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==============================================   Thursday, October 17, 2002
 
TTS - Trade Tuner System - More Q & A

Hello everyone,

There are a few inquiries on TTS - The Trade Tuner System by Edmond Petitjean at the discussion forum.  It would be a good idea to have a refresher on the newest questions on TTS, particularly now that there are good trends in stock market improvement.  Besides, you will see that TTS doesn't even depend on having a good market.

Q: Edmond,  basically I know you want to buy a stock at a low cost and resale at a higher price then get rid of it. Or if your pretty sure you can get into a small company and buy stock in it and keep it so it can continually grow for you. I know there are certain stocks that fluctuate so you can always buy and sell for profit if your timing is right. I've never taken the time to do any research because I've never really had the money to invest. That should
change within the next month or so. I'm going to college this august and will have extra money left over from grants and student loans. If I could just do well enough to pay for the interest on my loans with mutual funds, cds, or anything it would be a big help. I understand there is always a risk. I also understand anyone who has ever accomplished anything they truly desired never accomplished their goal without taking risks.

Even though I'm getting started late in life (being 32 and just now going to college) I know it's possible with the right person helping me make I can make sound financial choices for my future. I'll follow exactly what you tell me to the letter. If it doesn't work out then I'll just have to
try something else. I chose to come to you because my mother was English. I know that an
Englishman is more true to their word. So if you can help I would most appreciate it.

Thank You Edmond I look forward to both of us making some money.

A:  Hello,
I'm from Flemish origin (nearly the same language as Dutch) and we have an expression that says "better late than never", so one can only admire those that have the courage to start studying past their 30's.

If you order TTS you'll see how easy trading can be but you will of course have to study the material (don't worry, it's not rocket science).  After that I'm always available to help you if something isn't clear.

Today the markets are too wild to think long term, so I would advise you to swing trade (that means getting in and out in less than a week).

Greetings,
Edmond

Q: Edmond,
I day-trade the E-mini SP and average about 75% winning trades, you've stated in your information you win on about 90% of your trades. I have a few questions about your system in reference to day-trading the mini SP market.

Have you ever day-traded with your system in the SP market and if so what was your win rate?

If you haven't day-traded it, how do you know it will work, most of your material seems to be from a few years ago, the market has changed greatly in the last few years with much higher volatility. In addition, anything I've developed for day-trading inevitably has reduced profits versus what I saw when I back-tested due to slippage.

Do you use a fixed target and stop or do you get out of a trade based on indicators?

If you have any information which would be more convincing I'd love to see it.

A:  I have paper-traded the SP on an intraday scale as an extra test for my system and it behaves exactly as for longer term trades (days to weeks to months).

The markets have only changed on the surface, not essentially. I can see this when using TTS.

This is the strength of TTS: it is so basic that it keeps its performance today as it did in 1900.  The reason that the markets are still the same and will always stay that way (basically) is simple: the basic influence behind each move of the markets is purely psychological (mass psychology) and this makes the reactions very calculable. Mass psychology doesn't leave much room for improvising.

Be assured that TTS as it is offered now is not something from some years ago: it has continually developed since then. When you use it on the intraday scale, it is really enjoyable to see how things develop before your eyes just as expected by TTS.

For intraday sp trading I use a stop of 1 or maximum 2 points on the 5 minute scale! This shows you the extremely low risk when trading the mini.

Greetings,
Edmond

Q:  Hi Edmond,
I have been reading about the TTS Trading System on the Lets Talk Winning web site and I have a few questions for you.
First off how many pages are there in TTS?

A: 25.

Q:  How many different Stocks/Options, etc. are you following?

A: Maximum 10 stocks and indexes included.  Most of the time only 1 index.

Q: How many Stock/Options, etc. can one realistically track on a daily basis?

A: It is a good thing to limit yourself to very few.  1 index is enough.

Q:  What amount of Stocks/Option, etc. do you recommend to follow?

A: 1 index.

Q:  Where do you get your data from? Is there a cost involved in obtaining the data?

A:  I have included a lot of internet addresses in the course.  Most of them are totally free.  I even found one where the SP500 real time is free!

Q:  In the TTS system do you give some advice as to what Stock/Option/Index, etc. you can trade (with some degree of safeness). I'm not asking for a specific stock, but possibly
some guidelines, based on your experience.

