• We are not financial advisors. • We do not give investment advice. • We do not do road shows or seminars. • We do not do tipsheets or newsletters. • We do trade.
Tom Henderson
• Forensic accountant, economist, consultant.
• CFO of a large public company for 10 years.
• Company doctor
• Decision maker.
• Troubleshooter with a multi-national for 5 years.
• Analyst
specialising in
• providing solutions to the futures industry since 1990
• simple solutions for complex problems
• analytics and behavioural analysis
• systems analysis
• systems development
• systems programming.
To better understand the requirements of trading clients we commenced trading in 1995.
Involved in online realtime wide area networking using "super minis" from 1982. Played representative rugby and hockey, plus social soccer. Coached junior soccer. Undertaken coaching courses run by NZ Football Association and AIS Australian Institute of Sport.
Camron Business Systems was established in 1990 to provide specialist technical solutions to real-time online problems for private clients nobody else could solve. Particularly real-time unattended automated robotics systems. We were the call of last resort. An early success was providing a solution for an american client who flew from the USA to Melbourne to obtain our services. This introduced us to the "online trading" fraternity, the world of trading, and the many serious traders who came to our door. We have also been successful in offering "we make the hard decisions" services to small businesses outside of the "trading" arena.
It is easy to sit on the side lines at a sports event and see the mistakes made on field. And so it is in business. It's easy for an outsider to observe. Solutions to problems are always simple. They have to be. Hence the legend at the top of our home page "simple solutions for complex problems".
There are many aspects of the Australian market which, from a pure trading perspective, do not make sense. As a trader, an accountant and economist I start with the view that every thing happens for a reason. If you look long enough and ask the right questions you will usually find a reason that is logical and makes sense.
June 2003
Start with the premise the Australian market is dominated by a small number of large players. Logically they must be antagonists/opponents in the marketplace. We have seen behavioural evidence that can only lead to the conclusion the large players will and do act in collusion. This is not a marketplace populated by many groups and many individuals acting independently in their own self interest at all times. The fact is, the SFE had to take steps in the year 2001 to prevent market ramping and rorting. This had been going on for some years but the ASX and SFE only acted when a small upstart hurt the "majors" and the "majors" complained loud and long. The complaints had occurred many times before and nothing was done. But the one time the "majors" got hurt the noise was deafening. They had been doing it for years. Do leopards change their spots. So far no whistle blowers have appeared. No published swan songs have appeared in the financial press. In spite of the 2001 furore, the media was silent. No investigative research was ever published. It disappeared off the radar. Yet the authorities, and the media, pursued Rene Rivkin over an amount less than $1000.
references
Official ASX disciplinary report action by ASX against AOT Securities 16 Dec 2002
at www.asx.com.au/about/pdf/disciplinarycirculars/658c_02.pdf
The "Age" in Melbourne published the following article on 17 December 2002
at
www.theage.com.au/cgi-bin/common/popupPrintArticle.pl?path=/articles/2002/12/16/1039656342953.html
australian asx market rigging articles
lawbookco.com.au/academic/FalseTrading Nomura Case
at
www.lawbookco.com.au/academic/ccl-ezine/pdf/vol8issue1_FalseTrading.pdf
demonstrates the media is not part of the system of checks and balances and is not looking out for you.
the power of the few - a
the fine denim affair
better known as the waterhouse-rivkin law of relativity
For those who remember the fine cotton affair .. for those who dont it's on the web ..
When the ASX corporatised, Standard and Poors ("SAP") took over the ASX indices to provide transparency and eliminate conflicts of interest. SAP was to be the HANSARD of the indices. The independent reporter. On April 6 2004 NewsCorp ("NCP") announced it was relocating to US in October 2004. Initially SAP announced NCP could not be in 2 indexes at once. Capitalised at $70 billion NCP comprises 250+ points of the ASX200 index. Given the natural laws of the market place, (ie, thats the way the cookie crumbles, and, let the cards lay where they fall), and the approximate mechanics of the index, NCP should be replaced, in the index, by a company outside the top 200, worth at best, $½ billion or 5 index points. News of the potential removal of NCP from the index should have caused the December 2004 SPI contract to collapse 200 points. The contract did not even tremble. Not even a tremor. The fix was in. The fastest fix ever seen. Faster than fine cotton.
June 23 2004 SAP confirms its decision. Again the far contracts did not falter.
Standard & Poors 23 June 2004 Press Release NewsCorp.pdf states in such an event, SAP would, consistent with its general policies, co-ordinate index changes to limit unnecessary market volatility and the issue of dislocation.
What is SAP's definition of unnecessary and dislocation? When did SAP become responsible for managing market volatility?. Was it about the same time Hansard became responsible for managing the volatility of parliament?
