Stock Trading Game

This is about the real stock trading game. This is a video that introduces kids et.al. to the language of charting with candlesticks and explains the axis for time and value. Then for mom and dad there is a continuation of the technical analysis of the Gold Bug Index from the prior weeks action.

Check back each week where I will try to do a weekly wrap-up of the previous week and a probable outcome for the coming week. It’s all just math, I don’t read financial papers or listen to the news because it’s all just noise, I go by fact which is based on five pieces of data. The volume, open, high, low and close of each session. It’s that simple.

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I just want to make this quick, which is how it is in  the stock trading game. Like a cosa nostra oath, “you live by the ticker and you die by the ticker”, maybe we should make it a Wall Street oath, they are gangsters after all.

OK enough BS, CCME came back trading about a month ago. It’s like the beautiful pure in virtue girl who was raped, the glow has left and people see it differently. Even though it is still the same entity after as before. And I think women being abused is horrible, and companies for that matter. So here is what’s she looks like today…drum roll…

Because I try to leave you the reader with something that you might feel was worthwhile, and I also use my game to get kids into math, take a look at this below. It kind of blew me away, but then its just math, why should it be amazing, it is just conforming to what it is supposed to.

Until next time, may you prosper.

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The following (text in green) is taken from Yahoo Finance pages written about the stock market game of late (except for the grapic, that is my own for illustration purposes).

Street Picks CCME: The Biggest Short Squeeze of 2011 January 27, 2011

Short Squeeze Coming For China MediaExpress? January 27, 2011

Shares of China MediaExpress Holdin (NASDAQ: CCME – News) are surging by 16% on speculation the company could be subject to a massive short squeeze after short sellers have piled into the stock assuming the company is a fraud, according to a report by the TheStreet.com. China MediaExpress is a member of the Chinese Advertising Stocks Index, which is up 8.2% today. Making matters worse for the shorts is the fact that China MediaExpress have soared 43% in the past month, perhaps encouraging the bears to add to their short positions at higher prices, but as TheStreet.com notes, they may eventually run out of shares to short, forcing them to cover those positions, driving China MediaExpress shares higher in the process.

In the past six months, short interest in China MediaExpress has risen to 6 million shares from 1 million shares all while the stock has doubled, according to TheStreet.com, indicating the shorts are playing with fire here.  

On February 3, 2011 this happened: (the stuff inside the blue box on the chart for CCME) (click on image to enlarge)

Then Citron Research, Bronte Capital and the research firm Muddy Waters published reports that, collectively, alleging the Chinese company of embellished its revenue by tens of millions of dollars and that the number of buses running its ads is less than half what the company claims. They also alleged that the company falsified its relationship with its largest customer, Shanghai Bus Industrial Group Co., that it manipulated reports by the independent research group CTR Market Research and that fewer than half of the buses in China MediaExpress’ network actually display its digital advertisements.

Muddy Waters, a firm described on its website as one that “sees through appearances to a Chinese company’s true worth,” initiated coverage of China MediaExpress on Thursday with a “strong sell” rating.

In his letter, China MediaExpress Chairman and CEO Zheng Cheng countered that the firms making the allegations are actually short sellers — that is, investors who profit when a stock falls. He said it was no coincidence that Muddy Waters issued its report on Chinese New Year, when the company was not likely to respond but U.S. markets remained open. “By using the anonymity of the Internet and publicizing as many unfounded allegations as they can craft, they can make it look as if there is a ground swell of criticism against the company when in reality all the claims emerge from a small group of self-interested parties,” he wrote.

On February 7, 2011 this happened: Dyer & Berens LLP Files Class Action Lawsuit on Behalf of Investors Who Purchased China MediaExpress Holdings, Inc. Securities Between 11/8/10 and 2/3/11; Announces Upcoming Investor Deadline (CCME)

 All the above is material from Yahoo Finance, except the first line of preamble (and my graph, courtesy of Stockcharts.com).