A: You can trade anything with TTS.  Futures/Stocks/Indexes/... you name it.  As long as you can get a bar graph, you can trade it with my system.  However, I suggest to limit yourself to an index that is very liquid (SP500, Bonds, ...)

Q: Hello Edmond -
I am most interested in TTS. I want to day trade the Emini S&P.  Does your system work well for day trading and for that futures contract? If so, my initial questions are:
How many trades does your system average per day?

A: 4 to 5

Q: What percentage of your trades are winners?

A: 90%

Q:  How big are your stop losses?

A: Depending on the timeframe.  When you use 5 minutes frame, stop loss is only 2 points.

Q: My goal is to consistently make 8-10 points per contract per day.  Is this feasible as a day trader with your system?

A: Easily.

Q: What contract do you trade? Is this suitable for the E-mini S&P?

A: I'm trading mostly options on stocks or futures.  The E-Mini SP is ideal.  I'll give you a web site where you can get a real time graph of the SP for free!  Here it is:

http://finance.lycos.com/home/livecharts/default.asp?symbols=INDEX:SET.X

Q: Since there are 4-5 trades each day, does that mean you spend the entire day watching the screen or is there a better way to predict when a suitable trading opportunity may occur?

A: I don't do it often.  Most of the time, I trade with a time horizon of 2 to 5 days.  If you trade SP intraday, you have indeed to follow up as long as your trades are going on.  But you can combine that easily with another activity at the same time, such as working at your desk. 

Q:  Since you have indicated that 8 -10 points can be made easily each day, how many points do you go after on each trade? I am getting the impression it is a significant number since there are 4-5 trades per day and 8-10 points is easily made.

A: 2 points per trade can be expected reasonably on the 5 minutes frame.

Q:  Am I correct you only watch price bars or candles?

A: I'm watching price bards (OHLC) in combination with some specific indicators.

Q:  How often do you trade and how many points per day do you try to get?

A: I'm mainly trading 2 to 5 days on one trade.  This way, I'm not glued to my screen and by using options I easily can make between 20 and 100% on these trades.

Q: This has got me very excited.  If I can make 8 -10 points a few times per week and trade 4 E-mini contracts, that is an excellent week's pay working 3 days per week.

A: You are right about that.  There are people who want to make more and more money.  They forget however to enjoy it and so they become worse slaves than those who have a 9 to 5 job.  I like your attitude of being happy with a nice income and still have time to enjoy life.

Q:  I reread the initial letter Izak sent out about your system.  Perhaps I would be better off trading options like you do. If my goal is to earn $6,000 to $7,000 per week, how much money should I be prepared to invest in options each week and how much money would I have to have in play at once?

A: US$ 20000

Q: Also, typically how much time do you spend each day searching for your buying opportunities?

A: Maximum 30 minutes.

Q: Since you hold positions overnight, don't you worry about news which could kill an investment without giving your stop time to save you?

A: No. That's the reason I trade options (only open buy and closing sell of puts and calls, so NO writing of options).  My maximum risk is determined from the very start.

Q: If I understand the original letter Izak sent out about your program correctly, you trade stock and index options.  Do you have to watch many stocks and indexes to find sufficient investment opportunities each week?

A: A maximum of 20.

Q: When you purchase either a put or a call, do you know immediately where to place your stop and when to get out of a good trade?  If not, don't you have to pay close attention to the investment just as you do if you are day trading?

A: I'm following a very simple stop rule: 50%.  When to get out is exactly determined by TTS.

Q:  Once again, many thanks for all of your assistance.  I would not waster your time or mine if I was not extremely interested in your program.  The results on the web page are extremely impressive.  However, I am not certain I am reading them correctly.  For example,  February 2, it says you purchased an option (I assume a call) at 813 and sold it 1 day later at 815 and made $1000 profit.  And did you pay $815 per option?

A: That was a straight future. Not an option.

I am most impressed with your quick response and how well your program performs.

Thank you for all of your assistance.

Q: Good morning Edmond,
I hope this email finds you well. Let me begin by stating that I already have one half of your complete trading system.  I recently purchased Jack Brusie's Option All Money Management Software and it is brilliant in its simplicity and effectiveness in not only
preserving ones trading capital, but also shooting for triple digit returns per annum.