Bryan Frith The Australian June 24 2004
The ASX was opposed to News falling out of its indices
The SAP index committee has five representatives - three from SAP and two from ASX. If the talk is right the committee split on those lines - ASX wanted a compromise to be reached to allow News to stay in its indices, at least in some form, but SAP didn't want to create a precedent. Because it had the majority, SAP prevailed. However, SAP's decision to put News immediately in the NYSE S&P 500 index and to phase it out of the Australian indices over nine months, in four tranches, is thought to have satisfied most of the Australian institutional holders
Bryan Frith The Australian 29 June 2004
SAP originally intended NCP would be removed from ASX indices in three equal tranches over a three week period, and that was a concession because normally such changes would be done over a matter of days. SAP appears to be now backing away from that timetable, suggesting the phase-out may take place over a period of months rather than weeks, perhaps as much as six months. SAP said last week it would consult with market participants as to the appropriate level and period of the phase-out. It seems local institutions strongly favour the change taking place over as long a period as possible to ensure an orderly transition.
Jane Schulze The Australian August 07 2004
NCP's move to the US received a boost yesterday when index manager SAP provided a detailed timeline for any move. SAP had been widely criticised for fostering market uncertainty for failing to outline how the move would be managed. After consulting with fund managers, it has now unveiled a four-part transition process which will kick in if NCP shareholders approve the move later this year.
Wendy Frew SMH October 06 2004
In a surprise move, international stock index operator, MSCI announced it would remove NCP from the australian indices, to the US indices, less than a week after the shareholder vote in Adelaide on 26 October should the relocation be approved.
the smoothing effect
Postponement of the effect of an event. An unacceptable, and not unknown practice in financial circles, known as smoothing. Postponement of expenses to next reporting session increases profit. Postponement of revenue to next reporting session decreases profit. Activities prevalent in the dot.com era the results of which are now well known. Symptomatic of the power and influence of the dominant few.
SAP has created a powerful and dangerous precedent. In the event of a substantial two-day "rout" in overseas markets with the potential to cause a drop in the Australian market of say 200 points would meet the very criteria SAP has established. Uneccessary volatility. Based on the above criteria, SAP would now be expected to step in, pull the levers, and "smooth" the impact over a 9 month period.
Footnote
26 October 2004 NewsCorp shareholders approve relocation to US. June 2005 SPI does not falter
24 Jun 2004 spread between December 2004 Spi and June 2005 SPI = +27 points
31 aug 2004 spread between December 2004 Spi and June 2005 SPI = +20 points
25 Oct 2004 spread between December 2004 Spi and June 2005 SPI = +21 points
26 Oct 2004 spread between December 2004 Spi and June 2005 SPI = +21 points
Old saying - Follow the money trail. From the outset the heavy money was on one outcome. Evidenced by the heavy money staying on the table. Extreme confidence. The ensuing 6 months was merely the dance of the tarantulas.
demonstrates the inability to obtain simple answers to logical questions.
August 2004 inside the tent
On Friday 30 May 2004 between 10:00am and 14:00pm the SPI had an upward move of 14 points. Between 14:00 and 15:45 it fell nearly 15 points. The following week, the "market place" section of the AFR reported an email had circulated among brokers on that afternoon about the pending disposal of a $200 million portfolio. The sale took place at 16:05 in the after market auction. The cash index effect was only 4.40 points. The SPI recovered all its loss after 1610pm. And they got Rivkin for a mere $1000.
the power of the few - b
Michael West - Margin Call - The Australian - 19 February 2005
The ASX. What a profit result this week for the monopoly which is listed on itself and regulates itself. ASX is a fine company indeed but does it attend its own classes on market transparency? The latest ruminations about blacking out stockbroker numbers attaching to trades is a shocker. Retail punters should march, post haste, on Bridge Street because trading needs more transparency, not less. This is a blatant free kick to the powerful eight (merchant) banks that control 80 per cent of ASX turnover. Ban broker numbers (until three days are up, as is the proposal) and the funds management/principal punting/corporate advisory divisions of the ASX cartel member-owners will run amok. Um, perhaps this is why we heard this week that students of an ASX compliance course were advised that the term "Chinese walls" was being phased out in favour of "invisible barriers". A bit like schools changing blackboards to chalkboards.
The above is an example of Pareto's Law in action.
the power of the few - c
the amazing coincidence
Monday 21 February 2005 it is learnt the Sydney Futures Exchange will terminate its broker statistics service as at the end of February 2005. Broker Statistics is a live display of broker participation in the market. Showing broker code and quantities transacted. Gone.
