On Nov 10, 2007 8:33 AM
Subject : Conflicting Signals Daily vs weekly vs monthly charts
Message : For purposes of determining a trend and bias for going long or short, I believe the book suggests two consecutive closes below the 39 PMA. Lets say the daily market or sector chart shows two closes below 39PMA (short bias) but the weekly chart for the same market or sector does not confirm (shows long bias). How would you consider approaching this conflict. Would daily charts be used for day or swing trades while weekly charts would guide position trades? Also, would monthly charts be used more for long term investing?
I purchased the book and enjoyed it. I especially liked the structure for analyzing the markets and sectors as part of stock selection.
Thanks,
George
George -
Thanks for the email and great question. Like so many things in life, how to go about this trade is a question of perspective. While I am not privied to other parts of the trade, if you are trading the market on a daily time frame, then you can still take a short position should the setup occur, however, since we buy weakness in rising markets, sell strength in falling markets, and take profits at pre-determined price points, it's entire possible that you can be covering your long position on the weekly chart as someone else is initiating a short on the daily. The key is understanding the ebb and flow of the market and constantly putting yourself in spots of value.
I am not sure if you are in Las Vegas for the Traders Expo this week, but I discuss this every time I speak that the method is not really important as getting entries of value. Ideally, you want to stack all of the variables in your favor, but picking good spots for your entries is the most important.
Best of luck,
John
On Nov 11, 2007 7:51 PM>
> The section of your book concerning tax and business aspects of trading is unique in being written by a trader with the trader in mind. It gave me more information than several "taxes for traders" books on the market.
>
> As many others, I have been wrestling with the tax aspects of trading
> since the day one and need professional and affordable advice.
>
> I would appreciate if you could refer me to some CPAs in the Las Vegas area that would be knowledgeable in the trading business aspects of the tax law, both stocks and futures.
>
> Thank you for your kind help.
>
> Peter
Peter -
Thank you for your email on Tax and business aspects of trading.
This is a very important component of the book and something that really doesn't get the kind of attention it deserves in the industry.
I use a guy out of Chicago named Alan Schimmel as he is an expert in the futures component of taxation and has over 20 years in the industry. I am not familiar with anyone in Las Vegas. If you would like his contact information, he is included in the CC of this email.
Best of luck
-John
Subject : Confused over the high and low points for 0% & 100% Fabonacci calculations
Message : Hi John,
I am confused over where should I set the 0% and 100% marking for Fabonacci friends calculations. Is Fabonacci expansion and retracements settings of 0% and 100% oppose one another? For example comparing Chart5.3 to Chart5.2, and Chart5.2 to Chart4.5 from your book.
Possible for me to use Fabonacci expansion to estimate the bottom eg Chart4.5 iso using Chart5.2 to find out the bottom?
Thank you for your help.
Regards,
Adrian
Adrian -
Once again, thanks for your email and support . Let's start with your first question in regards to where you should measure Fibonacci retracements and expansions. Both originate and end at the same location on the chart, in regards to where the measurement takes place, however whereas Fibonacci retracements are attempting to ascertain where a pullback may occur within that measured space, expansions attempt to forecast how much further the market can go in the current direction of the trend. So that is a key conceptual point that needs to be kept in mind while looking at these charts.
In the case of chart's 5.2 and 5.3,I simply measured from the December 2001 high to the October 2002 low. I also measured from the key 2002 May high to the same October low. The main point behind this being that you want to find points that preceded key points of thrust in the market and as a result of that the areas of measurement from that give you viable and robust inflection points to trade off of. Chart 5.3 shows what transpired on that morning of Dec 2, 2002 as the market rallied into a .382 of a longer term move, as well as a .618 of a shorter term move. These spots are deadly and when coupled with patience and proper money management can provide a very lucrative means of profiting from the markets.
Good luck in the markets
John
Message : Hi John,
I am referring to the 2nd last paragraph on Pg87, I still can't figure out how you are able to get the retracement level at 4289. No matter how I calculate it 4338 is the near I can get to.
5100 - 3100 = 2000
2000 X 0.618 = 1236
retracement level at .618 will be:
3100 + 1236 = 4336
Need your advise, thank you.
Best regards,
Adrian
Adrian -
I rounded the numbers off on both the high and the low as the high in the Nasdaq comp chart was 5078 and the low was 3,042. The .618 of that comes to the area I was referring to. Nice catch and I will clarify that in future publications.
John
Subject : will USD/JPY carry trade keep unwinding?
Message : Will it?