Why am I even caring about this, because I know people who had already realized a huge gain, who sold at the first peak in the above graphic. They then bought back in during the subsequent trough, coming back for a double dip and were up big time at the second peak as shown by the blue arrow in the graphic above (this is where I said sell and run). 

Then they bought into the media BS and tried to convince me of the short squeeze that was supposedly taking place on February 3, 2011. The one that the media was pushing. You see they were running on emotions instead of looking at the technical indicators.

I disagreed, the technicals said they should take the money and run. As well, the total short position was 6 million shares out of 650 million outstanding, maybe 1%. It seemed normal to me. Well they hung in there, letting their greed get the better of them and they are now underwater on the trade. They even emailed my the media crap to show me I was wrong. 

So they were up $9 a share before the lies started flying. The percentage gain from there wasn’t worth the gamble to me, the technicals were showing exhaustion. There is an unwritten rule in the stock market that says, “the market will do what hurts the most people”. And that could be because the boyz fix it to be that way after they set you up.

This, in hind site, shows that the fix was definitely in, and they sucked a lot of people in, including the media. We saw here how it takes a lot of effort and support and confidence to make a stock appreciate in value and it takes a few well placed coordinated lies to undo that effort. When you have a profit, take it. Tomorrow is another day.

Over and Out.

Update two weeks later….It’s been delisted. See the flatline in the blue circle with the arrow pointing at it.

Bummer, the money is stuck in a delisted stock in a diving market in a currency that is dropping and may have restrictions imposed on it. That’s really f’d up. The market gods are nasty.

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The big boards, when I started this project in 1971, before electronic trading, which my daughter calls the olden days, were the huge chalkboards that lined the walls of the many regional stock exchanges in most cities around North America. Guys would mark the bid and ask on these blackboards with chalk as they ran back and forth on suspended walkways, and communicated with the floor traders with a colorful array of hand signals. Every city with a stock exchange had a big board. I so wanted to be a floor trader, but that was a very coveted gig. I used to sit in the gallery and watch the action like a kid that got cut from the team.

Raiders, were always the unwelcome guests at the party. They were lawyers, accountants, investment bankers, brokers and hustlers. They were bright, lacked any conscience and they hunted in packs like Rapters. These are the real soldiers of fortune, they wear Armani not Cami.

This is not a silly game. It is a virtual stock market, where the players make the market, as does their personalities make the kind of game you will experience. That said, it is for anyone who likes a strategy game that requires some hustle, communication or even interactive math games.

It boils down to, what you do affects the market value of stocks, but also what you say. What you say is the fun part, the hustle, you are trying to use someone else’s money for your benefit or you could just agree to cooperate to manipulate the market. It is up to you. 

Just trading stock is not what this game is about. We use the stock exchange as a means to an end. This is the cut-throat world of corporate takeovers, the ultimate power trip for the big DAWGs.

It is accurate for the principles of simple economic theories such as supply/demand and risk/reward, as well as the buzz from the floor of the exchange, where the men get separated from the boys.

The graphics and print quality is as good as I’ve seen on the best games. The certificates are on varnished card stock and have all the elements of a cert. The money is printed both sides and fits in your hand like money, to bring out the larcony and power trippers in us all.

The reason for this Blog is to bring your attention to the new kid on the block, called Big Board Raiders. The phrase “big board” is a registered trade mark of the New York Stock Exchange, which they acquired in 1978. I on the other hand, copyrighted the name “big board” for this game in 1974. I want to make it very clear, there is absolutely no connection between this game and the NYSE, none. In fact they don’t like that I use this name, but i owned the copyright before their trademark and I live in a different country. To not infringe on that Trademark, I copyrighted a later version by the name “big board raiders” in 2005, which is this version of the game. I know better than to make the big dog on the porch angry. So to all the lawyers at the NYSE, I come in peace, and I will not trade on your name and I will make it clear there is no affiliation.

