The HedgeFund Economy

[fxfox]

i just wanna repeat this post for those who didnt see the edit:

 

 

can anyone confirm:

 

from Dec1st on, all the FCM's in the US only are allowed to offer maximum leverage of 1:50, they are not allowed 1:100 or 1:200 anymore. I read that on a other site. Is this information correct?

 

TIA

 

Edit:

 

i jsut had a chat with a forex broker:

 

hello there, i just want to ask if it is correct, that from dec1st on all the FCM's in the US only can offer 1:50 leverage and not 1:100 or 1:200 anymore?

broker;: that is correct...but that rule only applies to the initial margin requriement

broker;: necessary to open a new position

broker;: not maintenance margin or the margin required to maintain a position, which will remain unchanged

 

does that only count for forex brokers or for all brokers in the US?

broker;: it counts for all registered FCMs under the juristiction of the CFTC and the NFA

 

so folks, from Dec1st on the minimum initial margin requriment will be 2%, there will be no 0.5% or 1% anymore, bastards!

[Captain's Log]

i can tell you that i wish id paid more attention to Simple Guy; in hindsight he may have been in a class by himself.  i dont remember exactly what happened, but i think he was criticized right off the Stool.

Here Here ! I sincerely regret SG got run off as well.

He was a top 5 trader and I'm pissed we have lost him. (If anybody knows where he his, please PM me.)

 

I hope Piles is going to continue to fart wet ones around here. Cut the personal crap out against him PLEASE.

 

If Piles is going long and you are short, question YOUR trade ! Just because it goes against your position doesn't mean you should tear him out. Piles has a better track record than me, so I will give him a personal reference.

 

Piles is not a dogmatic bull but a trader. He will swing on a spider's foreskin between being a bull to a bear and vice versa. He has previously published his short list which he stopped when mkt changed. Please do not feck him over and drive him away just because "fundamentals are right...market will drop etc".

 

Yes, I agree with y'all that fundamtals are right for a drop but if TA's are out of synch of timing, forget it. They will come eventinually. Don't Let Piles be your conduit for this frustration.

 

We need independence here and Capitalstool is not a "YES" board. We may be "Bearish" but we are not "100% Bear".

 

Respect for opinion is paramount for knowledge.

[slinger]

Thanks Maxxi Miser for the heads up on the bullhorns. Another name for a bulloney bullhorn is broadening top. This site explains it well.

[Captain's Log]

Because of all this, and also my suspicion of much, much more sophisticated, and totalitarian, Matrix control of the markets, I believe a redo of Hurst's work, also adding some studies you suggest, is very appropriate and completely necessary.

 

If you plan to do this, let me know of any way that I can assist you. This could be a lot of work, even with modern computer tools, and I will help to the extent I am able.

Ron - you have a very good fundamental question: "Has the basis for 'Hurst laws' changed since initial observation?

[Metamucil]

 

Outstanding cup-handle formation on the D/P ratio chart!

Lower prices directly ahead.

[Ned38]

Priced in already ----------or

 

http://story.news.yahoo.com/news?tmpl=stor..._chips_sales_dc

[dozer]

" something is bound to suddenly become unstable in an account-unfriendly way!"

 

 

yah, ask us how we know, eh?

 

 

""While Hurst's work convinced me, I have never done spectral analysis. I am just generally familiar with the concepts. You post you have performed them for the past 2 decades. I imagine if there is any flaw in Hurst's reasoning or work, you could spot it. ""

 

 

n-ron, i have not read hurst's book yet. Regarding me finding flaws in hurst's work....yikes! I hope i've made my disclaimers clear enough, that i'm a definite greenhorn in regards to "hurst cycles" TA, which to date, I've interpreted as the use of spectral-analysis to derive underlying periodicities in the markets.

 

i may be completely wrong in how SA is applied in this particular field....and I'm certainly looking for correction where that is so. My #1 reason for joining stool: I'm here to learn!

