my purpose in answering your questions for this book. It puts the traders on a one-on-one basis for understanding the complexity of the markets and helps establish a criteria for an overall plan with the most important points at the front of a trade program. More often than not, these simple thoughts are not used or known by most traders. It’s sad that everyone feels they have a great fortune hunt in front of them and there isn’t a lot of thought required in how trading actually unfolds. 這更是我為這本書回答您問題的目的。它讓交易者在一對一的基礎上了解市場的複雜性，並幫助建立一個整體計畫的標準，把最重要的幾點放在交易計畫的前面。更多的時候，這些簡單的想法並未被大多數交易者使用或認識。很可悲的是，每個人都覺得自己面前有一大筆財富可以獵取，而在交易實際如何展開的過程中，卻不需要太多的思考。
What subject do you want to discuss next? 您接下來想討論什麼主題？
ALS: It’s beginning to be a surprise to me and knowledge learned new again. ALS：開始讓我感到驚訝，知識又學新了。
Phantom's Book 魅影之書
By Art Simpson 作者：Art Simpson
Chapter 5: Rule Number 1 第 5 章：規則 1
Abstract 摘要
When the subject of why it was so important to write this insight, Phantom’s remark was always, "Catch me at the right time for that answer."I remember as a child playing out that situation. It was always better to get my Dad to agree to something when the mood was correct. When gathering Phantom’s insight on the reasons for this book, it wasn’t clear until I caught him at the right time. It was after a big move in the grains in early October 1997. 當談到為什麼寫這篇心得如此重要時，Phantom 的說法永遠是：「在適當的時候抓住我，讓我回答這個問題。」我還記得小時候曾經出現過這種情況。在情緒正確的時候，總能讓我爸同意某件事情。在收集 Phantom 對這本書的原因的見解時，直到我在適當的時候抓住他，他才明白。那是在 1997 年 10 月初穀物大變動之後。
Art Simpson (ALS): Phantom, I see you agree on the subject today. I need to know just why is this particular time the right time to give your reasons for this book? Art Simpson (ALS)：Phantom, 我看到你同意今天的主題。我需要知道的是，為什麼在這個特殊的時刻，是你為這本書提出理由的適當時機？
Phantom Of the Pits (POP): This day is an example of the reason for this book. The grain market did a total surprise on most traders. Oh, there were those who were fortunate to be on the right side, but most of them took their positions off too soon. I wanted to discuss the shock most traders get on a day like today. Phantom Of the Pits (POP)：這一天是這本書的原因的一個例子。穀物市場完全出乎大多數交易者的意料。哦，也有一些人幸運地站在了正確的一邊，但他們大多數都過早地脫離了倉位。我想要討論大多數交易員在像今天這樣的一天所受到的震撼。
A great number of traders got what we call “killed” today in the grain market. Most all of the new traders are now wondering what they did wrong today. There isn’t anything they did right today because they most likely don’t know what the right thing is. I don’t mean that all traders are in the dark. I am talking about those who fail to understand what to do and, if they do, don’t carry out that requirement. 今天在穀物市場上有許多交易員被我們稱為 「殺手」。大多數新交易員現在都在想他們今天做錯了什麼。他們今天沒有做對任何事，因為他們很可能不知道什麼是對的。我並不是說所有的交易員都不知道。我說的是那些不明白該做什麼的人，如果他們明白了，也不去執行那個要求。
I am going to express the importance of doing the right thing from the beginning of a trade and at the right time. 我要表達的是，從交易一開始就在正確的時間做正確的事情的重要性。
Many traders – and most new traders – aren’t even aware the market can do what it did to them today. I have often said the BIG money is on the surprise side. I should perhaps have said the BIG LOSERS are on the familiar side or the popular side of a trade. I call that the expected side. 許多交易者 - 大多數新交易者 - 甚至都不知道市場可以像今天這樣對待他們。我經常說，大錢在驚喜的一邊。我也許應該說，大輸家在熟悉的那一邊或交易中受歡迎的那一邊。我稱之為預期的那一面。
Today gave us several reasons for a surprise – harvest pressure is strong and this is a day you expect there to be more selling by the producer than normal. Expecting prices to be pressured by hedging and seasonal influence is the correct way to trade in most minds. You can’t argue with probabilities. It is not what the trader does with his trades until the market starts a big move like today’s. That’s what separates the big winners and big losers. There were more big losers today than big winners. 今天給了我們幾個讓人驚訝的理由 - 收成壓力很大，而且這一天你預期生產商的拋售量會比平常多。在大多數人的心目中，預期價格會受到對沖和季節性影響的壓力是正確的交易方式。你不能與概率爭論。在市場開始像今天這樣的大變動之前，交易者的交易行為才是最重要的。這就是大贏家和大輸家的區別。今天的大輸家比大贏家還要多。
There are traders who, because of today, can’t make their next month’s car payment or their house payment now. It just didn’t ever occur to them that what happened today was even a possibility. They were over-positioned, even though they thought they had a good protection plan. They used stops okay, but they forgot to tell the broker to place the order. 有些交易員因為今天的事，現在無法支付下個月的車款或房款。他們從來沒有想過今天發生的事情是有可能發生的。儘管他們認為自己有一個很好的保護計劃，但他們的倉位過高。他們使用了止損，但卻忘了告訴經紀下單。
Everything they did was based on their thoughts of how much they could take out of the market today. Their trades are designed to lose but not because of the good traders or the way the market works but by their own hand. The worst part is they don’t even know it was at their own hands. 他們所做的一切都是基於他們的想法，即他們今天可以從市場中獲利多少。他們的交易是設計好要輸的，但不是因為好的交易員或市場運作的方式，而是出自他們自己之手。最糟糕的是，他們甚至不知道這是自己一手造成的。
It is sad anytime a person’s heart gets pulled from their dreams but even worse when they lose money, too. Sometimes they lose a fortune in such a little period of time. It has happened to every trader. It happened to me when I was smarter than the market. Why does it happen? Mostly because a trader’s plan doesn’t consider, “What if I am wrong?” Their thoughts are always expecting to be right. 當一個人的心從夢想中抽離時是很傷心的，但是當他們失去金錢時就更傷心了。有時候，他們會在這麼短的時間內損失一大筆錢。這在每個交易者身上都發生過。當我比市場更聰明的時候，這種情況也發生在我身上。為什麼會這樣呢？主要是因為交易者的計劃沒有考慮到 "如果我錯了呢？他們的想法總是期望自己是對的。
Herein is the key to being a successful trader. I have learned this over and over again in my trading career. I haven’t found one trader to tell me what I am going to tell you. The reason for our agreement to give something back is that all of these big losers are doomed from the start unless they are given the knowledge of what the market can do to them. The blame is within their own responsibility and not anyone else’s fault. 這就是成為成功交易者的關鍵。在我的交易生涯中，我一次又一次地學到了這一點。我還沒找到一個交易員來告訴我我要告訴你的事情。我們之所以同意回饋一些東西，是因為所有這些大輸家從一開始就注定要輸，除非讓他們知道市場會對他們做什麼。責任在他們自己的責任範圍內，而不是其他人的錯。
Six months ago we started our journey in presenting one of the most successful sides to a market strategy. On the Futures Talk forum there have been exceptional traders who have read the information I gave and did not understand the simplicity of what I said. We will have a better exposure of presenting the same information in this writing. 六個月前，我們開始了介紹市場策略中最成功的一面的旅程。在 Futures Talk 論壇上，有一些特殊的交易者閱讀了我所提供的資訊，但卻不了解我所說的簡單內容。在這篇文章中，我們將有更好的機會介紹相同的資訊。
I never want to see a homeless person and always wonder how they became homeless. If traders aren’t aware of what the market can do against them as well as for them, they will head in that direction. Many homeless people I have talked with have had bad 我從來不想看到無家可歸的人，總是想知道他們是怎麼變成無家可歸的。如果交易者不知道市場可以對他們做什麼，也可以為他們做什麼，他們就會朝那個方向走。我曾和許多無家可歸的人談過，他們都有過糟糕的
luck. In most of our lives we will experience an evening out of luck. 運氣在我們大部份的人生中，都會經歷運氣不佳的夜晚。
In trading, if you have bad luck, you will eventually have to stop trading. To be prepared for that bad luck is a requirement in trading. You will not survive if you do not plan for bad luck. My first steps in trading remove the bad luck altogether. 在交易中，如果您運氣不好，您最終將不得不停止交易。為運氣不好做好準備是交易中的必要條件。如果您沒有為壞運氣做好準備，您將無法生存。我在交易中的第一個步驟就是完全消除厄運。
ALS: I know what you are going after here. Should we put this in red letters and double the size of the print here? ALS：我知道你想說什麼。我們是否應該用紅色字體，並將這裡的字體放大一倍？
POP: Yes, I think that would be appropriate, but traders must discover for themselves what I am telling them. It will save them from an outcome that they never discover until it is upon them. So let us not over-emphasize the most important point of any trading plan here as we will drill it into their plan until they survive at all costs in trading. POP：POP: 是的，我認為這樣做是恰當的，但是交易者必須自己發現我告訴他們的東西。這將使他們免於一個他們從來沒有發現的結果，直到它發生在他們身上。所以，我們在此不要過分強調任何交易計劃中最重要的一點，因為我們會把它鑽進他們的計劃中，直到他們不惜一切代價在交易中生存下來。
There are those who, in a modified way, do exactly as I suggest but may consider it more money management than a plan for trading positions. Every broker tries to limit a customer’s exposure and protects them, but the key word is “limit.” Putting a limit on something infers that you actually can put a limit on exposure when having a position established. You really only have a ballpark limit in most cases. It seems to be worse than you thought in looking back. 有些經紀人，以改良的方式，完全按照我的建議來做，但他們可能認為這更像是資金管理，而不是交易頭寸的計劃。每個經紀人都試圖限制客戶的風險，並保護他們，但關鍵詞是 「限制」。在某種情況下設置限額，意味著在建立頭寸時，您實際上可以對風險設置限額。在大多數情況下，您其實只有一個大概的限制。回顧過去，情況似乎比您想像的更糟。
I shall present two main rules in trading. Both are required to be successful. Every trading plan must start with the understanding of these rules. Before I give the first rule, it is important that what we say is understood correctly. Next, it is important to have this rule become second nature in all of your trades. The second rule I shall state and explain after the first is adapted into behavior modification by the traders reading this. 我將介紹交易中的兩個主要規則。兩者都是成功的必要條件。每個交易計劃都必須從理解這些規則開始。在我介紹第一條規則之前，正確理解我們所說的非常重要。接下來，重要的是要讓這項規則成為您所有交易的第二天性。在第一條規則被閱讀這篇文章的交易者適應為行為修正之後，我將說明和解釋第二條規則。
I need to ask you a few questions to better present my Rule Number 1. When the walk light comes on, assume there is traffic that will run the red light at each intersection you cross. What do you do now before you cross the intersection? 我需要問你幾個問題，以便更好地介紹我的第一條規則。當步行燈亮起時，假設在您橫過的每個十字路口都會有車輛衝紅燈。在您橫過十字路口之前，您現在會做些什麼？
ALS: I would double-check and look both ways before crossing. ALS：我會再三檢查，看清楚兩邊的路再過馬路。
POP: Of course, that is the correct answer – you know what I am after. Now, just because you looked both ways before you crossed and each time you cross you looked both ways and each time there wasn’t any traffic that ran the stop light, is there any reason to stop looking each time you cross the intersection? Your answer, of course, is no, you won’t stop looking. POP：當然，這是正確的答案 - 你知道我在追尋什麼。現在，就因為你在過馬路之前看了兩邊，而且每次過馬路時都看了兩邊，每次都沒有任何車輛衝紅燈，所以你有理由每次過十字路口時都不看嗎？您的答案當然是沒有，您不會停止觀看。
What kind of limits did I just give you? Are they life-saving limits before you cross the intersection? Yes, they certainly might be, but you will never know that if you follow the restriction each time you cross the intersection. You can’t know if it saved your life for you prevented finding out by looking each time. 我剛才說的是什麼限制？它們是在您橫過路口之前的救生限制嗎？是的，它們當然可能是，但如果您每次過十字路口時都遵循限制，您永遠也不會知道。你不可能知道它是否救了你的命，因為你每次都是通過看來防止發現的。
But what if you don’t look and you lost your life. You certainly won’t know you should have looked either. 但如果您沒有看，卻失去了生命呢？您當然也不會知道自己應該看一看。
Does the restriction tell you that, if you look, there will never be any traffic running the stop light? No. Does your experience of crossing and looking tell you what the probability of someone running the light will be? You can make an assumption based on your knowledge at this point. What does an assumption do? It actually presents criteria based on proven facts that are a possibility. It in no way gives you a high probability or low probability but the best answer you can present. 這個限制是否告訴您，如果您看，就永遠不會有車輛衝紅燈？不是。您過馬路和看路的經驗是否能告訴您有人衝紅燈的可能性有多大？您可以根據此時的知識做一個假設。假設有什麼作用？它實際上是根據可能發生的已證實的事實提出標準。它絕對不會給您高概率或低概率，而是您能提出的最佳答案。
I don’t want to lose you in this thinking but to point out that it’s the same in trading as in crossing an intersection. We need to make our best assumption of what is possible. We must plan for that assumption in trading as long as it is a possibility and not just when it is probable. This is a very important point in understanding Rule Number 1 correctly! 我不想讓您在這種思考中迷失方向，而是想指出，在交易中，這與過十字路口是一樣的。我們需要對可能發生的事情做出最好的假設。在交易中，只要有可能，我們就必須為這個假設做好計劃，而不僅僅是在有可能的時候。這是正確理解規則 1 的非常重要的一點！
If you were never to look at the intersection until proven wrong for not looking, wouldn’t it be too late? It is the same in trading. You must protect yourself from any possibility in trading and not just protect yourself when the probabilities are high. 如果您永遠都不看交叉路口，直到被證實不看是錯的，那豈不是太遲了？交易也是一樣。在交易中，您必須保護自己不受任何可能性的影響，而不是只在可能性高時才保護自己。
This will be the surprise side in trading The surprise side is a possible outcome but not a very high or likely probability like today’s grain trade. When someone gives you a gift, you are surprised by it. Getting that gift was not a high probability. However, you are prepared for that surprise because you say, “Thank You!” 這將是交易中的驚喜面 驚喜面是一種可能的結果，但不像今天的穀物交易那樣有很高或很可能的概率。當有人送您禮物時，您會感到驚訝。得到那份禮物的可能性不高。然而，您為這個驚喜做好了準備，因為您會說：「謝謝！」
Most traders plan only for the probability side and that, to them, is always what they consider the winning side. This is the biggest mistake you can make in trading. Instead, you must plan for the losing side. 大多數交易者只為概率方面做計劃，對他們來說，這永遠是他們認為的贏面。這是您在交易中可能犯的最大錯誤。相反，您必須針對虧損面進行規劃。
How you understand your plan is how you will react to a situation. You must learn that, when you are told not to do something in trading, it is not ever the same thing as saying you must do the opposite. 您如何理解您的計劃，就是您如何對情況作出反應。您必須學會，當您在交易中被告知不要做某件事時，這絕對不等同於說您必須做相反的事情。
I often get feedback telling me I told someone to do what I never said. As an example, I will tell you not to sell beans today. Would you tell me I told you to buy beans today? It’s not funny because most traders would. This is what I mean by “correctly.” 我經常收到回饋，說我叫別人做了我從來沒有說過的事。舉例來說，我會告訴您今天不要賣豆子。您會告訴我我叫您今天買豆子嗎？這並不好笑，因為大多數交易者都會這樣做。這就是我所說的 「正確」。
you don’t have those correct, you will not be able to fully understand and accept the two rules for trading required in all plans. 如果您無法正確掌握這些規則，您就無法完全理解並接受所有計劃中所要求的兩項交易規則。
ALS: Let me get this straight! When you say to not do something, you are never telling me I must do the opposite. Seems simple enough. Thanks for making that point by example. ALS：讓我搞清楚！當你說不要做某件事時，你從來沒有告訴我必須做相反的事。看起來很簡單。謝謝你用例子說明這一點。
On your meaning when you say “assume,” you are telling me there is a possibility or probability based on some fact of the situation that requires me to acknowledge and always have a plan for the possibility or surprise side in trading. Your meaning of the surprise side of trading is the side that presents the possibility but not the highest probability. Am I correct on this? 就您的意思而言，當您說「假設」時，您是在告訴我，有一種可能性或概率是基於某些情況的事實，這需要我承認並始終為交易中的可能性或驚喜面做好計劃。您的意思是交易中的驚喜面是指有可能但不是最高概率的一面。我這樣說對嗎？
POP: It really is quite simple. After our dialog, it will be more clear to the traders as to how to interpret our rules. I don’t want any misunderstanding. I say with a high probability that the readers will read our dialog again. POP：真的很簡單。在我們的對話之後，交易者會更清楚如何詮釋我們的規則。我不希望有任何誤解。我說，讀者很有可能會再次閱讀我們的對話。
We often don’t understand how news stories get out of context, but it can be done pretty easily. Lack of proper assumption is routine by lawyers a lot of the time. They’ll ask someone something like, “Who is in the picture?” and when they find out it was the defendant, their next question is, “Were you there when the picture was taken?” In their case, it might be proper for informationgathering, but you as a trader must have proper assumptions as you cannot know exactly how a market is going to react each day. 我們常常不了解新聞報導是如何斷章取義的，但其實很容易就能做到。缺乏適當的假設是律師經常做的事。他們會問某人類似這樣的問題：「照片上的人是誰？」當他們發現是被告時，他們的下一個問題就是：「拍照時你在現場嗎？」在他們的案例中，這可能是收集資訊的適當方式，但身為交易員的您必須有適當的假設，因為您無法確切知道市場每天會如何反應。
Trading is not a favorable game in most circumstances, and that is what we must use as our assumption in trading. The big mistake made by traders is thinking and expecting trading to be a favorable game. 在大多數情況下，交易都不是一種有利的遊戲，而這也是我們在交易中必須使用的假設。交易者所犯的最大錯誤就是認為並期望交易是一種有利的遊戲。
You have execution costs or slippage when getting in and out of a position as well as commissions as a cost factor to be subtracted from your winnings or added to your losses. The market spends much time in an unpredictable mode. Trends both short - and long-term do exist but not 100%100 \% of the time. 您在進出倉位時會有執行成本或滑點，而佣金也是一個成本因素，會從您的贏利中扣除或從您的損失中增加。市場長期處於不可預測的狀態。短期和長期的趨勢確實存在，但不是 100%100 \% 所有的時間。
The correct way to control positions is to only hold them once they prove to be correct. Let the market tell you your position is proven correct, but never let the market tell you that your position is wrong. You, as a good trader, must always be in command of knowing and telling yourself when your position is bad. 控制倉位的正確方法是，只有當倉位證實正確後，才持有倉位。讓市場告訴你，你的倉位被證明是正確的，但永遠不要讓市場告訴你，你的倉位是錯誤的。作為一名優秀的交易者，您必須始終掌控自己，知道並告訴自己您的倉位什麼時候是錯誤的。
The market will tell you when your position is a good one to hold. Most traders do the opposite of what is correct by removing positions only when proven wrong. Think about that. Your exposure and risk is much higher if you let the market prove you wrong instead of your actions removing positions systematically unless or until the market proves your position correct. 市場會告訴您何時您的倉位適合持有。大多數交易者的做法與正確的做法相反，只有在證明錯誤時才會移除倉位。想想看。如果您讓市場證明您是錯的，而不是您的行動有系統地移除倉位，除非或直到市場證明您的倉位是正確的，否則您的風險和風險會高得多。
Let me give you an example before we state the first rule. Today let us say you sold beans just like your plan said to do at $6.30\$ 6.30 on the open. If that position did not prove you correct, you must remove it to reduce your risk. You decide what is correct according to your plan. 在說明第一條規則之前，讓我先舉一個例子。今天，假設您按照您的計劃在 $6.30\$ 6.30 開盤時賣出豆子。如果該倉位沒有證明您是正確的，您必須移除該倉位以降低風險。您根據您的計劃決定什麼是正確的。
Let us say you expected hedging to come in early and the price to drop from 5 to 8 cents in the first hour. It didn’t even drop 3 cents so you remove the position. Say you removed it at $6.29\$ 6.29. Just because it showed a profit of 1 cent when you got out did not declare it a good position. However, your exit is a better exit than if you made the market tell you the position was wrong. 假設您預期對沖會提前出現，價格會在第一小時內從 5 美分跌至 8 美分。它甚至沒有下跌 3 美分，所以您移除倉位。假設您在 $6.29\$ 6.29 時移除倉位。僅僅因為您退出時它顯示了 1 美分的利潤，並不能宣佈它是一個好倉位。但是，與您讓市場告訴您倉位是錯的相比，您的退出是更好的退出。
When you remove the position because the market proved you wrong, it is always a higher loss, and with stops it also is usually with higher slippage. This is not the same as removing the position because the market proved you wrong – say, buying back at $6.45\$ 6.45 on a $6.42\$ 6.42 stop. By making the market prove you correct in order to hold a position is acknowledging that trading is a losers’ game and not a winners’ game. If you only remove your position because the market proves you wrong, you are acknowledging that trading is a winners’ game. 當您因為市場證明您錯了而撤銷倉位時，總是會有較高的損失，而且對於止損，通常也會有較高的滑點。這與因市場證明您錯了而撤銷頭寸--例如，在 $6.42\$ 6.42 止損的 $6.45\$ 6.45 時買回--是不同的。讓市場證明您是正確的，以保持倉位，就是承認交易是輸家的遊戲，而不是贏家的遊戲。如果您只是因為市場證明您錯了才撤銷您的倉位，您就是承認交易是贏家的遊戲。
You never want to be in a position that is never proven correct. If you only get out when the market proves you wrong, it is possible to have higher risk due to the longer time period required to prove your position wrong. We will further clarify these thoughts for you further into the book. 您絕不希望自己的倉位從未被證明是正確的。如果您只在市場證明您錯了時才出局，由於需要較長的時間來證明您的倉位是錯的，因此有可能會有較高的風險。我們會在書中進一步為您闡明這些想法。
So here is Rule Number one: 所以這是規則一：
In a losing game such as trading, we shall start against the majority and assume we are wrong until proven correct! (We do not assume we are correct until proven wrong.) Positions established must be reduced and removed until or unless the market proves the position correct! (We allow the market to verify correct positions.) 在像交易這樣的虧本遊戲中，我們應從與大多數人相反的方向開始，並假設我們是錯的，直到證明我們是正確的為止！(我們不會假設自己是正確的，直到被證明是錯誤的為止。) 建立的倉位必須減少和移除，直到或除非市場證明倉位是正確的！(我們允許市場來驗證正確的頭寸）。
It is important to understand that we are saying the one criteria for removing a position is because it has not been proven correct. We at no time use as criteria for removing a position the fact that the market proved the position incorrect. 重要的是要理解，我們所說的移除倉位的唯一標準是該倉位未被證實為正確。我們在任何時候都不會將市場證實該倉位不正確作為移除倉位的標準。
There is a big difference here as to how we treat all positions from what most traders use. If the market does not prove the 我們處理所有頭寸的方式與大多數交易者使用的方式有很大的不同。如果市場無法證明
position correct, it is still possible the market has not proven the position wrong. If you wait until the market proves the position wrong, you are wasting time, money and effort in continuing to hope it is correct when it isn’t. 如果您的倉位是正確的，但市場仍有可能未證明倉位是錯誤的。如果您等到市場證明您的倉位是錯的，您就在浪費時間、金錢和精力，繼續希望倉位是正確的，但事實並非如此。
How many traders ever hoped it wouldn’t be proved wrong instead of hoping it was correct? If you are hoping it is correct, it obviously wasn’t ever proven to be correct. Remove the position early if it doesn’t prove correct. By waiting until a position is proved wrong, you are asking for more slippage as you will be in the same situation as everyone else getting the same message. 有多少交易者曾希望它不會被證明是錯的，而不是希望它是對的？如果您希望它是正確的，它顯然從未被證明是正確的。如果無法證明其正確，請及早移除倉位。如果您等到頭寸被證明是錯誤的，您就會要求更多的滑點，因為您會和其他人一樣收到相同的消息。
What makes this strategy more comfortable is that you must take action without exception if the market does not prove the position correct. Most traders do it the opposite by doing nothing unless they get stopped out, and then it isn’t their decision to get out at all – it is the market’s decision to get you out. 讓這個策略更舒適的是，如果市場沒有證明倉位正確，您必須毫無例外地採取行動。大多數交易者的做法恰恰相反，除非他們被止損，否則什麼都不做，那麼根本就不是他們決定出局 - 而是市場決定讓您出局。
Your thinking should be: When your position is right, you have to do nothing instead of doing nothing when you are wrong! 你的想法應該是當您的立場正確時，您必須什麼都不做，而不是當您錯誤時什麼都不做！
I don’t mean to repeat and repeat but, in this case, you will better understand the rule the more you read it. It is very critical to your success in trading. Over time it has proven to be the rule which keeps the losses small and keeps a trader swift and fast to take that loss. 我並不想重複又重複，但是，在這種情況下，你讀得越多，你就會更好地理解這個規則。它對您交易的成功非常關鍵。隨著時間的推移，它已經證明是保持小損失並讓交易者迅速而快速地承受該損失的規則。
A person’s thinking when the market proves a trade to be bad is counter to what is productive. By using the rule properly, you are productive and don’t have to face the demoralizing effect of the market when you have a proven wrong position. This enables you to continue to trade with the proper frame of mind. You are more objective in your trading this way than letting a negative reinforce your thinking. This way you only let good trading reinforce your thinking and actions. 當市場證明交易是錯誤的時候，一個人的想法是與生產力背道而馳的。正確運用規則，您就會有成效，當您的倉位被證實錯誤時，您就不必面對市場對您士氣的打擊。這能讓您以正確的心態繼續交易。比起讓負面因素強化您的想法，這樣您在交易時會更客觀。這樣您只會讓好的交易強化您的想法和行動。
ALS: Phantom, not everyone is going to agree with your first rule. There will be traders who don’t feel this is a good rule for them. ALS：Phantom, 不是每個人都會同意你的第一條規則。會有交易員覺得這對他們來說不是個好規則。
POP: Look at it like you would buy a new car. The dealer says you can drive the car you think you want for a month and we will give you credit toward another car if you don’t want to keep it. Okay. After a week you decide you don’t want this car because it just isn’t right for you. You take it back and the dealer says you only owe $80\$ 80 for rental. POP：就像買新車一樣。經銷商說你可以先開一個月你想要的那輛車，如果你不想保留它，我們會給你另一輛車的信用額度。好的。一個星期後，您決定不要這輛車，因為它不適合您。你把它拿回去，經銷商說你只欠 $80\$ 80 租金。
You don’t buy the car and keep it until it proves to be the wrong car for you, which could be months from now. If you did, you would lose more of what you would have to pay for the car. 您不會買下這輛車，並一直保留它，直到它被證明是不適合您的車，而這可能是幾個月之後的事。如果您這樣做，您會損失更多的車款。
Most traders keep their position until it proves to be wrong for them. I say don’t keep any position unless it proves to be correct. 大多數交易者都會保留倉位，直到證明對他們來說是錯誤的。我說不要保留任何倉位，除非它被證明是正確的。
ALS: Yes, but who is to say a position that was not proven correct turns from a bad position to a correct position? ALS：是的，但誰能說未被證實正確的立場從壞的立場變成了正確的立場？
POP: That is the kind of thinking most traders have. They fear being wrong when they get out and that the market will show them they should have stayed with the position. If they don’t take early losses, it becomes more difficult to take a loss as it gets larger. However, the market assumption you must make is that big losses will eventually take you out of trading. 民研計劃：這是大多數交易者的想法。他們害怕在出局時出錯，害怕市場會告訴他們應該繼續持倉。如果他們不及早承受損失，隨著損失越來越大，承受損失就變得越來越困難。然而，您必須做出的市場假設是，大額虧損最終會讓您退出交易。
My Rule Number 1 is to address the swiftness needed in keeping your losses as small and quick as possible. It won’t always prove to be correct, but you will stay in the game this way. 我的第 1 條規則是解決所需的敏捷性，讓您的損失盡可能小且快。這不一定會被證明是正確的，但您會以這種方式保持在遊戲中。
Which would you choose? You have an opportunity of a 10% probability of making money in the long run if you take a position until you have lost 10%10 \% of your equity or made 10%10 \%. Or take the opportunity to have a 90%90 \% probability of making money if you only keep a position for three hours unless it has proven to be correct by that time. It is pretty clear which choice you would make. 您會選擇哪一個？如果您持倉直到損失 10%10 \% 您的權益或賺了 10%10 \% ，您有機會有10%的概率長期賺錢。或者把握機會，如果您只保持倉位三個小時，賺錢的概率是 90%90 \% ，除非到那個時候證明倉位是正確的。很明顯您會做哪個選擇。
Most traders don’t know what their choices are when it comes to assumptions about what is possible in trading. Keep in mind that traders are usually unaware that trading is a losers’ game. He who loses best will win in the end! 大多數交易者在假設交易中可能發生的事情時，都不知道自己的選擇是什麼。請記住，交易者通常不知道交易是輸家的遊戲。輸得最慘的人最終會贏！
Why not make a time-proven decision to change your behavior to trade the method that gives you the best long-term outlook. Trading is not gambling! Treat it as a business where you only want the best merchandise for the shortest possible time in order to have the maximum profit with the least possible chance of failure. That is what Rule Number 1 does for you. 為何不做出一個經過時間證明的決定，改變您的行為，用能給您最佳長期展望的方法進行交易。交易不是賭博！把它當成一門生意，您只想在最短的時間內獲得最好的商品，以便在失敗的可能性最小的情況下獲得最大的利潤。這就是規則 1 為您所做的。
ALS: I can see the need for much discussion and review of your first rule. ALS：我認為有必要對您的第一條規則進行大量討論和審查。
POP: It’s critical to have Rule 1 in force by next surprise day. The one thing that teaches most traders to take a small loss is a big loss. 民研計劃：在下一個驚喜日之前讓規則 1 生效是至關重要的。教導大多數交易者吃小虧就是吃大虧。
ALS: Yes, but that is expensive behavior modification. My wife, Karen, just gave another parallel example of your Rule Number 1. She points out that you don’t go buy clothes, take them home and wear them until they prove to be wrong for you. Instead, you try them on and make sure they have the proper fit and look before you buy them. I like her thoughts along this line. ALS：是的，但那是昂貴的行為修正。我太太 Karen 剛舉了另一個平行的例子來說明你的第一條規則。她指出，你不會去買衣服，把它們帶回家穿，直到證明它們不適合你。相反，您會先試穿，確定合身、好看後才買。我喜歡她這方面的想法。
POP: You can see in ordinary life you try to spend the least amount of money and have the least amount of waste. Why should you do it differently in trading? POP：您可以看到，在一般生活中，您會盡量花最少的錢，製造最少的浪費。為什麼在交易中要做得不同呢？
ALS: The answer is surely that in trading human elements take over. Everyone knows them and most likely have come face to face with them. They are fear and greed. ALS：答案肯定是，在交易中，人為因素佔了上風。每個人都知道它們，而且很可能已經面對它們。它們就是恐懼和貪婪。
POP: We must remove the emotional element as quickly as possible in trading. If you can do it before you put on a position, you have a good start. POP：在交易中，我們必須儘快去除情緒因素。如果您能在開倉之前做到這一點，您就有了一個良好的開始。
Note: To give some insight on Phantom’s Rule Number 1, several traders have indicated their experience with it as presented on the Futures Talk traders forum. The following is a copy from one such trader, M T: 注意：為了讓大家對 Phantom 的規則 1 有更深入的瞭解，幾位交易者在 Futures Talk 交易者論壇上發表了他們的經驗。以下是其中一位交易者 M T. 的複製本：
I’ve read Phantom’s postings about Rule Number 1. The price action must confirm the position or get out quick. What I have done in trading is to enter a position and have a chart position that is a good spot to exit if the price moves adversely. This would usually either be the previous swing point, which, if violated, would be a signal for a possible new trend and would definitely be the signal for me to exit my position or it would be the first 15 -minute high (resistance) and low (support), if it were violated adverse to my position. 我讀了 Phantom 發佈的關於規則 1 的文章。價格行動必須確認倉位或快速退出。我在交易中的做法是，進入一個位置後，如果價格出現不利變動，這個圖表位置就是一個很好的退出點。這個位置通常是前一個波動點，如果違反了這個波動點，這將是可能出現新趨勢的信號，也肯定是我退出倉位的信號，或者是前 15 分鐘的高點（阻力位）和低點（支撐位），如果違反了這個高點和低點（阻力位），對我的倉位不利。
So that meant there were times when I entered a position and the price action was flat or slightly adverse but not so adverse as to violate my predetermined chart exit position. I would stay in because there was no violation. I thought this meant I was following Rule Number 1. 因此，這意味著有時候我進入一個倉位，價格行動是平的或稍微不利，但不至於違反我預定的圖表退出位置。由於沒有違約，我就會繼續持倉。我以為這意味著我遵守了規則 1。
I was staying in not because the price action “confirmed” my position but because the price action did not “confirm” my stop-loss chart signal. I was thinking this is what Phantom means. I have to tell you that with this strategy I was keeping my losses small, just by the nature of my plan. 我一直持有倉位，不是因為價格行動「確認」了我的倉位，而是因為價格行動沒有「確認」我的止蝕圖表訊號。我在想這就是 Phantom 的意思。我必須告訴你，使用這個策略，我的損失很小，只是因為我計劃的本質。
But I was unwittingly violating Phantom’s Rule Number 1. I thought I had modified my behavior but, in reality, I was “behaving” incorrectly. It’s a very subtle thing, I believe. 但我在不知不覺間違反了 Phantom 的第一條規則。我以為我已經改變了我的行為，但實際上，我的 「行為 」是不對的。我相信這是非常微妙的事情。
Then last night, in a restless sleep thinking about my trading, an inspiration came to me (don’t laugh too hard). A lot of my losses had come after I had been in a trade for an hour or longer, where price action was mostly flat but my stop point was never touched. I realized I would have been better off if I had just gotten out in the first 15 minutes. It would have been a loss, but it would not have been as much of a loss as my chart stop point would give me. 昨天晚上，我在睡不安枕的情況下思考我的交易，我突然有了一個靈感（不要笑得太難看）。我的很多損失都是在我進行了一小時或更長時間的交易之後造成的，在這段時間裡，價格行動大多數是平穩的，但我的止損點從未被觸及。我意識到，如果我在最初的 15 分鐘內出局，情況會更好。雖然會有損失，但不會像我的圖表止損點給我的損失那麼大。