This is where TTS and you come into the picture. Let me state that I have several criteria that TTS "must meet" as I prefer to to trade short term swings using stock options, just as you do.

I do not wish to be stuck in front of a computer screen all day, which eliminates day trading. It's too stressful for me.  I want to be able to trade one stock option at a time. I want to be able to log into my brokerage account and check closing prices once daily.

I want to be able to use a free service like www.bigcharts.com  in conjunction with TTS to mechanically select the qualifying stock and use the OA software to manage my trading account. With the 80%-90% strike rate TTS achieves, I will see a steady increase in my equity curve.

I will be trading US stocks only, and I will be trading outside of the USA.
I look forward to hearing back from you soon.

Thank you for your time.

A: You have exactly the same attitude towards trading as I'm having myself.  Intraday is too much of a burden and long term is too boring (and also not very profitable these days!).
I'm also using Option-All for money management and my own TTS for the trading decisions: this is the ideal "marriage".

Bigcharts is also my favorite charting program: you can easily set all required TTS-parameters and you don't need a database on your own PC.

When you buy TTS I'll also give you an internet address with online stock scanning software that you can easily program to meet the main criteria for TTS.  It is not free but less than $9/month and it does an excellent job.

To resume: TTS + Option-All + Online scan = as good as things can ever be.

Q: Good morning Edmond,
Thank you for your prompt reply to my questions regarding TTS. I, much like yourself, have purchased many systems, strategies, books, software programs, trade simulators, latest
indicators all in search of the HOLY GRAIL!!!

However, in my quest for the Holy Grail of trading systems I also realized that Proper Trade Management combined with even an average number of winning trades would result in a steady increase in the overall equity in my account.

This is where the marriage of Option All Trade Management Software and TTS come together to finally complete my journey.

Edmond, I could immediately see the advantages of using the Option All software to increase my bottom line while fiercely protecting my trading capital. The benefits were staring me in the face.  I feel the same way about TTS, however natural skepticism as well as being burnt in the past keep one cautious even at the best of times.

Edmond, it is this point that I wish to discuss my situation a little further so that you can better appreciate what I am looking for from TTS.  So here goes:

I reside downunder and currently work full time, however my passion has always been to generate a comfortable lifestyle trading the US options market, while having the freedom to live life ON MY TERMS!!!

I have opened up an options trading account with a reputable discount broker and am currently setting trading capital aside. I believe Options trading for short term profits strictly buying calls and puts is the only way to trade, for all the reasons you describe in your web page.

1. Power of Leverage.
2. Maximum loss limited to premium.
3. Daily trading opportunities.
4. Can be applied to any market, over any timeframe.
5. Initial whipsawing not an issue.

Edmond, I am looking to start options trading with a US$2,000 trading account(A$4,000 roughly) using TTS and OA, to generate a minimum profit of 200%+ return annually. I know that if TTS helps me select options that win 80% of the time, then this will be a conservative goal. I will actually be looking for 400%-600%+ gains annually, but 200% will be the absolute
minimum.

Lets look at the results over time.

Year 1. Initial trading capital US$2,000 grows to US$6,000
Year 2. US$6,000 grows to US$18,000
Year 3. US$18,000 grows to US$54,000
Year 4, US $54,000 grows to US$162,000

At this point, I can withdraw US$62,000 as my annual salary and begin again with US$100,000 and continue the cycle. I believe this to be a realistically achievable goal and would appreciate your feedback in helping turn this dream into reality.

Thanks again for your patience.

A: Your expectations are reasonable and surely possible with the combination TTS/Option-All.

Your starting capital is however very small.

If you have $2000  to start with, you can't risk more than 10% on one trade and that's only  $200.

You can find options for $200 but it won't be the most interesting ones and the commissions you pay will eat too much of your profits.

If you buy an option for $200 and you make a profit of 40% that's only $80 minus commissions equals $60.

Normally you'll need at least $10.000  to make it worthwhile.

Undercapitalization is one of the main reasons for going broke in trading (besides not having an excellent system of course).

You could divide your capital in four equal parts of $500 and trade these, but it is not an ideal approach.

Q: Good morning Edmond,

I still have some more questions for you re-TTS now that you have a better idea of my situation and what I hope TTS will do for my TRADING DECISIONS, so lets get started...