 

I didn't so much -perform- SA's....I -used- SA's. I.e., to analyze the vibration of a machine-tool in order to find out which component was defective (i.e., a ball bearing with 12 balls, rotating at X rpm, will produce a frequency of Y, which can be extracted from a complex noisy waveform via analysis of the spectrum, etc. etc. ); and also quite a bit in electronics, especially RF work...i.e. the modulation spectrum of a radio signal.

 

in any case...

 

 

"""Have you read Hurst's The Profit Magic of Stock Transaction Timing yet? As you point out, any waveform can be mathematically broken down to a sum of sines. Hurst was very well aware of this, and he performed a spectral analysis to verify that the market is actually creating sinusoidal cycles. He found that it is, and that stable sinusoidal cycles account for about 25% of all the price movement, taken over the entire history of the Dow."""

 

 

hmmm....

 

Let me say this: Hurst would not have needed to perform an SA in order to -verify- it. EVERY waveform....repeat EVERY one; can be broken down into a sum of sines.

 

It's a -mathematical- thing OK? Not a "physical" thing that's only applicable to certain phenomena.

 

A "transform" is a mathematical algorithm used to derive one data-set from another. You could trace the flight-path of a yellowjacket, put any 2 axes of it on a graph, and I could use a fourier transform, or wavelet-theory for that matter, to derive a set of pure sine components which could be summed to make up that "waveform".

 

But it wouldn't MEAN anything.

 

damn....I don't know if I'm getting this across....

 

didn't someone say earlier today that text is a tough medium for humour? it sure is for concepts as well

 

 

All a fourier does is say that the waveform you just analyzed, during ==the period of it- that you just analyzed==, contains X power of a single-frequency component of freq. Y, plus P power of single-freq Z, plus.... That's it. That's what it does.

 

And if you don't perform a moving calculation, you won't even know WHEN, during the sampling period, that power was evident.

 

auughh...i'm rambling I think...

 

look....one HUNDRED percent of the waveform is made up of sine "cycles", ok? Not 25%. I don't know where that came from. Like you say, I should read the book...perhaps he meant something different by that 25% thing.

 

let me try again.... the market isn't creating SINUSOIDAL cycles....it may not be moving at all in any kind of visually sinusoidal manner. The MATHEMATICS of spectral analysis breaks the input waveform into single-frequency components of various frequencies and power-levels.

 

whups! light-bulb goes on....maybe I should've said THIS earlier:

 

A single-frequency component is BY DEFINITION a sine wave.

 

Does that help? Mathematically, a pure sine wave contains energy at only one frequency. ANY other waveform BY DEFINITION contains energy at multiple freqs.

 

The input waveform may not even be recognizable in the slightest way as a sine or variation thereof. It may not even HAVE any periodicity....i.e. the purely random white-noise example I gave earlier. But even white noise has single-frequency components within it. In fact, a good way to look at white noise is as a summation of an INFINITE NUMBER OF single-frequency pieces....i.e. energy at EVERY possible frequency.

 

So, getting back to amplitude-variations et al....

 

For example, if you sum a sine with its third-harmonic, you'll get a dimple in the peaks of the original lower-freq sine. i.e. somewhat "crushed" looking top/bottom.

 

If you add enough odd-harmonics, i.e. 3rd, 5th, 7th, 9th, your original sine will get closer and closer to a square wave. The faster zero-crossings of the higher-freq components make the "edges" steeper and steeper, and the shorter periods of these harmonics sum together to start filling in the top and bottom curve...until you have vertical edges and flat top and bottom.

 

I can't remember an exact combination for example, but if you have a basic sine, and add a particular 2nd freq, you'll end up with a resultant wave which has distinct areas of "zero" amplitude, on a periodic basis.

 

I guess that's something else to look for.....periodicity of the amplitude CHANGE itself. If the amplitude variation is caused by an additional PERIODIC input, then the variation itself will also be periodic. You should see it every 5 days, or 3 weeks, or whatever.

 

But if the amplitude-variation is caused by a chaotic or 'noise' event, then it won't show up every X periods, and in fact it won't be readily analyzed by any means, really.