Then I realized that is what Phantom means. My position was not confirmed in those first 15 minutes! It wasn’t violated according to the nuances of my plan, but it also was NOT confirmed. Get out. 後來我才知道這就是 Phantom 的意思。我的位置在最初的 15 分鐘內沒有被確認！根據我計劃的細微差異，它沒有被違反，但也沒有被確認。滾出去。
Well, Io and behold, I went back over the last three months of trading and, using the exact entry points (fills) that I used every day, reviewed what would have happened if I had followed this 15-30 minute confirmation rule. Let’s just say it made a huge difference. I know back-testing is not completely reliable, but it was significant. 看，我回顧了過去三個月的交易，使用我每天使用的準確入市點（成交），回顧了如果我遵循 15-30 分鐘確認規則會發生什麼。我只能說，這讓情況大不相同。我知道回溯測試並不是完全可靠的，但它是非常重要的。
Anyway, thanks Phantom. I’m still learning. I’m still here trading. Started with only a 5 K account, day-trading, and I’m still alive without even following your rules. I’m below breakeven. Let’s see if I can change that. I’ll keep you filled in. Once again, many thanks. You once asked for Rule Number 1 stories. Well, there is mine. 總之，謝謝 Phantom。我還在學習。我還在這裡交易。一開始只有 5 K 的帳戶，日間交易，我甚至都沒有遵守您的規則，但我仍然活著。我的盈虧平衡點低於盈虧平衡點。讓我們看看我是否能改變這種狀況。我會隨時向您匯報。再次感謝。你曾經詢問過第一條規則的故事。這就是我的故事。
Note: The following is an excerpt from a message in the Futures Talk forum that Phantom presented to help understand Rule Number 1. 註：以下摘錄自期貨論壇中的一則消息，魅族提出這則消息是為了幫助理解規則一。
Behavior modification is knowing the limits. Let us use basketball shooting as an example. Say you shoot 1,000 times and make an average of less than 50%50 \% of your shots. This means you have a better chance of missing than hitting whenever you shoot. After practice, let us say you are able to hit 55%55 \% of your shots. You would expect to say that, now when you shoot, you have a better chance the shot will go in than not. 行為修正就是了解極限。讓我們以籃球投籃為例。假設您投籃 1,000 次，平均命中率不到 50%50 \% 。這表示您每次投籃時，失手的機會比命中的機會大。經過練習之後，假設您能夠擊中 55%55 \% 次。您會期望說，現在當您射擊時，射中的機會比不射中的機會大。
Same in trading. You must know what the limits are! In trading most of you have a greater chance of being wrong than right! Trade accordingly . . . which means expect the limit (being wrong more likely) in your trading. 交易也是一樣。您必須知道什麼是極限！在交易中，大多數人錯的機會比對的大！相應地進行交易......這意味著在您的交易中預期極限（錯的機會更大）。
How can you come out ahead? In the short run, you can only with luck. But in the long run, luck tends to even back the other way. You must trade in the long run! 您如何才能出人頭地呢？短期來說，只能靠運氣。但長期來說，運氣往往會反過來。您必須從長期角度進行交易！
So what is a trader to do in a losing game? You must trade in the long run! How can you trade in the long run? Only way I know is that you must keep your losses small and take more small losses than small winners to come out ahead. This often means washing a position for the sake of being able to keep in the game. 那麼交易者在虧損的遊戲中該怎麼做？您必須長線交易！如何進行長線交易？我知道的唯一方法是，您必須保持小損失並承受比小勝利更多的小損失，這樣才能贏得勝利。這往往意味著為了能夠繼續參與遊戲而洗倉。
The theorem now is to assume your position is wrong until the market proves what you positioned is correct. Keep your losses quick and small. Don’t ever let the market tell you you’re wrong. Always let the market tell you when your position is correct. 現在的理論是假設您的定位是錯誤的，直到市場證明您的定位是正確的。保持您的損失快速且小。永遠不要讓市場告訴你你錯了。永遠讓市場告訴你，你的倉位是正確的。
It is your job to know you are wrong and not the market’s job. 知道自己錯了是您的工作，而不是市場的工作。
The other side of the coin is that you will get positions that are correct. You must be bigger at that time. This will require a Rule Number 2, which is designed around adding to winners in an unfavorable game to come out ahead in the long run. When you are correct, you must continue to use Rule 1 to keep losses small. It’s okay to be wrong small but never okay to be wrong big if you expect to trade in the long run. 硬幣的另一面是，您會得到正確的位置。那時候您必須做大。這就需要規則 2，它是圍繞在不利的遊戲中增加贏家，從而在長期中領先。當您正確的時候，您必須繼續使用規則 1，將損失控制在小範圍內。如果您期望長期交易，小錯可以，但大錯絕對不行。
Trading is not easy. Most traders just let the market do its thing. The correct way is that you do your thing and control your positioning. You control your positions by using rules that keep you in the game. 交易並不容易。大多數交易者只是讓市場做自己的事情。正確的方法是，您做自己的事情並控制您的定位。您可以使用規則來控制您的倉位，讓您保持在遊戲中。
Rule 1 is the most important rule in any trade plan. Rule 2 will be the other side of the coin, which must be dealt with if you are expecting to remain in the game in the long run. 規則 1 是任何交易計劃中最重要的規則。規則 2 將是硬幣的另一面，如果您期望長期留在遊戲中，則必須處理這一點。
Learn to be wrong, fast. 快速學會錯誤。
Phantom's Gift 魅影的禮物
By Art Simpson 作者：Art Simpson
Chapter 6: Rule Number 2 第 6 章：規則 2
Art Simpson (ALS): Phantom, do you want to continue on Rule 1 or is it time to move on to Rule 2? Art Simpson (ALS)：Phantom，你想繼續討論規則 1，還是該繼續討論規則 2？
Phantom of the Pits (POP): There will be lots more on both rules so let’s get to Rule 2 and see the other side of the coin. We will need to get to the qualifier of Rule 2, but we will do that later. We’ll state Rule 2 right now: 坑洞魅影 (POP)：關於這兩條規則還有很多，讓我們進入規則 2，看看硬幣的另一面。我們需要了解規則 2 的限定條件，但我們稍後會做。我們現在就說明規則 2：
Press your winners correctly without exception. 正確按下您的贏家，無一例外。
Sounds pretty elementary but correctly is the key. What you hear quoted most of the time is “cut your losses.” Cutting you losses is only one side of the coin. Without Rule 2, you will find that trading still isn’t even a 50/50 game. Without a correct method to press your correct positions, you will never recover much beyond your losses. You need rule two to ensure you have a larger position when you are correct. You always want a larger position when you get a great move or trending market than when your position isn’t correct. 聽起來很簡單，但正確才是關鍵。您經常聽到的是 「減少損失」。減少損失只是硬幣的一面。如果沒有第二條規則，你會發現交易仍然不是一個 50/50 的遊戲。如果沒有正確的方法來壓制您的正確倉位，您將永遠無法挽回損失。您需要規則二來確保您在正確時有較大的頭寸。您總是希望當您獲得一個偉大的行動或趨勢市場時，您的頭寸要比您的頭寸不正確時大。
There certainly will be debate on how you know when to add to a correct position and on how a market can turn a correct position into a wrong position. We will cover those debates later. First, let us get the rules and reasons established. By knowing what is expected in Rules 1 and 2, we can prove the theorem based on good assumptions and experience. 當然，對於如何知道何時加碼到正確的倉位，以及市場如何將正確的倉位變成錯誤的倉位，肯定會有爭論。我們稍後會介紹這些爭論。首先，讓我們確立規則和理由。只要知道規則 1 和規則 2 的預期，我們就可以根據良好的假設和經驗來證明這個定理。
Rule 2 does not mean just because you have a position in your favor that you must now add to that position. “Correctly” in Rule 2 means you must have a qualified plan of adding to your position once a trend has established itself. The proper criteria for adding positions depends on your time frame of expectations in your trade plan. 規則 2 並不表示您有了一個對您有利的倉位，您就必須現在加倉。規則 2 中的 「正確 」是指一旦趨勢確立，您必須有一個合格的加倉計劃。正確的加倉標準取決於您交易計劃中的預期時間範圍。
You might be a day-trader just trading back and forth, a short -term trader, weekly trader, monthly trader or trend trader only . The add criteria will be different for each trade plan. The important point of Rule 2 is to point out the rule is established so you can make the most gain with the least drawdown expectations. You must also use Rule 1 properly. 您可能是只做來回交易的日內交易者、短線交易者、週線交易者、月線交易者或僅做趨勢交易者。 每種交易計劃的新增標準都會有所不同。規則 2 的重點在於指出規則的建立是為了讓您能以最小的縮水期望獲得最大的收益。您也必須正確使用規則 1。
Rule 2 is important for it keeps you in a good position as well as impresses upon your own thinking about having a correct position initially. Most traders are conditioned to want to take a profit to prove to themselves that they are right. Being right does not, in itself, make the most amount of profit. 規則 2 是很重要的，因為它可以讓您保持良好的倉位，並讓您對最初擁有正確倉位的想法留下深刻印象。大多數交易者都希望獲利來證明自己是對的。正確本身並不會帶來最大的利潤。
Most traders also want to get out before the market turns and takes away any profit they may have. Ordinarily, they will let losses get larger but only let gain get started before getting out. This is just simple human nature when having a market position. Human nature in trading is not often proper trading technique. 大多數交易者也希望在市場轉向之前出局，以賺取他們可能擁有的任何利潤。通常情況下，他們會讓損失變得更大，但只會在獲利開始之前出局。這只是擁有市場頭寸時簡單的人性。交易中的人性往往不是正確的交易技巧。
Always a good reason for adding to a winner is because traders usually tend to doubt the position unless they reinforce the correctness of that position. Adding to the position correctly best does this. 在贏家的基礎上加倉永遠是一個很好的理由，因為交易者通常傾向於懷疑倉位，除非他們鞏固該倉位的正確性。正確加倉最能夠做到這一點。
The other good reason is that you must be larger when correct on a position than when your position is wrong. 另一個很好的理由是，當您的位置正確時，一定比位置錯誤時大。
Correctly adding to a proven position must be done so that a pyramid isn’t established that will hurt the trader in a minor reversal. Each add onto an original position should be done in smaller and smaller steps. As an example, if you put six contracts on as your initial position, you should use four contracts for your first add and two contracts for your next add. This gives you twice the original position when all three positions are in place. This is a 3:2:1 ratio in establishing three levels of positioning. 必須正確地加倉到已經證實的頭寸，這樣才不會形成一個金字塔，在輕微的反轉中傷害交易者。在原始頭寸上的每次加倉都應該以越來越小的步驟進行。舉例來說，如果您的初始倉位是六張合約，您應該在第一次加倉時使用四張合約，在下一次加倉時使用兩張合約。這樣當三個倉位都到位時，您的倉位就是原始倉位的兩倍。這是建立三層定位的 3:2:1 比例。
At all times during the trade it is important that Rule 1 be in your plan. This includes when you are adding to your positions to protect your trade from any major reversals, which often happen. 在交易過程中的任何時候，規則 1 都必須在您的計劃中。這包括當您加倉時，以保護您的交易不受任何重大逆轉的影響，而這種情況經常發生。
Your plan for adding positions could be as simple as using each buy signal for longs and each sell signals for shorts. It could be on 45-degree retracements or support lines. 您的加倉計劃可以簡單到利用每個買入信號來做多，每個賣出信號來做空。它可以在 45 度回調或支撐線上。
Without exception the rule indicates it is not an arbitrary decision on the trader’s part whether to add. Keep in mind this does not exclude the correct method of adding in respect to variables of different trading plans. What is a correct way of adding in one trade plan may not be in another. 該規則無一例外地指出，交易者不能隨意決定是否添加。請記住，這並不排除針對不同交易計畫的變數採取正確的追加方法。在某個交易計畫中的正確添加方法，在另一個計畫中可能不是。
Reviewing Rule 2, it states only that you must add to correct (proven) positions and that it must be done correctly. The rule does not tell you how to add, as this is your requirement in the trade plan you develop. The rule makes no exception on adding to correct positions. The intent of Rule 2 is twofold: Reinforce your correct position both mentally in your thinking and your execution and increasing the size of your position. 回顧規則 2，它只說明您必須向正確（經證明）的倉位加碼，而且必須正確地進行。該規則沒有告訴您如何加倉，因為這是您在制定交易計劃時的要求。該規則對於向正確倉位加碼沒有例外規定。規則 2 的目的有兩方面：在思維上和執行上強化您的正確倉位，並增加倉位的規模。
ALS: Phantom, what do you say to the traders who are going to ask you, if they must add without exception, why is there any question as to how to add correctly? Doesn’t the fact a proven position is correct indicate it is time to add? ALS：Phantom, 你對那些要問你的交易者怎麼說，如果他們無一例外地必須加倉，為什麼對如何正確加倉還有疑問？事實證明倉位是正確的，難道不表示是時候加碼了嗎？
POP: Adding can certainly be done this way, but it is not always good for all trade plans. I oftentimes add immediately when my position has been proven correct because I tend to do it in smaller steps and work more long-term trades. POP：加碼當然可以這樣做，但不一定適合所有交易計劃。我經常在我的倉位被證實正確後立即加碼，因為我傾向於以較小的步驟進行，並進行更長期的交易。
Let us say you are only a day-trader trying to take a little out of the market each day. You will find your adds at the wrong place by adding as soon as your position is proven correct due to the nature of the markets. They give you back and forth action much of the time, especially looking at it as a day-trade. 假設您只是一位日間交易者，每天嘗試從市場中獲利一點點。由於市場的性質，一旦您的倉位被證明是正確的，您就會發現您的加價位置不對。它們在很多時候都會給您來回的動作，尤其是作為日間交易來看。
One correct way for a day-trader is to see that the position is proven correct and then add at a proper retracement. This will not be the case for a trend trader. A trend trader would most likely have at least one add at a breakout or breakaway gap. It all depends on your trade plan. Your method of adding must be validated by your trade plan. 對於日內交易者來說，一個正確的方法是看到倉位被證明是正確的，然後在適當的回撤時加倉。趨勢交易員不會這樣做。趨勢交易者最有可能在突破或突破缺口時至少加倉一次。這完全取決於您的交易計劃。您的加碼方法必須經過您的交易計劃驗證。
Day-traders will have a problem with Rule 2 unless they position properly and understand that their adds must only be made correctly. Day-traders are in for the quick profit so it is hard to have a good add plan. Their best trade is to put all positions on at once – original and adds – and use Rule 1 to take them off unless or until proven correct. Believe me, this is the proper probability in a loser’s game like trading. 日間交易者會對規則 2 有疑問，除非他們適當地定位，並瞭解他們的加價必須只在正確的情況下進行。日間交易者是為了快速獲利，所以他們很難有一個好的加倉計劃。他們最好的交易是一次把所有倉位都放在上面 - 原始倉位和追加倉位 - 然後用規則 1 把它們取下來，除非或直到被證明是正確的。相信我，在交易這種輸家的遊戲中，這是適當的概率。
Rule 2 says you must add to your winners without exception. As a day-trader, you are only keeping a position if proven correct or until proven correct. In a sense the market is deciding how large your position will be. The variable can be from all to none in this situation. 規則 2 說您必須在贏家的基礎上無一例外地加倉。作為日內交易者，您只會在證明正確或證明正確之前保留倉位。在某種意義上，市場在決定您的倉位有多大。在這種情況下，變數可以從有到無。
Trend traders will get larger when they are correct, but day-traders will start larger and get smaller when they are wrong. Daytraders can be large when they are wrong, but trend traders will never be large when they are wrong. 趨勢交易者在正確時會變大，但日間交易者在錯誤時會開始變大，然後變小。日間交易者在錯誤時可以變大，但趨勢交易者在錯誤時永遠不會變大。
This is due to the nature of a loser’s game for day-traders. By reducing your positions when wrong, your exposure is not extreme for a day-trader, provided Rule 1 continues to be followed. 這是由於日內交易者的輸家遊戲本質所致。只要繼續遵守規則 1，在錯誤時減少您的倉位，您的風險對於日內交易者來說就不會是極端。
Exposure and risk are also an element of time in a position. That is the edge day-traders expect to work to their advantage. Trend traders are expecting higher probabilities in smoothing out the swings. 暴露和風險也是持倉時間的一個要素。這是日內交易者期望發揮的優勢。趨勢交易者則期望在平滑波動時有更高的概率。
ALS: Aren’t you changing the rule here for day-traders? ALS：你這不是在改變日內交易者的規則嗎？
POP: Rule 2 must be used if you expect to make money in the long run. Your validation of how you add is according to your trade plan, and a day-trading plan is certainly going to be geared for the quick profit so POP：如果您期望長期賺錢，則必須使用規則 2。您對於如何加碼的驗證是根據您的交易計畫，而日內交易計畫當然是要以快速獲利為目標，所以
why shouldn’t you have your biggest position to work with from the start? Right or wrong, you are going to use Rule 1 to protect at all cost. 為什麼您不可以從一開始就擁有最大的倉位？無論對錯，您都要不惜一切代價使用規則 1 來保護。
Criteria will be different for the type of trading you do, and scalping or day-trading has a lower probability of making money than most think. You have to be right when you get in and out and twice the execution cost for each trade. A day-trader takes most positions on a fade of an expected range and on what they consider to be the edge. “Correctly” for day-traders is different than “correctly” for trend traders. 對於您所做的交易類型，標準會有所不同，黃金交易或日間交易賺錢的概率比大多數人想像的要低。您必須在進出的時候都是對的，而且每筆交易的執行成本都是兩倍。日間交易者大多在預期範圍的淡出和他們認為的邊緣上開倉。日間交易者的「正確」與趨勢交易者的「正確」是不同的。
ALS: Wouldn’t you say that adding for day-traders isn’t always a good rule? ALS：你不覺得為日內交易者做加法不一定是個好規則嗎？
POP: Adding correctly regardless of your time period is useful in making bigger gains in the long run. Day-trading is certainly a shorter run. A day-trader should cheapen the cost of what they have, and to do this you almost certainly have to have your biggest position on first. POP：無論您在哪個時段，正確地加價都有助於長期獲得更大的收益。日間交易當然是較短的時間。日內交易者應該降低他們所擁有的成本，要做到這一點，幾乎可以肯定您必須先持有最大的倉位。
I use to watch a very good trader put a big position on and take it off until it proved to be correct. He made good trades and ended up with bigger gains by doing it that way than by adding after being proven right. 我曾經看過一位非常優秀的交易員，他先建立一個很大的頭寸，然後再把它撤掉，直到它被證明是正確的為止。他的交易很好，而且這樣做比證明正確後再加碼的收益更大。
What you are missing here is his positions were larger at first, and this really is the Rule 2 in that you still are larger when you are correct than if you had added later this way. The drawback is that you are larger when you are wrong, too, but it’s still a protected position if you use Rule 1 properly. It is acceptable but, again, I must remind you that Rule 1 is critical here. 您在此遺漏的是，他的倉位一開始是較大的，這真的是規則 2，因為您正確時的倉位還是比後來這樣加的倉位大。缺點是當你錯的時候，你的頭寸也會變大，但如果你正確使用規則 1 的話，它仍然是一個受保護的頭寸。這是可以接受的，但是，我必須再次提醒您，規則 1 在此至關重要。
It looks like a modified Rule 2, but as I stated, your trade plan determines your method of adding. It is understood that you want to have a larger position when correct. This is a way to do a trade when you don’t have an established trend and the probabilities are lower. 這看起來像是修改過的規則 2，但正如我所說，您的交易計劃決定了您的加倉方法。可以理解為，您希望在正確時有較大的倉位。這是一種在您沒有既定趨勢且概率較低時做交易的方法。
I can’t rule out this method. I have used it on short trades. When I feel I am trading an established trend, I have criteria for adding that gives better positioning. 我不能排除這種方法。我曾在短線交易中使用過。當我覺得我是在交易一個既定的趨勢時，我就會有增加的標準，讓自己有更好的定位。
These two rules are to give you the long-term ability to continue to trade with the least amount of drawdown and the best possibility of making the most money in the long run. Huge drawdown is the critical reason some traders go out of the business. 這兩條規則是為了讓您有長期持續交易的能力，以最少的虧損和最大的可能性賺取最長期的利潤。巨大的虧損是一些交易者出局的關鍵原因。
You must start your trade plan with rules created to protect your equity. I am presenting those rules to incorporate into your plan. Experience has proven these rules a necessity in survival and reaching your objective of making the most return with the least amount of risk. 您必須以為了保護您的權益而制定的規則來開始您的交易計劃。我將介紹這些規則，以便將其納入您的計劃中。經驗證明，這些規則是您生存和達成以最小風險賺取最大回報目標的必要條件。
The followup dialog below on Rule 2 took place as a result of feedback from the Futures Talk forum when traders expressed their questions about Rule 2. 以下關於規則 2 的後續對話是在期貨交談論壇上交易者表達他們對規則 2 的疑問時所得到的回應。
Followup to Rule 2 規則 2 的後續
It is clear that the traders are interested in more review of Rule 2. From the posts on the forum, it seems to be a problem of understanding not only why to use Rule 2 but also exactly how they should use the rule. 很明顯，交易者有興趣對規則 2 進行更多的審查。從論壇上的帖子來看，似乎不僅是理解為什麼要使用規則 2 的問題，也是他們到底應該如何使用規則的問題。
I asked Phantom to give us more detail on his Rule 2 so it can become more effective for the traders. Phantom feels there are several problems in understanding his Rule 2 from reading the posts of the trader’s forum. We will address a few of the problems and also try to explain more on how to use Rule 2. 我請Phantom給我們更多關於他的規則2的細節，讓它對交易者更有效。Phantom 從交易者論壇的帖子中發現，在理解他的規則 2 方面存在一些問題。我們將解決幾個問題，並嘗試解釋更多如何使用規則 2。
ALS: Phantom, it looks like your Rule 2 is not a good rule for most of the traders who have given return input on your rule? ALS：Phantom，看起來您的規則 2 對於大多數就您的規則提供回報意見的交易者來說並不是一個好規則？
POP: By now, you should see why we are spending so much time on just Rules 1 and 2. Rule 1 understanding has been pretty good so far. Rule 2 has been a problem. I could see that coming in the past posts. There is doubt in traders’ minds as to the real purpose of Rule 2 and why they should be saddled with a rule that requires them to put a bigger position on than they want to have. POP：到現在，你應該明白為什麼我們要花這麼多時間在規則 1 和 2 上。到目前為止，大家對規則一的理解還不錯。規則 2 則是個問題。我可以在過去的文章中看到這一點。交易者對規則 2 的真正目的心存疑慮，不明白為什麼他們要背負一個要求他們建立比他們想要的更大倉位的規則。
The traders aren’t going to like what I am going to tell them here, but I know they want me to be totally honest with them. There are going to be several reasons why a trader does not want to come up with a plan to add to winning positions. I will try to cover some of them. 交易員不會喜歡我在這裡要告訴他們的話，但我知道他們希望我對他們完全誠實。交易員不願意想出一個計劃來增加贏得的頭寸會有幾個原因。我會嘗試涵蓋其中一些。
ALS: Why is it that Rule 2 doesn’t seem to work for most of the traders? ALS：為什麼規則 2 對大多數交易者似乎不起作用？
POP: One simple fact! That fact is they are putting their entire position on at their entry into a market. This is not Rule 2 's intent. A total position is a series of positions until the complete expected position is established. They should only have their entire position established upon getting the move as expected. Rule 2 addresses this expectation. POP：一個簡單的事實！這個事實就是，他們在進入市場時就把全部倉位都放在上面。這不是規則 2 的本意。總倉位是一系列的倉位，直到建立完整的預期倉位為止。他們只應該在獲得預期的移動時建立全部倉位。規則 2 針對這一預期。
Keep in mind that I don’t blame the traders for their views on my Rule 2. It is not their thinking but their trading situation we must address as a place to start with Rule 2. It is a solid rule and its importance cannot be diminished in trading. Until you see the reward from Rule 2, it is very difficult to understand a bigger position being anything but wrong to you as a trader. 請記住，我不會怪罪交易者對我的規則 2 的看法。我們必須正視的不是他們的想法，而是他們的交易狀況，以此作為規則 2 的起點。這是一個堅實的規則，它在交易中的重要性不容忽視。除非你看到規則 2 帶來的回報，否則很難理解更大的倉位對交易者來說除了錯誤還是錯誤。
That, of course, is going to be some of your behavior modification (covered in a later chapter). Learning by experience is the only way most traders will be able to accept this rule. It is important to learn this rule by more than just example. It is not a rule you learn by making a mistake. It is a rule you learn by being rewarded for using the rule. 當然，這將會是你的一些行為修正（在稍後的章節中會涉及）。從經驗中學習是大多數交易者能夠接受這項規則的唯一方法。重要的是，學習這條規則不只是靠舉例。這條規則不是從犯錯中學會的。它是一項透過使用該規則而獲得獎勵來學習的規則。
How can we reward the traders for using this rule by example? I don’t think we really can. Therefore, we will explain why they are having difficulties and ask them to soul search as to the truth of the problem being within their own situation. 我們如何獎勵交易員以身作則地使用這項規則？我認為我們真的做不到。因此，我們將解釋他們遇到困難的原因，並請他們反省問題的真相是否出在自己的處境中。
The nature of trading is that more often you see a negative effect from what you have just done. Seldom do you see or remember the good effects from the proper trading as often as the negative. This will leave a plan to add to winners on the back burner when it is time to add unless you fully understand the need for this rule. 交易的本質是，您更常見到的是您剛剛所做的事情所帶來的負面影響。您很少會像看到負面影響一樣，看到或記得正確交易帶來的好處。除非您完全了解此規則的必要性，否則當要增加贏家時，這會讓增加贏家的計劃被擱置一旁。
The first problem with understanding Rule 2 is that any time a trader cannot or does not incorporate a plan to add to winners, they may be under-funded and unable to margin properly the additional positions in the add. Another aspect of being under-funded may only be that over-trading in the original position is actually a problem from the start. 理解規則 2 的第一個問題是，任何時候，如果交易者不能或沒有納入加碼贏家的計劃，他們可能會資金不足，無法為加碼中的額外倉位提供適當的保證金。資金不足的另一個方面可能只是因為在原始頭寸中的過度交易實際上從一開始就是一個問題。
Any time you plan a trade program, you must consider what size position you are looking to establish. If your position, as mine often is, is that you will have a total of six units upon completion of your position entering, you can have a better idea of what you must fund. You need to be able to fund the position properly from the start. 任何時候，當您規劃交易計畫時，您必須考慮您想要建立的頭寸規模。如果您的倉位，就像我的倉位通常是，在完成進入倉位時，您將擁有總共六個單位的倉位，那麼您就可以對您必須提供的資金有更清楚的概念。您需要從一開始就能適當地為倉位提供資金。
I believe most traders want to have a certain size position, and that is the position they place from the start. This is not a correct way to allow you to use Rule 1 and definitely Rule 2 properly. When you see an expected move from the start of trading, your thinking is counter to ever adding in the first place. 我相信大多數交易者都希望有一定規模的倉位，而且從一開始就放置這個倉位。這不是讓您正確使用規則 1 和規則 2 的正確方式。當您從交易一開始就看到預期的移動時，您的想法就與一開始的加倉背道而馳了。
True, you should be at least twice as big or larger when right than when wrong, but you must work that position into your trading plan. You never risk it all on the initial position being correct or you are defeating the rule. You are trading more like a day-trader if you put it all on at once. 誠然，您在做對時應比做錯時至少大一倍或更多，但您必須將該倉位納入您的交易計劃中。您絕對不能冒險把所有資金都放在正確的初始倉位上，否則您就違反了規則。如果您一次全部投入，您的交易更像是日內交易。
Another reason for problems with Rule 2 is that traders are actually day-trading so they won’t have undue risk in their positions. This will cut their odds of making the goals expected in any kind of move. It is more of a hit-and-run type trading. 規則 2 出現問題的另一個原因是，交易員實際上是在進行日間交易，這樣他們的倉位就不會有過大的風險。這會降低他們在任何一種移動中達到預期目標的機率。它更像是一種打了就跑的交易類型。
This type of trading leaves you vulnerable to the flow of orders into the pit. We can never estimate the exact quantity or direction of order flow for more than a very short period of time except in established moves. Sure, we have our three-phase theory, and it does work to an extent but never good enough for us to know without seeing beforehand just where the price turns are going to be. Looking back, we can always pick the price turns and possible support and resistance. 這種交易方式讓您很容易受到流入莊家的訂單的影響。除了既定的移動之外，我們永遠無法在非常短的時間內估計訂單流的確切數量或方向。當然，我們有我們的三階段理論，它在某種程度上確實有效，但從來不足以讓我們在沒有預見的情況下知道價格的轉向。回顧過去，我們總是能挑出價格的轉折點以及可能的支撐和阻力位。
I want the traders to ask themselves two questions: 我希望交易者問自己兩個問題：
"Do you put only part of your expected position on from the initial entry? "您是否從最初入市時就只投入部分預期倉位？
“Are you planning for adds prior to your initial trade?” 「您是否打算在初次交易前增加？」
If the answer to either of these questions is no, then you must go back and rethink your trading program. I have said it before. If you can think it, you can do it. Perhaps the traders aren’t thinking it to begin with because it certainly is not expected thinking without the proper planning. 如果這兩個問題的答案都是否定的，那麼您必須回去重新思考您的交易計畫。我以前說過。如果你能想到，你就能做到。也許交易者一開始就沒有想過，因為如果沒有適當的規劃，肯定是想不到的。
I knew we would have problems trying to convey Rule 2, and that is part of the reason we have stepped back to wait and see the blank stares. We have those blank stares as I can tell from reading the posts and resistance to Rule 2. 我知道我們在嘗試傳達規則 2 時會遇到問題，這也是我們退後以等待和觀察白眼的部分原因。我們有這些白眼，因為我可以從閱讀的文章和對規則 2 的抗拒中看出來。
That is okay for it is what can be expected from such a rule. I don’t want to get into telling the traders their game plan for actual trades or their trading programs. What I do want to do is to establish that you must consider the favorable side of adding to positions when they are correct. 這沒關係，因為這是可以預期的規則。我不想告訴交易者他們實際交易的遊戲計畫或交易程式。我想做的是，當倉位正確時，您必須考慮加倉的有利面。
More thought must go into Rule 2 as it is not as self-explanatory as Rule 1. It is true that Rule 2 is what makes my money for me. It does it in the long run and not the short run. 必須花更多心思在規則 2 上，因為它不像規則 1 那樣一目了然。誠然，規則 2 能為我賺錢。長期而言，而非短期而言。
There are several good aspects to the rule. We have discussed a couple of them previously. The fact that reinforcing a correct position actually keeps you thinking correctly is one of the important reasons for Rule 2. Another aspect is that, of course, you will be with a larger position when you are correct. 該規則有幾個好的方面。我們之前已經討論過幾個。事實上，強化正確的位置實際上會讓你保持正確的思考，這是規則 2 的重要原因之一。另一個方面是，當您正確的時候，您當然會有更大的倉位。
I think one of the of the hidden benefits of using Rule 2 in your trading plan is that it will actually keep you from over-trading from the entry through to the end of the position if used properly. 我認為在您的交易計畫中使用規則 2 的隱藏好處之一是，如果使用得當，它實際上會讓您從入市到持倉結束都不會進行過度交易。
By incorporating Rule 2 in your game plan from the start, you will be eliminating the desire to be proud when the market moves your way and want to take profits to show that you are right. Traders love to be right. 從一開始就將規則 2 納入您的遊戲計畫中，您就可以消除當市場朝您的方向移動時驕傲的欲望，並想要獲利來證明自己是對的。交易者喜歡自己是對的。
This is your enemy . . . to love to be right. Your motivation must be to love to do the right thing in trading by either reinforcing correctly your position or removing it should it not prove to be correct. 這是您的敵人 . . . 喜歡做對的事。您的動機必須是喜歡在交易中做正確的事，正確地鞏固您的倉位，或在證明不對時撤銷倉位。
You see, when you think you are right in the market, this is just the beginning of your trade – not the time to take your profits to say to the world, “See, I was right!” Let me ask you, “Who really cares if you were right?” So what? 您看，當您認為自己在市場上是對的時候，這只是您交易的開始 - 而不是拿著您的利潤對全世界說：「看，我是對的！」的時候。讓我問你，「誰會真正在乎你是否是對的？」那又怎樣？
You will become the best trader you can be by being wrong small, not right small! Get that in your mind now. You are going to have to press your winners if you really consider yourself to have the ability to make a living or extra income from trading. Otherwise, face the truth that you are only playing to break even. 你將成為最好的交易者，靠的是 「小錯」，而不是 「小對」！現在就把這一點記在腦子裡。如果您真的認為自己有能力從交易中賺取生計或額外收入，您就必須壓住贏家。否則，面對事實，你只是在玩收支平衡的遊戲。
Who wants to play for a tie? I sure don’t! 誰想打成平手？我當然不想
I remember a trader asking me how I felt about making money in my early days. She wanted to know how much I made. I indicated to her that if I did not make at least a thousand dollars a day, it wasn’t even worth trading to me. She said she would be happy with a hundred a day. 我記得有一位交易員問我早期賺錢的感覺如何。她想知道我賺了多少錢。我向她表示，如果我每天賺不到至少一千美元，我根本不值得做交易。她說每天能賺一百美元她就很滿意了。
I asked her if she added to winners. She said there was no reason to add to winners. I didn’t mean to laugh at her but at what she said. I pointed out to her that, if she had three days a week where she made money and two where she lost, she would be in the hole for it would be a 50/50 game if she was never able to add to winners. 我問她是否有加入贏家。她說沒有理由加到贏家。我不是要笑她，而是笑她說的話。我向她指出，如果她一週有三天賺錢，兩天虧錢，她就會陷入困境，因為如果她從來沒有為贏家加注，這將會是一個 50/50 的遊戲。
days. You would be better off working for a living rather than trading if that is the case. 天。如果是這樣，您最好還是以工作為生，而不是做交易。
Now, I am not laughing at anyone! I meant what I said about my statements of respect for the small trader! They need to know just why and how important it is to press winners before they will ever be able to approach the idea into their trading plans. 現在，我不是在嘲笑任何人！我說的是我對小交易員的尊重！他們需要知道為什麼要按贏家，以及按贏家有多重要，然後才有可能將這個想法納入他們的交易計劃中。
It isn’t an obvious thought to think that, even before you trade, you must have a plan to be bigger when the market is going your way. The first thought is always what size position to take to reach your goal. 這並不是一個明顯的想法，甚至在您交易之前，您就必須有一個計劃，當市場朝您的方向發展時，您就可以做得更大。首先想到的永遠是要採取多大的倉位才能達到目標。
You must understand that you are not the one who will determine your market position size. It is going to be the market and must always be the market. Rule 2 is going to tell you to put a complete plan into effect before taking the initial position.