This game is published by me and your relationship with the game Big Board Raiders is also with me, I take it personally. No big company here, just me and you. Thankfully, today people can self publish. If I were to get distributors, the price to you doubles for me to make my margin. So I’d rather stay small, keep the price to you reasonable and enjoy my little niche. This game will only be available through the internet, useless someone comes along with an obscene amount of money, and I mean really obscene then all promises are withdrawn, everyone has their price. Housekeeping… the three phrases in quotes are all registered trademarks of the New York Stock Exchange: “New York Stock Exchange”,”NYSE”,”Big Board”.

A stock trading game can require cumbersome conversion tables, calculators and constant number crunching if they are accurate simulations, or they are just plain silly and have nothing to do with reality. Over the years this well explored subject category, stock market games, has had many offerings. As a matter of fact, the very first game published by Parker Brothers was a stock market card game called “Pit”, which I assume had something to do with the trading pits. Now another stock market simulation, a good one, called Big Board Raiders.

It does not require intense concentration, no calculators, is not silly and is great for killing dead air of a visit with friends, great for a few laughs and best of all the kids can play too and you’ll be one of them. As well, nobody is eliminated because a winning condition ends the game and it was designed to be inclusive right to the end. If you played any of the “opoly” clones, you already know what to do, roll the dice and move.

This game, Big Board Raiders, has common and preferred shares, directorships with annual dividends, Time in quarters of years, Bonds and Debentures, Selling Short, Margin Calls, Options Trading with expiry and Rights Offerings. And they all behave as they do on real exchanges, except our stock exchange game takes place in a ficticious country called Rutland, back before electronic trading, where certificates were delivered.

This game is about a very serious problem that is going on right now. This is the next world war in my opinion and it is being fought right under our noses, no shots are fired, no bombs are dropped, and nobody seems to get it. Historically, when the resources of a nation were desired by another nation, there was an invasion and a war of occupation.

Today, anything worth owning is inside a corporation, and the really choice stuff is publicly traded on a stock exchange. As the world runs out of resources, the “have nations” through their companies can buy and are buying the good stuff, and leaving the marginal resources for the indigenous people. I do not consider the USA a have nation, the world is tiring of their printed IOU’s called the American dollar. It will soon be devalued.

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I have not posted to the stock trading game blog in some time, I have been learning how to shoot and edit videos to display on this blog and others. I’m still here, just busy with some new stuff, which I hope to present soon.

Happy new year, and be careful. This is supposed to be a nasty year for the markets.

Talk to you soon.

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Just for the record, I do not own KGC and never have and I have no affiliation with the company, it is just by way of illustration. I know how this company reacts.

This is a condensed version of three posts, you can find on facebook on the Big Board Raider Pages where they have the proper cronology of events. I posted it here because I started it here and felt it need to be finished here. yada yada.

Hopefully, this is the last time I’ll talk about KGC, which was never intended as a recommendation, it’s just an example that served to illustrate my point at the time. DO NOT BUY IT on what I am showing you here. It’s going to drop now, so don’t go losing your money.

Then on October 13 (above) price hit the top of the Bollinger band as it narrowed and I said this is probably a head-fake. On the 14th it started to back off (with a red candle). The start of the head fake. I also added the fibonacci retracement lines and some channel lines for illustration. We’re learning stuff, right?

Well in the October 18 chart (below) you can see it hit the top and changed direction like all head-fakes do. It’s cool because it is quite predictable.

Then on friday, I said “As an aside, I think it will drop down to the bottom of the blue line I drew on the chart and I base that on my suspicion that the Elliott wave count is a wave 4 correction, but I COULD BE WRONG.”  I put a small red circle on the above chart to show where I thought it might drop to.

When you’re hot you’re hot.

Now I will let KGC alone.

