1、 1Phantom of the Pits by Art Simpson About the author Arthur L. Simpson is an independent trader and has been a member of the Chicago Open Board of Trade and (now) the MidAmerica Commodity Exchange continuously since 1971. He is a registered floor broker with the National Futures Association. Art is
2、 a licensed Merchant Marine Officer by the United States Coast Guard. He is also a licensed pilot issued by the Federal Aviation Administration. He holds licenses issued by the Federal Communications Commission. His license includes first class radiotelegraph, general radiotelephone operator license
3、, GMDSS radio operator/maintainer license and an amateur extra radio license. Mr. Simpson has worked assignments with the United States Information Agency, Military Sealift Command and has served as chief engineer at CBS radio in Champagne, Illinois. He has served as a broadcast consulting engineer
4、and has been instrumental in construction of broadcasting stations. Art lives in Indiana with his wife Karen and their family of pets. His interests include trading, flying, amateur radio, computer programming, music and world travel. 2C O N T E N T S About the author Preface Forward Chapter 1. Phan
5、toms Insights Chapter 2. Your Book Chapter 3. A Little History Chapter 4. Preparation for Trading Chapter 5. Rule One Chapter 6. Rule Two Chapter 7. Trading with Rules One and Two Chapter 8. Day Trading Chapter 9. Options Chapter 10. Cloud Hopping Chapter 11. Time to Reflect on Gods Rules Chapter 12
6、. When We Lose One of Our Own by Harold B. Simpson Chapter 13. Behavior Modification Chapter 14. A Wink is as Good as a Nod To a Blind Horse Chapter 15. Quicker Than the Eye Chapter 16. Your Comeback After a Big Drawdown Chapter 17. Phantoms Christmas Gift Chapter 18. Rule Three You Say? Chapter 19.
7、 Is the Market Always Correct? Chapter 20. The Third Rule Chapter 21. Tie Ribbons on Your Trading Chapter 22. Trading and Three Accidents Chapter 23. My Order Was Filled Where? Chapter 24. Your Trade Program Chapter 25. Phantoms Chat Editors Notes on Knowledge & Research 3PREFACE It had to happen I
8、thought to myself as I took a walk to the top of a small hill just behind my home. There isnt a single trader who wouldnt give half his trade equity to know how the big guru did it! Knowing his thoughts could be worth thousands of dollars in a single trade. For decades traders have wondered what is
9、so special about perhaps the best trader ever. It was six months ago that we had talked about giving some back. And why shouldnt he give some back. Were talking knowledge and you cant put a value on knowledge or experience. He had both. We agreed that to give back it would have to be without expecta
10、tions of any recognition or rewards. He came up with a plan just as he always did. We would go on the Futures Magazine Traders forum and sneak information onto the forum and see how well the reception would be for the new knowledge. First he called me every name he could think of calling me other th
11、an my name. I wasnt happy with any of the names until he asked, how about POP? His agreement to give back (knowledge) to other traders was really important to him at this stage of his life. I could hear it in each breath of his voiced words. I could see it in his heart as his face mirrored his conce
12、rn. I could see he was taller than usual that day in the spring. It was almost thirty years ago that I had first met him. I didnt see him as a tall man until years later. Over the years he had grown taller than I had imagined possible. Not in height but in his confidence, his manner of thought, his
13、gestures, his speech and all the characteristics you would expect of a hero. I met him in the pits in Chicago on even ground. We were trading the same futures. I got the best of him that day but just one lesson he taught me by weeks end. A market is more than a day! The name POP sounded like a setup
14、 for me. He stopped at the top of the hill and looked to the sky as he urged me to agree on always keeping his identity confidential. He said I will not accept the credit for my good fortune and dont want recognition for my insights on trading. He looked me in the eye and said from now own you may c
15、all me Phantom of the Pits! Yeah, POP I thought to myself. As you progress from page to page youll see the importance of Phantoms insight on trading as I have over the years. Trading is not as we all thought. Few have ever approached his methods in trading. How do you measure the worth of a man or w
16、omen I still ask myself after that short walk to the top of the hill. Here is a trader who is the best trader I have ever known and perhaps the best trader in the world. We will measure his worth by his deeds and insights into trading! Yes, thats how we will size up Phantom of the Pits. Art Simpson
17、We will measure his worth by his deeds and insights into trading! Yes, thats how we will size up Phantom of the Pits. -ALS 4Forward Ive been asked over three decades to present to others just a few of the secrets of trading. I am not one to want my picture front and center. I am not one to want my n