The light is starting to come on about Rule 2 now. I can see some raised eyebrows in anticipation of what is possible now. Not only is Rule 2 a saver of your drawdown by its proper use, but it is an enforcer in pointing out that you are looking to have a complete position when your expected move allows you to be totally positioned. 關於規則 2 的曙光已經開始出現。我可以看到一些人對於現在可能發生的事情瞠目結舌。正確使用規則 2 不僅可以節省您的平倉，而且它還是一個執行者，可以指出當您的預期移動允許您完全定位時，您正在尋找一個完整的位置。
I am a little ashamed I did this, but I purposely held back the best part of the rule to see who would come up with the important aspects of Rule 2. Rule 1 was hit bullseye by at least half of those on the forum who thought it out. 我有點慚愧，但我故意保留了規則中最精彩的部分，看看誰能提出規則 2 的重要部分。至少論壇上有一半的人都想到了規則 1。
Rule 2 may have had a few who understood it but didn’t really make a remark on it. I do know one who did hit the nail on the head: Gerald Mullins. (Perhaps I better get permission to use his name before the book version comes out.) At any rate, there were others, I think, who did not indicate much about Rule 2 who most likely had some good clues. 規則 2 也許有幾個人了解，但沒有真正提出意見。我倒是知道有一個人一針見血：Gerald Mullins。(也許我最好在書的版本出版之前，先取得他的同意，才能使用他的名字)。無論如何，我認為還有其他一些人，他們對規則 2 沒有太多的表示，但他們很可能有一些很好的線索。
On adding to winning positions, I could give you my trading plan and my signals and tell you exactly when to add. But that would be doing the same thing as digging out the Mississippi on the west side and changing its course. I would be better off trading for you, and you would be better off giving me your money to trade. I don’t want that at all. Don’t forget my faith in the small trader. You shall have to see the prospects of Rule 2 more clearly yourself. 關於增加贏得的頭寸，我可以給你我的交易計劃和信號，並告訴你確切的增加時間。但那就等於在密西西比河的西側挖出河道，並改變它的流向。我最好為您交易，而您最好把您的錢給我交易。我完全不想那樣。別忘了我對小商人的信心。你必須自己更清楚地看到規則 2 的前景。
I cannot help you with over-trading or being under-margined. You must correct that situation before you can ever expect to be on even ground with the big funds. You must at all times be able to put only a portion of your expected position on at entry and be able to at least double your size somewhere along the route of an expected move. 我無法幫助您解決交易過度或邊際利潤不足的問題。您必須先糾正這種情況，才能期望與大型基金平起平坐。在任何時候，您都必須能夠在入市時只投入預期倉位的一部分，並能夠在預期移動的途中至少加倍您的規模。
The protection is Rule 1, but the biggest protection is Rule 2! Now I am going to tell you why Rule 2 is the biggest protection of all. You never suspected what I am going to point out. 保護是規則 1，但最大的保護是規則 2！現在我要告訴您為什麼規則 2 是最大的保護。您絕對不會懷疑我要指出的。
You have all heard that you should not add to a loser! Well, Rule 2 takes care of that from the start by keeping you with a smaller entry position in the first place. You never have your entire position until you are getting the move you had expected. 您都聽說過，您不應該在虧損時加倉！好了，規則 2 從一開始就照顧到了這一點，首先讓您保持較小的入市頭寸。在您獲得預期的行動之前，您永遠不會擁有您的全部倉位。
Now, why would I encourage you to have half of your total position at entry? Because it is a losers’ game from the start and you knew that from Rule 1. Now, from Rule 2, you find out that, to trade it correctly, you were never really suppose to have your initial position upon your entry of a trade. 現在，我為什麼要鼓勵您在入場時擁有總持倉量的一半呢？因為這從一開始就是一個輸家的遊戲，你從規則 1 就知道了這一點。現在，從規則 2 中，您會發現，要正確地進行交易，您從來就不應該在入市時持有初始倉位。
Can you tell me that you don’t expect the market to fade your trade to a slight point? You really are going to pick a range when you are right, and you are going to be at least half size when you are not proven to be correct. When you take your loss with Rule 1 , it is a milder way of slapping your equity from the start. 你能告訴我，你不期望市場把你的交易淡化到一丁點嗎？你真的會在你是對的時候選擇一個範圍，而在你沒有被證明是對的時候，你至少會有一半的大小。當您使用規則 1 承擔損失時 ，這是一種較溫和的方式，從一開始就打擊您的權益。
Are you beginning to see any of the value of Rule 2 yet? We can go into examples but understanding the rule is what we want now. Trading programs will all have different aspects of entry and adding. It is up to you now to understand Rule 2 and try to incorporate it into your plans. 您開始了解規則 2 的價值了嗎？我們可以舉例說明，但理解規則才是我們現在想要的。交易計畫都會有不同的入市和加價方式。現在就看您是否瞭解規則 2，並嘗試將其納入您的計劃中。
I am giving you a rule that not only makes you larger when you are right but keeps you smaller when you are wrong from the start of a position. I am also giving you a way to not over-trade. It is up to you to make sure you are properly funded to make this step an important one in your favor. 我給您一個規則，它不僅能在您做對時讓您獲利更多，而且能在您做錯時讓您從倉位一開始就獲利更少。我還給了您一個避免過度交易的方法。您需要確保您有適當的資金，使這一步成為對您有利的重要一步。
Never over-trading was one of the criteria of my Rule 2. A lot of thought went into Rules 1 and 2, and it must come out the other side for you to understand before it will work well. 永不過度交易是我的規則 2 的準則之一。規則 1 和規則 2 花了很多心思，它必須從另一邊出來讓您了解，才會運作良好。
Now, you have the background of Rule 2 and can understand it a little better. Whether we go any further trying to impress this rule upon traders depends upon its acceptance by the traders in whom I have complete faith. They shall continue to live up to my expectations, and I shall continue to be proud of the faith I have in them. 現在，您已經有了規則 2 的背景，可以稍微瞭解它了。我們是否要進一步嘗試讓交易員對這項規則印象深刻，取決於我完全信任的交易員是否接受這項規則。他們將繼續不辜負我的期望，而我也將繼續以我對他們的信任為榮。
I say it again and I know it for sure: Clothes makes the man, in most cases, if that man lets it change his thinking and feeling to a point of betterment. Knowledge is your new suit. 我再說一次，而且我確信這一點：衣服造就人，在大多數情況下，如果這個人讓衣服改變他的想法和感覺，使他變得更好。知識是您的新衣。
ALS: Okay, you are telling the readers that using Rule 2 properly will keep them from over-trading because their entire position is ALS：好吧，你是在告訴讀者，正確使用規則 2 可以防止他們過度交易，因為他們的全部倉位都是
never in place until they have added the remainder of their initially expected position only after the market has proven the position correct along the journey of the move they are working with in the trade. 只有在市場證明倉位在交易中的移動過程中是正確的情況下，他們才會增加最初預期倉位的剩餘部分。
What the traders have failed to see is that, to correctly use Rule 2, they never put the entire desired position on until or unless Rule 2 needs to be used along the way. Am I correct so far? 交易員沒有看到的是，要正確使用規則 2，他們永遠不會把整個想要的頭寸都放在上面，直到或除非在途中需要使用規則 2。到目前為止，我說的對嗎？
POP: Yes, you are. What other points am I making? POP：是的，你是。我還有什麼其他觀點？
ALS: Your Rule 2 is also protection from adding to losers and keeping the initial position smaller until proven correct. Is that right? ALS：您的第 2 條規則也是防止加碼到輸家，並在證明正確之前保持較小的初始倉位。是這樣嗎？
POP: Not exactly. What I want them to understand about that point is that they will only get bigger when their criteria in their trading program tells them it is time to add. They will not add just because the initial position has been proven correct. When they have completed their adding of additional positions, then and only then should they have their entire expected position established. POP：不完全是。關於這一點，我希望他們明白的是，只有當他們的交易程式中的標準告訴他們是時候加倉時，他們才會加大倉位。他們不會因為最初的倉位被證明是正確的而加倉。當他們完成加倉後，他們才會建立全部的預期頭寸。
Traders are over-trading most of the time when they say they can’t seem to justify adding to an existing position. Most of the time a trader does not think about the reason for adding because they have their initial position on from the start. This is their maximum risk from the start. 當交易者說他們似乎沒有理由在現有倉位上加倉的時候，他們大多數都是在過度交易。大多數時候，交易者不會考慮加倉的原因，因為他們從一開始就持有初始倉位。這是他們一開始就承受的最大風險。
That is never what you want in trading. You must take some risk but never your maximum. That is exactly what they are doing if they cannot plan for added positions along the way. 這絕對不是您在交易中想要的。您必須承擔一定的風險，但絕非最大風險。如果他們不能計畫在交易過程中增加倉位，這正是他們正在做的事情。
ALS: It is so obvious now! It is just like playing chess and seeing after the stalemate that you could have won so easily if you had just thought there could have been a stalemate. ALS：現在已經很明顯了！就像下棋時，僵局結束後才發現，如果你認為可能會有僵局的話，你本來可以很容易就贏的。
POP: Yes, the trader is playing for a stalemate if they don’t use Rule 2 in some form somewhere along the way in their trading plan. Isn’t it simple? POP：是的，如果交易者不在交易計劃中的某個地方以某種形式使用規則2，他們就是在玩僵局。這不是很簡單嗎？
To want to have a correct position from the start is over-trading when you place an entire position. Traders don’t add because they have their position. The big drawdown is that when that original initial position is wrong, their losses are as large as their gains seem to be if they were right. We don’t want that. 想要從一開始就有正確的倉位，在您放置整個倉位時就是過度交易。交易者不會因為有倉位而加碼。大額平倉就是當那最初的初始倉位是錯誤的時候，他們的損失就會像他們的收益看起來一樣大，如果他們是正確的話。我們不希望這樣。
Keep in mind that trading is always a losing game unless you change the odds. With Rule 1 and more so with Rule 2 , you are changing what you can in trading to your advantage. If any position is taken without forethought about adding to it later when it has been a proven correct position, you are in a 50/50 game at best. 請記住，除非您改變賠率，否則交易永遠是虧本的遊戲。有了規則 1，更有了規則 2，您就可以在交易中改變您的優勢。如果您在採取任何倉位時，沒有預先考慮到日後當該倉位被證實為正確倉位時再增加該倉位，那麼您充其量只能處於 50/50 的遊戲中。
ALS: You also said the light should start coming on for the traders. Do you think this is enough to digest or should we continue? ALS：您還說交易員應該開始看到曙光。您認為這是否足以消化，還是我們應該繼續？
POP: It’s time to step back and let them get off the elevator. Let us see how many frowns we still have and if we need to review more on Rule 2. My faith in the small trader is that they are the best majority of one I could ever want in my class. I am willing to stoop down and consider the questions of my little Phantoms. I can do it for a day, and I can do it always? POP：是時候退後一步，讓他們下電梯了。讓我們看看我們還有多少皺眉頭，以及我們是否需要在規則 2 上多加複習。我對小交易員的信心是，他們是我班上最好的大多數。我願意俯下身子，考慮我的小幽靈們的問題。我可以做一天，也可以一直做下去？
I am trying to make it possible for them to become the best traders they can be. I know they will grow up faster than they realize. Good luck to them as we see what their new plans become. 我努力讓他們成為最好的交易員。我知道他們會比自己意識到的成長得更快。祝他們好運，我們會看到他們的新計劃變成什麼樣子。
ALS: Any lights coming on? Do we understand CORRECTLY yet? ALS：有燈亮起嗎？我們的理解正確嗎？
Phantom's Gift 魅影的禮物
By Art Simpson 作者：Art Simpson
Chapter 7: Trading with Rules 1 and 2 第 7 章：根據規則 1 和 2 進行交易
Art Simpson (ALS): Phantom, your required rules seem pretty simple. Let’s use some practical applications in real-time trading. Art Simpson (ALS)：Phantom, 您所要求的規則看起來相當簡單。讓我們在即時交易中使用一些實際應用。
Phantom of the Pits (POP): In trading, rules are not meant to be broken for your own sake. The rules bring you to a no judgmenttype approach. You design your trade program and approach to trading by keeping the major choice of positions within your program while keeping the confirmation to the market. Your only job is to follow your trade program while obeying Rules 1 and 2. Phantom of the Pits (POP)：在交易中，規則並不是為了你自己而打破的。規則帶給您的是無判斷型的方法。您設計您的交易程式和交易方法，將主要的頭寸選擇保留在您的程式中，同時保持對市場的確認。您唯一的工作就是遵循您的交易程式，同時遵守規則 1 和規則 2。
The rules take away the need to decide while the market is open what to do during the trade day. You will have a good idea what you expect of yourself at all times rather than guessing what is actually going to take place with your positions. You will either be proven correct with your positions or you simply get out of the positions. You don’t stick around to get hurt with exposure if the market is not proving you correct. 規則讓您無需在開市時決定交易日內要做什麼。您可以隨時掌握自己的期望，而不是猜測您的倉位實際會發生什麼。您要麼證明您的倉位是正確的，要麼您就直接出倉。如果市場無法證明您是正確的，您就不會堅持暴露在市場中而受到傷害。
Yes, you will have exceptions when the rules don’t corporate with you and what the markets are doing. This will be a minimum problem, as the rules will keep you in the trading game for long-term trading. You must research your trade program well enough to be able to not enter at bad entry levels. Even if you make a simple mistake such as chasing markets, Rule 1 will still keep you from excessive drawdown during your trading career. 是的，當規則與您和市場的行為不一致時，您會遇到例外情況。這只會是最小的問題，因為規則會讓您在交易遊戲中保持長期交易。您必須充分研究您的交易程式，以避免在錯誤的入市水準入市。即使您犯了簡單的錯誤，例如追逐市場，規則 1 仍會讓您在交易生涯中避免過度縮水。
ALS: I notice a few questions coming up (on the Talk forum) about excessive commissions when using Rule 1 . . . ALS：我注意到（在談論區）出現了一些關於使用規則 1 時佣金過高的問題 .
POP: Today, as an example, I bought the DJIA after a 30-point rise and expected to see another 5-point increase within 30 seconds. After 30 seconds I bailed. I had a loss of 1 point on the trade. The market continued to drop against me, and my loss would have been 30-40 times my commission, even if I had paid top commission at the low point. POP：以今天為例，我在道瓊斯工業平均指數上升 30 點後買入，並預期在 30 秒內會再上升 5 點。30 秒之後，我放棄了。我的交易虧損了 1 點。市場繼續對我不利地下跌，即使我在低點支付最高佣金，我的損失也會是我佣金的 30-40 倍。
Now you can’t tell me that it is better to stay in and wait for the market to come back than it is to get out and re-evaluate the situation. In the end I would have been right, but my mental standing after a simple Rule 1 trade is a lot better and allows me to have sanity about my next move. 現在你不能告訴我，留在裡面等待市場回歸，比退出來重新評估情況更好。最後，我的想法是對的，但在簡單的規則 1 交易之後，我的心理狀況會好很多，也讓我對下一步的行動有更多的理智。
Most traders think it is bad for them to be wrong and, when they are, that’s it for the day. Well, being wrong is the best chance to put a correct position on with your next trade as you certainly can trade again. If you keep a trade that never proves to be correct within your program of time element, you will never be able to correct a bad situation but only be able to remove that bad situation. Your mental well-being is worth a lot in trading. You can trade well when you are thinking well. 大多數交易者認為錯了對他們來說是不好的，當他們錯了的時候，這一天就完了。但是，錯誤是您在下一次交易中建立正確倉位的最好機會，因為您當然可以再次交易。如果您在您的時間元素程式中保留了一筆從未被證明是正確的交易，您將永遠無法糾正糟糕的情況，而只能消除這種糟糕的情況。您的心理健康在交易中價值很高。當您思維良好時，您就能很好地進行交易。
What I am going to say next is something usually learned not by observation but by making the assumption itself. Most of your money from trading is going to come from trades that take off rather quickly from when you put them on. That is the reason Rule 2 is so important. Just look at most starting trends and the good runs you have once a market turns. The chop-chop markets aren’t going to give you good income. 我接下來要說的，通常不是從觀察中學到的，而是從假設本身學到的。您從交易中賺到的大部分錢，都會來自於那些從您開始交易時就迅速起飛的交易。這就是規則 2 如此重要的原因。只要看看大多數的起始趨勢和一旦市場轉向時的良好運行就知道了。斬倉式市場不會給您帶來好的收入。
While it is true that being in control of your position in the market rather than the market being in control of what you are going to think about your position next simplifies your trading life, it also greatly enhances your ability to make good trades. The main reason is that you know what to expect and have those expectations up front from the entry of your trades. 控制您在市場中的頭寸，而不是市場控制您下一步對您頭寸的想法，這固然簡化了您的交易生活，但也大大提高了您進行良好交易的能力。主要原因是您知道該期待什麼，並且在交易開始之前就有這些期待。
If you supervise building a house and you have several trades working on the house, you certainly make sure the plumbing that goes in the foundation is being put in correctly before you walk away and let the foundation be completed. Building a position is the same in trading as in most occupations. If the plumbing and foundation on the house are completed correctly, you move to the next step. 如果您監督一棟房子的興建，而且有好幾個工種都在這棟房子上工作，您當然會先確認進入地基的水管安裝正確，然後才會離開，讓地基完工。建立一個職位在交易中和大多數職業中是一樣的。如果房屋的水管和地基都正確完成，您就可以進入下一步。
Still, at any time the prior work finished could create a problem. Let’s say the foundation settles and cracks the sewer pipe. Would you continue on the house? Of course, you wouldn’t. Well, no way will you continue with a trade that proved correct but now shows problems. 不過，之前完成的工作隨時可能造成問題。比方說，地基沉降導致下水管道破裂。您還會繼續施工嗎？當然不會。那麼，您也絕對不會繼續進行已證明正確但現在卻出現問題的工程。
You can never let your guard down in trading. You must always know what the next step is for you in any situation. You rehearse your criteria of a trade, and it becomes second nature – just like driving a car becomes a subconscious effort for you when you are proficient at it. 在交易中，您絕對不能放松警惕。在任何情況下，您都必須知道下一步該怎麼做。您練習交易的標準，它就會成為您的第二天性 - 就像當您熟練駕駛汽車時，駕駛汽車就會成為您的下意識動作一樣。
You start out by not knowing what the trade will ever do when you put it on. You can never control what the market will do or how the orders will enter the pits. You cannot tell me when a large fund is going to take a profit or enter a new position. Nor can anyone else tell you for certain. 您一開始下單時，並不知道交易會如何進行。您永遠無法控制市場會做什麼，也無法控制訂單如何進入攤位。您無法告訴我大型基金何時會獲利或進入新倉位。其他人也無法確定地告訴您。
All you can do is build your criteria or trade plan to take every angle that is important into account. I can give you a plan that will catch every move, but you will catch moves that are the wrong way, too. 您能做的就是建立您的準則或交易計劃，將每個重要的角度都考慮在內。我可以給你一個計劃，讓你抓住每一個動作，但你也會抓住錯誤的動作。
Along with that plan to never miss a move, I can give you the big drawdown and the rules that will eat you alive if you can’t afford the drawdown. In the end you will have what you think is a very small profit for all your time and patience of going along with the plan. But, yes, you will have a profit. 隨著這個計劃，永遠不會錯過任何一個動作，我可以給你大的平倉和規則，如果你不能承受平倉，這些規則會把你生吞活剥。到最後，您會因為按照計劃所花的時間和耐心而獲得您認為非常微薄的利潤。但是，是的，您將獲得利潤。
That is not what the usual trader is about. He is not in this game to earn a few extra bucks for his vacation. He is always after a better return than most would consider fair in any other investment. That is another reason for creating Rule 1. You are expecting a big reward and fail to see the big risk that faces you at first. Somewhere along the way you must face the situation for what it is. 這不是一般交易員的目的。他參與這場遊戲並不是為了賺取一些額外的錢來度假。他總是在追求比大多數人認為公平的任何其他投資更好的回報。這是創建規則 1 的另一個原因。您期望獲得豐厚的回報，卻沒有看到一開始所面臨的巨大風險。在某個階段，你必須面對現實。
Trading is a loser’s game. You must learn how to lose. The biggest loser who loses small will continue in the game. 交易是輸家的遊戲。您必須學會如何輸。輸得少的最大輸家才會繼續遊戲。
Obviously, the small trader who loses big will quickly go to the sidelines. Sometimes the sidelines are not even there for a few. Their losses take away their hearts. Believe me, for I have seen them. It is the saddest thing in the world to take away someone’s dream – more so when they never knew the enemy in the first place. 很明顯，虧大本的小交易員很快就會去旁觀。有時候，旁觀者甚至不在幾個人的身邊。他們的損失奪走了他們的心。相信我，因為我見過他們。奪走一個人的夢想是世界上最悲哀的事情 - 當他們一開始就不認識敵人時更是如此。
A trader must know and accept what the market can do along the damage side to equity, to mental peace and to self-esteem. Every day is a big surprise in trading. You must plan for the surprise from the time you put your position in place. The big surprise can sometimes be a friend, but you must be prepared for it.
Why do I say the market is going to give you a surprise? Can you tell me exactly how far a market will move and then retrace before continuing? Or if it will continue? 為什麼我說市場會給您驚喜？您能告訴我市場到底會走多遠，然後回調再繼續嗎？或者是否會繼續？
What you can do is to eliminate your reactions to what the market does to you. You do this by not giving the market the power to control your position or emotions with adverse market moves. You start out expecting the adverse market moves and plan your action based on those outcomes. 您可以做的是消除您對市場對您所做事情的反應。要做到這一點，您就不能讓市場控制您的倉位或情緒。您一開始就預期市場的不利變動，並根據這些結果計劃您的行動。
When you place a trade, don’t ever think this is the only trade to make. There are thousands of trades you can make. You aren’t going to miss a move for long if you trade correctly. You aren’t going to chase markets if you trade correctly. You must have a plan to enter positions based on each market’s criteria. 當您進行交易時，千萬不要以為這是唯一可以進行的交易。您可以進行成千上萬的交易。如果交易正確，您不會長時間錯過移動。如果交易正確，您就不會追逐市場。您必須根據每個市場的標準制定入市計劃。
Rule 1 is the rule that keeps you in control at all times when that position is in place. 規則 1 是讓您在該位置時隨時都能掌控的規則。
Behavior modification can take place in many forms, but you need a rule to show you what must be done at all times. One trader suggested the rubber-band method. Each time you took a big loss or did some bad trading, you would snap the rubber -band on your wrist – that is, if you remembered to do it. I don’t like this method, but it is better than a lot of others. 行為修正可以以多種形式進行，但您需要一個規則來告訴您在任何時候都必須做什麼。一位交易員建議使用橡皮筋法。每次當您遭受重大損失或做了一些糟糕的交易時，您就會擰緊手腕上的橡皮筋，如果您記得這樣做的話。我不喜歡這種方法，但它比很多其他方法都好。
Just because you put on a trade that lost money is no reason to feel bad. If you put a position on and lose big money, that is when you can feel very bad. 僅僅因為您做了一筆虧損的交易，並不是您感到難過的理由。如果您做的倉位虧了大錢，這時您就會感覺非常糟糕。
With Rule 1 you are freeing yourself from having to feel bad. You put the trade on based on the trade plan. The market either confirms and you now have a good position, or it doesn’t confirm and you are not okay with the position and you get out. 有了規則 1，您就不必再感到難過。您根據交易計劃進行交易。要麼市場確認，您現在有一個好倉位；要麼市場不確認，您對倉位不滿意，您就出局。
Simple! Only a big deal if you don’t get out when it isn’t confirmed as a good position. No need to ever feel bad. Most of your trades that don’t confirm within a logical time frame are usually going to look bad sooner or later. Why not take the sooner? 很簡單！只有在沒有確認好位置時不出局才是大事。無需感到難過。您的大多數交易如果沒有在合理的時間內確認，通常遲早都會看起來很糟糕。為什麼不越快越好呢？
ALS: It’s beginning to look like it takes more thought to put a trade on than the time you’re going to be in it if you’re wrong . . . or I mean not proven to be in a correct position! ALS：現在看來，花在交易上的心思比花在錯誤交易上的時間還要多！
POP: The logical step is to have the plan in place for the next step before you put on the trade. I would guess that 95%95 \% of the traders put the trade on and then wait for the market to prove they have a bad position. Even if the position is correct, their next step is wondering when to get out. It’s human nature to do it their way. It causes a lot of unsuspecting reactions in their lives. POP：合乎邏輯的步驟是，在您進行交易之前，先為下一步制定好計劃。我猜測 95%95 \% 的交易者會進行交易，然後等著市場證明他們的倉位不對。即使倉位是正確的，他們的下一步是想知道什麼時候出局。按照他們的方式做是人類的天性。這在他們的生活中造成了很多不被預期的反應。
ALS: Human nature is as you say. I know you did some research on human nature of traders and non-traders. Perhaps we can talk about some of your data. ALS：人性就像你說的那樣。我知道您對交易者和非交易者的人性做了一些研究。也許我們可以談談您的一些數據。
POP: I’ll tell you what I would prefer to do. It would be better to just suggest some of the experiments and let the readers come to their own conclusions. Let’s keep that in the behavior modification tips. POP：我會告訴你我比較喜歡做什麼。最好是只建議一些實驗，讓讀者自己得出結論。讓我們在行為修正的提示中保留這一點。
ALS: There were some questions on when to get out of a position. I realize this is out of order here, but I know we need to include Rule 2. ALS：有一些關於何時離開崗位的問題。我知道這裏不合乎規程，但我知道我們需要包括規則 2。
POP: That’s okay, as a common question is when do you know when to get out of a position. Actually Rule 2 addresses this very well because it says to press your winners correctly without exception. Rather than getting out of a position with the proper criteria, POP：沒關係，因為一個常見的問題是，你什麼時候知道什麼時候該出倉。其實規則 2 很好地解决了這個問題，因為它說要正確地按下您的贏家，無一例外。而不是以正確的標準出倉、
you will be increasing your position. You only do the adding with correctly proven positions. 您將增加倉位。您只會在經過正確證明的位置做加法。
The time to get out of a position is not when the market is proving your position to be a correct one. You have the opportunity to be wrong as often as correct, but when you are already proven correct, this is certainly the time to step off of first base. 當市場證明您的倉位是正確的時候，並不是離場的時候。您有機會錯誤，也有機會正確，但是當您已經證明是正確的時候，這絕對是離開一壘的時候。
We have two rules to keep us protected from our lack of certainty and enforcement of certainty. Many trading plans have the trader in a position at all times, the thinking being that the market is either going to go up or go down. 我們有兩條規則，可以讓我們在缺乏確定性和執行確定性時得到保護。許多交易計畫都讓交易者隨時處於倉位中，其想法是市場不是要漲就是要跌。
Well, this is just absolutely an idiot’s plan. Maybe I shouldn’t say it so strongly as I should still have an open mind. I have to put this in the category of thinking a statement that says not to do something actually says to do the opposite of that statement. 好吧，這絕對是一個白癡的計劃。也許我不該說得那麼強烈，因為我還是應該抱持開放的態度。我必須把這件事歸類為 「說不要做某件事實際上是說要做與該陳述相反的事」。
Too many times I have watched a fund bid the market so they can sell the market. It’s a plan to take advantage of the surprise element in the markets. There was the day when you would only see me on both sides only when I was wrong. I am wrong a lot more lately. That’s not bad either! 我看過太多次基金出價讓他們可以賣出市場。這是一個利用市場驚喜元素的計劃。曾幾何時，只有在我錯的時候，你才會看到我站在兩邊。最近我錯得更多了。這也不錯！
The readers are surely asking by now: How do we use these two rules? 讀者現在一定會問：我們該如何使用這兩條規則？
It’s easier to use real-time quotes and markets to prove the points, but because we only have hindsight here, we will do it differently. Let’s use the old common day-trading technique, on which I am not going to give you judgment at this time. 使用即時報價和市場來證明這些觀點比較容易，但因為我們在這裡只有事後見證，所以我們會以不同的方式來做。讓我們使用以前常見的日內交易技巧，關於這一點，我現在不打算給你判斷。
You say your plan wants you long if you take out the opening range! Okay, let us say we are trading onions and the price is 1000 ($10). The price goes to 1001 and the opening range was 999-1000999-1000. Your plan says “buy” so you buy. You get filled at 1002 ! Why 1002? Well, execution is getting the position filled! You gave up a slip of 1 tick. Not bad. Most of the time it is small. 您說您的計劃要您做多，如果您走出開盤範圍！好吧，假設我們正在交易洋蔥，價格是 1000 ($10)。價格到了 1001，開盤範圍是 999-1000999-1000 。您的計劃說「買入」，所以您買入。您在 1002 價位成交！為什麼是 1002？為什麼是 1002？您虧損了 1 個交易點。不錯。大多數時候都很小。
We can go into the importance of execution now or continue the trade. Let us continue the nature of the trade and cover the importance of execution later. 我們現在可以討論執行的重要性，也可以繼續交易。讓我們繼續交易的本質，稍後再談執行的重要性。
Now that you are long at 1002, you are using Rule 1. You assume this is a bad trade until the market proves to you that the trade is good. If the market does not prove this a good trade, you are going to exit the trade. Fine so far! 現在您在 1002 點做多，您正在使用規則 1。您假設這是一場糟糕的交易，直到市場向您證明這場交易是好的。如果市場沒有證明這是一個好的交易，您就要退出交易。到目前為止很好！
What criteria in your day-trading plan says you are right? Most say what determines you are wrong. Not us! We only want to know the criteria for being right. Okay, for us our program says, “If in the first half hour the market opens lower than yesterday and moves higher, expect a move above the prior day’s high within the first half day of trading.” 在您的日間交易計劃中，什麼準則說您是對的？大多數人說什麼決定您是錯的。我們不會！我們只想知道正確的標準。好吧，對我們來說，我們的計劃說：「如果在前半小時，市場開盤價比昨天低，並且走高，那麼預計在交易的前半天內，市場會突破前一天的高點」。
Our program also says the position is only correct if the market stays in the prior day’s top half in the first half hour. Our last criteria for the trade is that it must show a 3-point profit by the close. Now, I ask you, what is your next step? 我們的程式還說，只有當市場在前半小時內維持在前一天的上半場時，該倉位才是正確的。我們對交易的最後一個標準是，到收盤時必須顯示 3 點利潤。現在，我問您，您的下一步是什麼？
Your criteria for remaining in this position is only when the requirements of your data indicate to you the position is correct. The other data you would need in the program is yesterday’s range, yesterday’s high and yesterday’s close. Your day-trading program says to use the old rule of opening range breakout. Yesterday’s data is critical in knowing when you are correct. 您保持這個位置的標準是，只有當您的數據要求向您表明這個位置是正確的時候。您在程式中需要的其他資料是昨天的範圍、昨天的最高價和昨天的收盤價。您的日間交易程式說要使用開盤範圍突破的舊規則。昨天的數據對於瞭解您何時正確持倉至關重要。
For our example we will use yesterday’s high as 997 and yesterday’s range as 991-997. It gets interesting here because you are going to decide whether you will exit the position. At the end of 30 minutes the market is at 997 . What would you do? 在我們的示例中，我們將使用昨天的高點 997 和昨天的範圍 991-997。這裏變得很有趣，因為您要決定是否退出頭寸。在 30 分鐘結束時，市場在 997 .您會怎麼做？
The first criterion of our trade program is in conflict with your day-trading strategy, but you still bought the opening range breakout. We don’t care if the two are in conflict! We only care what causes our position to be correct. 我們交易程式的第一個準則與您的日內交易策略相衝突，但您仍然買入了開盤區間突破。我們不在乎這兩者是否有衝突！我們只在乎導致我們倉位正確的原因。
Okay so far. The market has been open a half hour and our price is 997 . As you can see, you must know your trade plan before the market opens and what you are required to do. What makes your position correct? You must be in the top half of yesterday’s range after the first half hour of trading. 好的，到目前為止。市場已經開市半小時了，我們的價格是 997 .如您所見，您必須在開市前知道您的交易計畫，以及您需要做什麼。怎樣才算您的倉位正確？開市半小時後，您的位置必須在昨天交易範圍的上半部。
Are you indeed in the top half of the range from yesterday?
I am going to give you the answer indirectly so you can’t slip down to find it. We will go to the next step here. At the end of the first half day of trading the price is 996 . Are you still in the position? You did take out the prior day’s high but you didn’t open lower.
Okay we still did it! Stayed in the first half hour. That’s right.
Now the first half day price is down to 996 and we bought at 1002 – still in the top half of yesterday’s range. Okay, we are still in the position. Bad entry, though, as our plans conflicted. Should have only taken the position if it opened lower. It didn’t. Well, okay, because we are day-traders, we used the opening range breakout. Our entry wasn’t the best but so what!
At the end of the day the market is at 992. Are we still in the position? You have the right answer but why? The market had to be at 1005 to keep the position – it had to show a 3 -point profit on the close.
How would you get out of this position? You would have used a stop close only order after the first half day to sell the position: 1004 stop close only.
The example gives you several interesting situations and perhaps just as many questions about Rule 1 . Rule 1 will not protect you from wrong entries! That is your job. You must solve your own conflicts in your trading. Rule 1 did take you out of the trade on the close because you were not proven correct based on the required criteria.
Keep in mind this example is a very different situation than you would expect of your trading program. You can’t have a program that says, if the market doesn’t go to 980 , it looks for the market to go to 1100 sometime. There has to be a time frame on when to expect 1100.
When a market doesn’t go up anymore, somewhere it isn’t correct to stay in the position, regardless of the expectations. The market must prove and continue to prove. There can be simple or complex strategies in your program, but when the position is not going according to the expectations, it is wrong – not when it proves your stop price got hit.
Stops? Yes, we did use a stop to get out. We did not use the stop as the criteria for getting out. The stop did not prove us wrong, but the criteria proved us wrong.
I realize that in the example we put conflict, various criteria that was required for the position to be correct and a bad entry. Does this point out more than just Rule 1 to you? Rule 1 will get you out of a position that is not proven correct, but it won’t fix a bad entry. Know your plan before the market opens! If you had known your plan in this example prior to opening, you would have never positioned as you did.
ALS: Okay, I see your point. But how can most traders with jobs trade as the example shows?
POP: I can give you other examples, but it all comes down to the criteria for proving a position correct. If you trade by looking in the newspaper each night, your trading plan will be different and your positions must be smaller as you are going to need wider ranges to work with your criteria.
In the example above, you could never have placed the order to buy the opening range breakout; therefore, it would never have been in your plans. You may have had criteria that said to buy yesterday’s low plus one tick or two ticks and a time of day order that said, “TOD10:00a.m. sell 993 stop.”
The market would have to be in the bottom half after the first half hour to get out as the criteria indicated that, to be correct, the market had to be in in the top half of the range after first half hour.
The other criteria could be met with either OCO (one cancels other) orders or stop limit close only orders. Not all brokers take all orders so your plan must include this possibility of difficulty in trading.
For each tool you lose or don’t have in trading, you must reduce your position accordingly to have an effective long-range program. The farther away you are from all the tools you need, the wider road you must have. Reduce the size of your car (position) for the road that isn’t wider.
Now that we have your attention, I think it is clear to see how just two simple rules can be exploited. You can’t help but understand why trading can be so difficult. You want to be a knowledgeable trader, and you need to take all of the difficulty out of your daily trading when the market is closed.
ALS: I would like to ask you a question that I have wondered over the past couple of decades: When you take a position, do you feel you have taken a good position?
POP: Never! Do you understand my NO? If a trader thinks at any time they have a very good trade, they are going to get removed from trading very quickly. I make the best trade on my trade probabilities program, but who is to say my guess is better than someone else’s? Never do I know it is a good trade until it proves to be.
To feel you are making a good trade is signing your death warrant in trading. The majority of traders do certainly feel they have a good handle on a trade and are only putting on good trades.
There is an old saying that the market is never wrong. I don’t mean to protest directly, but I think that is not always the case. However, that is what we must trade by in price.
Markets go to extremes, and that is certainly a challenge in always being right. Once we know markets go to extremes, we can put that on our side and exploit the advantage. Very few traders exploit that advantage. You must press your winners with Rule 2.
Oftentimes, you won’t understand the importance of pressing the winners, but it makes no difference as to reason when you
collect your profits. Who really cares if the market is or isn’t always correct? The market price is what we are measuring our equity with and always will.
In trading nothing goes right for most traders unless they take total control of positioning and letting the market only prove when a position is correct. I know I am repeating myself, but there is no better way to impress information of this insight upon the readers.
I don’t want to see any small traders wiped off the map when it comes to trading, but that is what happens to most of them. They are small and are stopped by the big traders and funds most of the time. If they can understand the urgency of not letting the big traders ruin their plans and hopes, they will do much better.
The first step is what we are pointing out. I know because I have driven the big cars on the small tracks. It is better to drive the small car on the big track, but it just never comes out the same. With a little understanding we shall change that for them.
ALS: I remember an experiment that proved very successful with a group of traders or would-be traders. Do you foresee that situation again?
POP: I have no idea what you are talking about! I wish them well. No, I think an individual is the best minority of one I have ever hoped to reward. Only one at a time in trading is fine with me. It is their dream and my reality. They have to make it happen. If it doesn’t, don’t blame the messenger. Look in the mirror.
ALS: You and I are traders, not writers. Doesn’t it seem strange to you to bring forward your thoughts on trading for others to read?
