Daily Speculations
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James Sogi
Philosopher, Juris Doctor, surfer, trader, investor, musician, black belt, sailor, semi-centenarian. He lives on the mountain in Kona, Hawaii, with his family. |
5/13/2005
Surf's Up, by
James Sogi
In the big wave surf line up, being in the right spot is critical. The variation in the area in which the waves break is larger than the distance the surfer can paddle in the time before he sees the wave on the horizon and the time it breaks. Yet you have to be within the critical area to be able to paddle in on the steep part, but not so far in that you get crushed by the breaking wave. Positioning and timing are the keys.
How do you know where the right spot is to sit and wait: not so far out that you miss all the action, but not too far in that you get worked by a big breaker? The experienced surfers know their spot. We have secret line up points on the land from which to triangulate the position. For example, at Mahaiula, a famous big wave spot, I have a line up with a certain set of palm trees, and a formation of lava and grass on the mountain behind from which I can tell whether I am sitting 'deep' or still way far out. I can gauge my exact location in an otherwise featureless ocean. The goal is to increase the ratio of waves caught to times getting caught inside and worked. There is a triangle in which the waves are caught, and disaster on all sides. The 'kooks' don't have a clue and get wasted with regularity. The 'crew' catches wave after wave, barely getting their hair wet.
If you don't know where you are in the market, you get wasted and miss the waves. Ideally you want to set your orders right at the peak of the wave, and not too deep in so that the variations wipe you out, but not so far out that you don't even catch the wave. Line up with recent points, maxima and minima, or on cycles, pivots, variations, or whatever your methodology is that works. Often the variation in the moves is greater than the available equity or margin so positioning and timing is important. Its good to have a line up and know where you are, especially when big waves like today's come rolling in.
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