18、ame a household word. I am not one to face the five-percent of those who would cry foul in giving to others what has been given to me. If I can save the grief of some of the trading torture to those who search out the knowledge of trading then I am in a position to acknowledge my debt. Most traders
19、think that the important element in success is knowledge. In my trading career I have found that correct knowledge and the ability to change behavior are the most important parts of successful trading. Correct knowledge without behavior modification projects improper execution of an otherwise perfec
20、t trading plan. In three decades of learning correct trading knowledge and behavior modification, I have included in my trading plans, two rules that present me with the ability to change my thinking and behavior. Both rules are required for successful trading. Upon urging from a longtime trading fr
21、iend, I shall share my insight on these rules. By trade I am not a writer nor is Art. We are both traders but it is my desire to present insight into what is required in successful trading. This project was agreeable to me if we would do it on my terms. We came to an agreement on my terms of how it
22、would be presented and that it would be presented as I wished. Our agreement was that I would remain in my own privacy. I would not give my name but only my approval in writings about my insights of trading. You may call me Phantom of the Pits. Your success in trading shall be at your own hand and d
23、irection. You shall know me as Phantom, a shadow in your success. That is how I wish it to be. Phantom of the Pits You may call me Phantom of the Pits. -POP 5Chapter 1 - Phantoms Insights The following is an interview with one of the most powerful traders I have ever known and whom I consider the be
24、st trader I have ever known. His purpose in this agreement of this interview is to help those who have that ability and desire to become the best traders they can possible be. There is no claim to fame so to speak but only the honest effort to bring to other traders the insight of a very difficult b
25、usiness of trading for a living. ALS - Phantom, why do we start this book without knowing who you are for others to admire and thank? Phantom of the Pits - I remember being on a train after one of my first trading days and thinking of how I had doubled my account in that one day. I looked around and
26、 was so proud of what I had done but not one person on the train knew or would even care if they did know. At that point my direction was self-driven in seeking out what was possible in trading. I know more now than I knew then. The markets as a trader have humbled me more times than I wish to remem
27、ber. Its always easier for an observer to put their finger on a problem than the one who is wrapped up in the situation. That is who I am! I am the observer and I wish to point out the line in the sand. I dont know who puts the line in the sand but I clearly see it. Who remembers he who points out t
28、he line? You may call me Phantom of the Pits from here forward and we shall remain as the shadow of your writings. ALS - After over three decades of trading why havent you written a book sooner? POP (Phantom of the Pits) - I have but they have all seemed to be outdated because knowledge is quicker i
29、n coming than in writing I always wanted to have it exact. I have made mistakes and to give my mistakes to others seemed to be admitting I was wrong. It has taken years to understand that being wrong is what trading is all about. ALS - Surely there are those who know you and appreciate what you have
30、 accomplished in your trading career. Why dont you accept their recognition? POP - I have always believed that there are two sides to a coin. In fact I find out that there are times when you could argue a third. I wont take credit for what I have accomplished. There are no guarantees and I have been
31、 put on notice a few times. My success is nothing without putting a bucket full of water beside the pump to prime it for the next trader, the other side of the coin. There will always be those who drink all the water from the bucket (the third side of the coin.) Why shouldnt the thirst of others be
32、fulfilled when it can be done so easily? ALS - To You what is the most important aspect of trading? POP - Behavior modification without doubt is the key to trading success. Not only in how we think but also how we act in certain situations. We must adapt to changing situations which we have no contr
33、ol. We often must change the situations of which we do have control when trading. ALS - Lets start your writings and insights into successful trading from any background you can give us of your trading! Is there any important point you wish to make about your trading background. POP - My only point
