Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Your Trading Journal (Market Sniper)

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In the past few days there has been a lot of discussion on The Slope about keeping a trading journal. Here is a very brief examination of the subject. I hope it helps!

I cannot over stress how important it is that the trader maintain a constantly up to date trading journal. Yet most traders do not even have one! A trading journal is NOT just a compilation of entry, exit and net profit or loss for each trade. That is what is in your brokerage statements . Of course, you should also include that information. There are many things that can go into your trading journal and each trader will do it differently. Here are just some ideas of what can be included and they are by no means exhaustive, far from it. Nobody but you will ever see your entries in your journal. Be brutally frank.  Use your journal as a vehicle for improving your trading. Here are just a few ideas to get you started.

  • – Did I follow my trading plan for the trade? If not, why not.
  • - At what point in the trade did I doubt the trade.  If so, why
  • - What  did I do right in the trade
  • - Where did I stumble in the trade?

 When  you make an error, make a statement of correction. An example: I did not honor my stop in the trade according to my trading plan. I moved it NOT according to plan…therefore, in my next trade,  I will adhere to my trading plan as to stops. I will place stops and manage my stops according to my trading plan. This will demonstrate that I am a patient and disciplined professional trader.

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Pay OFF That Mortgage! (by Market Sniper)

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The other evening on Slope, we got into a discussion about the merits and possible ways to pay off ones home earlier than "as agreed." I thought I would do a post on this topic and go into greater detail as to the merits and some ideas for getting that done. I maintain, the average person can pay off his personal residence in less than 10 years without having to eat just beans and rice.

This post is solely about your personal residence. Where you live. Rental real estate is another area and this post does not necessarily apply to any rental properties you may have. It also is directed towards the individual that does not contemplate a move in the near or intermediate future as other factors then enter the picture.

First of all, recognize the FACT that your personal residence is NOT an asset! It is always a liability, even if it is owned free and clear of any liens or mortgages. It is ONLY an asset when you sell it and cash the escrow check. Why is that? On your personal balance sheet, any equity shows as an asset, right? Well, by my definition, to be an asset, it cannot have negative cash flow. Even a free and clear home has negative cash flow. You must pay property taxes and you should have at a very minimum, liability insurance. Fire insurance is optional once your home is mortgage free. If you cannot sleep at night without fire insurance, by all means, you will need that as well. The only possible exception to this would be if you are renting out rooms to tenants in your home.

Your home is your shelter and as soon as possible, you do not want any "bank partners" on your home. Most do not realize that if you have a 30 year amortized loan and you make each montly payment, as agreed, you will end up paying over three times the original loan balance (depending on interest rate) and it will take you approximately 23.5 years to pay that loan down by 50%! So, how can this pay-off be accelerated? There are a number of strategies.

1. When you get a 30 year fixed loan (or you have one now), get a complete print out of each month, all 360 of them, for how much of each monthly payment is interest and how much is principle. Your real estate agent should be able to get this for you. If not, I believe there are internet resources to get this information. Take that mythical $1,000 per month payment. First month say $982.00 is interest and $18 is principle. The next month, $18.04 is principle. What you do, that first month, is to take the next month's principle and add it to that first month's payment. Go to the 360th payment and strike it off! You just made that payment at the end of the loan! In other words, $18.04 today has saved you a $1,000 payment at the end of the loan! What, in effect, you have done is to create a 15 year graduated payment loan that you are in control of the payments! Many look at a 15 year amortized loan and the level payments are too high for their, then, budget. Hopefully, over time, your income will also increase.

2. Talk to your lender. See if they have a program that will allow you to make payments on the 1st and the 15th of each month, each time for 50% of the monthly payment and they then calculate principal reduction upon receipt of those payments. Some lenders can do this, most will not but it does NOT hurt to ask. Since interest is earned over each payment time period, anything you can do to reduce principle upon which interest is calculated is to your benefit. Word of caution: do NOT enroll in any mortgage reduction plan from a third party. They are charging you for something you can do without their help! Basically, such programs just adds a 13th payment per anum is all.

After doing this, then we come to a fork in the road. We need to further accelerate the pay off. There are only two ways to accomplish this. You must increase your cash flow and use that extra cash flow to pay down your mortgage and/or you must decrease your expenses and use that saving realized to pay down your mortgage.

Some starter ideas to increase your cash flow. 

1. Have any spare time? Get a temporary part-time job. Even if it is only delivering newspapers in the early morning. Weekend work, etc.

2. Sell unneeded possessions. We are all "collectors" and we all have "stuff" we do not use or need. Sell them. You can even start a small home-based business doing this if your so inclined. Become expert in one field, for example, porcelain.  You know what is good "stuff" and what is junk and you know what the market is in your field of expertise. Go to higher end area garage sales, estate sales, etc. Buy low and sell higher. You know what you are looking at and most sellers do not have a clue.

3. Let your creative juices flow. You may be very surprised what you can come up with when you really think about it. All extra generated cash goes towards principle loan reduction.

Some starter ideas for decreasing your expenses.