-Lisa
Lisa -
Thanks for the email and I love your last name. Are you Chinese? In regards to the USD-JPY Carry trade, I think US Interest rates have about stopped their easing policy and as a result most of the risk for interst rates in the US is higher with inflation being what it is, the Chinese eager to let the Yuan revalue at a pace faster that most expect based on last two weeks price action, as well as the Japanese being so slow to act and even last week announcing a huge acquisition of JGB bonds that were repurchased. I think there are more compelling carry trades out there, but I think the risk is the USD rallies against JPY, not the other way around.
Good luck
John
Subject : Page 109 in your book
Message : I just ordered the reprint of your book, thanks for letting me know it is on the way.
I am trying to understand your inflection calculation on the page 109, paragraph 1 and 2, figure 5.1, 5.2. Are you solving this problem for one variable only, using the early May 2002 pivot at approximately 1150 level as a known point to project the Fibonacci levels to obtain the 800 level inflection point? Or, are you solving this for two variables, one being the May pivot and the second being the 800 level inflection point? I would like to learn how to calculate the inflection point using your method and would appreciate guidance in that matter.
I found the tax section of your book very helpful. Do you know an accountant in Las Vegas knowledgeable in trader tax matters?
Your kind help is appreciated.
Peter
Peter -
Thank you for the email and patience in my delayed response. You ask a great question which illustrates not only your grasp of the method but what I am attempting to do in raising the stakes of the trading game by taking a more anticipatory approach in setting price targets. The ability to create the price target down near 800 on the NDX was done by forecasting where the market would turn if we used two key pivots as a natural .618 and .382 retracement insofar as providing an area of Fibonacci Friends if in fact the market turned from there. It was from this perspective that I created the level at/near 800 so we could also predict a bounce back to 1050 or so. The key behind this being that the markets have an ebb and flow and one may have to make a couple of adjustments along the way as other key pivots are created on a shorter term basis providing other opportunities as well.
I hope this enigmatic description provided you with the clarity you were looking for. I will be going over this and other subjects in both a free and paid capacity at this years las vegas traders expo in two weeks. I will also be participating in a live trading challenge. There is more information at www.lasvegastradersexpo.com
Good luck
John
Message : Hey John,
You may not remember me but I was in the UW CR's a long time ago with you. Well I was thinking "hey, where is that guy that always talked about day trading while paying no attention to the political science lecture?"....
Looks like you are doing your thing, how have you been? Finally got out of the Marine corps huh? I remember you talking about how you wanted to buy out your contract and just day trade full time
well, write me back when you get a chance, I am invested in the market but am kind of looking at day trading a little bit
take care
Kalen
Kalen -
Thanks for the email. I guess to fall in line with Mark Twain's saying of "don't let your schooling interfere with your education" . I am trading full time now and running a hedge fund, speaking at investment conferences, and a published author. My web site is www.osoktrading.com . What are you up to?
10/8/2007
First Name : Curt
Message : Hi John,
I have secured a very good NFL capper actuallt 2 I am following very sucessfully you may be just what the Dr. ordered for college football I have been looking for a capper since the start of the season I am dabbling a little on my own here and there ...If you don't mind me asking what has been your long term % in college foots?
Thanx for your time:)
Curt Stankavage
Curt -
Thanks for your email. I am glad that you found a good NFL handicapper as they are hard to come by. As you know, I am a handicapping hobbyist and know over the long run that I am up, especially on my big plays, which I am up nicely. However, on my 1-2 unit plays, I am probably 50-50 at best. The crux of my style is to weight my plays based on a scale of 1-5. 5 unit plays rarely come up and when they do I pound them exponentially harder than I do 1 unit plays. In other words, a 1 unit grade may only get $100, however, a 5 unit play may get $2,000. I am just using those figures as an example. So I keep track of the money I win more than the percentage. Plus, I do a lot of manuveuring around numbers as well, meaning betting the games early in the week and then hedging out of them at half time if I think I can work a middle. Again, when you play off of numbers, the win percentage can get skewed. Much of this I don't go into detail on my site b/c of time contraints and most people don't live in Las Vegas where they have access to 30 different sports books etc.
Bottom line is I am up nicely in college football, despite a crappy last weekend, over the last three years. I took my bumps early like a lot of people, but have figured out what it takes to make money.
-John
On 10/6/07, Brad Okresik
Hey John,
Thanks for all of the education. You're lectures are very good. You might find my attached study interesting. I've built my own backtesting platform (with Matlab) and I recently began doing my own research as I'm trying to transition to working full-time in finance.
I downloaded intra-day and daily data from TD Ameritrade (Esignal is their data source). I compiled the intra-day into daily open, high, low, close. I then plotted the difference between the two and the result was fairly inconsistent. It's a short 1 page read + plots, if you are interested.