34、is that I am not different from any of the readers who will read this. How I got started or who I am makes no difference in trading. Let us not dwell in such trivia, which has no significance in how your readers will succeed. What was is and what is was but a breath after the markets close. ALS - Ok
35、, with me if it is ok with you that we get started with our behavior modification of trading! 6POP - Ok with me but a little history on my first access to behavior modification as a child. My brother was at a tour of a blacksmiths shop in his youth and watched the blacksmith take channel lock pliers
36、, hold a horseshoe, hit it with a ball pin hammer a few times to shape it, and then put it into a fire to temper the metal. Upon removing the horseshoe from the fire and dipping it into water, a tempering process, he laid it down! At that point my brother picked it up and threw it down on the ground
37、. The blacksmith looked at my brother and said Hot isnt it son? Well my brother said It dont take me long to look at a horseshoe! That taught me more in trading than anything else. Trading is not taking long to look at a horseshoe. Dont ever forget that! ALS - Trading is like a hot horseshoe? POP -
38、Your losers are your hot horseshoes! Note: Phantom has observed and participated in an internet forum sponsored by Futures Magazine in an effort to pay his debt to other traders. Many sharp traders frequent the forum as well as beginning traders. One remark of interest in observation of the forum by
39、 Phantom was as to how effective knowledge can travel today compared to the late 60s and early 70s. It is Phantoms thought that he who has the most toys will not win but he who has the most knowledge and can change their behavior to what is needed will take it home. It should never take long to look
40、 at a horseshoe-POP 7 Chapter 2 - Your Book ALS - Phantom, can you remember the first advice you ever heard from another trader? POP - No, I cant ever remember any advice. I dont mean to be ungrateful to all my many friends and colleges but I really dont remember any advice. In fact that is part of
41、the reason I want to pay a debt to other traders. I dont think anyone ever gives much advice because they feel it is putting them at a disadvantage. Of course it isnt the case but most traders behavior is determined early in their lives. That is why I feel behavior modification is critical. ALS - I
42、can see the critics already starting to line up to point out your big point of trading is behavior modification! Are we going to write an entire book on behavior modification? If so we will have to give this book away. Not only that but also what creditability does Phantom of the Pits have to anyone
43、? POP - Nothing would please me more than to give the books away. Or perhaps we could ask Futures Magazine to sponsor it for all the publicity they would receive. Accurate insight is what we are going to give every trader who reads this book. It isnt enough to point out requirements. I want to give
44、them guidelines so they can chose their own destiny. ALS - Sort of like change your thoughts and you change your destiny, huh? POP - This is exactly where we want to be. No promises, no requirements, no false hopes and no undue influences. Exactly the way it should be. Traders must make their own mi
45、llions. I only need to be responsible for keeping them in the game forever. ALS - Phantom, I dont make my money from writing so how about making it a little easier in writing this book for me. Guide me a little in what you want to convey to the traders in this book. POP - I have an idea, which prese
46、nted itself, when I viewed some of the other traders questions on the forum I frequent. They dont know the important questions other than from their own experiences in trading. Eventually they will come upon all of the situations I want to protect them from getting into. However, I dont want to give
47、 specific trading advise or any outdated information like I wrote in some of my documentation of the 70s. Why dont we call upon the traders from the forum to guide us in the knowledge they are seeking for this book? ALS - Great idea! I am impressed with several traders but this one Trader I know he
48、will respond. But we dont want to exclude any of the others traders so I guess we kind of make them Phantom of the Pits Too! POP - I like the idea. No losses to throw out is what I enjoy. ALS - Ok again! You Win! You are right! POP - Funny, I have had years to hear what you just said. I really dont
49、hear that anymore. I mean you win and youre right. Trading is not those statements. A trained trader understands success as you lose well and youre wrong small. Trading is called coming out on the small losers side and being rewarded with knowing how good you have been wrong. 8It requires a balanced
50、 life to sustain the meanness of the markets. Traders never plan for the bad days and there are bad days. It is when it affects their lives that they must make a new choice. Either change their behavior or go down in defeat. ALS - Theres our subject again. Are we going to get tired of hearing the tr
