Bears Are Meant To Suffer

Sellings are events while buyings are a grinding process.  The market spends most of the time going up, due to dynamics of greed and fear, which fuels the law of supply and demand.  To catch the selling events, it's a given that the bears would have to suffer and endure the unrelenting taunting of the market.  And despite the suffering, the bears may still lose in the end.  Because even if the market operates according to the laws of the fundamental and technical analyses, the bulls have the Fed and the politicians on their side who often manipulate the market rather than letting it run its natural course.

The topping process may take months.  If the few lucky bears made it to the top, they may be emotionally drained by then to be able to hold their entire positions much longer without having  to let go of some during the few rare moments of respite to ease their pains.  The few who could ride their positions all the way through the bear market are the ones who attain the level of true zen.

So being a bear is not for the faint of heart.   The bears are essentially gluttons for punishment.  I'd liken shorting being a double black diamond trail and going long being a blue or even green trail, using skiing as metaphor.   Why go against the odds?  I guess I can ask the expert skiers why they want to go down the double black diamond.

All being said, if and when one catches these rare selling events before he gets wiped out or admit defeat due to the unbearable pain over a long course of time, he would be on top of the world and taste the ultimate joy of being vindicated and proven right.  Let's face it, the bears on average know more than the bulls.   The bulls are either naive imbeciles who think the market will always or eventually go up, or opportunists against their own conscience who buy despite in their guts they know the current financial systems are simply houses of cards, and doomed to collapse if it weren't for the politicians' greed and the agenda of the financial elites.

I am no saint, but I know too much to have faith in the market.  It's difficult to invest in today's unprecedented environment.  I own gold bullion since when gold was still prices in the $390.  Aside from that, all I can do is to somehow strike a balance as I make my daily trading decisions, and preserve my capital in the end.

Home Surveillance Using My Android Phone

I decided to set up my HTC Sensation smartphone for home surveillance.  I thought it'd be a fun project and I might feel the need for it in the future, even if it might be short term such as to catch naughty neighborhood boys in the act.

1. Set up the Android phone

The first step is to set up my Android phone so that it can stream video and audio.  I use and recommend IP Webcam by Pas.   It's easy to set up.  Once installed, simply hit "Start server" and it's off and running.  It even tells you the local IP address (e.g. 10.1.10.6) and port (default is port 8080).   If I were to run this regularly, I'd want to set up login/password as well.

2. Test within the home network (LAN)

The previous step readily allows my home PC running a browser to view the video streamed from my smartphone.  Using the running example, the URL to get to the streaming home page would be http://10.1.10.6:8080.  Since I am using a compatible browser, i.e., Google Chrome, I am in luck.  I can simply click "Use browser built-in viewer" off the home page and I am off to go.   Both audio and video are rendered through the browser directly in my case.  To skip the home page, I simply bookmark the URL, http://10.1.10.6:8080/browser.html.

3. Configure the router for external access

The ISP assigns an external IP address to my home network.  One of the many ways to find out about this IP address is through http://CanYouSeeMe.org.  But since I have a wifi router which routes incoming internet traffic to many of my networking devices, I need to somehow direct the stream request to my Android phone that's running the IP Webcam.  To do so, I need to set up and enable "IP forwarding" (or "virtual server" as some router would call it) on my router, and point all traffic on port 8080 to the Android phone's local IP address (10.1.10.6).

One quick way to verify the set up for this step is to use http://CanYouSeeMe.org and specify 8080 in the box next to "Which port?".  If the setup is correct, it should return "Success".  Make sure the IP Webcam is running during the test!

If there is another device sitting between the cable modem and the router, most likely a VoIP telephony router such as a Ooma or Vonage box, you might run into complications.  Refer to my other blog post for walk-around when dealing with a Ooma Hub.

4. Record the streams to a file

Finally, it is only practical to be able to record the "crime scene" that's under surveillance.  To to so, first download the freeware, VLC Media Player, if it's not already on the PC.  Open it and follow the following steps using the parameters of my running example.  Replace the local IP with the external IP of the network the smartphone is running.

1. From the Media menu, select Convert/Save...
2. Select the Network tab, and enter http://10.1.10.6:8080/videofeed as the network URL.
3. Click the checkbox to "Show more options"
4. Click the checkbox to "Play another media synchronously (extra audio file,...)"
5. Enter http://10.1.10.6:8080/audio.wav for the Extra media
6. Click the Covert/Save button
7. Enter the filename, for example, video_surveillance.mp4, assuming the default "Video - H.264 + AAC (MP4)" profile is used
8. Click the Start button.
9. Click the Stop button of the VLC Media Player to end the recording.

One last tip: sometimes I find it necessary to connect to the IP Webcam server using a browser in order to "wake it up", before attempting to record using the VLC Media Player.  Also, I  actually couldn't get the audio to be recorded but I left the instructions in any way for future twigs.

Good luck!

How to Place the Ooma Hub (or Telo) Behind Your Router

I got my mother an android smartphone for her birthday.  One of the great apps I like is the IP Webcam.  I've experimented it successfully on my own network at home.  By way of port forwarding, I can use a web browser from anywhere in the world to view what the smartphone is seeing.  The typical application is home security/surveilance.  But for me, being able to see whatever my mother sees at her home 180 miles away would be instrumental in helping her solve daily problems.

