Change is one of the constants in your life. One door closes, another opens.

The Vince Rowe Show will now be available daily on this site. Vince will be broadcasting on ustream.tv at the 11AM Central time slot. All the regular guests are still with us and we will be introducing new content which takes advantage of the Internet streaming format.

See this post for Vince’s comments.
Send comments/suggestions to jonvee@vincerowe.biz

David admits there are better looking traders. Vince starts out with the seven components for a successful trading plan. Technical and fundamental indicators are the first things to decide on. David uses price patterns to identify candidates to trade. Technical analysis is 70% weighted in decision process. Sector relationship is important also. Macro economics does not play much of a role trading domestic equities. (mp3)

David cautions that each model not be based on low probability events. Model has to be based on facts. Vince cautions about the dangers of not having a money management component. David uses blocks of equity to reduce the risk to the total portfolio. News can drop a stock 50%. Dirty word for the year “wise” trader. David uses a risk/reward ratio of 2:1 (mp3)

David admits that after 24 consecutive losses he needed to accept draw downs. After several losses, you have to reduce position size. If you have a positive expectancy model, you must take every trade. After a winning run, increase your position size. This is based on the Kelley Rule. Vince makes the point that psychology is a major factor in your trading plan. First big test for a trader is being able to operate in an environment of uncertainty. (mp3)

David gives his spin on hardware and software. Vince admits he may go overboard on the computational hardware and software. David feels Windows 7 will allow you to use all the RAM in your computer. Add RAM first, then more processors, then more storage. Current $400 - $700 laptops are adequate. Dedicate computer to trading. Manage process load. Always do custom install and avoid the extra junk they want to load. All these considerations are essential to your trading plan. Simple plans are easier to ensure consistency. Make a journal - You can’t manage what you don’t measure! (mp3)

Vince reads the rules for the drawing for the Passport from the OTAFest last week. Oliver joins Vince talking about the newsletter. Topics are gold, stock market, dollar, and bonds.(mp3)

Oliver starts with the stock market. Low volumes are a concern, lowest of the year. May signal top. Breath is narrow as shown by new high/new low ratio. Signaling sideways market. Interest rates versus GDP growth show decline in real interest rates. When have negative real interest rates, gold will continue to advance. Long term trend for gold to 2017. Gold adjusted for inflation would be $2000. Gold bubble? Dollar inverse correlation to gold still holding. Central banks switching out of dollars.(mp3)

Vince points out an article in the WSJ that shows that traders are twice as likely to seek out information that confirms their own biases. Gold ,CPI, and dollar data is freely available. Make inflation adjustment using Excel and OpenOffice. Negative real interest rates are the driver for gold appreciation. Yield curve spread leads GDP growth by 2 years. Implies 2011 would have negative GDP growth. Double dip recession scenario. (mp3)

Vince notes banks are starting to loan. Oliver sees gold rising through 1H10. 2H10 starts consolidation for next two years 1000-1300. In 2013, range to expand due to inflation and extends to 2016. Use 1973 to 1980 as a model for the market. Free newsletter at end of year will expand on these themes. (mp3)

Vince details the rules for the drawing for a Passport. Ticket request in by Nov 27th, 2009. Keith Fitz-Hugh joins Vince to discuss China and the future. (mp3)

Vince updates all on the current price of gold and the Pearlfisher portfolio. Keith talks about the N11 investment universe. They are rapidly maturing economies. The cost of insuring against developing countries default has risen significantly. Banks are still hanging on to capital. China is using stimulus money to build infrastructure which has immediate impact to their economy. They will have strong enough internal demand to growth out of this recession. (mp3)

Vince is still a very complex economy. China’s version of communism is different from the Soviet model. Keith notices a changs in China’s attitude about it’s place in the global economy. Water and Oil are major choke points in the next decades. May be a future growth area in Water purification and water engineering. China is using current downturn to buy for the future. Keith thinks in the medium term - long inflation, long commodities, long large caps. (mp3)

