Daily Speculations The Web Site of Victor Niederhoffer & Laurel Kenner Dedicated to the scientific method, free markets, deflating ballyhoo, creating value, and laughter;  a forum for us to use our meager abilities to make the world of specinvestments a better place.

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4/8/2005
Forensic Trading, by Jim Sogi

The Usual Suspects

"To be a forensic scientist requires the appropriate integration of basic human emotions with basic rational enterprise, what the ancient Greeks called "reason". Their term did not carry the unfortunate contemporary connotation of mere mechanical calculation. Forensic science, as science, demands cognitive skills, but more, it demands reason in the ancient Greek sense -- it demands of us a rational soul, with emotive and cognitive elements operating in harmony." Forensic Science, James and Nordby. Many top speculators such as our own Senator have a group of usual suspects to follow for regular market leads. How can these elusive profits be captured? It takes alot of footwork, sturdy boots and long hours.

Signature or profile

Forensic scientists seek a criminal's signature or profile, which are the unusual and distinguishing features of evidence or identification of certain characteristics belonging to a certain criminal. The market has its usual suspects with characteristic signatures. When they show up with their characteristic signatures, the alert speculator lays a trap hoping to capture some profits from the unsuspecting suspects.

Victimology

Many crime investigations fail to adequately study the victim. A good speculator will investigate market victims carefully. A good example of this in the market is the study of victims of failed trades on breakout/reversals. See for example the 20-day reversals or other breakout failures. Doc rock also has certain market victims under investigation. Investigate victims of failing momentum. See the failed range breakouts this past year or even this last Friday and Monday and Tuesdays failures. Who are the victims of these losing trades? How can the perpetrators of this be investigated and captured? What are their habits? Who are the predators stalking them? When will the market's modus operandi change and victimize the faders?

There is a suspicious circumstance under investigation. Where were you on the night of March 15-16 between 1201 and 1199. (June mini SP) Anyone with information leading to the arrest and conviction of the those responsible for this will receive valuable recognition. Will the perp return to the scene? What are his tendencies. Has he returned in the past. How soon? Will he linger or go further. To make things difficult, my investigation of the case files show that there has never been a gap down over 4 pts unfilled for over 16 days since 1994 in SP big. Very unusual and mysterious. Add to the mystery the solar penumbra, the round numba penumbra and the dead Pope and you get the Mystery of the Papal Penumbra.

Losing money in the markets is a crime. Let's do our best to fight losses and take out our magnifying glasses and examine the evidence carefully.