POP: You may end up a better writer than you think. It’s perfect as the best time to learn about trading is when the market is closed. Most traders only learn when the market is open, and what a mistake that can be! It can be costly and emotional. Both are wrong sides of the coin. POP：您最終可能會成為比您想像中更好的作家。市場休市時是學習交易的最佳時機。大多數交易者只在開市時學習，這可能是個錯誤！這可能會導致高昂的成本和情緒化。兩者都是錯誤的一面。
ALS: We need some examples of other questions the traders and readers will have on Rule 2. When do we press a winner, and when do we get out of our winners? ALS：我們需要一些例子來說明交易者和讀者對規則 2 的其他問題。我們何時按下贏家，何時出局贏家？
POP: I know they would like me to say this is the plan and it is very simple. I can’t say that as it takes work, experience and execution at all times. 民研計劃：我知道他們希望我說這就是計劃，而且非常簡單。我不能這麼說，因為這需要工作、經驗和時時刻刻的執行力。
Most traders – I don’t mean to group them so severely and handicap them – but it is true most traders look to remove their positions just as soon as they prove them right. They forget what their true purpose in trading really is. It is not only to make as much money as possible but, most important, to make it in the least amount of time. This keeps them from facing the problem of drawdown because they are not trading to face drawdown but only to trade to make money. 大多數交易者--我並不是要把他們歸類得那麼嚴重，給他們一個殘障--但事實上，大多數交易者都希望在他們證明自己是對的之後，就馬上把倉位撤掉。他們忘記了交易的真正目的是什麼。這不僅僅是賺盡可能多的錢，最重要的是在最短的時間內賺到錢。這樣他們就不會面對虧損的問題，因為他們不是為了面對虧損而交易，而只是為了賺錢而交易。
I will never forget my mother’s words when I was honest with her on a trade one day. She asked how I did the day she visited the exchange. I said I lost a large sum of money. Well, her remark was, “I wouldn’t have done that!” 我永遠不會忘記，有一天我誠實地跟母親談交易時她說的話。她問我那天去交易所做得如何。我說我輸了一大筆錢。她說，「如果是我就不會這麼做！」
I didn’t attend to my business that day and left a trade on. You don’t do that. But that is just what traders do everyday. They leave trades on when their mother visits! Believe me, Your mother will visit you every day when you trade! You have to attend to your job of cutting losses. 那天我沒有處理我的事情，留下了一筆交易。你不會這樣做的。但交易員每天都會這樣做。當他們的母親來訪的時候，他們會把交易開著！相信我，當您交易時，您母親每天都會來看您！你必須處理你的工作，減少損失。
Just a couple of days ago, I was asked to go out on a nice boat trip for five days. It is costly if you don’t attend to your affairs. There are times you must, above all else, attend to your positions. There are no long-term trades! Only trades that turn into longterm held positions. 就在幾天前，我被邀請出海遊玩五天。如果不處理自己的事務，代價是很高的。有些時候，你必須，最重要的是，處理好你的倉位。沒有長期交易！只有變成長期持倉的交易。
Don’t ever let anyone tell you they have a long-term position on at any time. How do they know? How does anyone know? Only the market can tell you, and it opens every trading day. Don’t ask me what I think. It doesn’t matter. I can only give you the best odds. It is up to you to believe what the market is telling you. 永遠不要讓任何人告訴你，他們在任何時候都有長期的倉位。他們怎麼知道？別人怎麼知道？只有市場可以告訴你，而且每個交易日都會開市。別問我怎麼想。這並不重要。我只能給你最好的賠率。你要相信市場告訴你的話。
ALS: How about Rule 2? ALS：規則 2 如何？
POP: What can I say other than set up an example. Okay, let us say beans opened today at 85-88 and after the first half hour 85 was still the low but 90 was the high. What would you do if it were 15 higher at 88 and you put on your position yesterday? Would you get out and take your profits, take half your profits or add to the position?
I will tell you what most will do: They will take all of their profits. That is when you know your position was proven correct again from yesterday. What do you think the correct answer is? 我告訴你大多數人會怎麼做：他們會拿走所有利潤。這時您就知道您的倉位從昨天開始又被證明是正確的。您認為正確的答案是什麼？
You must use Rule 2. You certainly don’t reverse pyramid by putting the same or bigger positions on because the market could very well take out the lows quickly, and you will have to salvage what you increased if wrong. Do it in smaller numbers. Your plan must tell you when you know that what you did yesterday is confirmed okay and that you must increase your position somewhere along the line. 您必須使用規則 2。您當然不會以相同或更大的倉位來倒轉金字塔，因為市場很可能會快速拋出低點，如果錯了，您就必須搶救您增加的倉位。以較小的數量來做。您的計劃必須告訴您，當您知道您昨天所做的已經證實沒問題，而且您必須在某處增加您的倉位時。
Sure, the argument is, “But I am not sure it will keep going up.” So what? We never really know that anyway. So what is different about going with the current certainty? 當然，有一種說法是，「但我不確定它會一直上升」。那又如何？反正我們也不知道。那麼，隨著目前的確定性走，有什麼不同呢？
As long as you have Rule 1, it makes no difference if you are wrong because you have all the doors covered. Don’t ever lose sight of Rule 1 when using Rule 2. 只要您掌握了規則 1，即使您錯了也沒什麼區別，因為您已經掌握了所有的門道。使用規則 2 時，千萬不要忽略規則 1。
Some traders will say they don’t really know where to put the trade on price-wise. Yes, you do! The word E-X-E-C-U-T-I-O-N means make sure you guarantee you have that added position. 有些交易者會說，他們真的不知道該把交易放在哪個價格上。是的，您知道！E-X-E-C-U-T-I-O-N這個詞的意思是確保您保證您有增加的頭寸。
There are times when execution is the most important aspect of a trade. If you can’t get a position on, you sure can’t take one off. I know you have heard that statement in the past, but it is with good foundation. You must say “at the market” in those situations. 有時候，執行是交易中最重要的一環。如果您無法開倉，就肯定無法平倉。我知道您過去聽過這種說法，但它是有根據的。在這些情況下，您必須說「在市場上」。
Okay, today we pointed out a situation where it was obvious to add. Looking back, it is always obvious. What matters is that after enough lead on your position after you have put some time between the position and an advancing price of a little magnitude, you must be pretty sure it’s time to take your profit. 好了，今天我們指出了一個很明顯的添加情況。回顧過去，它總是顯而易見的。重要的是，在您的倉位上有足夠的領先優勢之後，在您的倉位和一點幅度的漲價之間放了一些時間之後，您一定非常確定是時候獲利了。
Well, don’t take your profit. Add to your position. Then, if it doesn’t prove correct, take your remaining profit and expect to re-enter at a different level. So what if you lose a few ticks because you put an added position on and it was wrong! You will get enough lead on adds that you won’t ever think twice after you see the runaway markets! It isn’t because I say so but because the market catches traders the wrong way. It is seldom that it’s not the case. 好吧，不要把您的利潤。增加您的倉位。然後，如果它沒有被證明是正確的，拿走您剩餘的利潤，並期待在一個不同的水平重新進入。如果您因為加倉錯誤而損失了幾個點子，那又怎樣？您將獲得足夠多的追加頭寸，以至於在您看到失控的市場後，您再也不會三思而後行！這並不是因為我這麼說，而是因為市場抓住了交易者的錯處。很少有不是這樣的情況。
When a market gaps higher or lower, you are in a position to take the profit-takers position away from them. Do it, but use Rule 1 when you do. That way you will never worry if you are in a correct position or not. Doesn’t matter anyway because with your Rule 1 , you will do the right thing. It is.never bad to be wrong. Only then can you benefit when you are correct. 當市場出現較高或較低的跳空缺口時，您就可以從獲利者手中搶走倉位。做吧，但做時要使用規則 1。這樣您就不會擔心您的位置是否正確。反正也沒關係，因為有了規則 1，您就會做正確的事。錯誤永遠不是壞事。只有這樣，您才能在正確的時候受益。
Most traders will make a trade and lose a good amount and miss the next trade. Out of step with the market is bad and it gets worse. Don’t get out of cadence for long on any one trade. That way you can half step right back in line. 大多數交易者會在做了一筆交易後損失慘重而錯過下一筆交易。與市場脫節是很糟糕的，而且會越來越糟糕。任何一筆交易都不要脫節太久。這樣，您就可以馬上回到同一起跑線上。
ALS: Phantom, you are acting as if everyone can do what you explained. ALS：Phantom, 你的表現就好像每個人都能做到你所解釋的一樣。
POP: Not everyone can do what they must do. Learn what you are capable of doing and stick to those parameters. Use the protection rules in your parameters. Don’t modify them or misunderstand them for your own satisfaction. Use them as they were meant to be used. They will hurt you if you don’t use them correctly. POP：不是每個人都能做到他們必須做的事。了解您有能力做的事，並堅持遵守這些參數。使用您參數中的保護規則。不要為了滿足自己而修改它們或誤解它們。按照它們的本意來使用它們。如果您使用不當，它們會傷害到您。
ALS: We could use more examples of how to use your rules, but I feel the readers will get a little overwhelmed if we continue to throw examples at them. We could address every situation and eliminate most of the required interpretation by the traders. I don’t think we should do that at this time. ALS：我們可以用更多的例子來說明如何使用您的規則，但我覺得如果我們繼續向讀者拋出例子，他們會有點不知所措。我們可以針對每一種情況，消除大部分需要交易員解釋的地方。我認為我們目前不應該這樣做。
POP: Yes, I totally agree, as the integrity of a subject is not always how well it is presented but how well, in this case, it is impressed upon traders. It is up to the trader to fully comprehend their part of what is required of themselves. They can make mistakes but as long as they use the rules properly, they will stay in the game. POP：是的，我完全同意，因為一個主題的完整性並不總是看它被表達得有多好，而是在這種情況下，它給交易者的印象有多好。交易者要完全理解他們自己的那部分要求。他們可能會犯錯，但只要他們正確地使用規則，他們就能在遊戲中保持優勢。
It is a fine line when creating a program to trade markets. I have always suggested they establish their own criteria based on the best knowledge they can find. You start with point-and-figure charting to understand the characteristics of your market. Even if it is someone else’s chart, you must see what the market is capable of doing to traders. 在創建交易市場的程式時，這是一條細線。我一直建議他們根據所能找到的最佳知識建立自己的標準。您可以從點數圖表開始，瞭解您的市場特性。即使是別人的圖表，你也必須看到市場能夠對交易者做什麼。
I am not saying that there aren’t good trading programs but only that the trader must fully understand where the criteria in these programs are establishing the entries and exits. These programs will never have Rules 1 and 2 in them so you will have to incorporate them, which could void the program. 我並不是說沒有好的交易程式，只是交易者必須完全瞭解這些程式中建立入市和出市的標準在哪裡。這些程式永遠不會有規則 1 和規則 2，因此您必須將它們加入程式中，這可能會使程式失效。
So be careful and express your concern to the program vendor on these matters. Your concern is to keep your drawdown within reason to allow you to trade forever. 因此，請務必謹慎，並就這些問題向程式供應商表達您的關注。您所關心的是將您的縮水保持在合理的範圍內，讓您可以永遠進行交易。
So, Art, have we covered it yet? 阿特，我們講過了嗎？
ALS: Never in a thousand books can we cover it completely, but I think we have made our point and you have made your mark on the reader’s thinking. ALS：一千本書也不可能完全涵蓋，但我認為我們已經表達了我們的觀點，而您也在讀者的思維上留下了您的印記。
Phantom's Gift 魅影的禮物
By Art Simpson
Chapter 8: Day-Trading
"In day-trading when the last trade is made, you expect to be out of your positions. You are letting the clock decide if you win or lose. That, to me, is a restriction.'" Phantom of the Pits
Art Simpson (ALS): Just by the title of this chapter I can see a picture being painted by an artist. All these traders standing with notebooks, bow and arrows, alarms ready to sound and no bids in the pit as quiet sets in.
Phantom of the Pits (POP): Yeah, and I can tell you the artist. Phantom of the Pits (POP)：是的，我可以告訴你藝術家。
ALS: Who would it be? ALS：會是誰呢？
POP: Leroy Neiman! I’m impressed with his work. It is something he would paint. I can’t help but put him in the class with Oprah, MJ, Don Gibson, LeAnn Rimes and . . . POP：Leroy Neiman！我對他的作品印象深刻。這是他會畫的東西。我不禁將他與 Oprah、MJ、Don Gibson、LeAnn Rimes 和 . . . 同列。
ALS: . . . and Phantom of the Pits! ALS: . . . 和 Phantom of the Pits！
POP: Phantom of the Opera maybe but not the Phantom of the Pits! You must remember that no one knows who the Phantom of the Pits is. In fact, I can argue that there will be but this one book! Only this one! POP：或許是歌劇魅影（Phantom of the Opera），但不是坑洞魅影（Phantom of the Pits）！你必須記住，沒有人知道誰是 「坑洞魅影」。事實上，我可以說只有這一本！只有這一本
ALS: Now wait a minute. You said it depends on the reception of the traders when we started this project six months ago. Are you backing out? ALS：等一下。六個月前，當我們開始這個計畫時，你說這取決於交易商的反應。你是在打退堂鼓嗎？
POP: That is something I want to discuss with you. There is no big profit in writing unless you can really write. I can’t and don’t want to write except for my own keeping. You can make more money trading than writing. POP：這是我想跟你討論的問題。除非你真的會寫，否則寫作是沒有大利可圖的。我寫不出來，也不想寫，只想留著自己用。做買賣比寫作賺得更多。
This brings me to my point of insight in trading. I wouldn’t do this insight on my own for it would be a waste of my time. In fact, I am sure this reason is the primary cause of lack of knowledge presented to traders based on experience. Theory is great but not a learned behavior. Behavior is the key.
ALS: Phantom, you forget easily as it was YOU who came to me about giving back by helping other traders. You were as sincere as Michael Jordan is on the court. You don’t fool me! I know what your plan is! ALS：Phantom，你很容易忘記，因為是你來找我說要幫助其他交易者來回饋社會。你就像邁克爾-喬丹在球場上一樣誠懇。你騙不了我！我知道你的計劃是什麼！
POP: Yeah, perhaps, but I know you won’t tell anyone unless I let you. POP：是的，也許吧，但我知道你不會告訴任何人，除非我讓你說。
ALS: I am going to tell without your permission right now! You are going to cut your losses, if any, in this project, and you certainly will press your gain, if any, from this insight give-back. ALS：我現在不經您的允許就告訴您！在這個專案中，如果有任何損失，您要自行彌補；如果有任何得益，您當然要從這次的洞察力回饋中按下得益的按鈕。
POP: That’s good. Wish I had thought of that. POP：很好。真希望我也能想到。
ALS: I would like to know in day-trading if you should use the same rules as in longer term trading. Are there times when you shouldn’t use Rule 1 for day-trading or any trading, for that matter? ALS：我想知道在日間交易中，您是否應該使用與長線交易相同的規則。在日間交易或任何交易中，是否有時不應使用規則 1？
POP: Never, in trading forward from now. Looking back, you could say there are certainly times when you would have been far better off to forget the rules. But that is looking back and that is not how you trade. You must plan for what will eliminate you from trading in the long run and protect yourself. 民研計劃：永遠不會，從現在開始向前交易。回顧過去，你可以說有些時候忘記規則肯定會好得多。但那是回顧過去，不是你交易的方式。您必須為長期交易中會淘汰您的因素做好計劃，並保護自己。
ALS: There are going to be lines of traders lined up to tell you why you are wrong! ALS：會有許多交易員排隊來告訴你為什麼你錯了！
POP: Let me point some things out here. Many years ago when I first started to use computers and their speed was slow, I had so much to do that I had to get outside help. I had this one program that I could have written but it would have taken too long. I didn’t want to write it in assembly language because I needed to see every step work before I could use the program. I contacted newly established programmers and some not so new to help me. POP：讓我在此指出一些事情。很多年前，當我剛開始使用電腦時，電腦的速度很慢，我有很多事情要做，不得不找外人幫忙。我有一個程式，本來可以自己寫的，但是花的時間太長了。我不想用組合語言來寫，因為我需要看到每一步都能運作，才能使用這個程式。我聯絡了一些新進的程式設計師和一些不那麼新的程式設計師來幫我。
It was sort of an experiment within itself. I narrowed my choice down to about four or five possible candidates. I asked each one of them to solve a problem for me and gave them access to a computer and a basic programming language. The question I asked first was what is the answer to every number from 1 to 100 added up. 這本身就是一種實驗。我將我的選擇縮小到大約四、五個可能的候選人。我要求他們每個人為我解決一個問題，並讓他們使用電腦和基本的程式語言。我首先問的問題是：從 1 到 100 的每個數字相加的答案是什麼？
Think about how you would solve that problem for a minute before you see the final conclusion to it. One programmer used the computer and came up with the correct answer. It took him all of three minutes plus. One candidate put down his paper and computer and said the answer is 5,050 within 10 seconds. 在您看到這個問題的最終結論之前，請先想一下您會如何解決這個問題。有一位程式設計師使用電腦，得出了正確的答案。他只花了三分多鐘。一位考生放下紙和電腦，在 10 秒內說出答案是 5,050。
I asked the individual who only took 10 seconds how he came up with that answer. His remark was, "I don’t see or do things the way everyone else does. I take and split the numbers into pairs such as 1 and 99, 2 and 98,3 and 97 . When I am done, I have 49 pairs that make 100 ,with two numbers of 100 and 50 left over. If you multiply the 49 pair times 100 , you get 4,900 . Then add the 100 and 50 you get 5,050 as the answer. 我問那個只花了 10 秒鐘的人，他是怎麼想到這個答案的。他說：「我不像其他人那樣看問題或做事情。我把數字分成對，例如 1 和 99、2 和 98、3 和 97。當我完成後，我有 49 組數字組成 100，剩下兩個 100 和 50 的數字。如果您將 49 對乘以 100 ，您會得到 4,900 。再將 100 和 50 相加，答案為 5,050。
Well, that made an impression on me I still remember. 這給我留下了深刻的印象，我至今還記得。
Now, I want you to understand about day-trading the same way. WE DON"T ALL SEE OR DO THINGS THE SAME WAY! We are all after the correct answer. My answer is to keep you in the game for the longest possible time. 現在，我希望您以同樣的方式瞭解日間交易。我們的看法和做法並不一致！我們都在追求正確的答案。我的答案是讓您在遊戲中保持最長的時間。
ALS: Who gave you the quick answer? ALS：誰給你快速的答案？
POP: You know very well who it was! I didn’t say I wouldn’t give you credit in these insights, just that I wouldn’t take any. And wipe that big smile off your face. POP：你很清楚是誰！我沒有說我不會在這些洞察力上給予你讚賞，只是說我不會接受任何讚賞。把你臉上的笑容擦掉。
That impression was a start, but I wasn’t done with my experiment. Next, I asked each of them to write me a computer program to give me the correct answer for all numbers added from 1 to 10,000 . They were all able to give me a program to do what I asked of them in Basic language. I judged their success on how quick the computer would give the answer and not by looking at the program. I used 1 to 10,000 because I knew it would take longer. 這個印象是個開始，但我的實驗還沒完成。接下來，我請他們每個人寫一個電腦程式，讓我知道從 1 加到 10,000 的所有數字的正確答案。他們都能用 Basic 語言寫出一個程式來完成我的要求。我是以電腦能多快給出答 案來判斷他們是否成功，而不是看程式。我使用 1 到 10,000 的數字，因為我知道這需要較長的時間。
All of the programs came up with the correct answer but at different speeds. Because we were using Basic language, it was slower than I wanted for my particular program, but I was pretty well decided I wanted to understand the program for my own protection. The ranges of speeds were from 48 seconds to 3 minutes for all but one. 所有的程式都得到了正確的答案，但速度卻各不相同。由於我們使用的是 Basic 語言，因此對於我的特定程式而言，速度比我想要的還要慢，但我已經決定要了解這個程式，以保障自己的安全。除了一個程式之外，其他程式的速度範圍從 48 秒到 3 分鐘不等。
The last one took less than a second done in Basic. That surprised me so I took the fastest two programs and called in the programmers. The 48 -second program ended up with a loop: N=0N=0, for NN=1N N=1 to 10,000,N=N+110,000, N=N+1, next NNN N. Print NN. 最後一個用 Basic 完成的程式花了不到一秒。這讓我很驚訝，所以我把最快的兩個程式叫來程式設計師。48 秒的程式以一個循環結束： N=0N=0 , for NN=1N N=1 to 10,000,N=N+110,000, N=N+1 , next NNN N .Print NN .
The time of 48 seconds was still slow as far as what I wanted. The fastest program was: N=N\mathrm{N}=\mathrm{N} squared +N divided by 2 . Print N . 48 秒的時間對我來說還是太慢了。最快的程式是 N=N\mathrm{N}=\mathrm{N} 平方 +N 除以 2 .列印 N .
Just as each programmer came up with a different style and program, not everyone was correct for what I wanted. It is the same in trading. The common ground here is that we are all after the ability to not ever having to stop trading, and we are all after the ability to make more than we lose. 就像每個程式設計師都有不同的風格和程式一樣，不是每個人都能滿足我的需求。交易也是一樣。這裡的共通點是，我們都在追求永遠不必停止交易的能力，我們都在追求賺多於輸的能力。
You see, there are variables in all of our trading styles. It is just that my Rules 1 and 2 are designed to give you the longest answer when it comes to trading longevity (Rule 1) and the shortest time to get to your goal of return (Rule 2). You need them both. 你看，我們所有的交易風格都存在變數。只是，我的規則 1 和規則 2 是為了讓您在交易長期性（規則 1）和最短時間內達到回報目標（規則 2）時得到最長的答案而設計的。兩者您都需要。
ALS: You’ve made a good point! ALS：你說得很好！
POP: Let the debate continue for we all benefit from knowledge brought forth with each different situation. The only time I have a closed mind is when there is total lack of understanding of what is required of a trader. That part of a program is not a control from a program but the required execution by the trader. POP：讓辯論繼續下去，因為我們都能從每種不同情況下所帶來的知識中獲益。只有在完全不瞭解交易者需要什麼的時候，我才會閉門造車。程序的那部分不是來自程序的控制，而是交易者需要執行的。
ALS: Day-trading. Where do we begin? ALS：日間交易。我們從哪裡開始？
POP: We’ll start with the reason for day-trading by most traders. It is a function of my Rule 1 . And it is a function of my Rule 2 . POP：我們先從大多數交易者進行日內交易的原因說起。這是我的規則 1 .也是我的規則 2 .
ALS: You mean you are going to take credit for day-trading? I thought you said you didn’t want any credit! ALS：你的意思是你要搶走日內交易的功勞？我以為你說你不想要任何功勞！
POP: It is the traders desire to be able to trade and not worry overnight about their positions, risk and exposure of positions beyond a short period of time while expecting the maximum possible gain in the quickest possible time. Actually, the desire to have Rules 1 and 2 in a short time frame is a perfect prelude to day-trading. POP：是指交易者希望能夠在交易時，不必為倉位、風險和倉位短時間以外的風險而憂慮過夜，同時期望在最快的時間內獲得最大可能的收益。事實上，在短時間內擁有規則 1 和規則 2 的慾望是日內交易的完美前奏。
ALS: Okay, we’ll buy that. A day-trader often is doing just what your rules imply. ALS：好吧，我們信了。日間交易員通常會按照您的規則行事。
POP: There are advantages in day-trading but not many because restrictions come into play. In day-trading you are more apt to lose than win due to the time limit being a restriction that creates a situation of whoever is ahead at the buzzer wins. POP：日間交易有其優點，但優點不多，因為會有限制。在日間交易中，由於時間限制的關係，您更容易輸，而不是贏。
In basketball, when time runs out in the fourth quarter, the game is over. The high score wins. In day-trading, when the last trade is made, you expect to be out of your positions. You are letting the clock decide if you win or lose. That, to me, is a restriction. 在籃球比賽中，第四節時間一到，比賽就結束了。得分高者獲勝。在日間交易中，當做完最後一筆交易時，您預計會出倉。您讓時間決定您的勝負。對我來說，這是一種限制。
I did a study on day-trading and came up with some very interesting findings. The first thing I learned in the study was that you could use the day-traders to your advantage in trading by knowing that they would have to get out by the close. 我做了一個關於日間交易的研究，得出了一些非常有趣的發現。我在研究中學到的第一件事是，您可以利用日間交易者的優勢進行交易，只要知道他們在收盤前必須出局。
Second, I learned that day-traders actually do a better job of keeping ranges smaller than do scalpers whose purpose is to fade small moves for quick profits. 其次，我了解到日間交易員實際上比黃牛交易員能更好地保持較小的範圍，黃牛交易員的目的是淡化小的移動以快速獲利。
Third, I learned that day-trading did afford traders a way of keeping risk smaller and allow them to work larger positions in the short run as opposed to large positions in the long run. 第三，我了解到，日間交易確實為交易者提供了一種降低風險的方式，允許他們在短期內操作較大的倉位，而不是在長期內操作較大的倉位。
Without going into the next 10 learned points, we will concentrate on the first three. The first three are probably the most important, but they all have merits. 我們先不談接下來的 10 個學習重點，只集中討論前三點。前三個可能是最重要的，但它們都有可取之處。
Day-trading is good for some traders, as this is the only way they know to keep risk smaller because of shorter time frames. There are those traders who do not want to put up the margin to carry overnight positions and have the risk (better known as underfunded traders who don’t have the money in the first place and should not be trading such size). Whatever the reason for daytrading, it is a valid method of expressing my Rule 1. The only exception is that they usually expect their position to be right. 日間交易對於某些交易者來說是很好的，因為這是他們知道的唯一可以降低風險的方法，因為交易時間較短。有一些交易者不想投入保證金進行隔夜頭寸，也不想承擔風險（更為人熟知的是資金不足的交易者，他們一開始就沒有錢，也不應該進行這種規模的交易）。無論進行日間交易的原因為何，它都是表達我的規則 1 的有效方法。唯一的例外是，他們通常期望自己的倉位是正確的。
A scalper is quicker to take a loss but tends to let profits run a little less than a day-trader’s ability to take losses. In other words, a day-trader tends to lose on a trade more than a scalper makes. This leaves a margin of loss in losing trades. Believe it or not, guess who picks up that extra loss that day-traders make? It is usually the position trader. 黃金交易員承擔損失的速度較快，但傾向於讓利潤比日內交易員承擔損失的能力低一點。換句話說，日間交易員在交易中的損失往往會超過黃金交易員的賺錢。這就為虧損交易留出了虧損空間。信不信由你，猜猜誰來承擔日間交易者的額外損失？通常是頭寸交易者。
So that, to me, is the edge. You must know when you have the edge and just what it is. It is not an exact thing, but I feel it is because day-traders are not as good or don’t have the ability to execute as scalpers. A day-trader would do better if execution became a market order on exits – especially on taking losers. 對我來說，這就是優勢。你必須知道什麼時候你有優勢，以及優勢是什麼。這不是一個準確的事情，但我覺得這是因為日間交易者不如黃牛交易者優秀或沒有黃牛交易者的執行能力。如果日間交易員在退出時能夠執行市價指令，那麼他的表現會更好--尤其是在承受虧損的時候。
ALS: You’re going to discourage a lot of day-traders. ALS：你會讓很多日間交易者卻步。
POP: Not at all, as the day-trader is a more disciplined trader. It you take Rule 1 , which is the assumption of being wrong until proven correct, you will have the other side of the coin for most day-traders. They could become better traders if they were to use Rule 1. Day-trader’s odds are lower because of their limitations on overnight carries. POP：完全不會，因為日內交易者是更有紀律的交易者。如果您採用規則一，也就是在被證實正確之前假設自己是錯的，那麼對大多數日間交易者來說，您就會看到硬幣的另一面。如果他們使用規則 1，他們可以成為更好的交易者。由於隔夜持倉的限制，日間交易者的勝算較低。
Another big drawback is delayed reactions on what the market prices have done. If they use criteria such as opening range breakouts, they will have to be fast at getting the orders into the pits. On that type of trade they are better to take a position on the open and protect it than to take the opening range breakout. But they want the position proven before they take the position and wait until the breakout. 另一個很大的缺點是對市場價格的反應延遲。如果他們使用開盤區間突破等標準，就必須快速將訂單送入攤位。對於那種類型的交易，他們最好在開盤時建倉並保護倉位，而不是在開盤區間突破時建倉。但他們希望在開倉之前就證明倉位，等到突破時再開倉。
As a day-trader, they would do better if their trades were within criteria, executed and protected by Rule 1 instead of the delayed trade due to the lag in information. They must pick the points almost exact. This is another drawback for them. You put yourself at the mercy of how the orders enter into the pits as a day-trader. It is almost impossible to be exact in your estimate of price. A better situation is to be able to pick a range instead of a price on execution. 作為日內交易者，如果他們的交易在標準之內，並由規則 1 執行和保護，而不是由於資訊的滯後而延遲交易，他們會做得更好。他們必須幾乎精確地選擇交易點。這是他們的另一個缺點。身為日內交易者，您得任由訂單如何進入交易艙。要準確估計價格幾乎是不可能的。更好的情況是在執行時能夠選擇一個範圍而不是價格。
Same with exits. This all reduces your potential profit from day-trading. 退出也是一樣。這都會降低您從日間交易中獲得的潛在利潤。
So what is the answer? A day-trader can do better by averaging, but you never want to average in an established trend. The trend will tease you into bad entry positions if you don’t do your research on market characteristics. Countertrends will do the same thing, mainly because there will always be those weak positions that turn into profit-taking. This is a day-trader’s nightmare in daytrading. 那麼答案是什麼呢？日內交易者可以透過平均法來做得更好，但您絕對不希望在既定趨勢中進行平均。如果您沒有研究市場特徵，趨勢就會挑逗您進入不好的入市位置。逆趨勢也會做同樣的事情，主要是因為總會有那些弱勢頭寸變成獲利回吐。這是日內交易者在日內交易中的噩夢。
ALS: How can you be so certain on day-trading? ALS：您對日間交易如何如此有把握？
POP: The best traders will take what I have to say, study it, research it and decide how exact it is. They will judge accordingly and make their own trades based on improved judgment of day-trading. POP：最優秀的交易者會接受我所說的，學習它，研究它，並決定它有多準確。他們會據此作出判斷，並根據改進後的日間交易判斷進行自己的交易。
That is what we want them to do. It is too easy to think day-trading is everyone’s game and a good one. It is a good one for some but not most. It can be improved by understanding the drawbacks. All trading has drawbacks so it is critical as to how they view their trading probabilities. 這就是我們希望他們做的。我們很容易認為日間交易是每個人的遊戲，而且是個好遊戲。對某些人來說是好的，但對大多數人來說不是。了解其缺點可以改善它。所有交易都有缺點，所以他們如何看待自己的交易概率是非常重要的。
ALS: You said day-trading could also be compared with your Rule 2. How so? ALS：您說日間交易也可以與您的規則 2 相提並論。怎麼說？
POP: A day-trader tends to take bigger positions because they know they will exit quicker than most position traders. This will give less risk long term and affords them a way to over-trade . . . or I guess I should say gives them a way to trader bigger. POP：日間交易者傾向於持有較大的倉位，因為他們知道他們會比大多數倉位交易者更快退出。這將降低長期風險，並為他們提供了一種超額交易的方式......或者我想我應該說，為他們提供了一種做大交易的方式。
In Rule 2, the idea is to be bigger after proven correct, and I suppose that is what the day-trader is thinking in trading bigger as a day-trader. Right or wrong, it is correct in being bigger within correct criteria. The bad side is they tend to be wrong as often as right. This keeps it more of a 50/50 game than an advantage they would have if only being larger on correct moves. 在規則 2 中，我們的想法是在證明正確之後再做大，我想這也是日內交易者做大交易的想法。無論對錯，在正確的標準下做大是正確的。不好的一面是，他們往往錯的和對的一樣多。這使得它更像是一個 50/50 的遊戲，而不是他們在正確的移動中做大的優勢。
Being larger on correct moves as a day-trader is difficult, at best, due to limitations of the day’s range requiring the adds to come quicker after the initial position. Often, day-trading will not allow more than one add, if any add at all. Often, too, the profit side gets taken off sooner, restricting the range even more. 作為日內交易者，要在正確的移動中獲取更大的收益是很困難的，充其量也就是因為日內交易範圍的限制，要求在首次建倉後更快地進行加倉。通常情況下，日間交易不允許一次以上的加倉，如果有加倉的話。通常，獲利的一方也會更快被賺走，這就更加限制了交易範圍。
ALS: Is there a better way to day-trade? ALS：有更好的日間交易方式嗎？
POP: You bet there is! Now I have every day-trader’s attention. For a price I will be glad to give that information out. POP：當然有！現在我吸引了所有日間交易者的注意。只要付出代價，我很樂意提供這些資訊。
I am just kidding, of course. The answer lies in their research. Look at what causes the most losses in day-trading. Now study your own entry and exit criteria and decide what doesn’t work. Look at the other side and assume a day-trading criteria does not work and expect it to be wrong. Next, devise a way of removing positions until they prove correct. There you have the answer. 當然，我只是在開玩笑。答案就在於他們的研究。看看在日間交易中，什麼會造成最大的損失。現在研究一下您自己的入市和出市標準，然後決定哪些是行不通的。看看對方，假設日內交易的準則不起作用，並期待它是錯的。接下來，設計一個移除倉位的方法，直到證明正確為止。答案就在這裡。
Can you incorporate it? Not in all situations, such as we said previously. Trends and countertrends tend to do a number on day traders due to their not caring what a trend does. 您可以納入嗎？不是在所有情況下都可以，例如我們之前說的。趨勢和反趨勢往往會對日間交易者造成一定的影響，因為他們不關心趨勢會做什麼。
Next, set up a criteria for removing your positions. You must not allow the clock to dictate when you get out. 接下來，設定您的出倉標準。您絕對不能讓時間來決定您何時出局。
Most important in day-trading, you must never play everyone else’s game. Say, for example, you play the opening range breakout. Everyone does that. You will wash in the long run, even though you just want to day-trade. 在日間交易中最重要的是，您絕對不能玩其他人的遊戲。舉例來說，你玩開盤突破。每個人都會這樣做。儘管您只想做日間交易，但從長遠來看，您會被洗掉。
You set your criteria differently. Let us say you trade the third move through the opening range. Why? The market tends to be a trading market if you get the third move through. That is what you are, a day-trader. You can now expect the market to be on your terms as a day-trader. You expect it to come back, but what if you are wrong? Well, then you will make your profit instead of being prepared to break even on a swing trade. 您設定的標準不同。比方說，您交易開盤範圍內的第三次移動。為什麼？如果您在第三次移動時完成交易，市場就會成為交易市場。這就是您，一個日間交易者。作為日內交易者，您現在可以期待市場按您的條件行事。您期望它回來，但如果您錯了呢？那您就會獲利，而不是準備在波段交易中收支平衡。
As a day-trader without an existing trend, you can also fade the market. Let us say the last 10 days’ range averages 8 cents in onions (never heard of them). Your criteria could be the old Fibonacci number of 5. Wait for a 5-cent setback to buy or a 5-cent rally to sell. I am not saying this works in your particular market, but you can study it and establish your criteria in a non-trending market. 作為一個沒有現有趨勢的日內交易者，您也可以淡市。比方說，過去 10 天的幅度平均為 8 美分的洋蔥（沒聽過）。您的標準可以是古老的 Fibonacci 數字 5。等待下挫 5 美分時買入或反彈 5 美分時賣出。我並不是說這在您的特定市場中有效，但您可以研究它，並在非趨勢市場中建立您的標準。
I know some day-traders who take the day off until they have had two days in a row of a non-trending market in the same direction. The next day is theirs, as they will wait until it looks like the reversal is about to take place and then counter the two-day move. 我認識一些日間交易者，他們會休息一天，直到他們連續兩天遇到同一方向的非趨勢市場。第二天就是他們的了，因為他們會等到看起來要發生逆轉，然後反擊這兩天的移動。
Day-trading is a psychology study of the last few days. If you use Rule 1, you stand a better chance of being up in the long run. It is not exact, and as long as that is understood and losses are kept low, it is a possible moneymaker in the long run. If you like the odds, you can be satisfied if you do everything correctly, regardless of the outcome. 日間交易是對最近幾天的心理研究。如果您使用規則 1，您長期上漲的機會較大。它並不精確，只要了解這一點，並將損失控制在低水平，長期來看，它是可能賺錢的。如果您喜歡這個賠率，無論結果如何，只要您做的每件事都是正確的，您就可以滿足了。
A critical point in day-trading is not to just use the prior day’s high, low, range and close as inputs to your criteria of signals to use. Point-and-figure charts are closer to the market as P & F charts don’t restrict prices to within a day’s range. 日內交易的一個關鍵點是不要僅僅使用前一天的最高價、最低價、範圍和收盤價作為您使用信號標準的輸入。點數圖表更貼近市場，因為點數圖表不會將價格限制在一天的範圍內。
Remember, you are staying away from the same methods used by most day-traders in order to get the edge on them, as well as the position traders who most likely only use bar charts. 請記住，您要遠離大多數日間交易者使用的相同方法，以便在他們以及很可能只使用柱狀圖的頭寸交易者面前取得優勢。
Last of all, don’t just take someone’s word on day -trading. Check out your particular market and see the characteristics in action during the day. What you think is a good trade might not even be possible when you try to place the position. Use market orders to make sure you have a position but do it with intelligence. A non-position is a wash. 最後，不要輕信他人對日內交易的說法。查看一下您的特定市場，看看日間交易的特點。當您嘗試下單時，您認為是好的交易可能根本不可能。使用市價訂單確保您有倉位，但要用智慧來做。沒有頭寸就是洗盤。
ALS: Phantom, I have a question and sort of a remark from a successful day-trader. Using a volatility breakout system and using a stop after a series of consecutive losing trades, can you use Rules 1 and 2 correctly? ALS：Phantom, 我有一個問題，也算是一位成功的日間交易者的意見。使用波幅突破系統，並在連續虧損交易後使用止損，您能正確使用規則 1 和規則 2 嗎？
POP: I can tell you whose idea that is and what course it is in, but I don’t want to disclaim or endorse the data. There are some markets in which this is an excellent method for day -trading. Not all markets will be good markets for this method. I am sure 民研計劃：我可以告訴你這是誰的想法，以及它是在什麼課程，但我不想免責或認可的數據。在某些市場中，這是一種極佳的日間交易方法。並非所有市場都適合這種方法。我肯定
traders who use this method know which markets to shy away from by experience. 使用此方法的交易員憑經驗知道應該避開哪些市場。
Yes, you can use Rule 1 correctly, as it is saying that you assume your position is wrong until proven correct and, by taking a position after a series of losses, you are certainly aware that you are going for probabilities of a turnaround. If there is no turnaround, you certainly were expecting to get out. Naturally, the market will have to prove you correct after your entry within your established criteria.
