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Do Some Traders Have the Gift of Intuition?
11/21/2013 11:00 am EST
For 13 years, from 1998 to 2011, Greg Kolodziejzyk conducted an experiment studying the role of intuition as a trading methodology. During that time period, Greg used a protocol he invented called "associative remote viewing," which uses a form of intuition to predict the future direction of random financial markets. Greg was able to generate nearly $150,000 in profits over this 13-year period resulting in a success rate of 60% correct trades. The likelihood that Greg's success is due to chance expectation is less than 1 in 31,000. Listen in as we talk with Greg about that method of trading and how he is trading the markets today.
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Tim Bourquin: Hello, everybody, and thanks for joining me for another interview. I got an interesting one for you today. My guest today is Greg Kolodziejzyk. He was referred to me by another interviewee, Rob Booker, who had talked to him and thought he had an interesting story to tell.
Greg has been a trader, but he also has an interesting way of his approach to the markets. For 13 years, from between 1998 and 2011, Greg has been conducting an experiment studying the role of intuition as a trading methodology, and during that time period Greg used a protocol he invented called "associative remote viewing," which uses a form of intuition to predict the future direction of random financial markets, and he was able to generate nearly $150,000 of profits over the 13-year period, resulting in a success rate of 60% correct trades. The chance of Greg's success doing this due to chance is less than 1 in 31,000.
So I thought that was an interesting idea. We talk about a lot of different things here on these interviews about trading, and I wanted to get Greg on the line to talk about that. So first of all, Greg, thanks for joining me over Skype today.
Greg Kolodziejzyk: You bet, Tim.
Tim Bourquin: All right. So there will be some skeptics about this. I think you're the first to admit about that in our previous conversations via email about this, that it's not about predicting the future; yet, it's a little bit different way that you approach the market. So talk about why you decided to look at the markets this way.
Greg Kolodziejzyk: Well, first of all, Tim, let me ask you a question. Do you believe in trader's intuition?
Tim Bourquin: I'm not sure I believe it in terms of the market. I know that as a previous cop myself and still a Los Angeles police officer, there is definitely something there. I know when something is about to go bad, the hairs in the back of your neck raise up. You definitely get a feeling. I believe that it's there. I don't know if you could somehow translate that into electronics and out into the market. That's where I'm a little fuzzy.
Greg Kolodziejzyk: I think that's sort of the traditional concept of trader's intuition or intuition in any field. It will be something like the subconscious mind providing your conscious brain with some kind of insight. Maybe your subconscious mind recognized some pattern that has happened in the past and it's something that you're consciously possibly not aware of. Your subconscious mind recognizes that pattern and provides your conscious mind with little hints as to a potential way to go for you to avoid getting hurt or losing money for example, or in your job, where to look possibly or something like that.
I think that is typically most people's concept of what intuition is. I do believe that traders, discretionary traders especially use that kind of form of intuition. The subconscious mind is an extremely powerful observer and pattern recognition algorithm.
NEXT PAGE: Does ESP Work in Trading?|pagebreak|
It reminds me of an experiment that was conducted and described in a really good book about the power of the subconscious mind called The Hidden Brain by Shankar Vedantam. He described this experiment that they conducted with a group of office workers. And what was happening, it was a probably typical office where it was a volunteer pay for your coffee kind of a setup and the office workers had to deposit some money in a bin when they took a coffee. And, of course, the bin at the end of the month was always short because the office workers weren't fully paying for their coffee.
So what the experimenters did was they posted a very small picture of two eyes just above the coffee machine, and actually, that solved the problem. When they did that, the money that they collected at the end of the month all of a sudden equaled the full amount of coffee that was taken.
Now, the interesting part about the experiment was that after the experiment was over, they interviewed all the office workers and nobody actually recalled seeing the picture of the eyes. So what happened was their subconscious minds saw the pictures of the eyeballs and provided this input. Don't steal the coffee; somebody is watching. But the subconscious mind didn't know they weren't real eyes. It was a fascinating experiment and I think it really illustrates the potential pitfalls as well with relying on your intuition, I guess.
Tim Bourquin: So in terms of relating that to trading, if we do have trader's intuition, if we do have some sort of knowledge that we're not consciously aware of, that our subconscious is aware, why do you think so many traders lose money then? You hear the statistics about 90% of all traders fail at doing this. So why is that?