Brad Okresik
Thanks for the email Brad. I will look this over and get back to you...
-John
10/01/2007
First Name : Jean
Last Name : McDowell
Subject : Great to see you at the expo in San Diego this June!
Message : Hey John -- Intershow just called us to say that they have you and Bennett doing the trading challenge again, this time in New York in February at the expo. Wanted to say hi -- and also, tried to buy your book -- but everyone is sold out! Do you sell them driectly? Let me know, we'd love to read it. Drop me a line when you get a chance -- it was great to see you in San Diego this June!
Hey Jean -
Thanks for the email and I hope everything is going well with you guys down in San Diego. We sold out of the book and are in the process of reprinting it. We should have some copies in about a month and I will be sure to let you know when they come in. I think it's great that Bennett and I have the opportunity to collaborate again during the live trading challenge. I will call you and catch up. Thanks again for the email...
John
On 5/3/07, charliewrote:
My name is Charlie and I've been looking for a great system for technical analysis and I've found your system to be very detailed. I did have some trouble understanding a few of the sections in your book but after reading it and practicing it in paper trades, I feel a little bit more comfortable. My aspiration is to trade my way to financial freedom and be a full time trader!
I was wondering if you use the same techniques on Options Trading. I've been fascinated with options trading for quite some time but have not been able to capitalize on it and have been trying to find a good system, or develop my own, and have been doing a great deal of researching. I was wondering if you used the same technical system to trade throughout all markets and if you have any other suggestions specific towards option trading.
I appreciate any response and I truly respect the way you trade.
- Charlie
From: John Netto
Sent: Thursday, May 03, 2007 5:09 PM
To: Charlie
Subject: Re: New Enquiry Posted
Charlie -
I would love to help you, but I first need to understand more about where you are coming from. First of all, what kind of time do you have to trade? Full time, part time, hobbyist, etc. ? How much options experience do you have? What chapters in particular did you have questions about? What is your personality type? I think if I knew the answers to that, then I would have a clearer picture in helping you. I look forward to your responses.
Best Wishes,
John Netto
From: Charlie
Sent: Thursday, May 03, 2007 5:49 PM
To: 'John Netto'
Subject: RE: New Enquiry Posted
Hi John!
Wow, I actually got a response from you!!! Thank you very much!!!
- I spend about 1 – 2 hours a night to do research a night to prepare for the next day and the next day I spend around 30 – 60 minutes in the morning to trade in the morning. So I would say part time wanting to go to fulltime.
- I have been trading for about 3 years (both paper and real trades) in options and about 6 years in stocks. I have used William O'Neil's CANSLIM to screen stocks and have been consistently looking for a good mix of technical indicators that will work well to show trends and try to do what you (John) are very good at doing with inflection points. I have been trading straight calls and puts and looking into credit spreads too.
- Chapters. Hmmm.. To tell you the truth, I understood everything up to Fibonacci chapter. After that point, I'm a little hazy. I am currently studying the last half of the book so that I try and get a better grasp. I took a chance to actually email you to see if you could help me out (I did not know that you would answer so quickly and personally. I'm sorry for the assumption).
- What is my personality type? What do you mean? As far as risk? Risk wise I have a high tolerance. I've lost and made a lot of money in the markets. But I want to actually consistently make decent profits and minimize losses. I have been doing better doing that this past year but due to some bad business decisions this past year, I had to wipe out my trading accounts to survive. At this point, I'm paper trading until I get a few thousand into my options trading account (this may take some time which is fine by me so that I can paper trade and have a better feel at what works). I like to be aggressive and get free from "clients" and what not. I've always had interest in the markets (options, FOREX, precious metals) and it's been hard to get it started to have consistency.
Life would get in the way and I would get off track for a little and would dive back into it later. Now I'm serious as I am about to have a precious baby girl and my drive is much more intensified. Here's a little background information about me: I went to Purdue University and graduated in Computer Information Systems with a minor in Business (should have been the other way around). I moved to California after graduating (1999) and started programming thinking that it will get me closer to financial freedom. Soon enough, I realized that this was not the route.