On one of our examples of an onion trade earlier, we used end-of-day criteria as an example of what some would consider the last resort criteria for day-trading. It is the end-of-day criteria to get out. Day-traders tend to be or get out by the close. To watch a market go against you all day and not get out until the close is certainly a challenge in trading criteria, but sometimes your criteria will require this situation to be set up. You just know you will be out on the close if all does not prove out. This alone keeps you from carrying a loser overnight.
On using Rule 2 in your question, would you say the odds of increasing the position after a series of indicator losses allows you a better opportunity to add if the initial position is taken after those losses? Only if the position was to prove to be correct.
The swift would be able to determine if the position had proved itself and at that time adding or removal should take place without the fade to enter. I would agree that, with this plan, if your data feed is quick and your line to the floor is quick, you would certainly be in a position to improve your payout. The part I like in this style is that you are required to do either one of two things at a certain point – either add or remove.
Keep in mind that Rules 1 and 2 do not negate a successful trading system at any time. They are to keep you from a huge drawdown from which you would never recover. This could be additional protection outside the plan or could be incorporated within the plan itself. I appreciate that question and understand where that trader is in his career. It sounds like proper research for the proper criteria in his style of trading is paying off. It’s good to hear when that happens. It proves that trading is not easy but is behavior modification and knowledge.
You can learn from other traders, but you never learn to be them. Just the other day on a business channel I heard the announcer indicate that a particular trader was selling all day, and the question was why they would sell now. One of the answers was correct: He was offsetting his positions.
I remember one day when I bought all day and at the end of the day when the market was down on the close, one trader asked me why I went long all day. He didn’t know I had orders twice as large selling after every buy I made.
My point is that you don’t know what a trader did; you only know what you have seen him do at the time. You see, my plan was to establish what the market was going to do that day. Every time I bought, I had a broker with my exit double the other way. I would try to offset my new short position and getting out was wrong so we doubled it the other way again. At the end of the day I had a position twice as large as I had intended and the opposite way I intended to go. I only knew that it was the day I had to be swift.
Sometimes your criteria may be that you must be swift to take any possible loss – especially when a certain Fed chairman speaks.
ALS: Is there a way to plan for such surprises?
POP: Yes, there is . . . by not ever over-trading at any time.
Phantom's Gift
By Art Simpson
Chapter 9: Options
"An option can get bigger than its original size if all goes well for the trader. It can also melt with predictability." Phantom of the Pits
Options trading presents many more possibilities to vary your trading plan than do just futures, bonds or stocks. There are as many ways to trade a position or scenario as there are ideas, it seems. Phantom uses options for various reasons, as do most traders who understand them.
The purpose of this chapter is to give insight to all traders and not to narrow the insight just to the experts. There is much to be learned about trading options, and good research is needed to become properly prepared in trading them. Keep an open mind as to what the market can present on both sides of the ledger.
Art Simpson (ALS): Phantom, I know you don’t see or do as most traders when it comes to options trading. How can we better understand the proper trading of options?
Phantom of the Pits (POP): Most traders know what options are and how they work. I view them as ice cubes, which can either melt or get larger when the water around them also freezes. When water freezes, it will take up more volume than the water did in the original state. An option can get bigger than its original size if all goes well for the trader. It can also melt with predictability.
I like to weigh each of my option positions against a futures contract. By this, I mean that each position or combination of positions has a weight. To impress upon you my view, let us use a balancing scale. You know the kind I mean – one that has a platform on each side of a balance indicator. Put an ice cube in the glass of water, and I consider the weight of the ice cube as a call that has been purchased. I consider the weight of the water as a put that has been sold.
Regardless of how large the ice cube (long call) or how much water is left (short put), the total weight of that glass will remain the same. The ice cube can become larger when the temperature drops below 32 degrees, and the water becomes reduced liquid.
It is the same with the call and the put. They can and will change size. I call the size of each ice cube the delta and also the amount of water a delta. Any time you add the long call delta and the short put delta at the same strike price you will get 100 in theory, excluding the interest rate factor, volatility and time element.
Using this as a rule of thumb for our understanding, we will assume positive 100%100 \% delta in this case. You can consider the opposite as negative 100%100 \% delta – the ice cube as a call sold and the glass of water as a put bought. 以此作為我們理解的經驗法則，我們假設這種情況下的 delta 為正 100%100 \% 。您可以將相反的情況視為負 100%100 \% delta - 將冰塊視為賣出的看漲期權，而將水杯視為買入的看跌期權。
On the other side of the balancing scale you will have an equal futures position of some size and bias that will equal the option side and balances the scales. Your glass of water with an ice cube (long call, short put at same strike) is equal to short one contract of the futures you are trading. You will remain balanced and have no risk as long as this position is in place. We call this a conversion. The option side of the scale is the synthetic future. You would be either long or short a synthetic future, which can be offset with an opposite futures contract. 在平衡天平的另一邊，您將持有一定大小和偏向的等額期貨持倉，這將等同於期權一邊，平衡了天平。您的一杯加了冰塊的水（看多，看空同一行權價）等於做空一張您正在交易的期貨合約。只要這個倉位在，您就會保持平衡，沒有風險。我們稱之為轉換。期權的一邊是合成期貨。您會做多或做空一個合成期貨，可以用相反的期貨合約來抵消。
Pretty simple at this point. You start to throw variables in, and it changes dramatically. Each glass is going to be a different size, depending on the strike price. In other words, even though the delta of our initial position will be 100%, regardless of strike price, the size of the glass will be different. I consider the size of the glass as the value of the water and ice cube added together. It will be different at different strike prices. The delta remains at100%. 這一點相當簡單。如果您開始加入變數，情況就會發生很大的變化。每個玻璃杯的大小都會不同，取決於行使價。換句話說，即使我們初始倉位的 Delta 值是 100%，無論行使價是多少，杯子的大小都會不同。我將杯子的大小視為水和冰塊相加的價值。在不同的行使價下會有所不同。delta 仍為 100%。
You may be getting into this description and even a little ahead of me. If you have had geometry, you can have some good fun with this approach. 您可能已經進入這個描述，甚至比我還要早一點。如果您曾經學過幾何，您可以用這種方法好好玩玩。
We can now think of throwing out the futures contract but still wanting to balance the scale! We put on the other side of the scale the opposite option position, and we still have our balanced position. But guess what? What we have really done is to offset our position, and no position exists on either side of the balanced scale. We can only make money in certain situations, but we must know what we can do to move our position around when required. 我們現在可以考慮拋出期貨合約，但仍然希望平衡天平！我們把相反的期權頭寸放在天平的另一邊，我們仍然有平衡的頭寸。但是你猜怎麼著？我們真正做的是抵消我們的頭寸，而平衡天平的兩邊都不存在頭寸。我們只能在某些情況下賺錢，但是我們必須知道在需要的時候我們可以做些什麼來移動我們的倉位。
Now we get into the ifs. There is no limit to what we can do – almost no limit, I should say. What we want to do is to come up with 現在我們進入「如果」。我們可以做的事情沒有限制，應該說幾乎沒有限制。我們要做的是想出
a plan to make money in almost any situation. We must also find a way to include Rules 1 and 2 . 一個幾乎可以在任何情況下賺錢的計劃。我們還必須想辦法將規則 1 和規則 2 .
We discover we can balance the scale by using different strike prices and not just the same strike price. We also can tilt the scale to one side and leave it biased to the long or short side. Pretty simple still. 我們發現可以使用不同的執行價格而不僅是相同的執行價格來平衡天平。我們也可以將刻度向一邊傾斜，讓它偏向多頭或空頭一邊。還是很簡單的。
Now add a balanced scale on each side of the existing balanced scale. You have three balanced scales to work with. You can add four more balanced scales to the last two on each side. You see, you now have the possibility of each of the balanced scales giving you an opportunity to move positions around but still keeping it balanced. It becomes trickier with each set of balanced scales you place in use. You can even add as many balanced scales as you wish, but you are out of control trying to stay balanced. This is what happens to some option positions not well thought out. 現在在現有平衡天平的兩側各增加一個平衡天平。您有三個平衡刻度可以使用。您可以在每邊的最後兩個平衡刻度上再增加四個平衡刻度。您看，現在每個平衡刻度都有可能讓您有機會移動位置，但仍能保持平衡。每放置一組平衡秤使用，就會變得更棘手。您甚至可以隨心所欲地增加平衡天平，但是要保持平衡就會失去控制。這就是某些選項位置沒有考慮周全的結果。
I hope I didn’t confuse anyone with the balanced scales and ice cubes, but it is critical to understand what each move can do to your overall position. My option model is a combination of balanced scales as data input to the program, which determines what each variable will do to my position. You can make money when you know how to use volatility, time decay and price movement. The criteria research becomes a little more intense and expanded. 我希望我沒有用平衡天平和冰塊來混淆大家，但是理解每一步棋對你的整體倉位有什麼影響是至關重要的。我的期權模型是結合了平衡天平作為程序的數據輸入，它決定了每個變量對我的倉位的影響。當你知道如何使用波動率、時間衰減和價格變動時，你就可以賺錢。標準研究變得更緊密和擴大一些。
Without getting into specific programs, we’ll discuss the fact there are certain option positions that work with my rules. Extensive options understanding is beyond the scope of what I am trying to teach you. I only want to show you how you can incorporate options trading into a good method of trading while using Rules 1 and 2 to protect your drawdown. 在不涉及具體方案的情況下，我們將討論有某些期權位置與我的規則配合的事實。廣泛的期權理解超出了我要教你的範圍。我只想告訴你如何在使用規則 1 和 2 保護你的平倉的同時，將期權交易融入到一個好的交易方法中。
ALS: I know you use vectors, weights, volumes and angles as part of your computer program to establish criteria of balance as well as the usual research of option evaluation. I also know you developed your own evaluation of options’ worth, which is different from most programs. Is it because you don’t want to play someone else’s game? ALS：我知道你使用向量、重量、體積和角度作為你的電腦程序的一部分來建立平衡的標準， 以及期權評估的一般研究。我也知道你開發了自己的期權價值評估，這與大多數程式不同。是因為你不想玩別人的遊戲嗎？
POP: It’s like a basketball, which retains the same shape but has a different bounce when the pressure changes. Same with options. I consider an option evaluation in a bull market different than in a bear market. The market just considers the volatility different. It is how you can best work with options. POP：就像籃球一樣，籃球的形狀保持不變，但壓力改變時會有不同的彈跳。期權也是一樣。我認為牛市中的期權評估與熊市中的期權評估不同。市場只是認為波動性不同。這是你如何才能最好地運用期權。
If I gave you a notice that from now on we would consider bearish options and bullish options and not just change the volatility to fit the price, you could better understand what is expected of your trade instead of guessing the changing volatility every day. This has all been debated before, and we aren’t going to change what is believed to be the best method. In fact, sometimes when you are trading with a different view, you are better off. 如果我給你一個通知，從現在開始我們會考慮看跌期權和看漲期權，而不只是改變波動率來適應價格，你就可以更好地理解你的交易預期，而不是每天猜測不斷變化的波動率。這之前都有過爭論，我們不會改變被認為是最好的方法。事實上，有時候當你以不同的觀點進行交易時，你會得到更好的結果。
I am going to explore some option possibilities that use Rule 1 to start. Because we are going to assume we are wrong until proven correct in options also, we will put a fairly protected position on to start. Let us say we have a bull market started as we see from our criteria platform. Okay but we could be wrong so we will not go long an option. We will instead put on a bull spread. A bull spread is buying a lower strike and selling a higher strike price. This leaves Rule 1 in use. 我將探索一些使用規則 1 開始的期權可能性。因為在期權交易中，我們會假設自己是錯的，直到被證明是正確的為止，所以我們會先建立一個相當受保護的倉位。假設我們從標準平台上看到牛市已經開始。好吧，但我們可能是錯的，所以我們不會做多期權。相反，我們會做一個牛市差價。牛市差價就是買入較低的行使價，賣出較高的行使價。這就需要使用規則 1。
Options experts are going to say we only put a smaller options position on. Yes, that is correct for the purpose of requiring the market to prove us correct. Let us say we bought a 1000 strike when the future was at 990 and we sold a 1010 strike just for an example. 期權專家會說，我們只放一個較小的期權頭寸。是的，這是正確的，目的是要求市場證明我們是正確的。比方說，當期貨價位在990時，我們買入了1000的行使價，而我們賣出了1010的行使價，只是舉個例子。
If we had bought a 1000 call outright, we would have paid more for the call than we would by also selling a 1010 strike. We have limited our potential loss at this point to the debit we paid out. Let us say we had a debit of 3. An outright call bought without the bull spread would have cost us, say, 5. We have already started to use Rule 1 by reducing our possible loss to 3. Our maximum loss is 3 at any time. 如果我們直接買入 1000 的看漲期權，我們所支付的價錢會高於同時賣出 1010 行情的看漲期權。在這一點上，我們將潛在損失限制在我們支付的借方。我們已經開始使用規則 1，將可能的損失減少到 3。
What can now happen? Three things can happen. One of them isn’t going to happen as the price never remains the same very long. So prices are going up or down. What else can happen to our position? We can lose time value as the ice cube melts, and we can lose volatility as the interest in trading falls. 現在可能發生什麼？有三種情況可能發生。其中一種是不會發生的，因為價格從來不會長時間保持不變。所以價格會上升或下降。我們的倉位還會發生什麼？當冰塊融化時，我們可能會失去時間價值；當交易興趣下降時，我們可能會失去波動性。
We have used Rule 1 so we are slightly protected from time decay because we don’t have as large of a position as we could have with an outright call. We are also slightly protected form falling volatility because we are not with as large a position as we could have had with an outright call. 我們使用了規則 1，因此我們受到了時間衰減的輕微保護，因為我們的頭寸不像直接看漲期權那麼大。我們也受到波動率下降的輕微保護，因為我們的倉位不像直接認購的倉位那麼大。
Okay, but the experts are saying we did all this at the expense of potential profit. Yes, indeed, right again. But isn’t Rule 1 to keep our losses as small as we can? Isn’t the name of the game to stay in the game forever? Yes, so we need Rule 2 to make our money!
Rule 2 actually works better in options than futures. The main reason is that volatility can increase and decrease. With futures, sure, the market may go limit up or down, but options move that value as expected and then some extra because of what the experts call volatility changes. I call it changes form liquid to solid! Water freezes with higher volume as a solid.
At any time you are not risking more than 3 in our example and you are long a 1000 call and short a 1010 call (bull spread.) Let us say that our criteria for being correct is that the market moves at least 15 points. So at 1005 we accept being correct at this price.
We will make our position larger at this point. How? We have many option possibilities but the best option is to buy a higher strike than where our current position is due to the increase in volatility. We want a delta (position size) that can more than double. A delta of 50, 60, 75 can only go to 100. A lower delta gives us a possible double plus, triple plus, etc. Also we are risking less equity.
Okay, we buy a 1020 strike for example purposes. Let us say we pay 6 for it due to increased volatility. So what do we risk now? We risk our original 3 but, because of volatility increase and price movement, we have a value of, let us say, 6 on our original bull spread. Okay, because we paid 6 for the 1020 strike we still have only 3 at risk or do we? We have a value of 6 (1000/1010 bull spread value) +6 (1020 call purchase price) or a value of 12 and have only paid out 3+63+6 or 9 . We show a profit of 3 at this point and can work with our Rule 1 and have no additional risk on our position by using criteria here forward, which protects us from negative drawdown. To do this we remain alert to be swift and use Rule 1 properly. We don’t know this position is okay yet. We have also used Rule 2 here by adding.
The values of these moves will depend on time remaining and volatility changes but, for example purposes of using Rules 1 and 2 , we won’t consider those variables at this time. After two weeks we have a move to say 1030 . We are flagged that it is time to reverse. What do we do now?
Now comes the interesting part in options. Most traders want to take their profits. But we are using Rule 2 again here. We must press our position, and the market looks like a reversal. We don’t take our profits but decide to set up our payday. We do this by selling another 1010 call. This leaves us with a bull spread and a bear spread with 3 strike prices. In fact, we could call this a butterfly.
We sell the 1010 call at 20 due to increased volatility again. Okay, so what do we have at risk in the trade. We paid 3 for the first bull spread of 1000 long call and short 1010 call plus we paid 6 for the 1020 call. But, wait, we sold the last 1010 call at 20 . That means we have -3+(-6)=-9-3+(-6)=-9 paid out and +20 received. We are up 11 points. Okay, the experts say you could have had more if we had just offset the positions. Okay, so we’re bad! We still have 367%367 \% profit so far. That isn’t bad, is it?
Two weeks later the market is at option expiration and the price of futures is at 1009 . Oh, darn, we forgot our butterfly position! Well, let us salvage what we can! 兩周後，市場期權到期，期貨價格為 1009 .哦，糟糕，我們忘記了我們的蝶式倉位！好吧，讓我們盡力搶救！
What is the butterfly worth now? The answer is 9 . Okay, so we offset it and take commission charges or we don’t offset it and let it offset by our exercising the 1000 call. In the end, by leaving the butterfly on, we set up a payday provided the market was within 1000-1020 at expiration. We made anywhere from 11 to 21 (depending on where the butterfly is offset) on the trade. We made the 11 from the sale of the 1010 call and anywhere from 0 to 10, depending on where the butterfly is offset. Don’t take all your profits but let leverage work for you in options. 這隻蝴蝶現在值多少錢？答案是 9 。好吧，那麼我們抵消它並收取佣金費用，或者我們不抵消它，讓它通過我們行使 1000 看漲期權來抵消。最後，只要到期時市場在 1000-1020 之間，我們就可以通過繼續持有蝶式期權來賺錢。我們在交易中賺了 11 到 21 美元（取決於蝶式期權的抵消位置）。我們從賣出 1010 看漲期權中賺了 11，而根據蝶式期權的抵消情況，我們賺了 0 到 10。不要攫取所有利潤，讓槓桿在期權交易中為您服務。
Our maximum risk was our original 3 and never more, using Rule 1 correctly in options by having a limited risk. We also added to our position and used Rule 2. But, wait, there is more! Once we put the second short call on to establish the butterfly, we were never going to lose anything because we bought our butterfly by being given 11 to take the total trade of four options over the range of movement. Two options long at 1000 and 1020 strikes and short two options at 1010 strike for a butterfly legged into. In other words, as soon as we neutralized or balanced the scales on each side, we could never lose. 我們的最大風險是原來的 3，絕不會更多，在期權中正確使用規則 1，風險有限。我們還加了倉，並使用了規則 2。但是，等等，還有更多！一旦我們放上第二個賣空看漲期權以建立蝶式期權，我們就永遠不會有任何損失，因為我們買入了我們的蝶式期權，因為我們獲得了 11 個在移動範圍內的四個期權的總交易量。在 1000 和 1020 行情點做多兩個期權，在 1010 行情點做空兩個期權，蝶式腿成。換句話說，只要我們中和或平衡了每一方的天平，我們就永遠不會輸。
The experts again say, “What if the market had gone to 980 instead of up to 1005 and then 1030 ?” Well, we would have lost 3 . So what kind of ratio did we set up for our trade in options? Risk 3 to gain 20 equals 6.6:1 (slightly less with commission and depending on where the market price established itself at expiration). 專家們又說：「如果當時市場是 980 而不是 1005 然後是 1030 呢？」那麼，我們會損失 3 .那麼，我們在期權交易中設定了怎樣的比率呢？風險 3 對收益 20 等於 6.6:1（佣金略低，取決於到期時的市場價格）。
ALS: It looks easy. Is that all there is to it? ALS：看起來很容易。就這麼簡單？
POP: I don’t want anyone to think it is that easy because you must be aware of what is required in exercising options and the effects of increased volatility and decreased volatility. This is a start to give you the desire to learn more about options. POP：我不希望任何人以為這很簡單，因為你必須知道行使期權時需要注意的事項，以及波幅增加和波幅減少的影響。這是一個開始，讓你有更多了解期權的欲望。
One of the big keys in options is the hidden secret of putting on no-risk or low-risk trades and working the positions into a no-risk trade with the potential of a big payday toward expiration. If you are to trade butterflies, you must learn that the proper time to buy them outright is with a long time out when the liquidity may not always be good to put them on. You can often put them on with bull spreads and then a bear spread. Commission costs are a concern if you are at a full brokerage. You must figure all of the costs to reduce the ratio of payout. 期權交易的一大關鍵是隱藏在無風險或低風險交易中的秘密，把倉位做成無風險交易，並在到期時有可能獲得豐厚的報酬。如果您要交易蝴蝶期權，您必須學會適當的時間買入蝴蝶期權，因為在很長的時間內，流動性不一定很好。您通常可以利用牛市價差，然後再利用熊市價差來買入。如果您是全額經紀商，佣金成本是一個值得關注的問題。您必須計算所有的成本，以降低支付的比例。
ALS: Do you want to go into some other strategies? ALS：你想談談其他策略嗎？
POP: Let us put this on the back burner and see what the traders want? 民研計劃：讓我們把這件事放一放，看看交易員想要什麼？
Phantom's Gift 魅影的禮物
By Art Simpson 作者：Art Simpson
Chapter 10: Cloud Hopping 第 10 章：跳雲
"I believe if someone important can have faith and expectations in those around them, it will make a difference in their lives." Phantom of the Pits 「我相信如果重要的人能對周遭的人抱有信心和期望，就能改變他們的人生」。深坑魅影
“Cloud Hopping” is dedicated to the memory of your and our friend John Denver, who died in his experimental airplane on October 12, 1997. John touched our hearts with his songs, and his touch of kindness reached out to all living things. Our memories are stronger than death as we search the clouds and share past laughs. Far out, our Brother in Mankind. "Cloud Hopping" 獻給您和我們的朋友 John Denver，他於 1997 年 10 月 12 日死於他的實驗飛機中。John 用他的歌聲打動了我們的心，他的仁慈觸角伸向了萬物生靈。我們的回憶比死亡更強烈，我們在雲端尋找，分享過去的笑聲。遠方，我們的人類兄弟。
One of the most-used tools in trading is perhaps the chart. Charts not only show high prices, low prices and current prices but also other data that can be used for derivative information generating. Each trader has their own way of using and interpreting their charts. Some make up their own charts; others buy them from a commercial vendor. 交易中最常用的工具之一可能就是圖表。圖表不僅顯示高價、低價和當前價格，還顯示其他可用於衍生資訊生成的數據。每個交易者都有自己使用和詮釋圖表的方式。有些人自己製作圖表，有些人則從商業供應商處購買。
When it comes to their use, Phantom remembers when charts were charted on a big graph in the pits themselves for all to see. We continue our insight with Phantom on charting. 說到圖表的使用，Phantom 還記得圖表是在賭場內的大圖表上顯示，讓所有人都能看到。我們繼續與 Phantom 探討繪製圖表的問題。
Art Simpson (ALS): Phantom, sometimes I wonder how organized traders can be with all of the charts around their offices. I always thought the less information you had to research during trading hours, the better you would be able to react to the current market situations. What do you view with your charting? Art Simpson (ALS)：Phantom，有時候我在想，交易員的辦公室周圍都是圖表，他們能有多有條理呢？我一直認為，在交易時間內需要研究的資訊越少，就越能對當前的市場情況做出反應。您是如何看待您的圖表的？
Phantom of the Pits (POP): First of all, you mean “Cloud Hopping!” On a Sunday afternoon I would go out to the park and do my charting. Let me reach over and turn this old radio on with this funny-looking knob here. This big radio is an oldtimer, and it takes me back 30 years or so. As I turn it on, you will hear WGN and the Eddie Hubbard show with his theme song, “Poor People of Brooklyn,” playing in the background. I think his theme was a spoof on “The Rich People of Paris” but I don’t know that for sure. 坑洞魅影 (POP)：首先，你說的是 「跳雲樂」！在一個星期天的下午，我會去公園做我的圖表。讓我把手伸過去，打開這台老式收音機，這裡有一個看起來很滑稽的旋鈕。這個大收音機是個老古董了 它把我帶回了30多年前當我打開收音機時，您會聽到 WGN 和 Eddie Hubbard 節目，背景音樂是他的主題曲 「布魯克林的窮人」。我覺得他的主題是在惡搞「巴黎的富人」，但我不太確定。
I doubt that many oldtimers will be reading what we say here but, just the same, the past is certainly worth a view once in a while. A look back is good if, for no other reason, just old time’s sake. 我懷疑是否有許多老前輩會閱讀我們在這裡所說的話，但同樣地，過去的歷史肯定值得我們偶爾回顧。如果沒有其他原因，只是為了緬懷過去，回顧一下也是好的。
On my Sunday afternoon charting, this is what I would see with my charts! I would look to the sky and see all of these kites flying. My chart would show this as volume. All of the kites on the ground, not in the air, and the flying kites would be the open interest. The clouds in the sky would be my price on the charts. I would chart all of these with a connecting line from all of the clouds in the top part of the chart and volume and open interest on the lower parts of my chart. 在我星期天下午製圖的時候，這就是我在圖表上看到的景象！我望向天空，看到所有這些風箏都在飛翔。我的圖表會將此顯示為體積。所有的風箏都在地上，而不是在空中。天上的雲就是圖表上的價格。我會在圖表的上半部分用連接線將所有這些雲彩繪製成圖表，在圖表的下半部分則繪製成交量和未平倉權益。
As I saw the movement of the clouds in my sky market, I would place another chart point either higher or lower, depending on whether an existing cloud moved higher or a new lower cloud formed. Any time I could get a divergence from the clouds’ highs and the open interest of kites and volume of kites, I would get a signal to sell sunshine futures. 當我看到天空市場中雲層的移動時，我會根據現有雲層是否移動得更高或新的較低雲層是否形成，將另一個圖表點放置得更高或更低。任何時候，只要雲層的高點與風箏的開放興趣和風箏的成交量出現背離，我就會得到賣出陽光期貨的信號。
My father would ask me what I was doing, as he would always pick up the trash from our picnic when the wind would blow it away. I would answer him, “Dad, I am CLOUD HOPPING!” 我的父親會問我在做什麼，因為他總是會在我們野餐的時候撿起被風吹走的垃圾。我會回答他：「爸爸，我在嘗雲彩！」
I got pretty good at cloud hopping and sunshine futures as I could predict when it was going to get cloudy again. I think I was all of 13 at the time. That was my first introduction to charting. 我對跳雲和日照期貨非常在行，因為我可以預測天氣什麼時候會再次變得多雲。我想那時我只有 13 歲。那是我第一次接觸圖表。
I tell you this little insignificant point of my early charts because I have seen just this week examples of the same things in trading signals from traders. It may not make much sense most of the time to most of the people but if it works, who am I to argue. My cloud hopping worked for me!
There are advantages and disadvantages in charting. When you use charts to look back to get signals, you are setting yourself up to believe you can actually be more right than wrong. It is possible, but you must never forget Rule 1, regardless of how accurate your chart indicator shows over the past. Just because it worked nine out of the last ten times does in no way suggest that it will
stay 90%90 \% accurate. Protect your positions at all times.
I think the main advantage I see in charts is that you can plainly see what will be dictated to other traders for them to think at certain points. You will remember I said I don’t totally agree the market is always right at all times, but that is what we must trade with or against. How many times have you seen public sentiment be a massive majority of opinion one way or the other? What happens? More times than not the thinking was wrong.
In charting I have to say my strongest signals are when support or resistance is broken and thinking is in the majority against what is happening to that support or resistance.
I don’t want to go into specific types of charting and indicators as there are so many of them and so many ways to interpret them. I will try and point out what I think is useful to all traders the most. I could explain each type of indicator and charting process, but that serves no purpose. Each trader must decide his or her own criteria for charting.
My charting is based on knowing what the signals of each type indicate to other trades more so than to myself. I am always looking to find what is the edge to me. I don’t care about what the charts indicate if they are not my tools, but because others do use them, I must be aware of those indicators. I need to know what other traders are thinking.
I don’t position opposite to my signals ever, but that doesn’t mean I don’t position opposite to my fellow trader’s charts and indicators. My criteria takes into account the other signals, though not directly a signal indicator to me. 我從不與我的信號相反定位，但這並不意味著我不與我的交易夥伴的圖表和指標相反定位。我的標準考慮了其他信號，雖然對我來說不是直接的信號指標。
There are many trading plans based on various charts and indicators, which can be accurate over a period of time. The biggest problem with the dependable plans is that Rule 1 and 2 are not a part of the plan, and the traders never get to trade in the long run. The trade plan may have what they call money management, but that is always a weak point in the plan. Drawdown eventually demoralizes the traders. In the end all is lost. 有很多基於各種圖表和指標的交易計劃，這些計劃在一段時間內可以做到準確無誤。可靠的計劃最大的問題是，規則 1 和規則 2 並不是計劃的一部分，交易者從來無法長期進行交易。交易計劃可能有他們所謂的資金管理，但這始終是計劃的弱點。縮水最終使交易者士氣低落。到最後，一切都付之東流。
ALS: Do you have any specific advice on using charts? ALS：您對使用圖表有什麼具體建議嗎？
POP: Yes, when you see what most charts give you, it is clear that everyone is looking at the same data to establish a method of being the most accurate. POP：是的，當您看到大多數圖表所提供的資料時，很明顯每個人都在觀察相同的資料，以建立一種最精確的方法。
The key to usefulness of charts, as far as I am concerned, is that you take everyone else’s chart with a grain of salt and establish your own charting to be reflective of data not usually known to others. All bar charts show the same things. It is a daily chart of high, low, close, open, volume, open interest and other moving averages or indicators. This is one reason I prefer a chart like a point-and-figure chart. It removes the daily bar graph points as the most important for that day. 就我而言，圖表有用性的關鍵在於，您要慎重看待其他人的圖表，並建立自己的圖表，以反映通常不為他人所知的資料。所有柱狀圖顯示的都是一樣的東西。它是高點、低點、收盤點、開盤點、成交量、持倉量和其他移動平均線或指標的日線圖。這也是我比較喜歡點數圖這樣的圖表的原因之一。它將每日柱狀圖點剔除為當天最重要的點位。
Let me ask you what would you think of a chart that takes the same parameters as a standard bar chart but your daily high, low, close and open data had a time frame different than daily? You would laugh. I like that laugh! It tells me I have no competition with the idea. 讓我問您，如果有一張圖表採用與標準棒形圖相同的參數，但您的每日高點、低點、收盤點和開盤點資料的時間框架不同於每日，您會怎麼想？您會笑。我喜歡這種笑！它告訴我，我的想法沒有競爭對手。
I will give you an idea and an example here. Let us say you make a chart that starts one hour and fifteen minutes prior to the close of a market. We will justify this by saying that the most important trading data for a day is in that last part of the trading day. We will call this the opening for your next day’s chart. One hour and fifteen minutes of today’s trading is already on tomorrow’s chart. We will call this tomorrow’s support and resistance. We continue to chart tomorrow until one hour and fifteen minutes prior to the close. This closes out our day’s trading chart. 我在此給您一個想法和一個例子。比方說，您製作了一張從收市前一小時十五分開始的圖表。我們可以這樣說，一天中最重要的交易數據是在交易日的最後部分。我們稱之為您第二天圖表的開盤。今天交易的一小時十五分已經在明天的圖表上了。我們稱之為明天的支撐和阻力。我們繼續繪製明天的圖表，直到收盤前一小時十五分。這就結束了我們當天的交易圖表。
Okay, I think you see what I am getting you to think about. Now keep in mind I am not giving you my way of charting but using this as an example of how to change your behavior when it comes to charting. Most traders will never chart this way for several reasons and that, to me, is good. They can’t get the data this way as they may only get it out of a newspaper, delayed or through a broker. Other reasons exist that prevent them from getting a different outlook chart. 好了，我想你已經明白我要讓你思考什麼了。請記住，我並不是在給你我的制圖方式，而是以此為例，告訴你如何改變你的制圖行為。大多數交易者永遠不會用這種方式製圖，原因有幾個，對我來說，這是好事。他們無法以這種方式獲得資料，因為他們可能只能從報紙、延遲或經紀商那裡獲得資料。還有其他原因存在，讓他們無法獲得不同的展望圖。
I feel you need a jump on tomorrow’s trading to get the edge. The edge to me is important but not as important as execution. It is just that, with the edge, you can get better execution. You are ahead of the game because you are in front of the day -traders, funds, scalpers and position traders because you are not using their data to follow them. Instead, you are using your data to look beyond their view. By using Rules 1 and 2 , you can establish a plan that is a little more remarkable than anyone would think. 我覺得您需要在明天的交易中取得優勢。對我來說，優勢很重要，但不如執行力重要。只是，有了優勢，您可以獲得更好的執行力。您在遊戲中領先，因為您走在當日交易者、基金、黃金交易者和頭寸交易者的前面，因為您沒有使用他們的數據來跟隨他們。相反，您使用您的資料來超越他們的視野。透過使用規則 1 和 2 ，您可以建立一個比任何人想像的都要出色的計劃。
You will have to do back-testing and research and most traders can’t even come up with that data yet, even today. I guarantee in the future there will be those who look at what I have done lately and say it is time to make the computers earn their keep. You see, the frontier is just now opening! The sharpest trader with the most intuition will win here. I want you to remember where the idea of “Different Outlook Chart” came into play. It started with me when I was 13. It can start with you today. 您必須進行回溯測試和研究，而大多數交易者甚至在今天都還無法拿出這些數據。我保證，將來一定會有人看到我最近所做的，並說是時候讓電腦賺錢了。你看，前沿才剛剛開啟！最敏锐、最有直觉的交易者将在这里获胜。我希望大家記住 「不同展望圖表 」這個想法的由來。從我 13 歲開始。今天，它也可以從你開始。
Do your research! Do it again! Learn what different outlook charting can do for your trading plan. I have given ideas of what my criteria is in trading certain situations so that an understanding of where I am coming from shows up. Vary your data times. Use 15 做你的研究！再做一次！了解不同的展望圖表能為您的交易計劃做些什麼。我已經介紹了我在某些情況下的交易標準，以便讓大家了解我的出發點。改變您的數據時間。使用 15
minutes, half an hour, half day, first hour and other time frames. 分鐘、半小時、半天、第一小時及其他時間範圍。
I am giving you a gift here and someday it will hit you. Just don’t take too long to see what is behind all three doors. I still want to point out that we will see different outlook charts as the years go by, and they will get better and better. There will be a day when they are followed closely enough that they no longer have the same value. 我在這裡送你一份禮物，總有一天你會被它打動。只是不要花太長的時間去看這三個門後面有什麼。我還是想指出，隨著時間的推移，我們會看到不同的展望圖，它們會越來越好。總有一天，它們會被密切關注，以至於不再具有相同的價值。
In trading you need to change the odds to your favor. By using Rules 1 and 2, you are moving in the right direction. By using your own mind, you are doing what that computer programmer did many years ago. You are looking at a different view. An artist will view his subject material from all angles. Shouldn’t you?
