Lawrence’s Market Blog

f you noticed that the Oscar spreadsheet hasn’t been updated since 04/16/2009, there is a reason.

The entire spreadsheet covers the period of March 17, 2009 to April 16, 2009. A full month period to evaluate Oscar’s methods, strategy, etc. My conclusion, and you are welcome to agree or disagree (feel free to use the comments area), is that it is not possible to make (on a RISK-ADJUSTED basis) any significant progress with his trading advice. Now, if I keep going month-after-month, the results may change and I may change my mind, but the membership is $100 per month, and I can’t justify spending that money if I don’t have confidence that his system works.

Link to my Oscar spreadsheet

There are a few problems with his style of trading. I will talk about each in turn.

1) Trades are generally set up in the middle of the night and entries/exits during the evening are usually required.

This is purely subjective. You may not have a problem with it. But flash alerts come in the middle of the night. So depending on where you live, you may get a ‘ding ding ding’ at 2AM or 3AM or 4AM, etc. I am more keen on a day-trading service where I can get a good night sleep. Again, my personal preference.

2) Very wide stops.

I am scared of the very wide stops that Oscar uses. For the Euro trade, as an example, the entry on March 25 was 1.3508 and the stop was 1.3665. That’s 157 pips. At $12.50 per pip, that’s a $2k loss per contract! It’s enough to cause a lot of stress. I personally was not comfortable with the very wide stops that Oscar recommends.

3) Misses the Key inflection points / major trend changes.

Oscar has a system he calls the Omni. It tells him the price is going up (Green Omni), down (Red Omni), or Neutral. If Neutral, there’s no trade. He’ll say, Wait for a Sweet Spot, etc. But I have noticed the Omni tends to miss key inflection points or reversals. It is like trend following. If prices are going up, the Omni tends to be green. If prices down, Omni will be red. But it missed some key reversals that traders who employ more subtle techniques may catch.

This caveat is strictly my gut feeling. I am interested in other traders’ perspective on the ‘Omni’ indicator. Do you feel it works?

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Having said that, I have a theory about how Oscar trades. Please let me describe it and tell me if I make sense or if I am way off base. I am open to any kind of feedback.

First of all, the first order of business is to figure out if tomorrow will generally be an up day or a down day. So first order of business, Oscar tells you it’s going up and we want to buy on a pullback, or it’s going down and we want to short on a rally. I think the Omni is a simple trend following system, maybe using some elementary TA (moving average, parallel channel, head and shoulders, etc.). Since today is a down day, and we broke out of a bearish wedge going back to March low, I am pretty confident that tomorrow’s Omni would be red. ES closed at 837.50.

Second, once we have guessed direction, we need to figure out an entry. We know the ES ATR (average true range) is about 24 points. So we can say Short half the ATR or 12 points. 837.50 + 12 = 849.50. So I would say “Omni wants to sell at the 850 to 852 level”.

Third, add the other half of the ATR and you will arrive at the stop. 849.50 + 12 = 861.50. So I would say “Set stops above 862. Wide stops are needed for the evening session.” So that’s how I would set up the Omni trade.

Again, this is pure guesswork on my part based on following Oscar for a month.

If what I described is how these trades are set up, it’s a simple trend following system where you just add/subtract half the ATR to get your entry, and the full ATR to get the stop. So my conclusion is that there is no reason to pay $100 per month for this. The stops are too wide meaning that when there are losses, the losses are BIG. What I am looking for is more day trading service, where the Expert Trader says “Short ES right now and set a stop +3 or +5 handles away”. That person would be watching for divergences in things such as fast stochastics, MACD, etc., or he would monitor supply/demand indicators, or trend lines. There is never a good reason to have a 12 pt stop, if you know what I mean.

Based on my reasons noted above, his trading system is not for me. Please feel free to leave feedback.

final result

I made $212.50 before commissions. After paying the $100 monthly fee, I have a net gain of $112.50. On my worst day, I lost -$2,975 on March 22nd. There were 3 really bad days with daily losses of more than -$2,000. On my best day, I made $1,550 on 04/16/2009. I had 3 good days with daily gains more than $1,000.

Lastly, I received several relevant comments in the past month that I present to you without commentary or judgment (in the order that I received them).

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sadasdasd (unregistered) wrote:

Snakeoil salesman Oscar couldn’t even pay his mortgage with the OMNI…and you’re trusting him with your hard earned $$??? It’s sad to see him prey on newbie traders. No free money in this life people…well except the funds that Oscar gets each month in subscription fees from you lemmings…this guy is so pathetic…YOU’VE BE WARNED OMNIACS!!

emotions are IN!!….profits are OUT!!

-Former Prem member

http://209.10.98.182/seven/01162007/business/hot_commodity_business_zachery_kouwe.htm

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anonymous (unregistered) wrote:

Also Premium Member. At the end of the day you are accountable for your own trading management and should not blindly follow anyone. I am more than satisfied by Oscar’s professional demeanor , training, and market setups.
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johnny S (unregistered) wrote, in response to Lawrence_Chiu:

just saw your spreadsheet….today you took about 30 pips from the Euro 6E, and your stop was almost 200 pips?? Are u insane?

your profit and stop levels must be more symetrical or you’ll get really hurt in the long run.
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SIAD (unregistered) wrote:

Ha ha, that spreadsheet was very funny Lawrence. Theres a reason why Oscar trades a paper account only. LMAO. The turnover rate there is huge. People are not stupid, they come and go. The problem is that his a hole is just continuing to feed on newbies. How can this scam be prevented? Any ideas?
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gametheory wrote, in response to Lawrence_Chiu:

Lawrence, I know I’m new to your blog but I really enjoy it. Just wanted to say good trades with Oscar. You should be learning a lot from him, but be sure to adjust your risk tolerance to your account size.

When he is good, he is very precise with his entries. But when he is wrong, it hurts like a bitch. The best thing to do is learn the tips and techniques, and try to duplicate according to your own risk structure. My Rmultiple for any trade MUST be higher than 3 and I keep my trailing stops tight.
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MiniReaper wrote, in response to Lawrence_Chiu:

… That is my biggest problem with the way Oscar trades…the biggest loser is generally bigger than his biggest winner because his stops are too wide for daytrading IMHO. Today was a perfect example..he had a 20 pt stop on a daytrade with clear resistance on multiple timeframes…traders taking the trade had no chance to make money.
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gametheory wrote, in response to MiniReaper:

That is a good point. Simple mathematics will tell you traders with an inverse risk reward ratio are statiscally guaranteed to fail. One thing I notice about Oscar is that he is primarily a trend trader, he doesnt catch inflections well imo. The problem is that by the time he agrees with the trend, it is getting ready to inflect. But ocassionally his entries are awesome with a margin of error of less than 1-2 points.
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