I have been paper trading since college but never opened an account. I got more serious after graduation and after 2 years in the work force. I've always been entrepreneurial in spirit and knew there is more out there. I've lost my savings account to trying to build a consulting firm that catered to business who wanted to get onto the web. I've lost some money but ended up on the plus side (not by much) in stocks. I found options about 3 years ago and loved the leveraging aspect. So I delved into it quickly but so far I am breaking even. I realized that technical analysis was the most important thing to learn and I made a study on it but have not found the right combination. I know that if you find the right combination that you can "port it" to all markets and start trading. After reading your book,
I knew that I found something great but still have a little problem trying to actually implement it. I guess I need a lot of examples as I learn well while seeing. I am determined to learn the OSOK way of trading. One more thing about me. I love the martial arts, I trained in Tae kwon Do, Wing Chun, and now Choy Lee Fut. Training in these arts takes discipline. I just want to let you know that as I read that you served in the marines which gave you the discipline and the drive that you have and I want you to know that I am similar in that sort.
Let me know if you need to know anything else. I am all ears and eyes. I'm hungry and thirsty to learn!
- Charlie
Charlie -
Thanks so much for taking the time to lay out your strategy and perspective on the markets. After looking at your responses it seems like you are at a bit of an inflection point yourself. You no doubt have plenty of desire and passion for the markets, as evidenced by your responses. I like the fact that you can take on risk and have lost money b/c that is an important component for someone trying to make a living at this, insofar as knowing that at times money will be lost.
Your methods of screening for stocks via IBD is solid. It stands to reason that stocks that make it to that list can provide for nice volatility, which is something that we as traders thrive on. Some more questions:
1. What type of account and where are your accounts open at now?
2. What kind of bankroll do you have?
3. What kind of returns to you want on that?
4. What means of income do you have right now?
These are all important questions in determining what the next step in this process is. I understand this may be a little more sensitive personal information and would be happy to talk with you later next week.
Regarding mentorships:
http://www.osoktrading.com/workshops.htm?homeinclude=catalog&category_id=1&parent_id=1
There are also half-days in there, but not listed on the web site.
Regards,
John
On 7/13/07, rthubel wrote:
Subject : support/resistance
Message : How can you tell if mkt will blast thru or bounce off S/R line? Is there an indicator or volume measure that will give a higher probability of a bounce versus and breakout? I like to day-trade the 30yr bond futures. Thanks.
Robin -
Thanks for the email and question. The answer to your question involves the application of both art and science. Trading, and more importantly, trading successfully requires us to use the underlying price action in the market to gather an agreement of indicators. In the case of a market coming to support, and whether or not it will hold that support. I like to measure how recent the bounce was before coming to support, volume that went on, possible divergences that exist, as well as how many times it has attempted to go through that level. There are also market specific things as well which can be applied like the tick, trin, and a/d ratio. I hope this helps Robin and good luck.
John
Hey Moody -
I love your energy, agression, and passion for the markets. If you can, try to be at the las vegas traders expo as I was just confirmed today to "defend" my title on November 16 in another live trading challenge. Nice trades with AAPL and FSLR. Never apologize booking profits on a gap up, and keep putting yourself in positions of value. It's great that you are comfortable with options and can go in there and execute on them. Let's touch base later on and figure out how we can help each other b/c you're screaming with potential.
Your friend,
John
On 7/9/07, Moody wrote:
hey john,
thanks for the reply its nice to know you big guys dont mind helping the little guys. not much i can say about Tim Sykes, you know the 26 year old who started investing when he was 18 and made millions years later, ya well some people are just dicks. I cant wait to help out the college kids when i get up there.
So you book came in the mail today, postal service sent it to the wrong state... took 2 weeks to come. started reading it and im quite pleased.
Options are fun! i get all the complex strategies and the relationship to volitilaty but i still love swing trading rather then the managment aspect of it , now i just need to work on analytics....i made a bunch of money on apple selling put spreads when i saw people lined up at the istore on cnbc, next thing you know apple shot up 10$. Today i made money on FSLR which i cought last week when it was slowing down ready to bounce. fslr jumped 23% today but i got out in the morning at 11% gain haha
Now as far as futures go I am begining to understand how they work but it seems they are not as liquid as some of these option markets. and is the leverage just about the same? where can i get updated quotes to look at stratagies for my buget? think or swim os an amazing broker for almost every kind of trade specially options. The command center is amazing as well but futures arnt somthing they push cuz of high risks in leverage is what i hear.
Also your saying I need to know the rules and regulations of what kind of trades I can do in order to possibly take a postition with a hedge fund? is that what you mean by regulatory backround?
I should be coming to vegas soon... all my buddies are finnally turning 21 and we are definetly having some fun times by the end of the summer.
thanks for all the help!!