ALS: Aren’t you making it a little dangerous by telling traders to go find your own plan and make your own charting system?
POP: I believe I am only making it a little more difficult in showing that trading is complicated when it comes to getting the edge in trading. I don’t expect them to take entry and exit signals they devise without using Rule 1 for protection and Rule 2 for enforcement of their new knowledge.
I believe in the small trader! I know what the potential is because I know every trader started out as a small trader. Not one big trader started just big. You must start. There is no better place to start than at the start line. Only then can you say you went the entire course.
I want to impress upon you the importance of my belief in the small trader. I believe if someone important can have faith and expectations in those around them, it will make a difference in their lives. A good mentor knows that their guidance will grow up one day in those who benefit from their convictions of belief.
This story I am going to tell you was told to me by a very brilliant mind. I like the story better the way I like to tell it but will tell it the way it was told to me.
One year a math teacher in the geometry class had more students that usual. Thirty-eight students were just too many to have the time to give one-on-one guidance as required. Not only were there too many students in this particular class but the teacher also had more bad students than usual.
One particular student had never gotten grades above Ds in all his school years. His name was Robbie, short from Robert. Robbie was the class clown and had been his entire life because that is what the other students expected of him. He had no interest in school and would brag he would quit school at the age of 16 in a few short months.
The teacher had three Robert’s in his class: Rob, Robbie and Robert. It was pretty easy for the teacher after two weeks to keep the Robert’s clear, as the one who went by Robert was the top student in math.
Five weeks into the school year the first PTA meeting was coming up. The teacher told each of the students to have their parents come to the PTA meeting. That night only about a third of the parents showed up. The teacher knew by how well the students were doing just which parents would most likely show up at the meeting. The teacher took three to five minutes with each set of parents to chat and find out a little about them.
The last parents were a little backwards and shy, but the teacher shook their hands and made them feel at ease. The teacher never got an answer when they were asked their name so the answer was never known. The parents asked the teacher, “How is my Robert doing in class?”
The teacher thought and then answered, “I have never had such a good student in my class who takes so much interest and is a delight to have as an example to my other students. Why, your son is a living example of those who will be leaders in our future. It’s just wonderful to know that in our lifetime we will see youngsters like Robert grow up to make us all proud to have known him!”
The parents of Robert stood a little taller and smiled as they left the PTA meeting that night.
Over the next three months going into the end of the first semester the teacher noticed his students doing better than he had expected up to this point. Trying to comprehend how his teaching had improved and what he had done differently, the teacher spent more time trying to improve. At the end of the school year, the teacher was in his own glory as no student had failed – not even the class clown Robbie. In fact, Robbie had gotten all his assignments done, taken a math scholarship exam and finished with the top score nationwide. He had won a math scholarship as a sophomore. The teacher was really proud to have taught so well.
The last day of class, Robbie waited until everyone had left and then headed to the teacher’s desk to talk. Robbie held out his hand and said, “My Mother told me what you said about me! I have never had anyone ever want me in their class before or even cared if I learned. Thank you for giving me insight into my life!”
The teacher began to cry as all the efforts to improve as a teacher reflected back to the PTA meeting at the beginning the year. You see, the teacher thought that, when the parents asked how Robert was doing, it was Robert’s parents and not Robbie’s parents. The teacher had made the biggest mistake of his life at that PTA meeting by assuming he was talking about the right Robert. Not only was it the biggest mistake but it also was the best mistake of his life.
Can you imagine a grown adult crying? Isn’t it refreshing to know we as adults can learn from youngsters and it’s ok for us to cry! At one time or another in life we see a flash of light in thought looking back and realize what we have just been given.
ALS: Pretty touching. You say you like to tell it differently?
POP: I like to substitute Robbie’s name and instead use “a brilliant trader.” You must understand that somewhere as a trader the light must come on for you. There will be a point that the biggest mistake of your trading career will be the best mistake you have ever made.
I personally want that student to come to me and say, “Phantom, no one has ever wanted me in their class before or even cared whether I learned about trading. Thank you for giving me insight into correct trading.” 我個人希望學生來找我說：「Phantom，以前從來沒有人想讓我上他們的課，甚至沒有人關心我是否學會了交易。謝謝你讓我了解正確的交易"。
I do care and I have only one thing left that I wish to become: A better teacher! 我很在乎，而且我只剩下一件事希望成為：一個更好的老師
ALS: How do we go on from here? I think your pep talk has caught me by surprise. I don’t know what to ask right now. ALS：我們要怎麼繼續下去？我覺得你的鼓勵說話讓我措手不及。我現在不知道該問些什麼。
POP: I’ll go over point-and-figure charting next. Go and enjoy a walk to the top of your hill with your wife. POP：接下來我要講點數圖表。去和你的妻子一起享受到山頂散步的樂趣吧。
ALS: Okay, I would like to reflect upon what you have just given as insight – not just for the book but I also want to reflect for my own personal evaluation right now. Thanks. ALS：好的，我想反思一下您剛才的見解 - 不僅是為了這本書，也是為了我現在的個人評估。謝謝。
The next interview: 下一個採訪
ALS: On point-and-figure charting one question I see often is what size to make the boxes? ALS：在點數圖上，我常見到的一個問題是，方塊的尺寸應該多大？
POP: The fact of PP & FF charting is that the smaller you make the boxes and retrace criteria, the closer you will see the market characteristics and order flow. To learn the nature of trading and each market, at first I suggest the smaller box sizes. Keep in mind for the retrace that it must have some significance beyond a normal bid-and-offer slippage. POP： PP 和 FF 圖表的事實是，您把箱體和回調標準做得越小，您就越能看清市場特徵和訂單流。為了瞭解交易和每個市場的本質，我建議首先使用較小的方塊尺寸。請記住，回調必須具有超出正常買賣滑點的意義。
Each market can be a percentage of daily expected moves. I would say that, as an example in soybeans, if the daily range is usually 9 cents, I would use a 1 by 3 box – each box is 1 cent and each significant retrace has to be at least 3 cents. This pretty well says to take 10%10 \% of the daily expected move as the box size and 30%30 \% of the daily move as the retrace requirement. 每個市場可以是每日預期移動的百分比。以大豆為例，如果每天的波幅通常是 9 美分，我會使用 1 乘 3 的方塊 - 每個方塊是 1 美分，而每次顯著的回調必須至少是 3 美分。這很好地說明了以每日預期移動的 10%10 \% 作為箱體大小，以每日移動的 30%30 \% 作為回調要求。
As time goes by, you will want to extend the sizes to larger sizes. You may even keep multiple P & F charts to compare. Today computers can do this for you if you are set up for it. It is important to realize that, at one time or another, each trader will try and improve his trading office. 隨著時間的推移，您會希望將尺寸擴大到更大的尺寸。您甚至可以保留多張 P & F 圖表來進行比較。如今，如果您設置好了，電腦可以為您做這些。重要的是要意識到，每個交易者都會嘗試改善他的交易辦公室。
Is it good to improve your data before your success or after your success? The answer is a catch 22 as you will improve your trading as you improve your understanding of how markets work. Most traders do not want to extend the costs at first due to limited funds. What really can you do with your data if it is based on someone else’s criteria and information? You can only be a derivative trader of that restriction.
I am not going into how to specifically use P & F charts, but many good books on the subject will be a good library add for you. Learn the highlights of support lines, resistance lines, three wave recognition and breakouts. You will be able to see what the trade does each day within the market parameters. This is important to see first-hand, and PP & FF charts are the perfect way to do it.
You are better off if you do your own charting rather than using a computer until you understand and see what important data is available on these type charts. I also suggest that, if you had to use only one chart, it should be a point-and-figure chart.
I don’t mean to be weak on giving knowledge on charting, but it is critical that each trader come up with his own thoughts and ideas. For someone to give you their thoughts just limits a trader’s horizon of what is possible for them. Do your own homework and decide what your charting shows.
On some of my programs on charting and signal criteria, I narrow it down to inputs of importance. I could have as many as 64
inputs. I can weight each one according to how important they are, or I can have them in one of two states only. Some of my criteria input is qualified by going through several doors first. In other words, if the criteria is met, that input must go through the next set of criteria. It sort of ends up like an eye examination as you expect one total answer in the end.
Charts and criteria are nothing more than the best set of eyeglasses at the end of the examination. You will wear those glasses after your exam. Same in trading, you will use that data after your criteria is set. Why argue with it?
Many traders are always making exceptions. For example, the last time they used their criteria signal they lost money. They won’t make the next trade. The big one! If you lost money last time and aren’t happy with the signals, you must go back over your program or criteria and reintroduce the correct data that you expect to be required. If at any time data is excluded that you require, your signals are useless. Get the total picture on your plan and not just the pieces. Have a definite signal and not a maybe signal.
There are times when nothing you do seems to work. When things continue to go bad, I can say to you that you have violated another known fact. Diversity helps reduce risk but only in the long term. In the short run we are talking about luck, both good and bad. Believe me, if bad luck comes first, you are finished if you only depend on luck.
Charts are not an answer alone and have no use if your trades can’t be executed promptly. Any time you can’t do what is required as a trader to get the position on, you will take the scales the wrong way. Remember, you must be in before you can get a correct move.
ALS:What kinds of charts do pit traders use mostly in trading?
POP: I have seen P & F charts, bar charts with half hour, ten minute, down to 1 minute used. I have also seen several of the new popular volume based price charts as well as different color charts with indications of momentum along with price.
ALS: What type do you use when you are in the pits?
POP: I never use anything but mental graphs when in the pit. The mental charts are more point-and-figure charts. They are really easier as I am looking for the third wave to position against the public on the third wave in my desired direction. It works well for add-on positions and keeps my entry cleaner for protection requirements.
I don’t go to the pit often anymore unless it is to be an exceptional day indicated by my signals. I will go to the pits when I have an unusually downward bias indicated, as gravity seems faster to me in those markets that reverse to the downside.
Most of my charts are kept on computers, but that doesn’t mean the computer gives me my signals during the day. I like to have them before the day begins. It is more mechanical and not ever emotional that way. That is an important point in trading – remove those human elements as best as possible. Only then can you truly be objective.
Look at it this way. When it is no longer your money, it is easy to do the right thing. But, when it isn’t your money, you can also be careless. Just follow the rules and your signals without exception. If they don’t work in the long run, you are not using the correct system or you’re not using my two rules first and foremost.
ALS: You are still going to have arguments about your two rules as to whether they work for all traders!
POP: We wouldn’t have markets if everyone agreed on a plan. We would have nothing but limit day moves everyday. We really need various ideas and concepts. I just want one that will work over time and keep my drawdown smaller than when I first started. I must have a rule that allows me my freedom to know, regardless of what happens today, I will be here tomorrow and the next day and next year and next decade if I wish to be. POP：如果每個人都同意一個計劃，我們就不會有市場。我們每天只有限價日的行動。我們真的需要各種想法和概念。我只想要一個能長期運作的計劃，並使我的回撤小於我剛開始時的回撤。我必須有一個規則，讓我可以自由地知道，無論今天發生了什麼，只要我願意，明天、後天、明年和未來十年我都會在這裡。
Don’t ever think that no one ever cared whether you learned anything in trading. I do care and I insist you take full responsibility to learn the correct knowledge. That knowledge must be not only criteria for trading but also the correct method of changing your behavior to that which is required to be successful in the long run. Your trading career should be a long-term expectation on your part. A short time frame is not acceptable in trading. I am not saying that short-term trades are not acceptable but that you must look beyond one day in your trading career. 不要以為沒有人關心您在交易中是否學到了任何東西。我是在乎的，而且我堅持您要負起全部責任去學習正確的知識。這些知識不僅必須是交易的標準，還必須是改變您行為的正確方法，使您的行為成為長期成功所需的行為。您的交易生涯應該是您長期的期望。短時間的交易是不被接受的。我並不是說短期交易是不可接受的，而是說在您的交易生涯中，您必須把眼光放遠。
Some of the best traders started out broke! And then they got more broke. Until success! 一些最優秀的交易者一開始都身無分文！然後他們變得更窮。直到成功！
Phantom's Gift 魅影的禮物
By Art Simpson 作者：Art Simpson
Chapter 11: Behavior Modification 第 11 章：行為修正
Phantom has indicated it is a combination of knowledge and behavior modification, which he learned over his trading career, that are the important elements in correct trading. We will go into some of the observed behavior modification insights Phantom has seen and used over the years. Phantom liked the approach of a professional on behavior modification but felt it was important to present the unique situations that trading presents to traders. Phantom is not a professional in behavior modification and wanted to make sure that was known before we began any conversation on the subject. Phantom 表示，他在交易生涯中學到的知識與行為修正的結合，才是正確交易的重要元素。我們將深入探討 Phantom 多年來所觀察到並運用的一些行為修正心得。Phantom喜歡專業人士在行為修正上的做法，但他認為有必要介紹交易給交易者帶來的獨特情況。Phantom 並不是行為修正方面的專業人士，他希望在我們開始任何有關此主題的對話之前，先確認這一點。
Art Simpson (ALS): Phantom, you and I know that we are on some thin ice when we talk about behavior modification. You are only qualified to give examples of what you have seen and used over your career in and out of the Pits! Art Simpson (ALS)：Phantom 你我都知道，當我們談到行為修正時，我們都如履薄冰。你只有資格舉例說明你在賽車場內外的職業生涯中所見過和使用過的方法！
Phantom of the Pits (POP): Yes, thank you for being alert on that point. Your point is important, as my methods are unscientific, to say the least.
ALS: Where do you start in changing your behavior to proper behavior for successful trading?
POP: It goes back to history class. Not everyone liked history, but it was a way of understanding prior behavior and events in order to plan for the future. It is the same in trading. We must understand our present behavior so we can judge what we need to do to make changes in our trading style, if any at all.
A person will make the same mistake again and again if there is not a properly learned reaction to a particular consequence of an event. We must know the right and wrong reaction before we can make any judgment as to what is correct for the situation.
Most situations are pretty obvious as to what a proper reaction should be. Most traders assume their reaction is proper in the consequence of what the market has done. Some traders are better at knowing the correct behavior than others. The correct behavior is a learned process and not one that is always obvious.
Animals are easier to study than humans, and I think that perhaps is a good reason for studying animal behavior. Take a simple action-reaction event for any animal and see what results come about.
Let us say your family dog has never known what hot meant. In the old days when stoves burned coal and cobs, my Grandfather would pick up the stove lid to put corn shucks and cobs in the stove to get the fire to flame a bit. This would ignite the other coals better. He would lay the stove lid down on a fire-protected material on the floor-stove board.
Well, because the dog liked warmth, it would come over to lie near the stove. When the dog lay on the stove lid, he let out a yip you could hear on the trading floor. The dog learned behavior modification by instinct. The dog would never lie on a stove lid again. Now, was this correct behavior modification?
ALS: I’ve heard this one before. The dog never would lie on a cold stove lid either. I suppose it saved the dog from getting burnt again. In the dog’s case I would say it was proper learned behavior. It is the same when your brother threw the hot horseshoe on the ground. He would never pick up another horseshoe again.
POP: Yes, but, you see, traders learn that way, too. They take a big loss and, they will never take that signal to position again or perhaps just won’t take it the next time. Now, that is not proper learned behavior. It is learned behavior by instinct due to a consequence of an event. This is just one of the examples I mean for you to understand when I say behavior modification is one of the most important aspects in becoming successful in trading.
How can a trader expect to be successful unless the trader knows the proper behavior to react to an event, especially unexpected events, which a trader seldom is expecting? I think that, along with my two rules of trading, a trader must have a good inventory of what behavior they need to survive and succeed in trading. Something that has been missed on my rules up to this point by
traders (in the Futures Talk forum) is that the two rules incorporate behavior modification within the rules.
ALS: Explain how behavior modification is in your first rule!
POP: Look at what the rule states! In a losing game such as trading, we shall start against the majority and assume we are wrong until proven correct! Positions established must be reduced and removed until or unless the market proves the position correct. (We do not assume we are correct until proven wrong. We allow the market to verify correct positions, not incorrect positions.)
Rule 1 incorporates behavior modification by expressing the truth that trading is a losing game and that we start against the majority and assume we are wrong until proven correct.
ALS: Sort of like the IRS, huh?
POP: (Smiles) I think their behavior modification is going to be changed, but that is another example. I am not sure we even want this example.
By stating that trading is a losing game, we think differently each time we position. By also stating we shall start against the majority and assume we are wrong until proven correct, we also change our thinking. We should not trade under false assumptions for if we think most everyone wins in trading, our behavior is going to be based on winning protection rather than losing protection. In other words, our focus will be on when to take our gains without thought on taking a loss, much less a quick loss.
We need that correct assumption to be able to correctly incorporate the proper behavior when we have positioned. With the proper assumption we can now include the proper behavior. We are going to concentrate on protecting what we have rather than what we expect to make first. That is behavior modification. This, above all else, is just as important in trading as any plan for entry and exit.
Next, we know from the rule the proper behavior for protecting our positions is to remove them unless the market proves them correct. This is the proper behavior instead of letting the market tell you that you are losing money.
When the market tells you that you’re losing money, your reaction to get out is not by instinct because nothing really physical happens to you except that maybe you get a sick feeling in your stomach. That sick feeling as your body chemistry changes doesn’t teach you anything about the proper behavior. It is a fact that you will become braver when your body chemistry changes as that is a protection, which is natural. This is not the behavior you want to learn.
Actually, you never want to get to the point of a market move making you sick. It is destructive, and you won’t react properly without learned behavior modification. 事實上，您永遠不希望市場移動讓您感到噁心。這是具有破壞性的，如果沒有經過學習的行為修正，您將無法做出正確的反應。
Rule 1 is designed to protect you from ever being in a situation of distress. In distress you will make the wrong decision in trading most of the time. There are always exceptions but not at first. Because all traders must start somewhere, why not learn properly as soon as possible? 規則 1 旨在保護您不會陷入困境。在窘境中，您大多數時候都會做出錯誤的交易決定。總會有例外，但一開始不會。因為所有的交易者都必須從某個地方開始，為什麼不盡快好好學習呢？
ALS: I can see some psychology majors challenging you on your thoughts. ALS：我可以看到一些心理學專業的人在挑戰你的想法。
POP: Yes, they are the experts on psychology and not on trading. I am not expert on either subject. I am only an expert on myself. That is what I trade with today – expertness of oneself! 民研計劃：是的，他們是心理學專家，而不是交易專家。我不是這兩方面的專家。我只是自己的專家。這就是我今天交易的目的 - 自己的專家！
I could give you the reasoning behind Rule 2 with the behavior modification incorporated within the rule but let us leave something for the readers to interpret for themselves. 我可以告訴您規則 2 背後的理由，以及規則中所包含的行為修正，但讓我們留一些東西給讀者自己詮釋。
ALS: Okay, let us leave Rule 2 open to interpretation and reasoning for better understanding of one’s own expertness, as you put it.
It’s really strange how we start with this cheat sheet of an outline and never get to most of the points, and the ones we do, they seem out of order. It goes to show that we really don’t have a followed plan in such a widely interpretable field such as trading. I don’t think you are stepping on anyone’s feet, as you were concerned about earlier in your efforts. How about discussing some examples of observed behavior and behavior modification?
POP: There are so many possibilities, and every trader could come up with better ones than I am going to use here. I will start with the elevator behavior data. 民研計劃：有許多可能性，每個交易員都可以想出比我在此使用的更好的可能性。我先從電梯的行為數據說起。
It was my desire to learn how most people thought in certain situations. It was important to compare ordinary people and then traders. I wanted to see if they thought differently and reacted differently to situations such as getting on an elevator – pretty simple but yet complex enough that we had enough variables to group data. It was not scientific, but it did give me good insight. Rather than give the exact results, l’ll just give the particulars and let readers decide for themselves. 我希望瞭解大多數人在特定情況下的想法。比較普通人和交易員是很重要的。我想看看他們在坐電梯等情況下的想法和反應是否不同，這些情況相當簡單，但也相當複雜，我們有足夠的變數來組合數據。這並不科學，但卻給了我很好的啟發。我不會提供確切的結果，我只會提供一些細節，讓讀者自己決定。
We took an observation at a building away from the trading district at an elevator on the top floor of the elevator ride. We watched those waiting to get on the elevator to see what the behavior would be. We had two criteria: They would try to get on the elevator immediately or, second, they would stand back. This gave us a better-computed programming input by using binary input of one of two states. 我們在遠離交易區的一棟大樓頂樓的電梯乘梯處進行觀察。我們觀察那些等待上電梯的人，看看他們會有什麼行為。我們有兩個標準：第一，他們會嘗試立即上電梯；第二，他們會退後。這讓我們可以使用二進制輸入兩種狀態中的一種，從而更好地計算程式輸入。
The second group we observed was in the trading exchange at the top elevator floor. We assumed most were traders but did not know, without trading jackets, which were off-floor traders. It was important to find out about would-be traders also so we included a third group, which we took to the top floor to observe without their knowing our reason for the tour at that level.
The results were rather surprising. Most of the people would approach the elevator as soon as it arrived on the top floor. They had no thought that there could be anyone getting off the elevator. Some would even get on the elevator before all the people on the elevator got off. This was strange, but most who got on the elevator before those on the elevator got off apparently did not recognize the situation of the elevator being on the top floor and that all who were on the elevator would get off on the top floor. Others blocked the door when the elevator arrived.
A small minority of people would stand back and anticipate the elevator would not go down before all were off-loaded, new people back on and the door closed. They would wait to get in last, and they were the first to get off on the way down. I won’t tell you which group did the best because you will have to decide for yourself how you would react.
This little experiment was important because trading is not so different from the elevator. Markets go up and down and trends take off, stall and fall. And then they do nothing for a period of time. Behavior modification for the elevator riders didn’t occur to most of the people. It is the same with trading. Who would teach you this?
Okay, we watched behavior and next we would tell the group of would-be traders they would have to stand back because the elevator would be packed with people getting off. They became so good they didn’t even care to anticipate which elevator would be up first. Now, we had our behavior modification, but was it correct behavior modification for the would-be traders? In this case it worked for them because it is what they were told.
Again, not to repeat myself but it is necessary to say it is the same in trading. Traders mostly change their behavior by what they are told. Is this the proper behavior modification for traders? The answer, of course, is no, not at all. A trader must learn from research what the proper behavior modification is in all possible situations. This takes lots of inner soul searching and market data to understand what behavior takes them to the threshold of successful behavior in trading.
You are most likely seeing my reason for stating that knowledge and behavior modification are required for successful trading. It never is an addressed issue in trading, when a trader opens an account, as to what their behavior might be. They are qualified as being financially fit to trade and understanding the disclosure documents that explain the risks but nothing occurring to the trading public flags them to learn about their behavior in situations.
You see, behavior modification is your responsibility and no one else’s. You cannot dictate behavior to anyone. All I can do is tell you I feel it is not possible to succeed in trading at all without some sort of plan for proper behavior modification. I could never have survived without it.
Behavior modification can take many directions for traders and can be defined differently by experts. All successful plans have some sort of behavior modification built into the plan. I feel the best plans are those that address the proper observation of trading and the proper reaction of trading.
ALS: I have other examples we have jotted on our sheet here. It might be interesting to give the readers ideas for their own research.
POP: I don’t really think we could give them ideas greater than their own. But I understand they might be interested in some of mine. If we get to a few, that is fine. We have really made the point of behavior modification to the readers, I feel. That is my concern. We can give them a total book on it, but that is not going to help them search their own souls for their trading.
ALS: I hear what you are trying to say. Are there any people in the field of behavior modification who you regard as impressive?
POP: Yes, there is this one genius whom I have always admired and have felt is the only one who I can honestly say has every point in successful trading covered. If I were to tell you who it is, it would disappoint a lot of deserving people who are pretty close to being exact – especially when exact is almost impossible to maintain for long.
Changes mean changing behavior in trading constantly. I don’t know everyone’s trading characteristics and, besides, whom am I to judge. I am but an observer and only an expert at observing my own trading.
I really wish I could give you his name, but it isn’t fair. I shall tell that person some day. In fact, I have a diary in which I include the accomplishments of great people, and that person is certainly in it. I am not even in it. I don’t think I will ever be.
ALS: I think the readers are interested in your view on how they can imitate or change their behavior to be a successful trader.
POP: You are going to get me into trouble with someone. I’ll drive around the outside of the track here with another good story and example.
In a basketball camp about 30 students were trying to improve their shooting. Half were taken outside and told to sit down and practice shooting free throws. The other half stayed in the gym to practice real free throw shooting.
This went on for three days of practice. On the fourth day all were given a chance to shoot 100 free throws. The outside group actually did better, even though they had not actually been able to shoot prior to the fourth day.
This was astonishing to the main coach, and he asked the outside group coach why his group did so well. He remarked, “Most of my boys were shooting at the basket and not above it so I called out their name each day and told them to shoot the ball higher above the rim instead of at the basket. My boys improved on the last day as they never missed a single shot in their own minds.”
Now, I am not going to paint a picture of the head coach’s face, but you can imagine his mouth hanging open and shaking his head. It didn’t make sense that this could even occur to the head coach.
It is the same with trading. You cannot rule out any possibility but must have proper behavior to address any situation once it happens. This takes forethought.
You see, what the outside basketball coach did was to incorporate his knowledge of why most free throws are missed. It is usually because the ball never clears the rim getting to the basket. He told his students to shoot the ball higher above the rim. Even though they had not shot a single basket, they were able to improve their behavior through knowledge. They go together, knowledge and behavior modification.
I want to give you a well-known statement, and it is effective in trading, too: “You have to think it before you can act it!”
I am a believer in the small trader. We just need to point out they must shoot higher above the rim to have better odds. Behavior modification learned from knowledge is what they must research in their trading careers if they expect to succeed.
It shall happen in the future that the small trader will learn they can move more quickly than a big trader, and that is oftentimes an advantage provided they know how to use it. To make it happen, they have to know the rules – not my rules specifically but their own interpretation of what is required.
ALS: What is the most important point of this chapter on behavior modification, the point you want traders to remember?
POP: There are several but the one that is often missed or misunderstood is this: Trading is a losing game, and the best loser is the big winner!
ALS: Thanks again for your insight, Phantom. I know it’s meant as a gift and you are not selling anything or trying to show up the experts. Surely you are expecting some kind of reward here?
POP: Every day I am surprised by a reward. Today an editor whom I consider the greatest editor of all times and whom I have had great admiration for over the years humbled me by pointing to others as the reason for success. I cannot say that about myself and that bothers me.
I cannot point to others yet in my life and say that. It is not because I am selfish. It is because, to be a successful trader, we must walk alone in our days and do it alone. I feel it’s very sad until you actually can point to others as your reason for success. It says a lot about a person who can expand his or her horizons by including others.
Trading isn’t that type of business. It’s almost a solo flight at all times. It’s you and the markets. I shall look forward to my day that I, too, can say, “any credit for whatever I did belongs to a lot of people.” When that day comes, I can walk taller and I can reach the heavens! Until that day I can only pass along my insights of trading.
Phantom's Gift
By Art Simpson
Chapter 12: A Wink is as Good As a Nod To a Blind Horse
"There are few things in a child's life that allow a child to play as an adult while allowing an adult to play as a child." Phantom of the Pits
Many subjects of interest seem to intrigue Phantom on trading but seldom is there time in a person’s life or career when the time to smile and have nothing but fun exists. As a child we all experienced the great fun of a Sunday afternoon filled with surprises and anticipation of newly found fun things. As an adult we often miss the point of a balanced life in most respects and none more than to take the time to be happy, regardless of the current situation.
It seems fitting that Sunday could be one of those days for traders. With electronic trading now and world markets, it is more difficult to have the old days of limited hours of trading through the week and have weekends free.
Still, Phantom wanted to give a smile upon the serious adventures of trading. Today we start with a blank sheet of paper on the so-called cheat sheet so we can convey the thoughts of fun in trading as well as respect the seriousness of the business required. We never know the road and the turn this project is taking until we come upon it. Fitting, since this is written as Phantom’s view as a trader’s insight into reality of trading . . . nothing more than his presentation into your thoughts in order to generate your own ideas as to what the possibilities are.
Sometimes a question of how to approach any situation can usually be reduced to a series of qualifications of one of two states before going into the next priority of thought. Phantom indicated that, as we grow older, it seems to be natural to oppose change of any kind. Because change is the one thing we can count on, we must learn to use it to our favor even more so as we grow older or we fail to grow at all. This is true in trading and is usually magnified as change takes place.
Phantom’s explanation of how the opposition to change is directed was explained as a percentage of the whole. He indicated that, as a child of maybe 6 or 7 , we would judge change based on our new adventures of discovery. Over the next year as a child we would grow much more than the additional year of 12.5%12.5 \% from age 7 to age 8 – mainly that, in that additional year of growth as a child, we would find change an adventure of new-found knowledge and not put restrictions on ourselves.
As we grow older, say from 49 to 50, we have increased our new-found life knowledge by a smaller percentage of, say, less than 2%2 \%. Our new knowledge is now not new frontiers of adventure but more of an uncomfortable reality of unfamiliar situations. Because 98%98 \% of our known knowledge is more comfortable than the 2%2 \% of new knowledge, we tend to oppose any change created by the new knowledge for we strive for the simple, comfortable life as we grow older.
We tend to feel that our effectiveness of making changes ourselves is reduced as we grow older because the percentage of the whole of new knowledge is smaller and smaller each year.
Phantom feels when we reach the point of not caring about change any more, we have severely defeated our most powerful thought process of creativity. Creativity can enhance our ability to accomplish great things and make great trades.
One point Phantom felt about the question of change was that it is important to expand the creativity process best by doing the fun or new thing, which gives us a sense of adventure in our lives. To be young again is not a lost thought if we could decide to be young today in our thoughts and our motivation toward being creative again.
But how do we proceed with our creativeness to overcome opposition to change? Phantom is no expert on such a subject, so he feels as long as we could put a fun smile on the reader’s face, it would serve to put on notice anyone who failed to come up with their own excellent ideas or their own answer.
Art Simpson (ALS): Phantom, I know that “A wink is as good as a nod to a blind horse” is one of your favorite sayings. Why is that so great a statement to you?
Phantom of the Pits (POP): My Grandpa was one of the last people to have horses for working the fields that I knew. It really wasn’t that long ago, but to younger people it seems like long ago. When I was a small child, my Grandpa would take his workhorses to the field to plow. I would get to sit on the big workhorses, as they were very gentle. Being gentle horses had
drawbacks, as they also were at times very stubborn. When Grandpa couldn’t get them to do what was required, he would say, “A wink is as good as a nod to a blind horse.”
Well, that stuck with me whenever I knew I was correct on something and couldn’t convince anyone of it.
Trading is full of situations where that phrase is fitting. There are traders who are as stubborn as the horses my Grandpa had for working his fields. Still, we loved those horses until they died. We never gave up on them, and they proved to be great memories of wonderful efforts of a great team of my Grandpa and the horses.
Today if I take interest in any particular trader’s view and I see that view as very narrow or perhaps close to an opinion set in cement, I will use the phrase. It is meant only to provoke thought as to all possibilities rather than leaving a narrow and fixed opinion. There are often times when it is obvious to me that the particular trader is wrong in their fixed and narrow view. I am not making a judgment that the view is wrong but that it is too narrowly based or insufficiently thought out. I will use that phrase to provoke the important re-thinking process to search out new knowledge.
ALS: You must be careful with the statement because there are traders who will immediately think they are wrong and go the other way.
POP: Yes, that is a mistake newer traders will make. To verify an order, a broker will say, “Are you sure you want to place this stop?” The trader will doubt his plan at that point and say, “No, let’s hold off on that.”
I don’t mean to be responsible for changing a trader’s mind but only to change their horizon of knowledge and thoughts. I especially will see it as an important statement when a dramatic change is starting to flag our indicators.
A common thought is, “What if I miss the move?” So what? Is there no tomorrow? Okay, you put the position on anyway and you are wrong! So what? You expect to be wrong if you are thinking and trading correctly. It is a big problem only if you don’t properly protect your trade as required.
My statement is to prepare a trader for looking and being prepared to act on any possibility rather than being convinced beyond doubt.
ALS: You said we would talk and explore fun things that provoke creativity. Let’s just start with being a child again and playing games on Sunday.
POP: Okay, you have given me good thoughts when you said to start being a child again. I can remember when just our family would play a game on Sunday called “Pit.” I don’t think many folks knew of it that many years ago, but I just recently saw a deck published in the 1920s and that brought back memories of a game that has been around for a long time. It was a game based on trading. Now that I think of it, I can take my introduction to trading back even further.
It isn’t my intention to sell the game, but I know there will be a run on it now. Perhaps we should talk Futures into licensing its own version for marketing as a courtesy to their readers. The game was an exciting game then and still is today. We would get as many as four decks together and have 32 people at a time yelling and screaming. What fun that was to everyone from 6 -year-olds to 80-year-olds.
By expanding the players to four decks, we were being creative. To be creative, it is easy to improve upon anything that inspires your interest. That is what we all need to do to grow, as we grow older.
ALS: Why was the game so much fun?
POP: The game was rather simple and, though not well-publicized, became an adventure of newly found fun for anyone who discovered the game. It was a deck of cards with different commodities on the face of the cards. I remember there were commodities such as hay, rye, wheat, corn, barley, oats and I believe two others. I will leave the two others out to let the readers fill in the blanks as we get them to being a child again. Each commodity had, I believe, eight cards. There was a bell like the one you would see on the counters at motels; you ring it by hitting the top of the bell.
The idea was to deal eight cards to each player, and the first player who had all eight of the same commodity would ring the bell and say they had won. At that point the game was over. Each player who had never played the game before would be shy and say this seems a bit far-fetched. As the game progressed by the rules, the shy player would start screaming the loudest.
Each player could exchange any number of their cards with any other player up to three at a time. If you had five wheat cards and were trying for all eight wheat cards, you could get rid of the other three cards based on the number of other commodity cards you had. For example, if you had two corn cards, you would yell, “Two!” Anyone else who had two cards to trade would trade with you. You wanted to trade all of your cards away except the ones you were trying to get eight of the same kind.