This is the area where many people balk at taking action. Most do not want to really differentiate between needs and wants. Make a game out it. You will be richly rewarded. Your free and clear home can be almost just around the corner.

1. Have an RV? How often do you use it? Would it not be cheaper to rent one for those few time you do? If so, get rid of the RV.

2. Own a car you owe money on? Lease or purchase. Think about this carefully. You need reliable transportation that is comfortable. A vehicle's purpose is to get you from point A to point B. Why would you owe any money on something that decreases in value every day you own/use it?

3. Everyone should own a "business." Have a hobby? It is no longer a hobby, it is a business. Check with your tax adviser/CPA on this. He should be able to guide you in this area as to tax consequences. If he is unwilling or unable to do this, fire him immediately and find one who will. You are missing out on important tax savings if you are NOT doing this. Tax savings is cash and goes toward principle reduction!

4. Examine every bill you have. Your phone bill. Is there a cheaper program? Do you have voice mail box? Those things cost $20+ per month. Go get an answering machine! Your gas bill. Most utilities have free programs to better weatherize your home and get that gas bill down!

5. Go out to dinner once a week? Take that down to once a month. Get some friends together and form a "dinner club." Once a week, each will, in turn, throw a dinner party! Much cheaper than a restaurant and a lot more fun!

6. Clip coupons. You can even find them on the net. Why pay total retail for the things you need? Buy in bulk for saving whenever possible. Ever asked a retailer for a discount? Try it! Times are tough! You would be surprised! Especially, if you are carrying cash! They should give you at least a small discount for using cash over a card. Costs them when you use your card! Ask for it! Worse thing that could happen is you might hear no and that does not cost a dime!

7. Start buying good condition used instead of new whenever possible and practical. Often, used will last longer than the same item bought new!

8. The use of "windfalls" which could be inheritance, job bonuses and even a tax refund. Pay down that loan!

9. The possibilities are ENDLESS! You might make a habit out of asking yourself "do I really NEED this that I am buying or do I just WANT it?" before you pull out your wallet.

Some final thoughts.

First, let's slay the dragon of "I will lose my write off of the interest if I pay my house off." Let us take a hypothetical. You own your home free and clear of a mortgage and I owe on my home. I pay $10,000 a year to the bank in interest. You pay nothing and both of us start the year with $10,000 in the bank and we are both in the 40% tax bracket. At the end of that year, I write off $10,000 effecting a $4,000 tax savings and I have NOTHING left in the bank. You write a check to the IRS for $4,000 more in tax than I had to pay. You have $6,000 left in the bank. Who is better off?

One great burden has been lifted from you if you take action now and continue to take action. Your life can change dramatically once you are debt free! All kinds of other possibilities will be open to you. Look at it as a "game." See just how fast you can get it paid off! In this game, you can ONLY win!

Get that house paid off? Throw a good old fashioned mortgage burning party! Be sure to invite all your neighbors to the bbq! Every month then, your neighbors will look at your home while THEY are writing out a check to the bank and think…that SOB!! Be sure to invite me as well. If your too far away, lift a tall cool one in my direction on the West Coast!

Yours in the constant search of the edge. In trading and in life. Market Sniper

Final Slopefest Update (Market Sniper)

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Well, folks, the time draws near for our get together! I do have some disappointing news, however. Our gracious host and the cause of all of this, Mr. Tim Knight, will not be joining us, sadly. Family obligations have cropped up beyond his control. As we know, family ALWAYS comes first.

He will be with us in spirit if not in corporeal form. He has made a rather nice gesture in apology. There will be autographed copies of his book for the lucky slopers who show up before the stack of books runs out! Tim wishes to express his regrets for this last minute change and made me promise not to hunt him down like a wounded goat! 

I will be arriving late Thursday afternoon, early evening. Be glad to meet with anyone at The Deuces Lounge on Thursday evening. here is a link to The Deuces Lounge.  http://lightgroup.com/las-vegas-ultra-lounge-deuce/

Here is a map of the places, times and activities we have planned.  http://www.screencast.com/users/Victorio91306/folders/Jing/media/1e355201-81ca-452e-b78d-6fa8da7671e2

Thank you, vittorio (who has already caught a freight car to Vegas as we speak) for your work on that!

We should also be looking forward to meeting the mysterious Mr. K who helped me put this together. He has done almost all of the leg work! Thank you, Mr. K!

We should have Mr. Butch Headding and his lovely wife Phyllis from John Person's organization with us as well! And, if time permits, Mr. John Person himself!

I look forward to seeing all of you there and I can guarantee you, one and all, we will have a great time!

Yours in the pursuit of that trading edge (and edges in casinos as well!), Market Sniper

Principle Of Maximum Adversity (by Market Sniper)

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I was introduced to this principle a long time ago. Maximum adversity is the market's first and foremost rule. It goes like this: the market will do whatever it has to to disappoint the most traders. This is in no way a reference to contrarian thinking! The markets will do whatever it takes to throw the most roadblocks, obstacles and disappointment in the path of your journey to profitability and success as a trader. Maximum Adversity will do its very BEST to make trading, a relatively simple procedure, as hard as possible. It will make you doubt every trade you take and your very thought process.