Greg Kolodziejzyk: Well, that's a huge pitfall of relying too much on your intuition as a trader, and that is that sometimes those intuitive impressions get mixed up with your emotions. How can you tell the difference?
You feel a gut feeling that you need to get out of this trade now. Perhaps you're in a profitable position. You get this feeling that you want to get out. How do you know for sure that your feeling isn't an intuitive response based on your subconscious providing you with information about patterns that it had seen in the past and it has identified this point right now in time where you need to get out of this trade to maximize your profit?
How do you know it's not that? How do you know if it's that or if it's actually an emotional response caused by fear? I don't want to lose the profits I already have in this trade; therefore, I want to get out right now and get out early. So I think that's one of the dangers, I think, of following your intuition as a trader.
Tim Bourquin: All right. When you went through this period and were trading based on just intuition, were you taking random charts and then just gut feel whether or not it was going to go up or down? Or did you use some technical analysis? What were you doing?
Greg Kolodziejzyk: Okay. Well, what I just described to you is sort of everybody's traditional concept of what intuition really is. But I believe that there is a whole another side to intuition.
Let me ask you another question. Do you believe in luck?
Tim Bourquin: Sure. I mean luck to me is random, but it's also opportunity met by preparation. That's what I hear a lot.
Greg Kolodziejzyk: Sure, that's probably the classical definition of luck. Let me put it this way. Do you believe in ESP?
Tim Bourquin: I would say no, I don't. I believe that there is what people think of ESP is probably body language. It is sensing how somebody is feeling based on facial expression. That's kind of how I see it. I don't see it as a mind-to-mind communication in that sense of ESP is the way I think of it.
NEXT PAGE: What's the ESP Effect?|pagebreak|
Greg Kolodziejzyk: Sure. Actually, the statistics are that 50% of Americans don't believe in ESP; 50% do believe in ESP. Actually, Tim, I was definitely part of the 50% that did not believe in anything parapsychological. This was back in 1995 when I started getting into trading. I was definitely not a believer in that.
I was actually having lunch one day with a friend of mine, and we were just having this conversation about trader's intuition and exactly what you said, Tim, how you recognize body gestures perhaps and you're making some predictions based on those things. Maybe your subconscious mind is providing you with some input.
He actually told me about some research that was done at Princeton University about actual researchers studying real ESP, the power of the human mind to predict the outcome of some random unknowable future event like a coin flip for example. And I said that's ridiculous. That just doesn't happen. I don't believe that that actually happens. And he said, well, no. He said it's actually been studied for quite a few years.
I was interested enough actually to look into it, and what I found really kind of blew my mind a bit. I'll just give you the results of a meta-study recently that was done by Dr. Dean Radin of UNLV where he went back over the last hundred years and he did a meta-study of all of the ESP research studies that had been done over the last hundred years. It consisted of something like 5.5 million trials, and the effect size from that entire group of trials resulted in odds against chance of 10 million to 1.
So that's typical of the kind of research that's been going on out there, and this is university level research institute kind of research. So it's very, very real.
However, the effect size, that's the amount of ESP effect, if you want to call it that, per every single trial, was extremely, extremely small. I mean if you can imagine, if it wasn't small, we'd all be predicting everything and we'd be going to Las Vegas and taking down every casino, which of course doesn't happen.
So you would expect that if there wasn't effect size measured that it would be very, very small. But add it up over these millions of trials; it becomes extremely statistically significant. And I don't really think that you can argue that it doesn't exist if you believe that these research laboratories have conducted good science.
Tim Bourquin: What do you think is at work there? Is this just some kind of altered consciousness, just kind of if you believe in ESP, you believe in UFOs and all of that? What is that's happening there? Do they understand why statistically over all those periods of time there is a tiny, tiny bit of prediction that happens?
Greg Kolodziejzyk: No, I think there are lots of theories. Nobody understands how it works or why it works. I think that our understanding of the nature of time is not really the way it is. I just don't know the reason why. And like I said, there are lots of theories as to why this happens, but nobody really knows why. And I think that's one of problems that science is having right now is that typically in science you have to be able to not only prove that there is a statistically significant effect, but you also have to be able to say why it's actually happening and nobody can say because this falls outside of our current models of how the universe works, how physics works.