Keith shortens the time frame and suggests traders focus on puts on the SP500. In China, China Green Agriculture(CGA) takes advantage of expansion in agriculture grow. Market is topping. Check your risk management. Protect capital if the market rolls over. It’s not the trades, it’s the structure. (mp3)

Vince trys to pick the winning number for the Passport giveaway. Vince explains why he does the Alumni event and the Radio Show. Explains how to check up on claims of money donated to charity. (mp3)

Vince welcomes Matthew Klein to discuss how Collective2 provides a common yardstick to measure performance. Poor performance may not reflect bad intent just poor performance. Matthew describes the Lossy Award - The Worst Trading System in the World. You can nominate any manager or system. (mp3)

Matthew describes the features of the site. It’s a third party auditor for trading systems. Has a screening function. You can mirror the buys/sells of a system you like.Of 9000 systems, very few are consistent thru time. Matthew explains why it’s so hard to make money with trading. Most subscribers in ETFs. (mp3)

Oliver joins Vince for an update from Germany. Santa Klaus can give beer away free in Germany, but Vince can’t give away his prize. Correlation between assets classes is ending. Some weakness in indicators the past weeks. Dollar/Euro going in favor of the dollar. Next Tuesday and Wednesday have more than 13 economic announcements and a FOMC meeting. Volumes have declined significantly, more than the usual seasonal effect. Listen for the advance/decline status. (mp3)

Tomorrow, Vince will be at the Dallas Investors Forum at the MovieGrill in Addison.

*UPDATE* Camillo has been rescheduled to Nov 27th. This gives you more time to read the papers and come up with some good questions.

What you ask is the Hurst exponent? Well, today’s guest on the VInce Rowe Show is Camillo Lento. He has written a paper on “Long-Term Dependencies and the Profitability of Technical Analysis “. In it he explains how trending markets will have Hurst exponents approaching 1 versus a random market of .5. He tests 15 trading systems, generally in two classes, Moving Average Crossover and Trading Range Breakout.

The second paper, ” A Synthesis of Technical Analysis and Fractal Geometry - Evidence from the Dow Jones Industrial Average Components” expands on this analysis by looking at the Dow Jones Industrial Average. From the paper’s conclusion ” there is a natural synthesis that suggests that time series
with high H should result in higher profit levels from trading rules.”

A third paper,Tests of Technical Trading Rules in the Asian-Pacific Equity Markets: A Bootstrap Approach , This study examines the effectiveness of nine technical trading rules in eight Asian-Pacific equity markets for periods ranging from January 1987 to November 2005. The annualized returns from each trading rule are compared to a naive buy-and-hold strategy to determine profitability. The TSEC, Straits Times, Hang Seng, Jakarta, KOSPI and the BSE emerge as equity markets where technical trading rules may be profitable. There is no evidence of profitability for the other two markets, the Nikkei and the All Ordinaries. The results reveal that 56 out of the 72 (77.8 per cent) trading rule variants tested on all data sets, disregarding statistical significance, were profitable after accounting for transaction costs. The results are important as they provide investors with information about the Asian-Pacific equity markets that can be used to determine optimal asset allocations and to further diversify portfolios.

David joins Vince and starts in on the weakness of the dollar. Market has been drifting because of uncertainty about interest rates. Vince mentions that meeting attendees are asking how to handle this risk. David offers some solutions to the current market. (mp3)

David feels that a proposed .25% transaction tax would significantly increase trading expenses. Focus on percent return not actual amount. We’re all swing traders now. Your trading plan must adapt to regulatory environment. (mp3)

David updates status of PHI. Up $1.50  since last week. Neural nets are showing CRN. Using the 5 minute chart, CRN is showing a classic Gartley pattern. (mp3)

Vince makes the point about the difference between “smart” people and good performers. David analyzes TBT and it’s exposure to Fed statements. Listen in for David’s spin on gold. More kewl info at David’s blog. (mp3)