I said this, but now another interesting situation is developing, it never ends. Look at the convergence of the 50 and 200 day moving averages. And that is where support seems to be developing. In a few days, we’ll likely see a great entry point. The RSI and MACD are dropping like a stone in water. I think this is all because the FED is pumping up the dollar. It won’t last.

Please don’t invest on my say so. I am not an financial professional. I say you have to be your own advisor. This is just to make you think and get you to see the possibilities and look at TA as another skill you could have. There is much to learn before you put down hard earned money. You can start with the stock trading game called Big Board Raiders, it’s a lot of fun and you can practice with out the pain that losses bring and get your kids started early, that’s my mission, the kids.

And it is pain, if you lose money, your other half will remember it on their death bed with their last breath. “You shmuck you lost our money.”

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Here you can see that the price did try to return to the mean (or if you want to think of it as the moving average), which is the dotted line within the green bands, called Bollinger bands. Then I said I thought we might have one more kick at the can, and as you can see in the graphic below, that happened. But that is not what I want to show you. An interesting thing has set up, and in Bollinger band speak, its called the “head-fake”.

The guy who created the Bollinger band, John Bollinger, originally intended it to be a measure of volatility with the reasoning that as the outer green bands narrowed, it indicated lower volatility. But an odd thing happens most of the time. As the bands narrow, price will go in a direction until it hits the outer band and then reverse to a much larger degree than the original move from the narrowing point.

That’s why its called the head fake.

So I am expecting price to rise till it hits the upper band and then reverse to the down side. If it doesn’t it ain’t a head-fake.

I had to point that out because it’s a peculiarity of Bollinger Bands.

And you know I hated statistics. Probably in large part to the pedantic way it was presented. I just couldn’t see where I would ever need it.

Anywho, over and out.

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This is about a stock trading game, and that’s my apple for the teacher.

What follows seems far from a discussion about a stock trading game, at any rate, I showed this screen shot on Aug 23, saying this chart screams buy me. Let’s see what happened here on Sept 23. I should say that I don’t own any KGC and never have owned any, it’s just an example.

Charting coutesy of Stockcharts.com

And here we are today Sept 23, a 25% gain in 1 month and its now time to consider taking the money and running. There are signs of exhaustion here. My bet is it will backoff to the mean and take one more run, but I’d skill take the money and run. You can see the RSI is over 70, it doesn’t stay there for long, Volume is falling off, The Stochastic, (STO at bottom) doesn’t stay of 80 very long either.

It’s starting to run out of gas. Can you see how in mid Sept. it tried to return to the mean, which is the dotted line between the two green lines on either side of the mean. These green lines are confidence limits on the mean, they show that 95% of the pricing is between them. When you are outside these limits, it’s time to go. Another thing is an exhaustion candle on the day before the decline. Candle sticks are the the graphics that represent each days trading range. These tell you about supply and demand. They are a very old way to represent prices, used centuries ago by rice traders and today by technicians.

This is not rocket science, there are other factors at work here as well, like remember I said “Sell in May and go away”, this is an old saying that has some merit. The market slows down for the summer months and gets back into gear at the end of summer. But has the possibility of tanking in October, which is another reason to take the money and run.

If you trade all the time you will lose. My point is to trade when you get a killer hand dealt to you, the poker analogy, which is usually when prices are below the 200 day moving average (red line). You just read what the chart tells you and go pickup your dough, but you have to be smart about it. You wait for the killer hand. It may only happen a couple of times a year. Be disciplined. The one thing I learned about playing poker is, don’t bet unless your chances of winning are highly probable because you can’t bluff in the market.

This is a long ways from buy my game, Big Board Raiders, but Im trying to show you there is a portable skill you can take with you after, its not hacky sack or some useless pursuit like mastering Wii and becoming an effective bunny killer.

