How The Market Really Works by Robert Dorfman - HTML preview

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Well, Now You Can Do All Of The Above And Make More Money Trading Stocks Than You Ever Thought Possible!

How you ask? …Because this is your personal invitation for you to trade along with us in real time, using the exact same technological advantages mentioned earlier.

I can assure you that this technological advantage is not some Madison Avenue hype story to grab your interest in what we do……. It is simply the truth about the evolution of quantitative mathematics and the ever increasing role it plays in today‘s markets….

In a nutshell,… we have jumped on board with quantitative analysis data feed firm MarketLogicData Corp and are pleased to be able to make their signals available to a limited number of individual traders through an exclusive arrangement

You’ll love this!…..

But first things first…..

I would not be doing my job as a market educator if I did not have you first determine if you are truly ready to be a trader

You should know that trading can be a brutal, sometimes vicious contest that leaves many people, including professionals, devastated, demoralized, and desperate after suffering numerous successive or large losses… (they probably did not have an effective money management plan like ours.)

….But the rewards can be amazing…

Therefore,

You must be sure that you are emotionally and financially ready for this occupation/hobby.

So please take a moment to do this self analysis test…..

1. Is successful trading a long time dream of yours?

2. Do you have complete support from your spouse or significant other?

3. Are you willing to follow the rules I lay out for you?

4. Is the money you are using to fund your trading account strictly risk capital at this point?

5. Have you suffered previous painful trading losses? (we hope so)

6. Can you honestly accept that some losses will occur?

7. Will you treat your trading endeavor like a business and act accordingly?

8. Do you understand that trading is not gambling and that there is a methodical method to making money?

9. Do you understand that that there is no emotional attachment to any of our positions?

10. Are you ready to accept personal responsibility regardless of your level of success?

11. Do you want to supplement your income so that you can afford some of the finer things in life, instead of maybe living from paycheck to paycheck?

12. Do you accept the fact this is not a perfect business?

13.Will you commit to using a portion of your additional profits for charitable causes?

Ok …….I hope you answered yes to every question…if not you may need to re- evaluate your decision to trade….even if you are going to allow us to hold your hand all the way through….Its‘ not for everybody

But ….if it is for you……. There is only one thing that makes a dream impossible to achieve……the fear of failure.

The Alchemist

HEDGE FUND INFO

Some of you who are new to trading may not know exactly what a hedge fund is, so I will give you a brief definition so that you understand why we make superior returns over your standard mutual funds.

A hedge fund is a private investment vehicle used by wealthy individuals (accredited investors) and institutions which can use aggressive trading strategies such as selling short, leverage, program trading, swaps, arbitrage, and derivatives etc. that are unavailable to mutual funds due to SEC prohibitions.

We are restricted by law to no more than 100 limited partners (investors) and as a result most hedge funds set extremely high minimum investment amounts ranging anywhere from $250,000 to over $1 million.

As with traditional mutual funds, our investors pay a management fee; however unlike mutual funds, we also collect a percentage of the profits (usually 20%) and most hedge managers such as myself, have their own money in their fund, so producing profits is how we make money.

Funds structured under foreign law, or located outside the U.S. are designated as offshore hedge funds" whose advantage is that the investors are not subject to United States taxation, and are typically based in the Caribbean; however a European/Asian offshore fund may be appropriate if a substantial number of investors from those areas are involved. …..

We are also known for being "first movers" with technology to achieve our profit objectives

Oh..I almost forgot.. we are not allowed to advertise in any manner to entice investors…especially non-accredited ones.

SELLING SHORT

Another question you may have is what does "selling short" mean? The quick answer is this.. It is simply a technique employed by investors and traders who believe the price of a security will drop and want to make money as the price goes down.

This is one of the fundamental advantages a hedge fund has over a mutual fund which are strictly prohibited from selling short.

Very simply it works like this…

When deciding to sell short, you simply advise your broker you want to “sell short" the particular stock and the number of shares

The broker then borrows the stock from one of their other clients or themselves and loans them to you and the order is executed….The trader has in fact borrowed the shares and is now short those shares and profits as the price declines….

Now when you close the short position you in effect want to "buy back” or “buy to cover” the position at a lower price.

After paying the brokerage commission for the transaction just like you do when buying stocks, you keep the difference from what you sold them for and from the price you bought it back for.

There is nothing difficult, illegal, immoral, un-American, or even mystical about it as you might have been lead to believe. The reality is that short sales are an integral part of supplying market liquidity…

Why You Should Also Know That Trading In “Real Time” Can Make All The Difference In The World Between Consistently Winning And Losing…..

You may be asking yourself what is the big deal about trading in "real time”

...Great question.