 

Note: an FFT of the overall waveform, which the single chaotic event affected, WILL show energy present at some other freq...i.e. you will get sine outputs at additional freqs, leading you to think that there are other periodic stimuluses; but of course there aren't. That single event, BECAUSE it was a single event, i.e. BECAUSE it started and stopped within a finite time, contains energy at frequencies other than the main wave's freq.

 

The quicker it starts and stops, the higher the frequency the energy is at.

 

 

So, any other contained frequencies will distort the basic sine in various ways; and cause apparent amplitude variations. Today I have spoken of these other frequencies as harmonics, but would like to correct here that they can be ANY other frequencies. I just used harmonics (i.e. truly phase-related waves) as a convenient example of how complex waveforms are made up of individual sines. In fact, the math works just the same for an unrelated pair such as a 3-day wave and 4-day wave, as it does for a 3-day and a phase-synchronous 1.5 day.

 

whew....hope this is of some help.

 

Until I have time to sit down and get up to speed on the Hurst et al material, I'll remain an ignoramus on the cycle charts themselves. At this time, when I look at them and see the 6-7 week cycle, for example, not looking like a sine at all; then I wonder what math is being used to derive it; since it obviously contains other freqs. I would've thought that hurst-software would be designed to give pure-tone outputs at each desired freq, each varying in amplitude as the FFT is swept time-wise along the data-set.

 

but hey, I'm a tenderfoot...whadda I know??

[dozer]

Dozer- nice piece-for more on your theories-Click Here Trade Safe.

 

"electrical field of the earth" huh? well, it might well be!

 

what an amazing "huckster" tone he's ended up with tho eh?

 

too bad.

 

thanks B4 !

 

anyone who'd like an erudite AND down-to-earth tutorial on chaos and fractals as applied to the markets, look no further than the original applicator himself, J. Orlin Grabbe.

 

I'm pretty sure it's:

 

http://www.orlingrabbe.com/

[anoscope]

alex,

 

The IB account agreement contains many paragraphs of warnings about IB conducting trading for its own behalf;

and if I recall correctly, they also warn that it might be

with our money...but don't hold me to that last part. It's

been a while since I read it.

My accounts (cash and IRA) were with Datek, now Ameritrade. I rec'd a notice yesterday that neither account is itself over $100k and would not be an APEX level account after December.

 

Interesting, because they say they don't aggregate them now. Guess Ameritrade doesn't need my business now.

[dozer]

Bullhorn !!

 

maxxi, thanks for the charts.

 

question: is it truly a bullhorn, considering the much

higher lows near the end? the lower line is really only touched by one low.

 

???

 

tanks!

[Guest]

dozer,

 

I do understand that Fourier Transforms are a mathematical thing rather than a physical thing. I really do. Honest. I do understand the technique can be applied to anything to obtain frequencies, yet these frequencies may mean nothing about any physical process and have no predictive value, like the bumble bee flight path example you gave.

 

Hurst understood this too, and that's why the additional analysis beyond FT. He explains it as verifying whether or not the frequencies he found mean anything. He did extensive studies with combed filters to isolate and study the persistence of specific frequencies over time. He concluded that they are very persistent and from there concluded the cycles have predictive value and further are manifestations of something cyclical about human behavior in markets, i.e. that is "really physically present." Hurst understood, with human behavior, that "physical" did not mean something like a vibration from classical physics. Hurst stated he did not have a clue what the "something" was, yet this ignorance would have no ill effects on trading. Thus, Hurst then moves on to graphic techniques for locating individual frequencies and generating trading signals.

 

The 25% bit is Hurst's contention, based on his SA, that from any point in time to a forward point in time, 25% of the price movement in between would be the result of continuation of the cycles as they are at the starting time. About 75% is the pure linear upward trend over the history of the Dow. Hurst only found 2% for randomness and 0% for news, even major news events. If I remember correctly, he used the bombing of Pearl Harbor, the start of the Cuban Missile Crisis and the assassination of JFK as case studies.