Tim Bourquin: So even if you knew that the S&P, E-Mini, ES futures contract was going up in the next week, there's more to it than just knowing that as a successful trader. Even if everybody really knew that, managing your trade to make money with that information, there's still an extra step there, right? I need to know more than just that it's going up. So how did you use that information in conjunction with maybe good trade management or something to make money?
NEXT PAGE: Details of Greg's Experiment|pagebreak|
Greg Kolodziejzyk: Okay. You're exactly right. Just simply relying on knowing within a certain percentage of being correct if the S&P 500 is going to go up tomorrow or not isn't really a very good way to trade. However, what I embarked upon way back in 1995 is this research program where I wanted to actually put some of what I learned about ESP research, I wanted to put together a methodology to actually use that to come up with trading decisions, trading directions, build a trading system out of it, in fact.
What I decided to, my goal was to spend a number of years and apply this methodology in a very, very strict method without using any stops, without using any targets, without using any traditional trading systems at all. The reason I decided to do that was because my goal was number one, to prove or to demonstrate or to see. I was experimenting. I wanted to see what would happen. I wanted to see if it was possible to actually use this ESP research that I had learned about to come up with a methodology to actually do something useful, to make money trading the markets.
Number two, by the time the experiment was all over, if I was able to show an effect, I wanted to be able to prove that the effect was caused strictly by my approach of using ESP and that it wasn't caused by any of the other traditional trading strategies I might have been employing like using stops. Using stops is a trading methodology; it really is. So I didn't use any stops. I basically just would use my system, my methodology, which I called associative remote viewing. I used that protocol to decide whether the market was going to go up or down tomorrow.
Okay, let's just take a step back for a second here. To keep the whole system completely totally brutally honest, what I would do is I would first of all decide on my trading timeframe and that was different all the time. Sometimes I would hold the trade for a week, starting say Monday next week, get the close on Friday. Sometimes I would hold for a month. Sometimes I would hold for a day. Sometimes I would hold for an hour. But all of these trading times, holding periods were decided in advance. It's the very first thing that I did, decide this trade is going to be for one week. I'm going to enter the trade on Monday at the market open. I'm going to close the trade on Friday at the market close.
The actual market that I was going to trade was going to be a futures market, but that was never known to me. Later on within the protocol, my computer program would pick a futures market randomly from a basket of a variety of different markets like the S&P 500 bonds, gold, oil. I had a couple of wheat, that kind of thing, a couple of currencies, as well, in there.
So the very first thing I do, I would pick a timeframe for my trade. Then I would take anywhere from a day to a couple of weeks to actually apply my associative remote viewing protocol. That's the work. And we're going to get into the details of actually what one of those ARV trials was in a little bit, but let me just finish this explanation for trades.
So the very first thing I do is come up with a time period. The second thing I do, I work my ARV protocol. It might take me a week to two weeks to do. And then at the end of the ARV protocol, I would come up with a trading bias, a trading decision, and that would either be buy or sell. So I would take that. I would enter that into my computer program that I wrote to manage this whole process for me, and I'd push a button and the computer at that point would randomly pick the commodity to trade, wouldn't let me see what that commodity is.
Then on Monday morning, there's an API on the computer program that automatically links up to my broker, and it would automatically buy, because that's the prediction that I generated, automatically buy the chosen futures contract and it would hold that contract for the time period that I pre-designated. Say in this particular case it was a week, and it would close the trade on Friday. And then at that point, after the trade closed, I would be allowed to actually see what it was that I traded and see if I actually made money or not.
NEXT PAGE: Trading Real Money Using ESP|pagebreak|
Tim Bourquin: This is interesting. You mentioned before about trying to figure out if this truly was your ESP or some other trading methodology. When you think about this, Fibonacci is based on fractals. It's based on things that occur in nature. So I guess people rely on Fibonacci as if it's a sound technical analysis tool, and yet, it's based on something that is found in nature, numbers that are found in nature and that sort of thing. So in that sense, I guess it's not too different. It's not too much of a stretch then to think that this will work. But I'm fascinated to hear about the way this actually happened, this remote viewing, and how you did this.