You wouldn’t think much of this game without seeing the action it created. All the players would start screaming at once as they got into the game. I remember we had a visitor come by one day when we were playing, and they thought there could be a war going on when we were playing.
“Pit” is the closest game to true trading emotion and adventure to this day. I haven’t played it for decades but still remember the fun it gave us all.
If I were a magazine or broker, I would put my advertisement on the cards and give that game to all of my clients at a discounted price. It’s a fun game anyone can play within minutes of hearing the rules, and it takes less than 15 minutes for each game. We found it was the best way to bring strangers into a conversation at a new meeting or reunion.
ALS: You’re going to start a run here! I am sure lots of people remember the game and would like to get a game or two.
POP: Okay, I know we have the readers thinking and being creative now. They can improve the game and the cards, as an example of showing them the nature of how being creative will overcome opposition to change.
ALS: Why don’t you put your picture on the cards and call them the “Phantom of the Pits” game?
POP: Why didn’t I think of that? You see, you are very creative, too! Sure, we could do that and give the game to each person who bought a book. In fact, I know you have two artists working on the trademark now.
I realize we are getting a little away from what the traders want to read. Do you think they will forgive us and understand the importance of the Sunday fun point we are trying to make?
ALS: To use your phrase, “So what?” I know you are going to cover it all eventually and interactively with the traders. How can we deny you the smile on your face as you think back as a child would and enjoy the pleasures of being creative. I know the readers and traders whom you have so much faith in are enjoying this as much as you.
POP: Yes, it is important to me. There are few things in a child’s life that allow a child to play as an adult while allowing an adult to play as a child. I don’t regret bringing up the game I remember best as a child. “Pit” is a game that will sharpen your awareness of your surroundings and interaction with other people without requiring much of a task on your part. Do you remember the game?
ALS: Yes, and a few others, too, more recently. I remember playing drop the clothespin in the milk bottle with a 101-year-old lady. Now, how much younger thinking can you get! If a 101-year-old can go back and enjoy the childhood memories, then why wouldn’t a trader be able to understand this importance, too?
Phantom, it looks like you’re on a roll here. I remember a well-known writer saying that he felt the books with less in them were sometimes better books. We certainly are giving less in this part anyway.
POP: I know whom you are talking about. I don’t know whether he would want credit for that statement or not. I think I know what his point was. It was to express that it was important not to overwhelm readers with too much data, which could do more harm than good.
ALS: I think so, too. Could that be the true Phantom of the Pits who said that?
POP: You’re not going to get me to admit or narrow the field, but why don’t you ask yourself that question? I guess we can narrow the field, can’t we? That is pretty clever on your part. By knowing who POP isn’t, I guess you do narrow the field some. But why is it important anyway?
ALS: Okay, I’ll drop it. I was just trying to think from the reader’s point of view in asking. I am just being creative. Can you be more creative in front of a warm open fire on a cool fall day or cold winter day?
POP: Relaxed, maybe, but I think serenity sets in with comfort. That, too, is important in a trader’s balanced life. I really see trading as driving a car around the Indy 500 track at 200+ and having to always be alert at every turn.
That is why it is so important to wink at a blind horse sometimes. You don’t need to operate at 100% -plus all the time for you lose some sharpness that way. Come down and go a different direction on thoughts. We are kind of doing that now.
One of the ways a trader can be creative is to just pick up the newspaper on a Sunday and ask how a story they read could be expanded for more information. I like to do this, as very few times do we happen to see the followup story of something that is a question for which we want the ending answer. It is easier to research further today with the news updates on the Internet news posts. Oftentimes, we read news on different trading stories, and we must keep in mind that the view is not ours but the writer’s
view.
I don’t want our discussion to be taken as my views but my effort to provoke traders’ views and ideas.
ALS: Yeah, and I know your draft chapters are just a beginning in getting feedback to complete the process of interactive feedback so you can continue and complete each chapter. You have presented ideas, which have generated other ideas, and questions to which you want to respond for the benefit of the readers.
POP: It’s part of the reason I wanted a light part in our discussion here before we get into trying to narrow down the needed answers to questions that will or already have been presented. We have many subjects yet to draft before we turn the car around.
ALS: I remember reading an article about motivational speakers recently. Do you see your insights as doing that?
POP: Not at all! Who would want to replace their own intuition of what they see as success with someone else’s? It is important to have your own thoughts and ideas. You can’t be someone else so why would you want to be totally guided by someone else’s idea on what is best for you? Motivational speakers have a place and it is important to be motivated, but most that follow forget one of the most important truths: You are the one who motivates yourself. It must be you. As in trading, it is you who must make the trades, not someone telling you to make a trade.
I see my insights as a guide to knowledge that the trader may not have had otherwise. This always leaves open the interpretation of their own ideas and thoughts. In fact, that is what makes markets. In trading we make assumptions based on known knowledge, and we use theory to prove or disprove our expectations being correct. I am trying to take away the feeling that a trader usually has the advantage when they do not. I am trying to take away the feeling that there is no way to succeed in an unfavorable game.
My insights are not anyone’s ideas but experience in my trading career. When I was in junior high school, I and the class were asked to select one of two stories to write. The first one was, “Clothes don’t make the man;” the second one was, “Clothes make the man.” I chose “Clothes make the man.” It was the worst grade I ever got.
The teacher was biased toward clothes don’t make the man. Well, I chose the one I felt would be the hardest to prove with theory and assumption. I had good arguments, and I think to this day that I did the best piece of writing in that class. The teacher had her mind made up: Anyone who chose what I chose would be wrong. “A wink is as good as a nod to a blind horse” was what I thought of the teacher’s grade.
I have proven that I was right in my lifetime, and I think that story is part of my success. You see, a person must believe something and then proceed to either prove or disprove their theory. My theory proved out over the years. My theory of clothes make the man built my character and my determination that I would someday be able to prove in fact that it was, beyond theory and assumptions, true in my case. Now, that does not mean it would be true in all of the classmates’ cases. This is what the teacher missed.
ALS: How did you prove you were right by fact?
POP: My assumption was that how a person feels affects their actions and reactions to situations in their lives. My main point was that someone who had good clothes and was dressed well would have a different feeling about themselves than someone who would be wearing, let’s say, just shorts in important situations. The key was “important situations.” Can you imagine being at a funeral in just shorts? How would you feel? Wouldn’t your actions and reactions be more agreeable with your feelings if you were dressed in good clothes? Of course, they would.
My fact proof came as a parallel to that article. I considered the well-dressed person and the well-knowledgeable trader as a parallel in points of feelings. In the pits trading with good knowledge (well-dressed) I felt more confident in trading. When welldressed in correct situations such as meetings and important events, I felt better confidence and my effectiveness was much higher. True, I am the same man, regardless of how I am dressed, but I am not the same person if I have not prepared my knowledge before I trade.
For the traders, I want to impress in their minds the same parallel. If you trade with lack of proper knowledge and behavior modification in situations the market will present you with, you are only wearing shorts at a funeral. How does that make you feel? It certainly won’t say to you, “Clothes don’t make the man!” It will strike you to know that being prepared properly is the same as having the proper clothes for any situation.
ALS: Okay, did you ever want to get back at that teacher?
POP: I don’t think I was smart enough to know what getting back at someone even meant as a child. I had lots of stars in my eyes. I still do, for that matter. It is a waste and non-productive of time to have anger or greed or regret or fear.
ALS: How about hope?
POP: Hope and love have a place in my life. Hope must be tied to action and plans. Love is my reflection of what I have given or am willing to give.
Phantom's Gift
By Art Simpson
Chapter 13: Quicker Than the Eye
"You really are looking at a reverse image. Sometimes it is important to see things differently than others." Phantom of the Pits
Usually a newly placed trade in any particular market is placed with the greatest optimism and with human elements of hope for its correct movement. Perhaps the hope for the correct movement is what keeps new traders mesmerized by the market’s inability to comply more times than not. Can it be possible that it is easier for a trader to do the wrong thing, or is it that, when a trader makes a trade, all the other information comes out two minutes later?
We will explore Phantom’s insight on why things seem to change rather quickly when a new trade is established. Why does the market seem to know when we have placed a new position? What does it take to expel this type of thinking and reaction to our newly placed position?
At what point do you feel that it is the other traders against you in trading? Why should you feel that someone who is giving objective advice is now your new enemy and on the other side after you have just positioned yourself? Doesn’t everyone?
Is it possible to do just the opposite of what we think is correct and come out ahead because we seem to do what we think is right and get slapped too many times? We are talking emotion here, and that is the one element that no one seems to have at the time of researching a position or entry. Once a position is placed, emotion becomes an element we don’t like to deal with. We get excited when the position moves our way but become complacent far too often when it totally ignores our hard-earned research for positioning.
Art Simpson (ALS): Phantom, I know you have said you are not an expert on anything except on your own trading. I also realize we are only talking about your insight and that you have said it is important for each trader to grow and develop his or her own ideas from insights they formulate from observation and research.
Sometimes it helps other traders to know other points of view on a subject. We know that everyone has his or her own ideas on what a particular market is going to do. Do you think it is important to view other people’s insights as a way of understanding our own behavior?
Phantom of the Pits (POP): I’ve read good books on the adult-child theory in trading. We start out as the child, and traders often never go beyond that point. Our thinking must become adult in trading, and that is from understanding and knowing what is correct. As a child, we often don’t need a reason but just the rule. As an adult, to be effective in trading, it is important to know why and not just the rule.
It is difficult to convey to someone an insight of what happens when a position is placed unless the person you are trying to convey the information to has the same position on and effectively has the same environment.
Just a simple thing as changing a flat tire is a good example of what I mean. If you are not the person who had to change the flat tire, the effect of frustration is not the same. Because of this, you are going to be more removed from the important feelings of such an event. Trading does have the same type of removal from a situation of a particular point of view as changing that tire.
Most trades are placed with good reason and backed with good research. If the trader didn’t feel they had a good chance of being successful with that trade, they never would have made that trade. That feeling of better-than-average probabilities is selfdefeating because, with that feeling alone, it is possible to miss the big moves by being wrong first.
I view the nature of entering positions a little differently, and I feel that is a key in better trading. It is not natural to feel other than optimistic about a trade. What must be done is that the optimistic view must be projected beyond the initial position.
The most important point of a newly established position is to understand that the initial entry of a trade is only a small part of the expected process of trading your position. Look at it as if you are going to make a series of trades anytime you get a signal. You must have the latitude of knowing and doing what it takes to correctly end up with a position that reaches to your goal. Your goal is the important part and not the trade you have just entered.
If I were to tell you that your signal to enter a market has the criteria that you must also be swift in protecting that position and correcting that position as quickly as you can, would you be able to reverse your position as many as three or four times. You would be more agreeable to that prospect by being alert to the possibility of having to reverse your original position. That thinking would make it easier for you to make the needed adjustments to your position. This is what you must do anytime you enter a position. You must know that the initial entered position is just the beginning of your trade.
Rather than taking a position and letting emotion enter the picture, you must understand that position does not justify any emotional modification of your thoughts. Stop that position before emotion even enters the trade by removing the position. You can re-enter the position correctly again and again until you have no emotional effect from that position. If your position brings emotion into the picture, it is usually wrong or the wrong way.
The market will seldom comply with your position at first, but that in no way says not to trade correctly. A lot of times your entry is at the place where many think the same as you. Don’t ever feel bad about this because you’re not alone in your thinking. It is that you seldom can all be right at the right time.
The edge you have over everyone else’s thinking is that you know you are quicker than the eye. You can remove your positions quickly because you are alert to the idea of knowing you can re-enter immediately quicker than the eye. A bad or incorrect position is the best opportunity to do the correct thing. You are going to always do the correct thing. Be swift! You can stop this emotional feeling of always getting in at the wrong place immediately, and it will soon become second nature to you.
If you find that you feel you are wrong as soon as you enter, remove that position because you are right (in removing that position!) Why do I know this works? I know that some of my best days and trades are when I started out wrong with a position. Learn to understand that an existing wrong position is the best excuse to get a good position.
So what if you are wrong and wrong and wrong again. The best part of being wrong is that you are going to do the correct thing by removing that wrong position. Listen to your inner thoughts on being wrong, and when emotion becomes an element, remove the position. It really works. Emotion has no place in a trade. If emotion is in your trade, it is a wrong position.
ALS: It seems easy to say but how about executing the idea of getting out when emotion shows its face in your trade?
POP: You must make it a mechanical thing. It can be done in various ways. Most new traders don’t have enough funds to diversify properly so they have several positions, which gives them the opportunity of throwing out the bad and keeping the good with lower overall risk proportionally.
There are other ways of making the removal of emotional positions mechanical such as when you use Rule 1. You are not going to become as emotional when a position proves correct as when it proves wrong. So what you need to do is listen to yourself and your emotional distress of knowing that you and not the markets are going to tell yourself that you are wrong in a position. Your emotional distress is telling you to remove the position immediately. Do that without hesitation, and it becomes mechanical to you.
Isn’t the purpose of Rule 1 to also listen to yourself and not the market on telling yourself when you are wrong. If you let the market tell you, you have an elevated emotional distress, which now will affect your judgment and decision to remove a bad position properly. Because we don’t allow the market to tell us when we are wrong but only when we are right, we must have something tell us when we are wrong. What do you think that is? There is probably not a better signal to get out than the beginning of elevated emotion in a trade.
I know it take practice and a method of behavior modification, which you must devise to help you work with the implications of emotional elevation when wrong in a trade. You can do it and make it a habit after a little practice. It is no different than if you were to go to a stranger each day and say good day. After a period of doing it, you would find it second nature.
ALS: Aren’t you going to give us your methods or suggestions for helping with the behavior modification on getting out of bad positions?
POP: If you have to unbutton your top button on your shirt, you had better get out. If the phone ringing irritates you, you had better get out. If you are beyond your reasonable time frame to hold a position that does not prove correct, you had better get out.
We know a broken clock is right twice a day. You could assume that when you don’t know the position is correct, you just as well reverse as you still won’t know, but you can be sure you will soon know one way or the other. Of course, this isn’t a very good assumption so it will actually keep you on your toes more than anything else will.
This can also be a dangerous way to position but, believe it or not, I have seen day-traders position this way to establish a position when the trend is not established. I don’t personally recommend it, but I don’t advise against it if you do it with good research of non-trending markets. Sometimes your best opportunity comes when you have initially entered a bad trade. The opportunity is that you correct a bad position and profit from that wrong position being corrected. It happens more than not if you
are alerted to this thinking.
Be swift is all I can say to impress you to this possibility in markets. The surprise is often the other side of our current position. Just because we have the expected side of a trade does not prevent us from going with the surprise side when we know our position is wrong. In a correctly proven position, we never go against that position, though.
ALS: Do you feel it is easier to put the wrong position on rather than the right position?
POP: Actually, it works out that what we have just done is often not proved correct, but that does not mean putting on the wrong position is easier than the correct position.
There is another element that gives us the feeling that we seem to see the market go against us as soon as we enter. That element is timing. Timing will cheat us more than not. An inexperienced trader will fail to recognize the importance of persistence in our re-positioning after removal of a position. Just because we exited an unproven position in no way says we were wrong. It is our intention to keep the drawdown small and allow us a better entry when we are not proven correct.
Isn’t it better to get out if you don’t get the expected move? You want to be swift when the market is working for you, and you want to have the least exposure you can have when it isn’t working for you. I realize most markets spend lots more time going up than down, and your exposure will be longer in a bull market than a bear. But why diddle in the middle when the market is doing its chop-chop? You use the chop-chop to better position and to cheapen your position.
ALS: Just as soon as a position is placed we seem to hear all the news that does the opposite of confirming our entry. Why?
POP: After we enter a position, we are more open to listening to news that makes us more sensitive to doubt our position. The answer, of course, is to remove our position if the market does not confirm our position. If we see the news is against us, we surely are having doubts about the position, and it hasn’t proven correct in the first place. It is just another signal to ourselves that Rule 1 must be foremost upon a new entry above all else to keep emotion out of our thoughts. That way you can bring on any news and not let it directly affect your thinking.
ALS: Why does it seem the market knows when we have just placed our position?
POP: It is true that it seems to happen to us. I think every trader feels that way at one time or another until they learn to be mature in their understanding of how the markets react to waves of orders.
Price movement makes other traders decide to enter into a position. We tend to take obvious signals and entries, which many others are taking at the same time. Because of that, the market will appear to make a move against us immediately. Every trader will eventually face this impression. That is not a bad circumstance to have happen unless we don’t react properly to it. It happens much more than you think when the market turns very close to our entry. To be alert to that possibility is a must in trading at all times. To be able to have a plan to address that situation is critical in survival long term.
To eliminate the feeling of the market knowing when you enter and immediately moving against your position, you must know that the most critical time of a position is immediately upon entering. That is when you must be prepared to be the quickest to protect your position. I always consider the most dangerous time of a position is at entry because you do not have a proven position at that time. Why is the most dangerous time of a position upon entry? My answer is that it is because this is your only opportunity to keep your drawdown small if you aren’t proven correct with the position.
Keep your loss small and quick; act early while you have the opportunity, otherwise you will allow bigger losses to affect your loss taking and thinking. This is why I call entry the dangerous time of a position. It is your first opportunity to keep losses small. The first opportunity to keep losses small is your best opportunity. What you do immediately upon entry of a trade determines whether you will be a good loser and the best winner you can be.
ALS: I have often heard traders make the statement they should just do the opposite of what they think and they would trader better. What do you think of that statement?
POP: I also have heard that remark. I know my Dad thought that was a good strategy in my early trading days, too. It does have merits. Don’t get this wrong! The merits are that it is good thinking to have a plan for acting upon that thinking. Plan to know that what you do has a good possibility of being wrong and have a plan to do the opposite as soon as you know you don’t have a proven position. This works better in non-trending markets.
Let’s say you know a big news item is going to come out or you have just been given data from a big report. Your thinking could be that the news is already in the market but you aren’t sure. Most traders will trade accordingly and, when wrong, get out and that is that! Well, doing the opposite is the correct thing to do, but you do it because you were the wrong way to begin with after the data. It is important to avail yourself to all sides of a market in certain situations such as reports.
So you must admit the merits are true in a sense of that statement. You can do the opposite of what you think, even though you did something that was wrong at first. Isn’t that the same as doing the opposite of what you thought at first? In a roundabout way it is!
ALS: I have another question that just recently became pretty important. On a news channel an interview with a particular expert was like throwing gas on a fire. The traders who were positioned counter to a remark made felt the person making the remark was their enemy for making such a statement. Is this appropriate to have such remarks made, and is it destructive thinking to let it affect a person’s trading?
POP: It happens all the time. That is the first assumption you must make for it is true you will be more sensitive to a person’s remarks that are counter to your position. And I suppose that is okay to be sensitive as long as you keep emotion out of it. But keeping emotion out of it when you see a big slide or big runaway market is hard and almost impossible to ignore.
The true test of such remarks is what the market does in reaction. I have found over the years that markets do react to such remarks. But here is the key: You will have more than one reaction. You can use those reactions to your advantage if you remain swift in your market moves. In fact, you must be swift, and you must use what the market gives you for your advantage to position for profit.
Here is why you will tend to have more than one reaction. The local traders will see the remark or even a report of data first. Their reaction will be as a professional, and they will position according to their beliefs. At first it won’t be in unison but it will pick up a cadence of sorts, and you will see some kind of trend in pricing early. That is usually your first wave of buying or selling.
Next come the orders into the pit from those who have just gotten the news, and you see a further reaction to the news. The third wave of news is the customer (public) who has been told the news and has contacted or been contacted by their brokers. The third wave will usually be the strongest because the willingness to fade the news is less prominent when their orders reach the pit. This is when you have your thinnest market and when markets make new highs or lows.
After all three waves of orders are filled, you still have your stragglers who take positions upon learning the news. This could take a day and a half to enter the market. The news is seen on TV, heard on radio and read in the newspaper after the market is closed. That is part of my day-and-a-half theory on news items and events. Upon the conclusion of a day and a half of response and reaction to data or a critical news remark, the market usually comes to a plateau of understanding of equilibrium.
The second part of your question is that it is not constructive to become emotional about a news remark, but you should recognize the opportunity of such a remark being a mechanical reaction you can make to capitalize on other people’s behavior to emotion from such a remark. This sometimes will take a couple of days to play itself out.
It is important to understand that this can change the continuing trend, countertrend, non-trending or interday trading and void some trader’s signals. To be alert to this is crucial in following your protection of your positions. More times than not, you can cheapen your cost of your position by using the knowledge.
You can improve your cost of positions by using the news to properly split half of your profits and re-establish on the waves of orders. Or you can use the news to establish a trading range to have a better position than from putting it on all at once. In other words, you have the opportunity of scale trading due to an expected wider range of activity.
But keep in mind this must all be thought out in your trading plans, and you should be prepared at all times for these events to utilize them in your trading. Most systems do not take this into account. The surprise side is created often by, as you called it, adding fuel on the fire.
Its is sort of like watching someone pile logs up next to the fireplace. With almost certainty you can say with high probability as soon as you gather additional information what is going to happen. If the temperature is very cold, you can say there will be a fire in the fireplace from the knowledge you have gathered.
Well, news stories at critical turns in a market can do the same thing. You see the logs and you are waiting for the temperature to drop. You certainly don’t use a squirt gun on the match. You use the warmth to your advantage, even if you don’t like fireplaces. Same in trading. You use the warmth of news items to your advantage, even if you don’t like the fact it is against your current position. Change your ideas on events when you gather additional information whether fundamental, technical or tactical (as I call the mix.)
ALS: With a slide of the hand and quicker than the eye, we seem to get back to the same things in successful trading: knowledge gathering and behavior modification. Isn’t this most everyone’s theme in trading?
POP: You know, I don’t really know. I only know what I have learned over my years of trading. If it isn’t most experts’ themes, I would venture to guess it soon will be. I know there are those who will read this to improve understanding of insight into successful
trading. I know they can understand the problems of trading better because of what we are doing. I am not out to disprove any successful method by presenting my views on trading but only to enhance the possibilities.
ALS: I think there will be critics of your views.
POP: Do you really think so? I disagree with you. I am wrong in the markets a lot of the time, but I don’t think you are right with that statement. It is like going down one of two roads. Unless you go down both of them, you cannot say you chose to take the wrong one for the better view along the way.
It is the same in trading. I have presented a view along the way. It is just that I have been down both roads, and I can accurately express which road I feel is the better one to take. I am presenting an opportunity to expand horizons of trading within each trader’s mind. I am not presenting a limit or restriction to improved thinking on trading systems or criteria.
To be a critic, it is important to look at things from all views. You look in a mirror and you don’t even see yourself the way others do. It is reverse image. To be a good critic you must be able to see as others see. You must not rule out the reverse image as a correct view.
ALS: Is that what you consider your rules, reverse image?
POP: Very interesting observation. I suppose you could call Rule 1 a reverse image rule from what others see. It is just the opposite of most people’s understanding of what is necessary in trading rules.
We do make the market prove us right rather than wrong, and that is the reverse of common thinking. We do assume we are wrong and in an unfavorable game until proven correct. That is also reverse image. In Rule 2 we do press our winners, and that is the reverse of taking losses or the other side of the coin.
Yes, I guess that by looking in a mirror you could easily understand why others do not see as you do. You really are looking at a reverse image. Sometimes it is important to see things differently than others. I have learned it is better in trading to be different. You never need to conform to anyone’s view but your own in trading. Don’t forget that! Use your own ability to improve your behavior in trading.
Phantom's Gift
By Art Simpson
Chapter 14: Your Comeback After a Big Drawdown
"You want to establish your position prior to the increase in volatility. This will be your entry of the fourth day when the market breaks above the prior four day's highs." Phantom of the Pits
Art Simpson (ALS): Is it true that you have saved the best until last in your insights? (NOTE: At the time it was written, this was the last chapter of Phantom’s Gift. However, due to reader response and questions, the Phantom elaborated on some insights and presented other thoughts in additional chapters.)
Phantom of the Pits (POP): You will see as clearly as anyone can see that what I am going to tell you is the most exact and best information you will ever get in your entire trading career. You can call it the best. If it isn’t the best part of any book you ever read, I will send back every thought to the cleaners.
There are great authors, great advisors and great traders in the world of trading. There are great editors, great reporters and great teachers of trading. They all have a reputation. They carry that reputation well. I could never carry a reputation for it would be such a burden I could never survive. Great people have been able to deal with it like my friend John Denver, Don Gibson, Oprah and my brother. They have learned how to carry such heavy baggage in their lives.
Who I am is always going to be more important to myself than anyone else in the field of trading. It must be that way in order not to interfere with my duties of success. It isn’t a selfish thing; it is just that we must be in control first. You see, trading must be the most important thing in your life for it to be possible for you to become the trader you know you are capable of being.
You will take the blame and try to take the claim. But listen to me! You must never be so lost in your trading to think that your success is because of you.
Art, you have dropped some hints along the way with the events that have taken place. I can tell you that my faith in the small trader is no whim. As I read your brother’s memorial to John Denver (see chapter by Harold Simpson), I realize Harold said it as perfectly as anyone could say the true reason of what this is about. “Was I somehow meant to be here? Was this moment just coincidentally mine for my imagination to make it as I will, or was I supposed to be a part of all this?”
I can figure theorems pretty well from the facts I am given, and I can assure you that you and I have learned a great deal from this project. We have learned more than we started out to give. We have learned more than we could imagine in a lifetime. Do you know the mail and understanding I have received over just the last two weeks (NOTE: from Futures Talk forum participants following John Denver’s death)? I know you have seen the response, too.
I have it calculated we could put no less than a 1,024-page book together of those we can thank for not our, but their, insights. It is overwhelming to think that we are alone. But being alone is what trading is about. It is very lonely in the world of trading.
I can tell you that our experience has opened our eyes and unlocked our hearts because of what has happened to us by being a part of the Futures forum. What a step forward it has been to see the speed of thought in our lives today. I believe, because of the faster speed of communications, the markets are quicker today and my rules are even more appropriate.
I don’t know why I say my rules anymore for I feel they are supposed to be the small traders’ rules now. I don’t mind or regret the route it took to give what I have to give. I am not capable of carrying a burden. I have just lately learned what tears are about. I have been told, scolded and directed to a different light in my life. It has all been for a good reason, and I thank my new teachers for all of the effort to let me be in their class.
You must accept my thanks and appreciation for your understanding of my weakness and loneliness of trading. Only a trader can understand that darkness. I thought I was alone but find out there are many lights along the path. Those lights are our newfound friends who have walked the path, strategically placing their brilliance so we can continue our walk.
What a joy to receive the oldest book of Shakespeare form New England. What a lesson to receive guidance from more countries than I have visited. It’s important to learn again the zip code of every state in the U.S. It’s an important lesson to learn what I would
never have imagined 30 years ago of how thought and feelings could transit the world so quickly. This is my shock to new learned knowledge.
Winston Churchill once stated, “This is not the end or the beginning of the end but could very well be the end of the beginning.” We’ll accept that. We have started! It gets better. There are more of us now. I no longer shall have to walk around in a majority of one.
It is going to be difficult because there are those who would pull my mask off. But all I can ask is for understanding -understanding of why I do not want or, mostly, why I cannot accept credit for my insights. To answer your brother, Harold, yes, I was meant to be here! As long as I know why I was chosen to be here. Only others can tell me why I am here. I shall listen to them! They will give me joy from their hearts and allow me to bow at their feet in appreciation, for they know more than I of what need brings in my life.
Traders are a macho bunch but look at me, Art! Am I macho and the true image of what a trader looks or acts to be in the world of finance? No, I am just a teddy bear in my own world of big complications. I am a very simple man and a small image of God.
I no longer shall ask Harold’s question. I accept the idea that I truly am supposed to be here, and I have the responsibility to respond and give what I can give to satisfy my inner needs or my boss. You and I know it is the readers and the givers on the forums and all walks of life who are the guides in our lives. We have learned behavior modification well and acknowledge that criteria in our lives from here forward.
Just ask and you shall have the answer. But it is in your own thinking that the appropriate ration be dealt. Consider your reasons and you shall change your destiny. It is Phantom’s duty to follow and see that you don’t stumble for I have already walked the path. I do not lead and I do not follow. I only walk your path in appreciation of knowing you shall grow and be the leader that is expected of you.
I need to show the starving how to take a bushel of rice and, instead of eating it, sowing it instead and learning the magnification of effort in prosperity. The starving are my traders who are my little Phantoms in an overwhelming world of giants. My Phantoms shall become the leaders in the world of traders – not by my hand but by their own. You see, they are the chosen ones to lead the New World of finance. There are cycles and a new one shall surface. The little Phantoms shall learn the smile of trading in their lives. What more could you ever wish for them!
Art, I hope your wife isn’t getting tired of my stepping on her cats. It has been good to share some of the sad times with you both and the traders who have helped us get beyond a period of sadness in our lives. I know some day your hill behind your house will be famous. I expect your brother, Harold, has already renamed it. Take it to heart. It is not your hill. It’s only your walk, which is yours. It is the same in trading. It is not our success; it is theirs. Not by forfeiture but by design, the student of a good teacher shall surpass the teacher.
I asked Alfredo if we could use his ideas from a post (to the Futures forum) to convey more of what my intentions are. It surprises me that others seem to pick up on what I am supposed to do more than I do. Look at his posting (below).
Can you forgive me for not sticking to the subject on this chapter?
ALS: I and the readers and traders understand where you are coming from and the importance of what it is to walk alone. I know you are pouring your heart out to us in an effort to show your genuine appreciation of what has been given to you. I know you are humbled again by what others have presented to you. You have always prepared yourself for the possibilities as well as the expected probabilities in your trading. When it comes to being an expert on everything, it just can’t happen.
I know what a genius you are and how it sometimes robs you of simple happiness that most people take for granted. To continuously move swiftly into the next step of life is true, as you have stated thus far. Opposition to the unknown is high. You are no different than any other person or trader. It is just that you have been given a different view on life, events and reactions to events that puts you where you are. You have been given a gift, and you are the first one to accept that you do not have a right to accept any credit for what you have been given. It is your time to give back!
So it takes us a little longer to get to our chapter theme? We have only shown what an ordinary person the Phantom really is. You are no different from the inside out than any other trader. You may see the line a little more clearly; as you said, you are the observer and you do see the line in the sand. You have been patient enough to wait for others to see the line in the sand. And they will see the line in the sand. It only needs to be pointed out to them that there really is such a line.
Phantom, I am not saying this because you are my long-time friend but because it has been proven to me. You are the light in the lighthouse for the future, current, expert and novice traders, not just in the U.S. but in the entire world. You are their hero because you dared to be great. And you are great.
Anyone who could teach Christine to sing surely must be worth something (said with a grin) in somebody’s life! The fact of you, Phantom, is that you are a very simple man! That is what you have always wanted to be! So be it!
POP: Do I have your wife sew my buttons back on? You have exposed me more than I could ever have shown. I have to put it in the category of committing a random act of kindness! I do appreciate what you are trying to do. Let’s just turn the tables a bit here so the readers know more about you now.
You see, I know of your love for music and your first trip to Nashville in the 1960s and your collusion with Floyd Cramer on your song. I know you didn’t make much on your first song and that trading has been better to you. Maybe you should go back to your first love, no offense to your only wife ever! After all, what is important in life?
ALS: My brother is the singer and the musical part of our brain sides. It is funny how daring to be great can change our lives. It is the same with traders. You hear! Go ahead and dare to be great! Phantom knows it can be done, and he is giving you the gift. Somewhere you will know how the thank you will be directed.
I am impressed with the faith you have in the small trader. Just today on CNN I heard an expert say just that same thing about the small trader leading the way. It is true, you know, that the word has been written already. A small trader can and, Phantom, if you are correct, will make a big difference in life. I use faith and not hope in your view.
You know, Phantom, if we keep this up, we are going to have to pay the readers and the other traders to pay attention to us!
POP: We know where we are going so what difference does it make if we can be real people like everyone else. I think that, for the first time in my life, I have an outlook on life, which is a total shock. I can’t get enough. I don’t care what my positions do tomorrow.
ALS: You never did! I guess that is why you are who you are. If the other traders who read your insights can understand how simple it can be to not care because of your rules and just do it – DO IT! I mean, as you say, it only matters what you do with your losers that determines your success.
I don’t mean to change the subject, but the CD we are listening to now is Floyd’s “Losers - Weepers.” Do you think that has any significance in this interview?
POP: Yes, Keep emotion out of it. If you do the right thing in trading, never be a weeper. Hey, that is pretty good, don’t you think?
ALS: 12:15 a.m. and I have your attention and tomorrow is Friday. I know you have big positions on in the stocks. It is a long drive to Chicago! How do you think you will trade tomorrow?
POP: The same as always. I will sell more corn on the rally and cover when I am wrong. That will be at 9:30 a.m. But, first, I will run the stocks. Lucky I covered on the close today. It has been down and then up. I like it. More opportunity for us tomorrow, don’t you think?
ALS: Why don’t you just take tomorrow off?
POP: Okay, I will get out at the open or perhaps we can do it before tomorrow’s open with the night trading.
ALS: How far do you think the corn will move if you get out tonight?
POP: You don’t even want to know! At least I am on the right side. We could see by going at the market heavy. I can’t for I know better. Okay, we’ll just have to look for a Saturday and Sunday walk back to the top of the hill.
I notice that song you wrote in the 1960s is now playing on your CD. Are you ever sad you sold it for such a miser of a penny?
ALS: You may not know how much I got for that song. It is the best price anyone could ever get for a song. I have the greatest memories. I don’t make many of them anymore. Nor do you, I bet!
POP: I’m pretty simple! My memories are no different than our traders’ . . . or our little Phantoms, I mean. I hope Phantoms can grow up faster than children. I don’t want to watch from the sidelines. I want to pass the ball once in a while.
ALS: Phantom, we are losing out here. I think this is all going to be cut from the book. Maybe we had better call it a night until we get back on the subject.
POP: Okay, we can cut our losses. We will start over again. I just want you to do one thing for me tonight before I head back. Put
this on the Futures forum and let the other traders know I am one of them. I’m no different. I’m just a bigger size!
ALS: Okay, you win again. I will be up until you get home. See you for the true part of our trading after the big DD.
POP: I’m going to take that bushel of rice to starving you now! First, I would like to go to Lake Tahoe for the best chateaubriand. See you beyond!
ALS: We will get to the point soon!
Alfredo's posting
(Note: Alfredo posted the following in relating his view on the parallel of Phantom’s rules with his beloved game of chess.)
[top] [post reply]
Date: 30.Oct. 1997 (Thu) - 06:03
Author: Alfredo A.
I consider myself a weak amateur of the game of chess. But an amateur (in the sense of lover) nevertheless. There are some fundamentals that even beginning players know they must execute properly in order to stand a chance of at least forcing a draw against a better player, or checkmating a weaker one.
The opening is critical. You have to be both aggressive as well as defensive and work your pawns looking 10 or 12 moves down the road. Some games are won during the first five or six moves. (Phantom’s Rule 1 ???)
Next comes the consolidation. You develop your horses, bishops and towers and protect your king. You are preparing your pieces in such manner as to later permit you to launch a successful attack. You explore the weaknesses demonstrated by your opponent. You try to tire him as much as possible. (Phantom Rule 2dots2 \ldots. . press your winners ??? )
If possible, the final attacks and checkmate. Against a stronger player, a draw will do. (Phantom Rule 3 – this one he owes us -when to liquidate and take your profits ??? )
Battles are battles, be they on the air, sea, land, chessboard or the PITS. Is this a very futile analogy???
Any chess players out there to correct/improve my reasoning?
Good trading
ALS: Phantom, I think Alfredo has you pegged pretty well! Did you ever play chess?
