Daily Speculations The Web Site of Victor Niederhoffer and Laurel Kenner



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.

Changing Conditions by James Sogi;

Shane Dorian, wave riding master, made another astute comment about Cloudbreak surf spot. He said that the conditions are always changing, from day to day, from minute to minute with the change of the swell size and directions, swell quality... whether the swell is clean lines or are lumpy swells, the direction and intensity of the winds, storms in Antarctica, the tide, the number of surfers in the water, your own physical condition - tired, recent wave, recent wipe out, the water currents, board size, the sun angle in the eyes, the clouds, sharks, sea snakes, temperature. Each wave is different. The surfer has to adapt or wipeout.

Compare the ergodicity of the markets and the interplay of so many factors. So many changing conditions affect the trade, from day to day, minute to minute. Each trade is different. Each market is different. Different and changing factors from the around the world, and even your own trading room, affect the market and each trade. How foolish to try to use the same tools, the same trade, the same correlations, the same indicators, the same approach for the ever changing conditions. Flexibility and adaptability are paramount. No fixed system can compete in different changing conditions. The astute trader must always be looking ahead at the shape of the market forming to anticipate how it will form up as the trade takes shape and adapt his approach, adapt the technique the position to each situation, anticipate the ebb and flow of the market, even during a trade. Its very difficult without a broad range of knowledge and experience in markets.

Wave size and wind are the main factors for wave riders. In the markets, our Bondmeister cites the Doctor in naming "3 forward risks: labor costs, energy prices and bond yields" for market riders to look at, and to react to. My 'board' shows energy and rates picking up. Unit labor costs increased 3.3 percent during the first quarter of 2005, following a jump of 7.1 percent in the fourth quarter of 2004. Normally when the swell is bad, and the wind picks up, we wait for better conditions. At Cloudbreak Fiji, there is a 3-5 day swell cycle which seems, oddly enough at eye check, to compare with market conditions. (needs testing)

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