# Which 5 systems Would you Choose? **URL:** \ **Category:** C2\ **Created:** [February 8, 2018, 5:28am UTC](https://forums.collective2.com/t/which-5-systems-would-you-choose/11381 "2018-02-08T05:28:45Z")\ **Posts on this page:** 1\ **Showing post:** 10
**Author:** ![O5355p](https://yyz2.discourse-cdn.com/flex028/user_avatar/forums.collective2.com/o5355p/32/13094_2.png) [@O5355p](https://forums.collective2.com/u/O5355p)\ **Post date:** [February 8, 2018, 7:12pm UTC](https://forums.collective2.com/t/which-5-systems-would-you-choose/11381/10 "2018-02-08T19:12:30Z")
Thank you to my investors that mentioned Payoff Matrix. On 1/30/2018 at 9:34pm, I sent my investors a memo and charts for the next day. My investors are aware of how I qualify the market. When I sent the charts that night for trade date 1/31/2018, my investors were aware that the market at that point had flipped to a negative skew. They know how I qualify the market and what changed to give the market a negative skew. That negative skew remained intact for the next three days and my investors were made aware of that. The night of the Super Bowl, I sent another memo to investors at 5:50pm before the futures opened that Sunday night. The negative skew remained. I sent a chart for Monday that night. They are aware by looking at the chart if the market has a negative skew. In the memo itself, here’s part of what I wrote that Sunday night for the next day Monday (the crash day). It’s not the entire memo but it’s part of the expectation: I wrote this about the ES. “selling strength is a better choice” and “The market may go into trend mode. If it does don’t get in it’s way” and "negative bias ". Those are some of what was included in the memo Sunday Night for trade date Monday 2/05/2018. Yesterday a little over 10 minutes before the close, I informed investors of $3 billion dollars that needed to be sold in equities. One of my investors thanked me for that as he got out of longs he had yesterday. I’m sure he’s very happy today. Last week I informed investors that pension funds needed to reallocate and sell $12 billion in U.S. equities and buy $24 billion in fixed income. I also informed investors of a note that funds would need to reallocate and sell $70 billion worth of equities if the S&P 500 closed below 2700. I’m keeping an eye out on the bond auction and we had a market move down that was dollar driven the other day (after Monday) that was due to the results of the bond auction. Investors were made aware of what was causing it. The day of the crash I sent investors a memo at 9:59am on Monday 2/05/2018. Here’s part of it: “ES is controlled by day traders right now. volume high and the book very thin.” and mentioned it’s still weak. I also included “NEWS: White House monitoring market sell off. White House concerned about market fall but confident about economy. just crossed wires.” That day the DOW opened down almost 300 points. It rallied all the way to even from down 300. This is the time everyone was buying the market. If I had not sent that note, my investors may have been buying also. But I informed them that the market was still weak. It rallied all the way to even and crashed. All that above isn’t luck that I stayed out of the market on 2/05/2018. I also posted this below in another post. Here’s the quote: > [@Payoff Matrix coupon](https://forums.collective2.com/t/payoff-matrix-coupon/11187/61): > > You’re absolutely correct that most people don’t factor in leverage. Stops and leverage are only the fundamentals. Most traders don’t even have those down. Once they get that down there’s mindset. There’s psychology. There’s discipline. Then there’s the analysis. They need to be able to properly qualify the market. On top of all that, they need passion for the game. The market is a huge game of probabilities. They need to be objective always and only look at facts. If they ever catch themselves saying “I think” they’re being subjective. Most of these guys yesterday don’t have what it takes. They hold on to a bad trade like they’re holding on to life. They view a loss as a negative reflection of who they are and it’s the furthest thing from the truth. They need to learn to lose first before they ever become profitable. You could have given the best trading system in the world to some of these guys yesterday and they would have found a way to blow up. It’s not the way trading works. You win a bunch of 1 R trades and lose a few. Keep managing the risk and about 10 times a year the bulk of your profits will come from those handful of trades that become huge winners. You need the discipline to stick to your trading plan. The mindset to always look at facts only. The passion to review your trades when the market is closed. Did I mention record keeping? > > I don’t think you have these issues. But a lot of these guys that lost $10,000 or $50,000 or whatever crazy amount. That’s not trading. And how many of them got lucky making some back today? Luck isn’t going to always be there. When you find yourself praying that the position comes back the game is up. The first mistake they made was say “I think” yesterday. I think the market has gone too far down. I think it’s going back up. The market could care less what they think. Once they stop thinking and start looking at facts they might have a fighting chance. In addition to that quote, I’ll add that I don’t focus on my “wins”. I focus on the quality of my decisions. I’m not afraid to take a loss and that’s why I use stops and have such strict risk management. To me, I don’t want the loss to linger. I want to move away from it as fast as possible and move on to the next trade. I look at facts always and always stay objective. I’ve never once said “I think”. The market doesn’t care what I think. Once you stay objective, you’re head is clear and you ONLY look at facts. Sorry to post all this in your thread. But it’s important. Trading isn’t only looking at a chart and trying to guess the next move. You need to bring a 360 approach to trading. I don’t have a fear of missing out so I haven’t taken trades the last few days. The book in ES was so thin it was trading like the DAX and that’s unusual. I almost had a trade yesterday in ES and/or CL. For oil I needed to wait for the inventory report to come out. Traders were caught off guard because they were positioned long due to the API report the night before. I also sent Investors a memo that they halted production at the Forties Pipeline. When the EIA report came out it was complete opposite and traders immediately had to liquidate. That’s why I don’t trade the news and make sure news is out before I take the trade. For ES I couldn’t get the risk/reward to work on 3 contracts. Even 1 contract the risk was too high and I skipped the trade. My risk is 1% to 2% on average with an absolute 5% max risk of my capital. In dollar terms that means I risk on average $500 to $1000. That risk is the risk on the entire position not per contract. A stop is attached to every single order with no excuses why. Some of these guys that crashed and lost $50,000 or whatever crazy amount is insane to me. And it wasn’t all XIV guys. So for a guy to be in equity futures and lose that much is insane. Here’s some of the excuses they used about a stop before the crash: “I’m an expert market timer” “There’s really a stop but it’s on a server ready to kick in” “I hedge” “I’ll give you the stop tomorrow” There’s no monkey business with Payoff Matrix. Every single order has a stop and it’s attached with the pending order. I send out a memo to investors informing them we have a pending order and the risk in dollar amount. My stops are only moved to protect profits. That means only in our favor. Once the initial stop is set, it never moves the other way. Investors know the risk UPFRONT of every single trade. For me, my biggest fear isn’t getting stopped out. My biggest fear is not following my trading plan. That’s why I’m so focused on the risk because my trading plan is based entirely around risk management. Thank you and sorry for the long post. --- _[View the full topic](https://forums.collective2.com/t/which-5-systems-would-you-choose/11381)._