Let me first make it clear that if you are not trading in real time you are either..

A. really a buy and pray investor or B. giving the edge to the players who are trading in real time…. Either way you will probably lose… but if you are serious about taking money out of the market on a fairly consistent basis, then real time trading is probably the edge you need

So for those of you who still don‘t get it, Here is common sad scenario that takes place every trading day to most traders/investors simply due to complete lack of knowledge about how the market really works. (note……this is a dramatization of factual events)

The under-educated investor, or better known as “Mr. Dumb Money” to the street, (we‘ll call him MR. DM for short) …..is about to get sucked dry….so please follow along closely…This could be happening to you…..

MR. DM finally gets home at 6:30 one night after working all day as a manager at the local Coke bottling plant which he has done for 20 years, grabs a beer, plops down in his favorite chair, turns the TV on to CNBC to see what news affected his retirement savings today.

He has $118,000 in his mutual fund account (was $183,000 last year) and just recently opened a separate trading account putting $45,000 in there which he hopes to build up and trade full time when he retires to live his dreams.

Watching CNBC this fateful night, he sees Jim Cramer hootin,‘ hollerin,‘ and booya‘in‘ that IBM just released a great earnings report after today‘s close and Cramer says "its‘ going higher…IBM is a great company…solid fundamentals"

Now that‘s great news for IBM but not necessarily for its stock… There’s a big difference between the two……but here‘s exactly what happens next……

Mr. DM., feeling Cramers‘ excitement, agrees with him and thinks he needs to buy IBM tomorrow at the open because it is going to make a big move thanks to this "great" news.

He goes to his Dell desk top computer, opens his E*Trade brokerage account, gets a quote on IBM and sees it closed at 105.38, and puts in an over –night order to buy 400 shares at the next days‘ open, loading up his account on this “sure winner” …..

MR. DM just made another dumb investment decision….

Without knowing, he just basically gave control of his account to the IBM specialist who now has the power to open the price as high as he wants thanks to Mr. DM’s, and the thousands of other MR. DM’s who all also believe that IBM is going to rocket higher because of this fantastic news that Cramer is pontificating about, causing those numerous same over night “market open buy orders” landing on the specialists desk. (note..in no way are we suggesting that Cramer has done anything wrong in this scenario)    

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Jim Cramer

The next morning as Mr. DM is getting ready to go to work, he turns on CNBC and sees IBM is trading $3 higher in pre-market trading…. creating an opening "price gap" meaning the price is trading $3 above yesterday‘s closing price before the market opens…… and if you have read this far and paid attention, you already know what happens to a stock when this "good" news comes public

but let’s continue with Mr. DM’s saga

Unfortunately, Mr. DM was incorrectly assuming that his order would be executed near last night‘s closing price of 105.38 and is thinking he has already made $1200 today..(400 x $3) and gleefully heads off to work.

"IBM is going to 125 today" he is thinking…based on absolutely no fundamental or technical criteria, other than his gut.

As soon as Mr. DM gets to work 30 minutes later, he runs to his computer, checks his trading account and learns he was executed at the opening gap price of 108.5 …$3 m ore than the previous close ....

He does not understand how all that works and grudgingly accepts it…but he sees IBM is already trading at 110 …..up about $5 from the previous day's close....... thinking he‘s still in good shape..

"I am still up $600 in 30 minutes…I‘m going to sell it at the end of the day for a big gain and go buy that SeaDoo I‘ve been eyeballing in the Yamaha showroom window" which he passes everyday to and from work,.

Mr. DM. then dutifully heads out on to the plant floor whistling his favorite song,

Another One Bites The Dust.

 Now here’s w he re it starts to ges ugly for Mr. DM….

Just as it has a few times already since he opened his trading account…..

At lunch time, he runs back to his tiny office with those dollar signs filling his head....puts on CNBC to find out how much more money he has made and sees the scrolling ticker at the bottom of his screen….. IBM…. 107.35 …+1.97.....

“What???” ....He spurts out loud… "that can‘t be right… I must have mis-read that..it must have been 117.35" ....

With his heart, now pumping a little faster, he quickly logs back on to his E-Trade account to make sure he did not really see IBM was at 107.35……. and sadly sees that IBM is now trading at 106.95

What the heck happened?… Sweat now starts dripping into his already sweaty armpits…"fear of loss" is setting in… he is now actually LOSING $620… (remember he was executed at the open price of 108.5)

He is now frozen with fear …..doesn't know what to do...so he does nothing, figuring it must be some sort of "profit-taking" and convinces himself that it will certainly close higher. "It has to"… They reported record earnings!!! Cramer says its heading higher!..... and he heads to the cafeteria for lunch… ..quiet as a mouse……

 N ow at this point, I feel sorry for M r. D M… I know w hat’s com ing…..