Maximum Adversity refers to the discipline the market imposes on market participants. This is part and parcel of the market's mechanism that makes certain that the funds of the many flow to the few. Think about it. Money flows from weak hands to strong hands. From the majority to the minority. Also consider that if making money trading was easy, everybody would be doing it and coining money, right? The trader who does not recognize, comprehend, internalize and respect this principle is doomed to trading failure.

What does this mean to you? What is should mean is to develop healthy skepticism. Like the old saying, if it sounds to be too good to be true, it is too good to be true. If a particular trade sounds too good to be true, it most likely is too good to be true and you will lose money.If a simulated equity curve looks too smooth to be true, it is too good to be true (Madoff). If a new charting program (red and green arrows type) makes trading look too easy to be true, most likely it is too good to be true. It is only through experience that you will find in all these "too good to be true" scenarios, Maximum Adversity at work.

Maximum Adversity also has another component: PAIN. Lots of pain! From the new trader to the most advanced trader there IS pain. To deny it is not only wrong, it will hinder your development as a trader. In a way, it can be very much like a perpetual Marine Corp boot camp. Life of the trader is NOT that image of sitting at the beach, a drink with a small umbrella in it in one hand, pecking away at a lap top computer, entering winning trade after winning trade with the other. Maximum Adversity will do its absolute best to make your trading life as uncomfortable and painful as possible. It will attempt to fill your trading world with pain. It will attempt to make your trading hard, harder still and then even harder. When you lose money, it will hurt.  When you make money, you will think about how much more you could have made, the money "left on the table" and that will hurt. When you spend time, energy and maybe even money to develop trades on a plausible theory and it does not work, that will hurt. When you do develop a methodology that works and you lose money using it, that will hurt. When you finally develop working trading edges and you spend time and energy making them sharper and lose money doing that, that will hurt. When your out of the market, waiting for the next trading opportunity and miss it, that will hurt. While your waiting, Maximum Adversity will heighten your anxiety about "missing" the next move and that too will hurt! As you can see, Maximum Adversity will seek to ensure that your trading life is full of pain and hurt!

Maximum Adversity does then make certain demands on us. It demands we each take total responsibility for our trading decisions. It demands that we always expect to get bushwhacked and ambushed at every turn. It demands that we expect the unexpected and most of all, it demands that we actually have to determine IF we are each up for the challenge. IF we have the intestinal fortitude for the task in front of us. Do we accept the higher probability that our lives as traders will be miserable in spite of the potential financial rewards? IF your answer is yes, ALWAYS keep this first market principle, the Principle of Maximum Adversity, in the back of your mind.

Good hunting out there, predators! Yours in the ever elusive search for the trading edge, The Market Sniper

Slopefest III – All Firmed Up! (Market Sniper)

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As most of you know, Slopefest III is scheduled for Saturday and Sunday, May 14th and 15th in Las Vegas, Nevada. I had a lack of input from Slopers as to events, activities, etc. but no problem! With the massive help of a Slope lurker (Mr. K) who is a long time resident of Las Vegas, we have put together the formal meeting. I kept in the front of my mind the fact that the size of everyone's' dollar is different (As Dear Old Dad Used To Say!). I think we have found the right spot to accommodate everyone price wise and it is also a spectacular venue!

Saturday, May 14th between 6 and 9 pm at a private club at the top of The Mandalay Bay in the Foundation Room!

Go to the main elevator bank at the Mandalay Bay. You will see a desk at one of the elevators. You will need to tell the person there that you are with the Slope Of Hope. As this is a private club, there is a minor dress code. No open toed shoes/sandals for men. No sneakers, no shorts (no gang apparel either for you wannabees). No tank tops either I think. Just use common sense.

There is a minimum cover of $50 per person. Use your credit/debit card. Your drinks and eats will be charged against your minimum. IF you cannot afford $50 for the evening, you should not be in Vegas! This way, you are in control of what you spend. We most likely will be in the Media Room which is the best one according to Mr. K. We will have an absolutely spectacular view of Las Vegas while we get to know each other. Here is a link to the site. There are some pictures if you scroll down to the  links.  http://www.houseofblues.com/venues/clubvenues/lasvegas/foundationroom.php

Dinner is a bit pricey for many so we can all decide where to go for dinner from there, should we wish to eat more.

As for further meetings/get togethers, that is open. Personally, will be going to the Sterling Buffet on Sunday at Bally's. Never miss the chance myself.

For those who do not yet have rooms. City Center has the best deals and the rates are not only good, they always have rooms and the rooms are VERY nice. Check the Vdara and the Aria for best deals.

Have another special announcement. Mr. John Person, his wife Mary as well as Mr. Butch Headding and his wife Phyllis may also be in attendence! So if you have an unautographed book by either Tim and/or John Person, bring it with you!

I look forward as does our host, Mr. Tim Knight to meeting you all at Slopefest III!

Time to take a time out and have some fun, good people. We have MORE than earned it! I will also be giving mini-seminars on how to get an edge on the casinos at blackjack and craps!

Yours in the ever elusive search for edges in and away from markets, the Market Sniper.