John Netto < john.f.netto@gmail.com> wrote:
Hey Moody -
Thx for the spirited email and taking the time to write. I see you have a passion and energy for the market that resonates through this electronic correspondence. You ask a lot of viable questions with regards to what is the best direction for you to head into and each of them requires a very individual answer. My first suggestion is to get a free two-week trial to cqg. I have a hook up there where you can get data, that would run about $700 per month, for a free two-week pump. There is no credit card and once the trial expires, they dont call and hassle you. This will let you test option strategies and give you the familiarity with a high-end system as you graduate through the ranks as a trader. I would also start to learn about some of the regulatory components of the business.
Places like NFA.futures.org and the SEC web site. If you want to get hooked on with a hedge fund, having a regulatory background gives you immediate value. Understand what different requirements are for hedge funds as compliance is not cheap, and can be a way for you to break into the game and make good money.
While I am not presently looking for an apprentice or intern, my situation is a very fluid one. I have lots of irons in the fire and things are always coming up. I would also start keeping a journal and use this attachment as a base. it's the class I gave on trading plans and how to make one. Go through and start to make one as it serves as a very important cognitive process in your overall development. I hope this helps and let me know when/if you come out to Vegas.
JN
On 6/27/07 Moodystockwrote:
There was a new enquiry posted at your website.
Subject : A New Fan
Message : whats up John,
wanted to let you know you rocked at the trading challenge in san diego.
SO im 21 living in orange county and just started trading a month ago. Used to work at Mass Mutual selling life insurance and other financial products but got sick of people not trusting a 21 year old with their money(cant blame them).
I've been reading alot about options and I practice trades with think or swim's play money platform.My gf think im nuts cuz i get up at 6 to watch the market every morning. Im learning to analyze charts and starting to get good at day trading options rather then holding them. After watching you I started getting into futures. Your book is on the way and i have about 7k to invest.
My gf think im nuts cuz i get up at 6 to watch the market every morning. I really like the idea of making daily trades as you were at the show. It just makes more sence to know your returns rather then waiting it out.
so ya I'm pretty much addicted...hah
I wanted to know if you could possibly help me put a strategy plan together on what i should be learning to become as successful as you are if not more(haha). I have a goal to be that kid who made it huge in the market and it would be awesome for you to be a part of it. Some book recomendations would be great and if you have an internship program or want an apprentice let me know!
If your ever in orange county hit me up id like to buy ya a beer
-Moody
7/3/2007
Subject : Book
Message : Hello Mr.Netto,
I live in Greece,but I am trading through an American broker.Mostly the DAX and the E-mini S&P futures.Unfortunately,with very poor results...
Anyway,I've watched (through Internet)your presentation in San Diego and I were impressed.It seems to me that you are a real trader and not just another book and seminar seller.So,I've visited your site and I've tried to find your book,but it is not in stock.So,I wonder if you have any extra copies and you are willing to let me have one of them...
Thanks a lot
Andreas
7/3/2007
Hey Andreas -
Thanks for the email and taking the time to watch the presentation in San Diego. It was a great event and one that we have been receiving a lot of positive feedback from. I have good news on the book that will help you in your efforts. They have begun a second printing of it and it should be out at the end of July. In the meanwhile, maybe there is a way to help each other. I have a brokerage relationship with Man Financial, Alaron, and Fortis. Since you trade futures, I work with clients as part of a relationship I have with these firms. If this is something you would like to talk more about, please let me know. My number here in San Francisco is 650-589-3450. I will also send you an email when the re-reprinting is done.
John
On 6/30/07,
Katy wrote:
There was a new enquiry posted at your website.
First Name : Katy
Last Name : Chen
Email : chenyi80@hotmail.com
Phone : 86-13621840938
Fax :
Website URL :
Subject : China stock market trend outlook
Message : Hi John,
I bought your book in Chinese and find it very helpful in my daily application in China stock market.
I'm experiencing big ups and downs with the stocks recently. And I heard about the "bubble" in the newspaper outside China. So what is your insight and suggestions about China stock market in the later half of the year? Thanks a lot!
Best regards,
Katy
7/01/2003
Katy -
Thank you so much for the email as I love hearing from my Chinese readers. I majored in Chinese at the University of Washington and spent two summers living in Beijing, so I am always very excited to talk about the Chinese markets. My Chinese name is Tao Jian Ming
To answer your question about the Chinese stock market. The SSE composite index is one that has shown a lot of range and is perfect for the One Shot - One Kill Method. The market to me is still very bullish long term and has a couple of spot to step in and buy it since shorting in China is very difficult to do. A couple of key spots i would look to add to my positions would be at 3,050 on the Shanghai Stock Exchange. Short term, I would reduce my holdings to half and sit with the bid down at 3,050 as a retest of that breakout level seems like it's in the works. From there, I think the SSE can rally back to around 3,800, giving you a great trade of about 750 points.
I hope this helped.
John