Immediately at the end of his ass breaking shift on the plant floor, he runs back to his tiny office, turns on CNBC impatiently waiting for the IBM quote to scroll across the screen hoping for the best…but before he gets to see the IBM quote, CNBC cuts to a commercial…. and he freaks....

He can‘t even wait for the commercials to end….so he logs back on to his E*Trade account…… and unfortunately finally sees the bad news..

IBM …. 102.8 ..down $2.58 from the previous close ….

Mr. DM is slack-jawed to say the least…He is down $2280 …...(remember he was executed at the opening price of $108.5.. ….$5.7 x $400= $2258)

…He now feels like vomiting

I’m down $2300 !!!…in one day!!!!!!!!!!!!! He doesn't understand how this happened...... IBM...great company…great news! It should have gone higher!

And then Mr. DM makes another bad decision…..

Unable to cut his losses, he decides to hold on till it comes back to near his purchase price where he will sell at "break-even" …It has to.. he says again …. (this another common mistake most investors make……hoping)

But as you can probably guess,…… In this drama, IBM does not come near that price again for a long time which is no reflection on IBM or even Cramer…They are both genuinely optimistic about IBM‘s future earnings potential.

But…..The “smart money" crowd had been buyers of IBM long before this news was released, because they expected, or even knew that it was coming,and were the ones selling everything they could to all the Mr. DM‘s piling in….. driving the price down further and further…..

Mr. DM never had a chance……

Weeks go by...... IBM keeps drifting lower and lower after some failed rallies giving him false hope.

Mr. DM finally gives in and sells his shares at $98.00 taking a $10 loss…over $4000, 10% of his account balance….… and decides to look for another good trading opportunity to "win" it back.

Luckily he found www.hedgefundtradealert.com

I hope this important story made sense to you. This is just one example of the markets working against the individual.

You too may also be missing out of what could be many profitable trades or giving back large profits, because you do not know what happens to your stocks during each trading day…. relying only on opening and closing price information

……..which tells you really nothing that important.

Many stocks make major money making moves during the day and even close lower….. and all the Mr. DM‘s out there did not take profits when they were available. They just didn’t know how or when….

But by trading in real time with us, you will capture those profits.

That is my responsibility to you and I take it very seriously.

My reputation depends on making you money, reducing your risk, and minimizing any losses so that you stick around for a long time.

Nothing that happens in the market on a daily basis escapes us. If any unexpected news or event creates a sudden price move in a particular stock, we will be there to advise you via our real time alert system.

We are your eyes and ears for your open positions…..

A continuous monitoring of the market is needed to be effective at taking those profits and cutting losses ….utilizing both real time analysis and real world instinct.

Therefore real time trading gives you an enormous advantage over market participants who don‘t. And this advantage, this edge, is exactly what you are looking for if you truly want to be a consistently profitable trader...

And you don’t have to be at your computer all day to do it!

You Can Take Advantage Of This Amazing Technology Secret That Wall Street Has Coveted For Over 30 Years ……..Starting Tomorrow!

Ok…..Here We Go…………

"The journey of 1000 miles starts with a single step"

So if you are seriously thinking of participating in our real time alert service, which I truly hope you are, you will need some tools (which you probably already have) in order to trade along with us..…

They are : a cell phone that can receive text messages (this is required), a calculator, … and a notebook… ….That’s it!!!!

If you can operate those simple lo-tech items,, then you can participate in the most progressive technological advances driving most of Wall Street’s current profits… ironic right?

As a real time trade alert client, each trading day you will receive alerts advising you which stocks (ETF‘s) are expected to move based on the analysis provided my MLDC‘s Logicast program, then verified through the AutEx trading network institutional order demand and our own proprietary risk/reward analysis.

The alerts simply specify the symbol, direction and the exact price where this expected move will commence from.

This service is therefore a perfect solution for you if you simply cannot, or do not want to watch the market all day, but still want to profit handsomely from it.

So our first disclosure is that obviously our fund will be entering these same trades as well. We do not trade ahead of our clients but of course in some cases that may happen..

The alerts go out AS we are entering the trades ourselves…You may in fact, get executed before we do because of our size issues..

We never trade for the sake of action… We trade for the sake of profits.

Please remember that stocks do not go straight up or down. ..The data we use is tracking the underlying market maker buying or selling action that will soon expose itself to the market which is usually when price then explodes and we take profits.

The only thing that disrupts these mathematical behavioral patterns are unexpected news events that no one could predict…even the specialists.

One of the benefits of our trading plan is that we also get to trade entire market sectors through ETF‘s.

So what are ETF’s?...glad you asked….