Unfortunately, what worked for my set up didn't work on hers.  Same phone, same router, and the same ISP, but somehow I just couldn't make port forwarding work in her home.  I couldn't even access her router remotely even though such feature was enabled for her router.  Finally, I found the culprit -- she had an Ooma Hub (for VoIP telephony) placed between the cable modem and the wifi router.  This is the default setup for Ooma and works for perhaps 95% of the users, except for the 5% who run network servers from their home networks.  The Ooma Hub had either blocked incoming ports and/or masked the external IP address (http://canyouseeme.org showed a complete different external IP addresses with and without the Ooma Hub).  I am not quite sure.  The bottom line is that it would not work with the default recommended setup.

Ooma Telo

Some suggested designating the local IP address of the wifi router as the DMZ in the Ooma configuration.  But there have been complaints that it didn't work, so I didn't bother trying it, even though I didn't get to the bottom of it.

I took the other approach -- placing the Ooma hub behind the wifi router.  I made it to work.  Since I couldn't find this documented anywhere else, I am hereby doucmenting the solution that works for me.

1. Access the Ooma Hub's configuration page at http://setup.ooma.com
2. Change its Network Connection setting from Automatic to Static IP Address.
3. Assign the Ooma Hub a static local IP address outside of your wifi router's DHCP pool, say 192.168.1.101, assuming your router's DHCP IP pool ranges from 192.168.1.2 through 192.168.1.100.
4. Assign your router's IP address as Ooma Hub's static DNS Server and Router (gateway) addresses.
   
5. Make sure you click "Update" after you've made the above changes.
6. Access your router's configuration page, and specify the Ooma Hub's new static local IP address (e.g. 192.168.1.101) as the virtual DMZ host. Make sure DMZ is enable and the changes are applied.
7. Power down both the Ooma Hub and the router.
8. Reverse the current physical connections so that the the cable modem connects directly to the router's uplink socket, and the Ooma Hub's "Modem" socket connects to one of the router's available LAN sockets.
9. Connect one additional cable from the Ooma Hub's "Home" socket to one of the router's available LAN sockets.
10. Power up the router and wait for it to reach steady state.
11. Power up the Ooma Hub and wait for the blue light.
12. That should do it.
13. To access the Ooma Hub's configuration page, you'd now have to use the static local IP address (e.g. http://192.168.1.101 in our running example) instead of http://setup.ooma.com .   If you have a more advanced router, you would be able to fix this problem by adding translation.  But personally I'd rather not do that and keep the changes minimum in case I need to restore the orignal set up in the future.

Good luck!

Notes on Al Brooks' Price Action Trading

Al Brooks' style of trading is based on price action only.  He does not look at any technical indicators, only candle sticks, trend lines, and moving averages.  He trades mainly S&P futures, but I am trying to apply the techniques to stock equities (SPY).

Chart Setting

• 5 minute chart with 20 EMA.  The point is to be simple and nimble.  Too much information will simply paralyze you from making quick trading decisions.

Terminology

• H1, H2 Signals:  The first and second occurrences where the high of the current bar is greater than the preceding bar during a given pull back of an up trend.
• L1, L2 Signals:  The first and second occurrences where the low of the current bar is lower than the preceding bar during a given pull back of a down trend.
• Signal Bar:  The bar preceding the H1, H2, ... or L1, L2, ... triggers.
• Entry Bar:  The bar after the signal bar.
• Range Bar: A doji or near doji.
• Trend Bar: A large white body candle is a bull trend bar; a red/black one is a bear trend bar.

Entries

   

• H1 long or L1 short with-trend entries.  These work well on a strong trend.
• H2 long or L2 long entries near the 20 EMA.  These work well based on the observation that a prevailing trend normally uses a 2 legged pull back before resuming the trend.
• Parallel channel over-shoot and failure.  Stay-in-the-channel, don't chase.
• Reversal counter-trend entries only after trend line break AND a retest of the low (long entry) or the high (short entry).   Look especially for 3 pushes for better reliable trade.

Exits

• For scalping SPY: Exit 1/3 after the first .10, another 1/3 after .20, and let the remaining 1/3 run.
• Stop exits:   Initially 1 tick "beyond" the signal bar; after the entry bar transpires, move the stop to 1 tick "beyond" the entry bar;  after taking the first target profit, move the stop to break-even.

Miscellaneous Notes

• Do not look for perfect patterns.  Resembling one is good enough.
• Don't over-trade.  Be selective.  3-4 trades per day is enough.  If you're consistently profitable, simply increase the shares.
• Most of reversals fail, so make with-trend trades.
• Beginners tend to make reversal trades, so areas where they'd be stopped out would be good entries.
• Market usually makes 2 attempts to do something; if failure, it would do the opposite.
• Bail out if the signal bar is weak. E.g. a doji range bar or a bull trend bar on a L1/L2.
• Reversal long entries - if lower low then expect 2 legged up; if higher low, then perhaps only 1 legged up.  (Reverse for reversal short entries.)
• Non-trending days: if long tails and overlapping bars during the 1st hour, then try fading at extremes.  There tends to be 2 trading ranges.
• Trending days: may want to have a swing trade rather than just a scalp.
• Spike and channel trend day: a gap can be a spike; the channel would be in the direction of a spike.
• Scalping requires higher percentage of winning trades. Swing trades require less winning percentage.
• Only use 1 minute or 3 minute charts for with-trend trades, never counter trend trades.