Early in 2004 the Sydney Futures Exchange ceased live publication of Broker Statistics for Bonds and Bills. Reasons given for cessation, at that time, are identical to those outlined above in West's article on ASX broker identification. It's the old closing the stable door trick. A bit late after the horse has gone. As the saying goes, you don't know how good it was until you lose it.
Few know of it's existence. SFE doesn't advertise it. Vendors dont offer it. One solitary broker does. So who cares.
demonstrates the constant erosion of the system of checks and balances in the market place.
influences
what goes round .. eventually comes around ..
For those wondering what this is all about .. theses pages are not flights of fancy .. each topic is included for a reason .. demonstrating the collective influences we experience. Various ideas are tried, those that dont work are discarded, and those that do work are retained. Over time a series of ideas is built up that becomes your own collection.
The seeds for this work were sown in 1982 while working with an american software specialist on real-time multi-user super-minis, before windows was heard of. His repeated saying that 20% of effort and 80% of value was in screen design, echo's down the years as Pareto's rule. Later in a continuing education program, attending a psychology class at university, I discovered sight was not what I thought it was, learning about psychology of sight, perception, and how we see things. Everything the specialist had said about visual recognition was true. During the long hours his knowledge of the stock market and Granville also emerged. Large influences on the design of software found on this site. Fifteen years later I meet a blackjack player who explains the blindingly obvious. Connecting themes which recur throughout these papers.
influences ..
If you read these pages in their entirety, the complexity of the forces influencing the SPI will be noted. I have been very fortunate to have on the team two of the brightest sharpest female minds I have ever worked with. During this quest they demonstrated time and time again an awesome capacity for conceptual and analytical thought. Whereas the male mind has capabilities for focused analysis of a specific area, the female mind is more able to comprehend dynamic complexity. I have come to realise a female trader makes a better trader.
There is a high degree of probability these pages will influence you too.
acknowledgements
To Blackjack Tony who put up with our constant questions, enabled us to see, and
To Golda King for original thinking and insight, who could see when others couldn't.
To Jelena who inspired us with an amazing capacity for conceptual and analytical thinking.
To Dr Dennis Eric Creasy BSc Lond. PhD Lond. CEng CPEng for explaining Einstein's particle motion, stochastic motion, stochastics, and the mathematics of possible combinations.
To the Candleman for access to the inner sanctum of the market.
To the many others who contributed their time and ideas.
quote:The eye sees only what the mind is prepared to comprehend. Henri L Bergson
decision tables - the foundation of any system.
Decision tables are a precise, and compact method of modelling complicated logic.
A mechanical trading system, is in reality a discretionary (attended) computerised (mechanised) decison table .. change the words a bit and a mechanical system becomes an attended probability engine, or simply a discretionary probability engine.
Have been surprised at the number of clients that did not know what a decision table was. Technical analysis sites don't mention them. When I first started programming we were taught flow-charting and decision-tables. Rules and Conditions. Programming is a series of decisions. Programming for the obvious is easy. The skill is to anticipate every non-obvious condition. Decision-tables were once a part of learning how to program. How to plan, anticipate, provide for, and expect the unexpected. Trading involves the same processes. A decision table is a simple device that assists in the assessment of complex conditions. Search the web and there is not a lot of information about what they are, and how they are used. The few sites that provide them assume the enquirer knows what they are looking for.
which leads to the following interesting extracts from two of John Sandford's "Kidd" novels. It reinforces the above paragraph. If you are not technically inclined it may seem meaningless. However, if you are technically inclined and it rings a bell it's worth it.
extract from "The Devils Code" source www.johnsandford.org
Kidd .. I took the box out of my pocket. Inside I kept a Ryder-Waite tarot deck. I'm not superstitious. More than that, I reject superstition. Ghosts, astrology, numerology, phrenology, and all the new age bullsh**t etc; the world would be a happier place without it. Tarot is different. Tarot is - can be - a kind of gaming system that forces you out of a particular mind-set. Let's say youre trying to .. oh say steal something. Your mind-set says X is a danger, and Y is a danger, but the Tarot says "think about Z". So you start thinking about things outside the mind-set, and when you finally do the entry, you've considered a whole spread of possibilities that otherwise would have gone unsuspected. Nothing magic about it, and it will definitely save your backside. So I did one quick spread, of my own invention, working toward a key card. The card came up. The Devil. interesting ..
extract from "Hanged Mans Song" source www.johnsandford.org
Kidd .. I got out my cards, a Rider-Waite deck. I'm not exactly a scientist - I was trained as an engineer - but I've studied the philosophy of science, and I am a true believer .. in science that is. The Tarot as a predictive system is the same sort of nonsense as astrology. The deck is useful as a gaming device, and thats how I use it. Like this: when we are forced to deal with complicated problems, when some of the facets of the problem are unknown or unreachable, we deal with them in terms of past experience. That's almost inescapable. But approaches that are useful with some problems don't work with others. The Tarot deck, when used as a gaming system pushes you outside past experience and encourages you to think of new ways to deal with it. It is simply a subtle way to "game" a problem.
