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Poker? Hmm, should I title today's missive Poker, Mathematics, or Algorithms Win Again?" Of course there are other potential titles, but since poker has now been slain by artificial intelligence I really wanted to go with SKYNET. Alas, I flipped a non-algorithmic coin and it came up "poker." Some of you may be wondering why I am discussing poker at all. The answer will become clear soon as the story below reports: artificial intelligence (AI) has conquered poker. Frankly it's rather surprising that it took this long; after all, SKYNET (AI) took over the multi-$Trillion daily global equity markets years ago. So imagine my surprise as I read the following at http://www.bbc.com/news/science-environment-30718558? Scientists have created a computer program they say is the perfect poker player and never makes a mistake. The developers told Science journal they had "solved" the two-player game Fixed-limit Heads-up Texas Hold 'em. And the algorithm had a strategy so close to optimal "it can't be beaten with statistical significance within a lifetime of human poker playing". The poker-ace algorithm is also now available online for people to test, query and even play against. 'Perfect information' Since scientists first started to develop game-playing artificial intelligence, there have been a series of famous cases where computer algorithms developed strategies better than the very best human players. In 1997, for example, IBM supercomputer Deep Blue defeated world chess champion Gary Kasparov. But these machine victories have been in what are termed "perfect-information games" - where all players are informed about everything that has occurred in the game before making a decision. This is not the case in poker, where players do not know which cards have been dealt to other players. This new poker-playing program has taught itself to overcome this. It has played trillions of hands of poker and been designed to learn by "regretting" and remembering every decision that does not lead to the optimum outcome. ... when Dr Bowling was asked whether he thinks purist, professional poker players might be irritated by the breakthrough, he said: "I have no idea. We'll have to see how much hate email I'll be getting come Thursday afternoon." Oh boy, I'm sure Dr. Bowling will be getting more than a few of those hate emails. The online trading community that is anti-algorithmic is enormous and growing. Rather than join them, however, one should adapt to the onslaught of algo trading in stocks & futures. I did. According to the article, however, that option may not be available to Texas Holder players. OK, so if you are an online poker player you now need AI. Trust me, if you don't have it, the other guy will and you will lose. You can test and implement it from here ...http://poker.srv.ualberta.ca/ GOOD LUCK. Trade well and follow the trend, not the perma-bull OR perma-bear "experts."

The markets rallied back to finish up for the calandar year. Talk about volatility in recent days, we have had huge swing in the markets. It all leads to today's jobs report, as all eyes are focused on if we exceed expectations or not. A beat of expectations could push us to the upside again, but we are still susceptible to a pullback from profit takers. The market conditions have been more than ideal for the swing traders, but havoc for the longer term investor. Watch how the market trades early on. If we come up short on expectation for the job report, then it might be a fast and heavy slide early in the session. Either way, stops must be in play, and you must be diversified to play within the parameters of the market conditions. This is what will allow your portfolio to grow quicker than the gains in the markets. Trying to weather the storm can end up leaving a lot of profit potential on the table. Define your risk parameters and accept the risk. Otherwise your money shouldn't be in the markets. Last I heard, wishing for the stock to rally back doesn't work. Read More

TECHNICAL DATA ES 2055.75/2045.25 POC 2053.00 YM 17,824/17,740 NQ 4239.00/4196.00

Break your complex options positions down to their most simple form. This will not only help you understand what it is you have on but it will greatly help with your risk management. There are a lot of different names thrown around to describe different option spreads: condors, iron condors, ratio spreads, back spreads, butterflies, etc. Let's look at one of our favorites, the "broken wing" butterfly. Butterflies can be a very profitable trade. They can also be tricky if done for strictly a directional play. You can be right on direction but "so right" that you blow through all of your strikes and end up losing in the end. Enter the "broken wing" version. A butterfly is simply two verticals put on at the same time. Think of buying one vertical while financing part of the premium outlay by selling another vertical against it. If the distance between the strikes is symmetrical, you run the risk of each spread maximizing and thus you are out the initial outlay. but if we use an asymmetrical set up, we can alleviate this issue. True, there is always a yin for every yang. In this case, there is more initial premium outlay, but if you are making the play primarily for directional reasons, you take away the possibility of losing out. Read More

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IMPORTANT NOTICE: The risk of loss in trading futures, options on futures, stocks and stock options can be substantial and is not suitable for all investors. Past performance is not necessarily indicative of future results. Trading Advantage LLC only provides educational services. By accessing any Trading Advantage content, you agree to be bound by the terms of service. Click here to review the terms of services. The hypothetical signal results shown above represent signals offered in real time in the training room. A signal does not get posted unless there is a reasonable likelihood that if an order had been placed it would have been executed. Further, adjustments are made to simulate the costs of commissions. Past performance is not necessarily indicative of future results. The posted information is shown for educational purposes only and no signal shown was actually executed as a trade. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those talked about in our site.

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