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My daughter just finished grade 6, but she has been reading technical charts for a while now. She got her start by playing our stock trading game but doesn’t know the math that makes the charts, and yet she doesn’t have to. These charts are subscribed to and are all plotted for you. You just access them and they tell you their story. She can look at the indicators plotted and tell you if it is over bought or over sold, and from that she knows the direction of the market. In math talk, these predictions have high confidence limits, if read correctly, with odds of 1 in 40 you are wrong, or in math talk, a higher than 95% confidence limit. In Statistical speak, you are outside the confidence limits in one of the tails, that’s what makes it 1 in 40 instead of 1 in 20. Some pretty nerdy stuff, but very rewarding.

Here’s the deal, if you are in grade 6ish, more or less, or any grade for that matter and you learn how to play Big Board Raiders (and yes my web site needs a lot of work) for some background knowledge, then I’ll point you in the direction of some kick ass math, that will open your eyes to money. You don’t have to do the math, you just learn to read it. If you learn what the displayed chart says, which I will teach you, then you are on your way. There’s a card inside every game, register the number at our web site and you will advance in years of math money smarts. There is no additional charge for this information, many people are teaching and writing about it. I will show and point you to some very good teachers.

This chart is screaming buy me…it is a large gold mining company which just came off being oversold. THIS IS AN EXAMPLE NOT A BUY RECOMMENDATION, I DON’T DO THAT !   I will look at it again in a month and see whats what. I should say that I don’t own any KGC and never have owned any, it’s just an example.                                  Charts courtesy of stockcharts.com

Above there are 7 indicators on this chart (out of many), and if these are all that you learn, these when you know how to read them, will guide you to get into or outof the market. It is not difficult and is a skill that will last you a life time.

Once the players have Big Board Raiders as a base of information, and they want to know more, I will show them how the statistics of the market are followed with a discipline called Technical Analysis. I didn’t learn this as a kid because it wasn’t available to the public until I was about 35 years old. It had to be done manually, with pencil and paper and you had to know the math. It really hadn’t been invented for public consumption yet. And it is cool math. Today, there are millions of people all over the world using this for market entry and exit points, and because they all see the same signals, the waves of money that flow make them a self fulfilling endeavor. It’s not just ordinary people doing this, its fund managers, the big banks with their proprietary trading platforms, pension funds and old age security funds. When the signals are triggered, the money moves and the market responds.

While I am not a licensed trader and I am not encouraging anyone to get into the market, never the less, in October 2008, I convinced a client who I do accounting work for, to buy near the low in the crash, when everyone was jumping out windows screaming “the world is ending”. They had cash paying them near 5%, so they took a portion of it and followed my advice. The stock we bought was normally a $20 stock, the company was in business for over 100 years, well we got it for $0.41 (the low was $0.36) and this was on the New York exchange. It was so bad, that normally stocks are suspended from trading in New York if they are below $1.00, but there were so many that they let them trade. We sold into the spring rally the first time at $0.97 for a profit of around $240,000. Then it backed off during the summer, you know, “sell in May and go away”, to $0.71, (which was a full fibinacci retracement if you know Technical Analysis) where we bought back in. The stock was rolled back 10 for 1, making our price $7.10 and we then sold into the fall rally later at $17. (the stock went to $21 later but the guys were nervous being rookies and all) for a profit of close to $375,000, in all $US 615,000 capital gain. A huge% gain from recognizing the opportunity and acting on it. That’s from knowing that the world doesn’t end, it goes on and on. People panic and if you know that, these panic attacks are a gift from the market gods. This group had never bought stock before, except for me. Now they think this happens everyday. It doesn’t. The point is to recognize the opportunity and that comes with practice, like anything. Opportunity and Timing, the two keys to success. These opportunities will happen in your life time, not always, but when they do, act. You never really know when the market will go up or down, but when it is so oversold even grandma knows, these are great opportunities. Everybody knows buy the dips, but this is buy the crashes.

Lots of the great fortunes came from these huge selloffs. Keep your powder dry, it will happen again.

Over and out

Starcraft 2 Guide

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