NB: a thorough knowledge of "gaming systems" can assist in identifying rules. There is world of difference between "gaming" which is intellectual, and punting.
related topics .. "theory of games" and "business games" under section8.
Feedback - outgoing
kamron @ optusnet•com•au
October 2004. In 1995 there was nothing like this site available. Today, apart from us, there still isn't. We would have given our right arm for something like it. Four months ago we started gathering page stats to see where visitors were going. In the tradition of modern multi-media instant-electric-immediacy, most visitors arrive, flick around and disappear. Must be seeking a golden goblet of the holy kind, sitting on a pedestal, bathed in light. There is some stickiness as many return for a longer visit. One returning 94 times. Of 4000 hits in the past month, other than 2 great calls, we have had little feedback. Of those 4000 hits, only two visited the articles on probability and spi pre-market. We must be missing something. So for us there are several issues to consider. (a) The information is not useful, or the logic is impenetrable. In which case we need feedback, or (b) it is useful and (c) considering we are not dealing with tiddly-winks but a serious white-shoe money game the minimum price to pay is a not unreasonable acknowledgement. So what is it. (a) or (b). Current thinking is we take the site down and re-introduce it in 3-5 years time.
CAUTION - This stuff is not free - see Terms and Conditions of Use
Feedback - incoming
kamron @ optusnet•com•au
Any feedback you care to give will be appreciated. If you have obtained any helpful ideas from these notes, let us know. If you disagree, let us know.
Feedback - received
MA.au - November 2004 Amazing. I think you're giving too much away for free.
BB.au March 2005 I have been searching for information about SPI trading. Most of what I have found is contract specifications or advice that it can be day traded successfully, only if you do this course or that course etc. While I have read that 90% fail, some people succeed, and I want to be one of those. I stumbled across your site by accident, and it is the best information I have come across in a long time. I hope you don't take it off the internet. I am still looking at your site and want to give some initial feedback before you become disillusioned. I can't believe that people haven't found these pages helpful. I will give further feedback as I am able.
TS.us - March 2005 I discovered your website thru serendipity and consider it an excellent source of information not found elsewhere. I'm a novice trader in the US and have observed on many occasions some of the things mentioned on your pages regarding market manipulation and trading patterns. If one decides to trade stocks or futures, I believe it's essential that you know how the game is played. You've described that well and pointed out the weaknesses in various trading methods. I believe this is applicable to the US markets as well. As a novice, I got interested in technical analysis, but I see already that there is no "Holy Grail". I'll be back for many more visits. I hope you continue to offer the information to everyone. I'm surprised that others haven't discovered your website. However, I think most people are looking for easy answers or systems to very complex issues. Please keep up your excellent website. I would think people here would be banging on your door! Your website is giving traders a picture of how things really work behind the scenes. Therein lies my interest as I'm trying to avoid being a market casualty.
BL.au - April 2005
Regarding the SPI, I find your content thought provoking and challenging. Your work and the software solution to identify commercial activity in the SPI is immensely valuable and I could see how that alone would enhance my trading performance. The commercial counter in Q84 is fantastic. While the replay download has only four days data, you can see from this very small sample, clear examples of the commercial and cluster activities you describe in your site. In fact, the examples you give on your site of some 10+ of trades at one price (but not moving price), compared to the single 1 lot trade at the offer that pushes the price up 1 point should be compulsory reading for those obsessed with charts.
disclaimer
While all care has been taken in the preparation and presentation of the information appearing on this website, Camron Systems, its directors, employees or agents cannot guarantee the security of this site or the accuracy, correctness, timeliness or fitness of the information for any purpose whatsoever. If you use any information here, you do so at your own risk, and you accept full responsibility for any consequences. Please note that this information does not constitute investment advice. If you require personal financial advice, please consult a licensed investment adviser. While we provide links to a number of external web sites, this does not imply an endorsement of the content of any of these sites, nor is it an endorsement of the bona fides of the operators or owners of those sites. Camron Systems, its directors, employees and or agents will not be responsible for any type of financial or non-financial loss you or anybody else may suffer as a result of using information provided on this website. We therefore strongly advise you to protect your own interests by first verifying any critical information before you rely on it in any way. This site provides you with contact information and web links to help you in this.
These methods and analytics can be used with and applied to any futures products including DOW, FTSE100, S&P500, NasDaq, 10year Bonds, 3 year bonds, 90 day bills, Currencies, GB British Pound, US Dollar, Australian Dollar, Euro, Treasuries, emini, e-mini, mini-dow, mini dow.