I will be looking to trade globally, so I will have a laptop with internet access, www.bigcharts.com, the OA software and your manual as well as  access to the SCANNING sites. Will this be enough to enable me to qualify several stock options (picking the best one) to trade for a short term profit/loss easily targeting 8 out of 10 winning trades all in around 15 minutes daily using nothing more that the closing days prices, checking in once daily?

A: Yes.

Q: This is essentially what I am looking to achieve with TTS, and I would like to offer you the highest praises if you can deliver what I ask!!!

Edmond, some of the sites and products I have purchased recently to use in conjunction with OA all seem to use lagging indicators which get one in when most of the move has already taken place or provide many false entries into the market or are just downright useless as well as relying too much on one's skills in reading a bar-chart (and you know as well as I that 10 people looking at the same chart will interpret it 10 different ways.) You can
see how frustrating it can be for those of us out there trying to succeed in the
markets!!!

A: That's exactly where TTS shines compared to other systems.  No lagging at all and very few false entries and no interpretation on your side.

Q: I would ask you to please be keep in mind that I have no interest whatsoever in being glued to a computer screen all day. I want to log on after work, check the closing prices, change in option premiums etc, adjust stops if necessary and perform new scans if a trade has hit a profit or loss target.  That's it. A totally relaxed way to trade which enables me to sleep well at night while churning out obscene profits from the market on a consistent
basis.

A: That's how I am doing it.

Q: Once again I need to be sure that this will be The One. I have lost so much $$$ in the past, but rest assured that I will never give up until my goal has been achieved.

Getting back to the US$2,000 account, using your 50% loss of premium rule and trading only 1 contract at a time, even hitting an 80% strike rate will result in the following. 8 X 50% = 400% less 2 X 50% = 300% return. Is this
correct?

What would be required of me to achieve profit returns of 200% per annum on my account?

A: Your reasoning is correct if you trade each time for the same amount of money.  However, using Option-All will transform the few losers in winners, too.

200% a year is very reasonable and you will attain it easily.  It could be 10 win of 20% as an example.  so, if you only make 20% per month you will reach your target easily.

Q: Having TTS be purely mechanical is of utmost importance as it eliminates the emotional factor coming into one's trading decisions. Also having it be simple to understand and implement is paramount. Would you care to elaborate on this in more detail?

A: TTS is self-explanatory.  If you have exercised it a few times on some graphs you will see how easy and eye opening this method is.  So, hands on!.

Q: Edmond, what makes TTS work so well in so many different markets, and under such a wide variety of conditions? I feel that it is important to know why it is able to correctly identify winning trades some 90% of the time? This just seems TOO GOOD TO BE TRUE and you know what they say???

A: I know what the losers are saying.  People are strange animals: they like complexity and are only comfortable when they are drowned in impressive looking mathematics.  What they don't understand is that those people who are developing all these IQ250 systems... are not trading.  They are only hiding their ignorance behind complexity.

And why does TTS work in any market?  Simple: because it is not based on markets but on... people!  The real secret is in being able to measure the reactions of the masses (that are trading).

Q: This must have something to do with your EPE Oscillator indicator which is a modified version of an existing indicator. How did you come up with this one, and what convinced you finally that it would continue to pick 8/9 out of 10 winning trades on a consistent basis?

A: See reason above: because it is the best way of measuring the reactions of the masses that are trading and human behavior won't change.

Q: Edmond, how can I prime my OA software to achieve the very best results options trading using TTS as opposed to your 50% premium rule?

A: 50%  is not a rule: it is the maximum that you would allow to lose when using OA.  See OA for details.

Q: Edmond, could you also email me some recent trading results (say 1 week
trades using end of day data much like I will be trading) to illustrate the awesome power of TTS?

"Edmond, I've gotten a little carried away but I am excited about being so close to having my dream realized. Once again I will thank you for your time and look forward to hearing from you soon.

It is the 90% correct trading decisions in TTS's overall performance that has me intrigued.  Even with a US$2,000 account, and buying a $300 - $500 option, and losing half the premium still leaves me with the opportunity to fight back and increase my trading account trading 1 lots only, until I have a decent capital base. When the account reaches US$10,000 in size, than I can implement OA full speed ahead.

Establishing a trading methodology that I can feel comfortable around is worth its weight in gold."

Click to order.
Thank you,
Edmond Petitjean

Wishing you all the best,
Until next week,
Izak

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