 

I hope you do choose to read the book. I would like to read your thoughts and opinions, whatever they may be.

[depends]

Dozer, Makes sense to me. Well put.

[anoscope]

I promised a number of people that I would e-mail them details of my trading system. However due to the overwhelming response I thought I'd try to put it here on the new StoolCities.

 

Lesson 1 The ThorWay Plan

 

Please be my guest and post your comments here. Remember my only payment for this effort is your feedback. If you think it's a load of wank please say so but at least try to be critical in your assessment. Thanks.

your link you posted is a signin link. you have to go to the page you posted and copy that url.. i think... anyway, the link you posted wants your userid and password.

[dozer]

Because of all this, and also my suspicion of much, much more sophisticated, and totalitarian, Matrix control of the markets, I believe a redo of Hurst's work, also adding some studies you suggest, is very appropriate and completely necessary.

 

If you plan to do this, let me know of any way that I can assist you.  This could be a lot of work, even with modern computer tools, and I will help to the extent I am able.

Ron - you have a very good fundamental question: "Has the basis for 'Hurst laws' changed since initial observation?

 

 

CL; i enjoyed your post re the US, creeping socialism et al.

 

n-ron: you said earlier that you thought the 1900-1960 period which Hurst analyzed was a great comparative data-set for 1970-2000. But then you listed a number of factors, i.e. significant market and societal changes, which, to me, contradict that view.

 

i'd also add that the 1960 timeframe saw several developments which I'd call epochal...two of which would be:

 

- exponential rise in TV penetration into households; and concomitant use as the most effective propganda/brainwash tool in history.

 

- exponential introduction and use of computers in all fields.

 

Overall, I'd think that the period Hurst analyzed is NOT such a good comparative to the past 30 yrs. But hey, it's the only one we have, eh?

 

and certainly was the only one -hurst- had !

 

 

in any case, i think you and CL are both correct; it would be a worthwhile exercise to analyze the most recent 30 yrs and look for variances, and any potential mods to hurst's original conclusions/methods.

[Hiding Bear]

Icky,

 

My post was actually tongue in cheek.  I read an article about a year ago on Prudent Bear, titled something like "Confessions of a Supply Sider".  This guy looked into where his money market fund was invested.  It was all derivative related stuff.  So I'm in with eyes wide open.

 

I just don't know what else to do.  I get a match from the company, and it's taken out before taxes.  I was thinking maybe I should take the money out, pay my taxes, and pay down my mortgage.

 

Ed

Ed: If your you money is otherwise sitting in money account in your 401k account, here is another option for you to diversify.

 

Take a loan against your 401K and use that money to buy precious coins I did (~10% of my fund) where Interest rate on that was 5% which is pretty good IMO. 5% is what you'd pay on a overpriced front / back loaded fund. I bought my coins over ebay.

 

The 401k loan is structured so that I pay myself back direct out of you salary check plus I still make your original 401k contributions and receive your employer contribution. (If I wanted to I could lower 401k contributions to account for the loan payments).

 

Another option was putting that money into a IRA account that is self directed. (Allowed 3K PA I think).

 

Only drawback with 401k loans is that if you leave, you have to pay outstanding balance back otherwise it become classified as withdrawl with tax consequences.

 

The loan is tax free. Withdrawl is not and can be very unpleasant. You may not find out your total liability until you do your tax returns.

A few more comments on 401ks, etc..

 

If you have self-directed IRA, certain types of gold, silver, and platinum coins (ones that are usually acquired for their bullion value) are allowable IRA investments. Finding a broker that may handle such investments is another matter.

 

The upcoming ETF for gold, Equity Gold, is a grantor trust and I would not invest in it within an IRA account or 401k until it is formally authorized as a retirement plan investment by the US.

 

As for myself, and my spouse, we can't make any withdrawals from 401k type plans until age 59.5, which is about 10 years from now. Meanwhile we can only make small loans, which I will quickly consider if things get any worse.