POP: In my younger days I would pride myself in chess but as I grew older, I never felt I had much time for the game. I should play more chess to relax, but there are so many things to do now.
ALS: We’ll cover your chess matches someday but for now let’s go to “trading after the big drawdown.” Why do want to put this part in?
POP: First, it was a question that one of the forum followers posted, and I want to answer their questions. It is a good question. Second, most traders wouldn’t be reading this if they had never faced a similar situation as a big drawdown.
It can happen in so many ways. I am not going to judge why a trader would have a big drawdown because it has searched each of us out at one time or another. A big drawdown is what will stop you from trading. I am going to approach the reason for the big drawdown as if a trader had 15 losers in a row! I am not going to judge any other reason of character as to why the big drawdown occurred. I want you to also forget the reason for your misfortune from here forward.
ALS: We both know that holding a loser too long is the biggest cause of the big drawdown! Why are you so kind?
POP: Really, this is the best part and to go forward is what we are after here. We don’t look back except to learn from what has happened in this case. Another reason I want to approach the drawdown as having a series of losses in a row is because that is
an event that happens every once in a while.
We are going to recover, and I shall show you how to recover after the big drawdown. I am pretty intent on not giving you specific trading plans or signals from my programs, but I do need to give you the way to recover.
To do it correctly, I will have to give you a good suggestion to take in your recovery. I want you to research on your own and take the suggestion only after you have understood the suggestion correctly and can approve of what I say to you on your own. In the end it will be you who make the decision to make the trades. Therefore, please verify your data. It leaves some interpretation to you, the trader, in your trading program.
To start, we are going to make sure we have enough funds to continue to trade. If you don’t really have enough funds, then you should postpone until a later date. Notice I did not say you had to quit trading! We all quit trading for some reason. It is just that your reason is different at this time. Okay, we proceed now that you are satisfied you have enough money to continue to recover from your past misfortune.
I want you to go into the next stage of your trading by accepting an assumption. I want you to accept an assumption that you have made 15 trades in a row that have all made money.
ALS: I thought you said we were going to assume the big drawdown was caused by 15 losing trades in a row. What do you mean now when you say, “Assume you have 15 trades in a row that have made money”?
POP: Frame of mind is what I am changing for you by asking you to make an assumption that you have 15 winners in a row. The reason I am asking you to do this is because you will be more careful if you have had 15 winners in a row. If you assume you had 15 losers in a row, you will be sort of careless in your thinking by expecting that, surely, you won’t have many more losers in a row.
Your frame of mind with 15 winners in a row will put you on the edge of caution. I want you to be on the edge of caution. Or we could call it being alert to quick market changes. You can no longer afford to make a bad trade, and now that puts you at a disadvantage. We will turn that table from here forward by doing the following suggestions.
First, you must know what your risk to the dollar is going to be on each trade from here forward until you get to a point of recovering from your big drawdown. How many ways can you know your true risk to the dollar on your trades? Actually, with options you can but only if you are a buyer. There are other ways to do this, too, by using butterflies in futures positions and by using three contract months, but this is too advanced for you at this time so we will stick to options.
I don’t like to give trading advice, but it is imperative at this point that you understand we are talking about an exception. You do need some advice as to where you can find the correct road. You know what you want, and I am only giving you directions on which road has what you want along the way. I am not going to give you specific advice but a method of turns and directions to get you on the road and headed in the correct direction.
Second, I am going to tell you that you can and will recover after the drawdown if you do not take a side road along the way. You can get to where you are going, but you only have enough gas (money) to get you to that point. Don’t take any detours. Sometimes it is not as much fun to head straight down the road with one purpose in mind. That is your only handicap. You have a good choice to make. Knowing you can do it by following the road correctly is a good choice. Should you decide differently, you are putting the recovery in your own hands.
Take out your chart book and study it. Tell yourself the nature of the market you are studying! Pick only your best eight markets. Try to diversify to a point that they don’t all tend to trend together or that they are all related in their behavior. Pick out the existing trends of the eight markets. Write them down and notice how many are in up trends and how many are in down trends. You’ll most likely see that most are not in trends at all. At this point it makes no difference. You are not in a hurry except to make the right trades at the right time.
What you are going to do in your recovery is to put as many aspects of trading in your favor as you can to change the law of probabilities of recovery in your favor. By knowing the trends of your chosen markets, you are to classify them as bullish, bearish or non-trending. Seems simple enough, doesn’t it?
Place the bearish and non-trending market charts aside for this day and pick them up again tomorrow to see if any changes have been noticed in behavior. You are going to concentrate on the bullish established trends at this time.
The main reason we need eight of your favorite markets is because we are only making the highest probable trades and we need to diversify. You are also going to put advantages on our side. You have a better chance to predict a bull trend than a bear or tired trend. Or do You? Sometimes a tired or bear trend is easier to see. Bear markets tend to move down quicker than bull markets move up. Or do they? You don’t really know, do you?
Okay, do your research and look at the market behavior from today backwards a few years at least. Learn from this research. It won’t do you any good for me to tell you since each market can react a little differently. At any rate, I want you to know, not me.
You are going to use options for your recovery because we can limit your exact known loss. Futures tend not to give you an exact known loss when you enter due to the variable factors you have no control over. You also get other benefits from options that you can’t get from futures.
The best advantage we are looking for in options is the fact that, in bull markets, options pick up and increase in volatility most of the time. Because of our limited required risk, we can use the bull market’s increased volatility tendency to our advantage.
In a bear market options tend to lose volatility. Because you don’t want to sell options and have open-ended risk, we rule out the bear markets for your recovery.
Also bull markets tend to spend more time going up than bear markets do going down. Markets, that go up give us more time to increase volatility as open interest builds and interest increases. Bear markets tend to lose traders’ interest. Or do they? Do your research!
I am not going to give you a lesson in options as there are experts and software programs on about any aspect of options you could want to learn. If you are interested in learning more during your recovery, by all means do it. You are, however, going to use the best part of options for your recovery. You are going to put increased volatility on your side as a part of your plan.
Now that you have your vehicle for recovery, you need to get a friendly trend working for you with some information in your corner that also has some help from the charts and from research. Isn’t it a good assumption that, in bull markets, volume and open interest tend to increase? Isn’t it a good assumption that increased volume and open interest increase volatility? Isn’t it a good assumption that markets tend to have three major waves of buying in a bull move? Again, please do your research so you have confidence those statements are true and good assumptions.
After looking at all of the charts to determine if any bull market is established, you are ready to make a trade when the parameters are correct. Just what are the correct parameters? First, you must find a bull trend in one of your markets. Next, you must learn which phase it is in. Is it in the first, second or third wave up? How do you tell?
The answer can be several possibilities. You are going to research your own possibilities! You will have to make your own assumptions. When you are convinced a bull trend has started, look for a four-day reversal. At that point you shall call that wave one of buying. Look further and see if you have any other four-day counter trends. If you can point out another, let us call that wave two. And then look for a third. You may have to look backwards in your research to find some examples.
On your current charts, look for a market that is established as a bull market. What you want to find is a possible four-day counter trend starting to develop. We want it to be in the first wave of buying in the established bull market. You could look at the second four-day counter trend development, but we want the most powerful opportunity.
You will want to take a position on the first four-day counter trend in the direction of the bull trend. You can make it one of two ways. You can do it on the breakout of the fourth day’s highs when it breaks above the previous four days or you can position when the move is above the high of the established bull move. The best way in your case is the first. You want to establish your position prior to the increase in volatility. This will be your entry of the fourth day when the market breaks above the prior four days’ highs.
You have a pretty good idea of what you want to do and how you want to enter your trade. You are looking for a limited risk trade when you have an established bull trend. You are expecting to be wrong but with limited risk by buying calls, you can make the trade. You want to either place a call bull spread or purchase the next higher strike call, depending on your capital available for trading.
You must decide what amount of risk you can afford to take based on your account size at this time. It is your decision. A rule of thumb is 10%10 \% of your capital on the trade. If the bull spread costs you $500\$ 500 and you have $5,000\$ 5,000 in your account, we can go along with it. After you put the trade on, you will be looking to get out when it is half value or your position has met the criteria to press, get out or reverse.
You want to trade the option with at least 40-60 days of time remaining. An option with less than 40 days remaining will leave you too little time to participate in a good trend without losing too much time value. You can position an option with time upwards of 120-180 days with little problem, but in a good bull move, the closest contract will be the faster volatility mover. You are after the fast volatility move in this position.
Your trade can benefit from any increased volatility in the established bull market and the fact you have entered at the first phase of a bull market. Your entry point is a critical point in that you are going to see either a continuing of the trend or a failure of the
continuation. You have used Rule 1 by limiting your exposure and risk. You have set your limit on your risk, and you are expecting to only lose half of your risk by placing an order to get out of the position once you have lost half of the value of the option. If the option reduces in value by one-half, you surely are not in the trend anymore at that time or you have moved too close to expiration. You move to the next trade!
The other criteria of removal of the position is failure of the four-day counter trend to re-establish the continuation of the existing trend. A failure is confirmed when you have moved below the prior four-day lows during the next trading day. You could have a very fast trade if wrong and a long ride if correct. Be prepared to recognize the failure or the continuation. With your option position, you are protected in the amount of drawdown, but be swift in preserving your funds when not proven to be correct.
You can take the second four-day counter trend to establish an added position by using Rule 2 but only if you were able to properly establish the first four-day counter trend position. Be under the assumption you may be too late on the third to establish positions. The third four-day counter trend can lead to some pretty wild swings if it fails to continue the trend but is still in a trend. This is the part of the bull trend you will want to think about taking profits. Because you are in a recovery stage, you must decide to take your money on this move rather than trying to force another trade. You make the next trade with the same criteria.
The importance of this type of positioning in your recovery is that you will make a much better return than what you risk when you catch both a bull trend and the increased volatility of the move. You want to make the most amount of money with the least amount of risk. You want as many factors working for you as you can possibly have.
You will be tempted to take the four-day counter trends in a bear market, but you have an additional drawback – that is, volatility most likely will fall and your expectations are reduced rather quickly on what is possible in the move. Therefore, it is recommended you stay with only bull trending markets and the first four-day counter trend.
You’ll find many advantages in this style of trading, but patience is rewarded in the long run by good gains only from waiting with the correct trend. On the other hand, running away from failures of continuation of a trend still leaves you with small losses. This is less fun than most trading done by you over the period when you had the drawdown.
There will be times you won’t have positions on – in fact, many times. But don’t let that be your downfall as you are not trading to trade but to recover from the big drawdown. The best benefit from this type of trading is that you will learn a lot about markets and options this way, too.
ALS: Let me review a little here. You are suggesting that, after a big drawdown, traders take at least eight markets, study them and determine which are in established bull trends. Next, you are saying you must see a four-day counter trend to enter an options position. You establish either a bull spread or bull call position in the direction of the original trend when the market takes out the prior four days’ high.
For protection you suggested a continuing trend failure is reason to get out on the next day if it goes below the prior four days’ low. Also, if the option loses one-half of its value, it is time to get out. You want at least 40-60 days of time left on the options. Have I left anything out?
POP: Yes, you want the first position on the first four-day counter trend and you want to press on the second four-day counter trend, but you want to use the third to take profits rather than add again. You only add on the second four-day counter trend, and it is best to establish on the first four-day counter trend of a bull move. You are looking for volatility to be your friend in a bull move, and you are expecting to have bigger profits in a bull move than your risk by at least a ratio of four to one.
ALS: Will this work every time?
POP: Of course not, but there are good merits presented here. As I have said before, I really have a lot of faith in the small trader. The large trader has all of the data to establish the good trades and has the funds to back up big drawdowns. I am not giving advice but presenting a situation that can lead to recovery from adverse market effects on drawdowns. I want the small traders to become the leaders I know they can be. It has to start somewhere, and I think it is going to start from a big drawdown for many of them.
No one is immune from market exposure. To control that exposure, first, we must trade with extra advantages on our side. We are doing that with this type of trading. We are trading with an established trend, and we are adding but only correctly. We also are protecting our position in two ways. Both Rules 1 and 2 come through again.
ALS: I have been meaning to say something about that – your two rules. As Alfredo mentioned in his chess parallel, he says you owe the readers a third rule of when to liquidate and take profits. What about Rule 3?
POP: I have said on the forum what I feel about taking profits and when to liquidate. I did include it in the recovery. I am a believer in taking profits in the third phase or wave and within three or four days of high-volume days. In most markets I like to take profits
within three days in most cases. I hope that gives some answers and makes a few traders alert to functions of profit-taking. I am not going into the detail at this time. I really have given more than I intended to give in this book on profit-taking.
I see as the most important aspect of Phantom trading at this time the understanding of Rules 1 and 2 . As far as giving a Rule 3 , not yet!
ALS: There are a lot of questions about Rule 2 yet. Most traders are still uncomfortable with it. They have taken to Rule 1 pretty well. We surely can explain Rule 2 a little better.
POP: Maybe we should do a followup on Rule 2. Let’s ask what questions are foremost in traders’ minds on the forum. If we don’t get it into this part of the book, we will do it in a later writing.
ALS: Okay, that sounds good to me. It also sounds like you might have another rule yet.
POP: Time will tell on whether there is to be a Rule 3.
ALS: Are you giving a hint here?
POP: Have you noticed how sometimes things don’t get written or interpreted correctly? I don’t care about errors about me or my career as I am in the background by my own asking, but I don’t like to see data wrong. I shall challenge when the data is wrong that affects a trader’s interpretation or their ability to trade correctly. How can I know unless I get feedback. I must get that feedback before I can move on to other points. I don’t mean to take so long in Rules 1 and 2, but there is no other way.
ALS: Should we cover some detail into recovery after the big drawdown a little more?
POP: No, let us wait and see the reflections coming back first.
Phantom's Gift
By Art Simpson
Chapter 15: Is the Market Always Correct?
Nov. 28, 1997
Everyone knows the market is always considered correct, and there isn’t reason to even dispute this belief. Most of our beliefs have been previously written or have been stated for years or decades by experts.
Phantom has hinted his feeling as to how he felt about the market being correct. He made the statement that he didn’t always agree. We felt it would be an important insight into trading plans by looking at his view on the subject.
Art Simpson (ALS): Phantom, do you feel the market is always correct?
Phantom of the Pits (POP): NO! NO! NO! Definitely not! Can you tell me who proved that to be a correct statement? Or can anyone tell me who proved it? This statement is the biggest reason traders are buying highs and selling lows.
ALS: They’re going to put you away with that kind of statement. They’re going to lock you up. You are going to lose all of your credibility unless you can make a good case for your disbelief, Phantom. You are taking on a lot of people.
POP: I guess I appear to be bad with that statement. The experts seldom know or acknowledge that trading is a losing game. A trader expects it to be a winning game. It is the same with the statement that the market is always correct. Whoever thinks it is possible the market could be wrong at times? Why do as many as 92%92 \% seem to lose in the markets?
I see the market as a continuing image of liquidity. A liquid market reacts differently to news situations and technical indicators than non-liquid markets. After all, what is the purpose of floor traders in the pits of different markets? It is to provide liquidity.
Liquid markets are the leaders in determining price. Non-liquid markets tend to be sloppy in price determination. We have the reason for different markets and the creation of new markets. It is to provide liquidity and ACCURATE price discovery.
If a news item is bullish or bearish in a non-liquid market, the bid and ask spread is usually wider than in a liquid market. Now, are we to believe a wide spread on bid and asked price is telling us the market is correct? I think not! Sure, you can try to make the same demand and supply argument in the market being correct, but lack of liquidity is an artificial market condition of demand and supply a lot of times. Not having an offer to sell is not the same as not having any product available. Sure, it can have an effect on changing price, but it is an artificial condition.
These artificial market conditions must be utilized in a good trading plan in order to survive. Our plan is to trade as long as you want. To not get caught in artificial market conditions requires criteria. Every trader has been told the market is always correct. The market is always in a process of moving away from what it currently says about a price. Does that say it is correct? It only says to me, “A market is more than a day!”
ALS: Yes, that is the first lesson you taught me in trading. I didn’t even know who you were when I learned that from you. It didn’t take me long to respect you and watch you in your trading. I’ve studied you ever since, and I feel I know you almost as well as you know yourself. I know there are those who study you now. I see by the respect shown toward you since you began this project that loyalty comes from the reflection of traders changing views about trading.
POP: A simple statement about markets being more than a day can change a person’s thoughts and lead to a different outcome. It says the market is changing every day, and what price it shows now is surely not correct all the time and definitely not correct for long.
You often see larger market moves in thin markets. Those who direct a fund know new prices generate new orders. So why wouldn’t they place desired positions in the market on thin days in the direction of their indicators? This does happen.
Now, are you telling me the market is correct at the close in thin markets at all times? I am telling you to look at both sides of the coin in thin markets. Why? The thin market move is not often going to hold without some kind of base building or reversal when liquidity comes into a market. The fund positioning in a thin market is going to see a slight advantage on thin days, but it is at their expense in the long run. After they have positioned, the market will tend to retrace.
When funds take profits in a thin market, it hurts their average price fill because the market will move farther than in very liquid markets. So it is a double-sided edge where there is a good side and a bad side. Okay, so it evens out pretty closely. Markets in trends do react differently in thin markets. It is important to have the knowledge of the difference of thin and liquid markets. This
never occurs to a trader most of the time because they are using price to generate their positions.
Markets are more than a day! This alone tells you not to believe the markets are always correct! This is a good reason to use Rule 2. Not all of your position will be established until or unless the market proves you correct.
ALS: Isn’t this a conflict to make the market prove you correct while not always believing the market is always correct? Doesn’t this present an implied conflict in your trading plan?
POP: Isn’t this the same conflict most traders use to get out of a position by getting stopped out? Even if the market were thin on the day they got stopped out? This is what traders think of when they say the pit is gunning for their stops. The fact is that, when the markets are thin, a trader’s chance is greater of being stopped out of a good position.
Why shouldn’t we turn this situation to our favor by using another rule in trading? Yes, there has been a third rule in my trading. Not everyone will want this rule. In the search for a third rule by our trader’s input and their looking for a third rule, they have come close but not exact on Rule 3… They wanted a rule to tell them where to take profits. This is their desired Rule 3, but they all have agreed they just could not justify a criteria for Rule 3 telling them when to take a profit.
You see, my Rule 3 takes into consideration both sides of the market instead of just taking profits. It also takes into account when to take positions off totally. Sometimes it will be to take profits and other times it will be to offset any position when the market’s criteria says to do so.
Rule 3 uses the criteria of the market not always being correct.
ALS: Do you want to state Rule 3 here?
POP: No, I don’t! I want the traders’ input now that they know they have been on the right track of Rule 3 but not quite getting to the important point in the criteria. I want them to think about it and give us input. We will state Rule 3 shortly. To just state Rule 3 without a lot of thought on their part will make the rule a little less useful to them. We need more information for them so they understand my view on the market being correct.
I have indicated on the Futures Talk forum the importance of several aspects on offsetting positions. There have been those who have asked. l’ve passed it on lightly. Some who have read my posts to the forum are picking up on it. You’ll be surprised at how punctual and accurate their input shall become after knowing they have been correct about a Rule 3 all the time.
We have traders for years and decades saying they see the market reflects all the market conditions by just looking at the last price. They continue to trade based on that fact. They make their trading programs based on that thought about the market always being correct. Why shouldn’t I use that to my advantage with a Rule 3? Why shouldn’t traders take advantage of that knowledge by modified behavior in their reaction to the current price?
I want to state again, "It just never occurred to most traders the market could be wrong! They think it is only their trading that is wrong all of the time. They continue to lose when they know they are correct. Just how can there be so much confilict in their trading plan. I’m saying the market is not always correct and that liquidity and timing are two elements that keep a market from always being correct.
In making this assumption, wouldn’t this help in positioning and exits? It is not complicated, but another rule to keep the advantage of a situation from being unfavorable at all times. My rule looks at the liquidity situation of a market and uses that knowledge for Rule 3.
Let us further explain our position on this thought! To review the statement,“Is the market always correct?” let’s start on even ground. Let’s say we do not know either way whether the statement is or isn’t accurate. Do we say the statement must be always correct or always incorrect to be a legitimate statement?
Why must we say always correct without exception? I start with the assumption that there are times when the market is not correct, and I will show you that side. It is important because I want to point out that you can trade correctly and lose money. Why do you lose money when you are correct? It is because the market is a true reflection of liquidity at any one time when a market is trading and not always based on a fundamental or a technical reason.
I know many experts are going to say that liquidity is really a technical or fundamental aspect of trading, and that helps prove the market is always correct. What about timing in a market? Is a market’s timing always correct? Why does the market prove the most people wrong and make more losers than winners? Think about this very carefully. Is the market not as we had all been taught or thought? Let us research that further.
By assuming the market is not always correct, I am going to show you that you can devise a better trading plan by just knowing you must question the correctness of the market being correct.
Most traders use either fundamental or technical reasons for trading. I like to use what I call “tactical” reasons, which include aspects outside of purely technical or fundamental aspects. Let us use examples of how markets can react in situations to better show our point.
Say, for example, a report came out that the orange crop was the smallest in history and the night before the report we had the worst freeze in history in the Florida crop area. Based on fundamentals, the orange juice market should go higher normally. Based on technical indicators, let us say the market shows a bullish trend being established. Before the open, the public knows no other information. At the day’s open, the market opens limit down with locked in sellers and offers, which build, and not one trade is made.
Now, the market is open and no trading is taking place and OJ is limit offer two hours into trading. The experts and the reports in the news make the following statement: “Well, we see the market is correct in proving that OJ was overpriced.”
How can you say that the market is correct when there are no buyers willing to buy? Any shorts in the markets are not willing to buy back! This does not show the market to be right in my book! It only shows me there is no liquidity in the market at this time.
Say the market closes limit offer. Now, are we to believe that from close to tomorrow’s open the market is always correct? And that this situation is correct during the time the market is closed and there is no market? How can the market be correct when there is no trading?
Okay, now we watch the next day’s open in OJ, and it opens limit bid with no trading the entire day. No additional news is available except the news reports stating, “The market proved to be correct today in that OJ was under priced.”
The only thing the news reports did for the last two days was to declare the current price correct. Let us say, for example, the stock market moved to a point of being halted for half an hour. Is the stock market right because of the halted trading?
While it is true we only have the current price to use to gauge our equity and balance our accounts, other criteria must be used to understand if the market is correct. I am not sure you are beginning to see my point here so we need to use another example.
ALS: When we say “market,” are we talking about the price of a contract currently or does “market” mean what is or has happened over time in a market action of a contract?
POP: That is a very good observation, and the question needs to be answered. You hear reports the market moved up today. Is the market correct in moving up? Say it opened lower and closed higher than the low but lower than yesterday. Is this moving up a correct statement? Or what if the market opened on its high and closed on the low but a point higher than yesterday. Is the statement, “The market moved higher,” correct? Is the market always correct?
What are the reporters referring to when they say the market? Their definition is “now,” I believe. That is what they mean about the market: now. “Correct” can be different, depending on their reference point. Timing can be different, depending on when the observation is made.
I hope you are seeing my point, but let me use an example of how a pit in a thin market might react to various situations to better relate our thoughts on the market not always being correct. Keep in mind the market’s price is a function of liquidity.
We will use a small pit in bread futures (no such futures contract). There are10 traders in the bread pit – two are brokers, five are day-traders and three are position traders. Yesterday March bread closed at 66 cents a loaf. The daily limit on bread futures is10 cents.
The two brokers have orders on the open, and all are executed at 66 and 67 cents. The positon traders in the pit have all kept their existing positions and not traded. The day-traders have positions on the other side of what the brokers orders were.
Because little activity was taking place, the position traders in the pit decide to leave and trade something else. The day -traders don’t see any big volume so they offset their positions with each other and the brokers orders when they come into the pit. When the day-traders in the pit have offset their positions, they leave and go to lunch for an extended time. Effectively for this day no change in open interest exists at this point. The only two left in the pit are the two brokers.
All of a sudden someone bought wheat, and it went limit up within 10 minutes. Now the pit brokers in the bread pit get large orders to buy bread futures. The brokers bid and bid and bid and now bread is bid limit up at 76 cents. The locals are eating lunch, and the position traders happen to be short. They all return to the pits as quickly as they can. No one wants to sell so the market closes limit bid.
Is the market always correct and correct now in bread futures? I still only see the market is not liquid. I don’t see this as being a market that is correct. Okay, the experts say that, yes, demand and supply have proved the market is correct because demand outstrips supply.
No one wants to sell, but this may not be correct just because the wheat market went up. Traders think this way, though, and that
is why I always look to sell the weakest market in a strong up move. It is because of the similar thinking toward the bread market that, when wheat goes limit up, bread should also.
Often, there are correlation’s until the positions are or can be filled. At that point the true market takes over when there are now no buyers. There are times the markets are not correct. It happens and those are often times of great opportunity.
You would never think of this side of trading if you only see the market is always correct. The experts are going to tell you this view is more of an interpretation view. I am going to tell you the opportunity of the surprise side is often because of the market not being correct.
There are times I do not consider the market correct. I feel it is useful in questioning the correctness of the market in certain situations. If there are situations where I must question the market for correctness, then there is always a possibility the market is incorrect, and I must be prepared for it.
Some days when we are seeing a topping action and the market makes several moves up and then back down, we are not seeing anything but good liquidity. So can you say the market is correct? With good liquidity, I consider the market correct. With poor liquidity, I do not consider the market always correct but possibly distorted.
Anytime I consider the market distorted, it is my judgment as to whether I consider the market correct, and I do not want to leave it to the market.
ALS: Isn’t that just another technical indicator you are using rather than debating the correctness of the market?
POP: If a market moves limit one way or the other and no trade takes place and you have both a gap and lack of liquidity, you can call the gap a technical indicator, but the lack of liquidity is a different flag in addition to a technical indicator. It is impossible to trade without liquidity, and those times are flagged as not fit for trading and a not-correct market.
You could have several days in a row of limit moves without the ability to establish a position. Which day do you want to pick as the one where the market is correct? Would you pick all of them, none of them or any one of them?
Art, let’s go back to the traders for input on whether the market is always correct. They now know there is a Rule 3. Let them discover it as best as they can. We shall state Rule 3 soon.
ALS: Okay, we now wait for input! Is the market always correct?
Part II: Is the Market Always Correct?
There are great traders and many great ideas. You usually can tell the great ideas from experience, and in our search for answers we know the input from Alfredo A. is always very worthy indeed. We felt the following post by Alfredo A. (on the Futures Talk forum) important enough to put in this section.
Alfredo A.'s post:
Phantom/Art/et al: Was travelling the past two weeks. Am excited by your concepts and developments of an eventual Rule Three relying heavily on volume/open interest/liquidity. I think you are definitely on the right track.
I personally don’t like and shy away from illiquid markets. We have all seen OJ go limit up for three days and then down for four sessions with no liquidity. You can get really hurt because you won’t even have a chance to implement Rules 1 and 2. (This is OJ, never mind pork bellies).
I like to watch OBV (on-balance volume) and be wary of major divergences. But a market (OJ) that sometimes trades only 300 lots of the first futures month per session is subject to violent price fluctuations, not to mention eventual attempts at manipulation, resulting in impairment of liquidity.
As for the markets being “correct,” I daresay they are never correct, and that that’s where you have a chance of making some money. The only “correct” market I can imagine is the SPOT market, where someone actually stops and the other side actually tenders the merchandise.
If, on the date of expiration of a gold contract, the last contract tendered is, say, at US$300 per ounce, then that perhaps is as “correct” a price as you can get. But as for futures, the very fact prices fluctuate constantly during one session shows there are differences between traders; for a market to be “correct,” there would have to be, by definition, unanimity. I think futures markets, at least in their nuances, are essentially “incorrect.” (Ergo, the importance of being proven correct.) But I also guess this
“incorrectness” adds to the fun of the game.
But, yes, I myself consider OI and volume very important, both as indicators of liquidity as well as giving us inklings about where prices might be going. It’s a shame the exchanges can’t get Ol to us faster as they do with volume, but I suppose that would be an operational impossibility.
Best regards and good trading.
Alfredo A.
Phantom felt Alfredo has lots of great ideas, and when we are fortunate enough to be presented with them, others should read them.
We need another chess piece on the board, and many of you have ideas and feel open interest and volume are very important. As Alfredo believes, they are important indicators of liquidity and give good feedback about where prices could be heading.
I believe we can trade our pawn in for another more useful piece to improve our trading. Phantom took note of Geoff Hughes’ thoughts as they show correct interpretation of the importance of volume and liquidity.
Geoff Hughes' view:
POP, what I THINK you are telling us is that Rule 3 pertains to volume. Volume = Liquidity. If a market rises on low volume, the market is incorrect, and a short order would be the best way to enter a trade. If the market rises on large volume, the market is correct, and a long trade would be the best route. This pattern would be reversed on a market that goes down. Open interest would be another factor in Rule 3. If open interest decreases in an up market, shorts are covering their losses. I think that’s right . . . not quite sure . .
Phantom liked seeing Geoff’s excellent interpretation of questioning a market with price and volume. David Palmer had great insight.
David Palmer's post:
Phantom, ALS and all. Thanks for stirring the creative juices on this forum. I’m certainly a better trader for the effort. On the volume/liquidity thought, I remember reading a while back that Phantom had mentioned he looked to take profits within 3 or 4 days of high-volume days, so this must be part of Rule 3 .
After reading the last posts, I attempted to build an indicator that would show me current volume relative to recent history. What I came up with was current volume divided by 45 -day highest volume minus 45 -day lowest volume times 100 to yield a percentage of range. I then averaged the percent volume over 5 days to smooth it and better see a trend.
Then, using Phantom’s 1//31 / 3 theory, I put alerts at 67%67 \% and 33%33 \%. Tell me if I get out on a limb here. This could almost be used as a confidence indicator for the price-discovery process. Anything in the upper third of the range could be considered “correct” price discovery, and anything in the lower third would definitely be suspect. Nothing special about the exact numbers used.
This seems to make sense. Any thoughts on this, anyone?
What do you think of David Palmer’s ideas? Phantom was impressed and indicated, with good testing, even if the criteria had to be modified slightly, it would be a very useful indicator. We will call it the Palmer indicator after David Palmer. Think this one over and put your thoughts on paper.
Randy Hogan always gives his thoughts plenty of time for accuracy and they are always well thought out. Take a look at his thoughts on Rule 3:
Randy Hogan's post:
Rule 3 thoughts . . . How often are markets thin? Can you tell a thin market as it’s trading or does Rule 3 criteria get us away from the effects of making a trade in one?
The comments l’ve read about offsetting are after a position is taken and the market moves in your favor (near high of day on a long, for instance). If the market doesn’t follow through immediately the next day (10 minutes in some markets, 30 minutes in others, etc.), the position is “offset.” Is this Rule 3 protection?
Can a thin market or an incorrect one last more than 1 day? Rule 3 criteria changes daily so the market must continue to prove, eliminating the possibility the position was taken and added to in an “incorrect” market.
That was a stab in the dark (with maybe a little light on in the background)!
Thanks . . .
Phantom’s thoughts on Randy’s ideas were that Rule 3 should do as he asked in getting away from making a trade in illiquid markets. Thin markets certainly can last more than a day. Alfredo had a good example in OJ.
Ulrich always questions both sides of a situation and has good insight. Phantom wanted to post part of his thoughts as being bold enough to agree the market is not always correct, a very big and unpopular stand. Here are a couple of Ulrich’s ideas:
Ulrich's ideas:
I stated the market is always correct before. I meant it in the way that your equity runs will always reveal the truth. If you lost, YOU lost. Not the market, the broker, etc. It was you putting on the trade, no one else.
The market itself is wrong most of the time. This is what gives opportunity to trade. If the market were to be right today, why should I trade it? I wouldn’t expect a move – would I? . . .
Ulrich usually hits the nail on the head because he never gives up his search. That is a characteristic that leads to great trades.
Phantom appreciated all the input and didn’t want to leave anyone out of the input process as he feels it is very useful. How often do you come face to face when the market is closed to search out ideas that have been around for a long time. Many of those ideas of the past are in need of discovery as to the correctness of them.
I asked Phantom if he would want to expand on the input he received. His comment was that, yes, indeed he would. We shall come up with what will be known not as Rule 3 (his rule) but “THE THIRD RULE,” which is their rule.
Thanks for your input and thoughts on improving a knowledge and behavior search beyond Phantom’s Rules 1 and 2.
Phantom's Gift
By Art Simpson
Chapter 16: Rule 3, You Say?
“It’s all the traders, you and me, who will be satisfied with Rule 3 at its conclusion.” Phantom of the Pits
I’ve noticed a lot of arrows drawn on pieces of papers, a few triangles and other strange dittos. I thought they might be new flow charts for another one of Phantom’s computer programs. It’s not unusual to have scribbles that turn into worthless pieces of paper shortly after the markets are closed and are tossed out to the circular file.
These particular scribbles didn’t get thrown away, and that made me more interested in them. Because they didn’t make any sense to me, I decided to ask Phantom just what they were. He was a bit uneasy about them and didn’t want to detail any of them.
I decided to try and figure this out myself. Here is what I saw. In his first set of scribbles, there were arrows and two triangles. The first set contained four arrows. The first arrow pointed to the top of the page, and the second pointed to the right of the first arrow. The last two arrows pointed from the other two arrows down toward the bottom of the paper, and the last pointed to the left side of the paper. In other words, what we had here was your old ordinary “to turn left, make three right turns.”
The next set of arrows had but two arrows. One pointed to the top of the page and the other to the left of the first arrow. In other words, we now had the old “turn left directly” symbol.
To the left of both sets of arrows was a triangle, indicating one of two choices. It still looked like a flow chart for a program to me at this point.
But wait, there it is! I see it at the bottom of the page. In very small letters are the words “rule three.” Great, I thought, Phantom is going to give us Rule 3 just like everyone had asked.
Traders on the Futures Talk forum had asked Phantom to give them Rule 3 to tell them when they should take their profits. Their feelings were that the circle must be completed. The traders were beginning to understand Rule 1 in getting into a position and whether to keep the position established. They were also beginning to understand Rule 2 better and what the purpose and advantage of adding to correct positions would do for them.
Could it be that Phantom has had a Rule 3 all the time? Did he just not want to share this rule? I wasn’t sure about Rule 3 in his trading career as I thought I knew reasonably well how he traded. How had he kept it from me? Why wouldn’t he share his Rule 3 with us? So many questions ran through my mind.
I turned the papers over, and I was a little disappointed in what I saw. Nothing other than a big question mark was on the other side. There was nothing written on the pages except the scribbles and “rule three” at the bottom.
Art Simpson (ALS): Phantom, about Rule 3, what can you tell me so I can pass your insight on to our traders as we had agreed upon when we started this project?
Phantom of the Pits (POP): I am afraid I have let them down, Art! I don’t have a Rule 3 as such. What the traders are asking of me is more automatic for me than a rule. When to take profits is not an easy and clear-cut rule.
You see, my rules have been set up to address the nature of trading as a losing game and to keep losses small. This is the most important aspect of trading and to add to correct positions when correct. To have a rule on taking profits is to have a rule that is second nature most of the time.
I can understand the point of view that taking profits must be done correctly also. Though it might be second nature for me, I am learning that important insight on that aspect is just as important to our traders.
We will come up with a Rule 3. Did you notice I said “we?” It’s all the traders, you and me who will be satisfied with Rule 3 at its conclusion. It is not clear yet at this time, but we shall do what we discover as correct.
If you take a beaker of dirt and water, what do you get when you stir it up?
ALS: The clear water becomes muddy. Is the rule going to be revolutionary?
POP: Okay. Well, that is what taking profits becomes when it is time to take them. Revolutionary, as you say, and I suppose revolutionary Rule 3 will be the most liked rule of all! There are so many variables that we can’t just