nab, anz and comm, page-25

re: dealer wanted at nab Hmmm ... back in early 1997 I had the opportunity to sit with a guy who had been recruited from an international merchant bank as a 'gun option trader' ... options were relatively new back then.

This guy spent an hour showing me an algorithm he had used overseas (the so-called holy grail...) that would give short/neutral/long signals for the ASX20 stocks and the basis for derivatives trades.

This algorithm worked top to bottom down the page using a logic-tree approach of PRICE and TIME .. if yes, then, if no, then, etc, etc, applying various formulae until at the bottom < short, = neutral, > long for that particular stock. These 'signals' were then telegraphed to the traders desks.

I played with this algorithm which seemed to work at first but then later it didn't ... and thru the latter part of 1997 I became disappointed and abandoned it.

Years later, I noticed that T/A for instance, seems to work well in an uptrending market but less so when downtrending.

When I looked back at 1997 I noted that the early part of the year was trending up .. but the latter part it was trending down and my opinion is this algorithm has the same limitations.

Sooo .. these guys don't know anything we don't know ...

Like most traders, I tend to be bullish 60/40 and whilst we have devices in our toolboxes to profit both ways in the market ... I have over time made more money in uptrending than downtrending markets...

It does not surprise me to hear that NAB Options had a bad year in 2002. The market was in a downtrend ...

Aggressive traders also tend to be bullish ... 'suspension of disbelief' and if these NAB 'turks' played in any way LONG the USD (to cover losses or otherwise...) then no wonder they have lost big time.

Cheers ... tight stops.


This is only my view ... read the red stuff.