From a founder of index arbitrage
Modern financial hedging techniques
Timer Digest's 4X
Top Stock Market Timer of the Year
Trader's Sensei Publication
Market Timing Redefined
with our Twin-Bar Market Trend Model
Market timing and trend following redefined from Michael R. Gibbons who was one of the founders of stock index arbitrage and modern financial hedging techniques.
We have a publication called Trader's Sensei and it contains all of our trades which have produced outsized returns compared to traditional market timing/trend following methods.
Clients receive our proprietary buy and sell signals for stocks, bonds, currencies and forex. Our trades are based on a totally objective and systematic set of rules and nothing else.
Gibbons' Trading LLC is engaged in proprietary trading, option/index arbitrage, research, and publishing. Gibbons' Trading LLC is operated by Michael Gibbons who is the managing partner.
Michael Gibbons employs his Trader's Sensei Trading Method exclusively to trade index based ETFs as well as twenty eight commodity futures markets. All ETF trades and futures trades made by the Trader's Sensei Trading Trading Method are featured in a publication we call Trader's Sensei.
Michael Gibbons has been trading since 1971, and was one of the first to discover what is now known as stock index arbitrage as well as a pioneer in hedging financial risk. He was a member of the General Honors Program in college and graduated with a Bachelor of Arts Degree in Economics from California State University at Long Beach.
He was one of the first to employ computerized trading-his first computer trading system was programmed in 1971. He worked for major brokerage firms and has managed large amounts of money. He eschews industry organizations, and is now a very private trader and researcher.
He currently provides his proprietary research primarily to large traders and hedge funds. His trading of his own method takes up the majority of his time.
Gibbons' Trading LLC currently offers all of Michael Gibbons' proprietary trades in the Trader's Sensei publication. Information and pricing for a subscription to Trader's Sensei can be found by clicking on the services button at the top of this page.
The only way to obtain our Trader's Sensei Model Portfolio trades is to subscribe to our publications, as we do not provide trading signals to anyone other than our subscribers.
Eight Trading Basics & Rules
Michael Gibbons' Important Trading and Investing Concepts
There are many important things you need to know to trade and invest successfully in the stock market or any other market. Eight of the most important things that I can share with you based on many years of trading experience are enumerated below.
1. The market is always right and price is the only reality in trading. If you want to make money in any market, you need to mirror what the market is doing. If the market is going down and you are long, the market is right and you are wrong. If the market is going up and you are short, the market is right and you are wrong. Other things being equal, the longer you stay right with the market, the more money you will make. The longer you stay wrong with the market, the more money you will lose.
2. The trend is your friend. Since the trend is the basis of all profit, we need long term trends to make sizable money. The key is to know when to get aboard a trend and stick with it for a long period of time to maximize profits. Contrary to the short term perspective of most traders today, all the big money is made by catching large market moves-not by day trading or short term trading.
3. If you are looking for "reasons" that stocks or markets make large directional moves, I can tell you that you will probably never know for certain. Large institutional investors and well capitalized players move markets for reasons known only to them. Since we are dealing with perception of markets-not necessarily reality, you are wasting your time looking for the many reasons markets move. A huge mistake most investors make is assuming that markets are rational or that they are capable of ascertaining why markets do anything. To make a profit trading, it is only necessary to know that markets are moving-not why they are moving. The most profitable traders only care about direction and duration, while market losers are obsessed with the whys.
4. Markets generally move in advance of news or supportive fundamentals-sometimes months in advance. If you wait to invest until it is totally clear to you why a stock or a market is moving, you have to assume that others have done the same thing and you may be too late. The market reaction to good or bad news in a bull market will be positive more often than not. The market reaction to good or bad news in a bear market will be negative more often than not.
5. You must let your profits run and cut your losses quickly if you are to have any chance of being successful. Everyone will be wrong a lot when they trade- and that is to be expected. But staying wrong (holding losing trades against the trend) is not acceptable and a clear sign of losing market behavior. Trading discipline is not a sufficient condition to make money in the markets, but it is a necessary condition. If you do not practice highly disciplined trading, you will not make money over the long term. In my long market experience, at least 90% of investors lack the necessary discipline to be successful. Emotion will replace discipline for most investors at the most critical of times. This is the real reason most people cannot beat the market- the market simply beats them psychologically.
6. The Efficient Market Hypothesis (EMH) is fallacious and is metaphysically a derivative of the perfect competition model of capitalism. The EMH at root shares many of the same false premises as the perfect competition paradigm as best described by economist George Reisman in his work Platonic Competition. The EMH was created by University of Chicago academician Eugene Fama, who borrowed many of the same concepts from another University of Chicago professor- Frank H. Knight. Knight in Risk, Profit, and Uncertainty (1921) provided the intellectual basis for the EMH forty years earlier by describing perfect competition. The perfect competition model of capitalism and markets (and the EMH) is not based on anything that exists on this earth. Inefficient markets can last for long periods of time. You see, there is no valid reason to think that investors are rational. That is, the EMH is based on a false premise that investors are rational. It is precisely because investors are irrational that trends last for much longer than any rational person could reasonably expect. You cannot explain away bubble periods in markets as just an aberration. "Irrational exuberance" is hardly a rare phenomenon. The presence of large emotionally driven swings in markets gives trend followers an opportunity for large profits.
7. You should make your own trading decisions. Never trust the advice and/or ideas of trading software vendors, system sellers, market commentators, financial analysts, brokers, newsletter publishers, trading authors, etc., unless they trade their own money and have traded successfully for years. You should note that those that have traded successfully over very long periods of time are very few in number. I know some very rich traders, but no rich analysts.
8. There are no market gurus. Good traders take advantage of high probability trades and capitalize on direction and duration. Beware of all self-proclaimed or self-anointed gurus. Most of them are net losers in the markets.
One of the biggest mistakes the vast majority of investors and traders make is to hold to the premise that you have to be able to forecast to make money in the markets. That is why "forecasting" services and predictions are so popular.
People attempting to tell you (for a price like a fortune teller) what the best stocks are to hold for the future, what a stock will do a year from now, or if gold will be higher or lower in two years. Gurus galore and they tell you with great hubris how they have a special connection to the future. The reality is, no on can predict or forecast markets with any consistency over long periods of time.
Fortune tellers make predictions as do most investors. What they don't get is that no one can predict or know the future. Trend following is about reacting to the now situation and thus we never attempt to pick tops and bottoms.
Black swans are much more common than most people think, and fat tails are where we make a lot of our profit. My Trader's Sensei Trading System has been on the right side of every major market move in history. It has done that because it automatically adjusts and changes course (if need be) to mirror the market and cannot miss a move because of it's very construction.
Of course trend following is not popular despite it's highly profitable track record. That is because if trend following was widely accepted, there would be no need for about 95% of the people employed in the financial industry. There would be no need for fundamental analysis and no need for any financial media other than to report on results. Logically, trend followers receive almost no media coverage. Now, why would that be?