Greg Kolodziejzyk: Right. So let me just say before we get into how the typical ARV trial was structured, let me just tell you my results after 13 years of doing essentially what I just told you that I did. That is essentially putting a blindfold on and throwing a dart at a futures list and picking a futures market and then flipping a coin. Essentially that's really what I was doing and going long or short and holding for some arbitrary period of time and exiting that trade.
After 13 years, and it was something like 385 trades that I did over the 13-year period, I was correct in the direction of those trades 60.3% of the time, which generated profits and it was around $146,000. I think my capital base was typically somewhere around $50,000 during this whole process.
Tim Bourquin: So you traded this with real money in a real account?
Greg Kolodziejzyk: Yes, right from day one. It was always real money with a real account. My objective here with this whole thing was to make it as real as possible.
Tim Bourquin: And were you skeptical through that? How were you feeling about it as those years progressed?
Greg Kolodziejzyk: As I started ramping up the number of contracts traded, as my confidence increased through the process, that made it a little easier. I started with not a lot of money risk.
First, it was pretty nerve-wracking. I remember one trade in particular. What I had done as I had spent about two months generating four predictions for four different futures contract, and that was a lot of work for two months. So I have these predictions and I believe there were two long predictions and two short predictions. That's all I knew at that time. And I was actually going to hold these futures contracts, these trades for a full month.
As you know, you're a trader, a lot can happen in a month. So it was a little bit, but I really wanted to do this. This was the first time I wanted to see if my approach could actually work for time periods of longer than a day to a week. So I went all out on this one. I went, "Okay, I'm going to spend a lot of time. I'm going to generate a lot of really high-confidence result prediction."
So I remember I went in and pushed the button on the computer. I had all my trades entered. And of course, remember, I had no idea what it was I was trading. I just knew it was four of my basket of like ten different commodities. I waited for a full month. Can you imagine how I felt not knowing if I was long or short, not knowing what futures contract I was in, but knowing I had money at risk? I could have been losing my shirt for this month.
And I remember I closed the trade and how nervous I was. I can imagine as I was looking at my account statement. At this particular case, all four were profitable, and I think on that one trade I made something like 30 grand on that one.
Tim Bourquin: Wow! All right. So not only did you not know whether you're long or short of what market; you had no idea whether it was making money or losing money at that time.
Greg Kolodziejzyk: That's exactly right. That was part of the protocol. I wanted to stay emotionally neutral as well, and I thought that was an important component of this as well. The only way to stay completely emotionally neutral is to hide what was going on from my conscious mind, like I couldn't know. So if you don't know, you don't think about it.
NEXT PAGE: How Greg Tested His ARV System|pagebreak|
Tim Bourquin: I got to hear what the remote viewing was, and I have a feeling this is where it's going to get a little weird, but I got to hear about what this was. What did you do?
Greg Kolodziejzyk: Okay. What I'm going to describe to you right now is one typical ARV trial. As I said before, what I did was I used a consensus of many, many trials to generate a trading decision, a prediction, let's say, of either up or down, but to keep the description simple. I'm just going to describe to you a single trial.
Way back in 1995 when I started researching all of the research into ESP, I kind of learned two really, really important facts about what the researchers discovered. Number one was that the effect size per trial was very, very small. As I said before, you can imagine it would be or we would be all be winning roulette wheel games in Vegas all the time.
And number two, the other thing the researchers discovered was that the only way to actually measure or produce an ESP effect in an experiment was to hide the details of what was trying to be predicted from the subject. So in other words, if the subject knew what it was that they trying to predict, then their conscious mind would start getting involved in the process and would try to think up an answer, and that completely destroyed any effect at all. So this had to be a very random chance kind of thing.
So what I did when I designed this ARV protocol is I tried to consider both of those limitations in this and how would I increase the effect size per trial so that I could gain more confidence to actually risk my money on a trade, number one, and number two, how could I possibly hide the fact that I was trying to predict the outcome of some market tomorrow from my conscious brain in order for me to actually come up with a genuine ESP-based prediction. So I came up with this protocol called associative remote viewing, and I'm going to describe how one trial actually works here right now.
So now, the way I get it, as I said before, I use a consensus of many ARV trials, but I'm going to describe one single trial here to you right now. I used a computer program to manage this entire process, but what we're going to do for the purposes of this example is we're going to just use a manual process so that it makes it easier for your listeners to understand how it all works.
Now, what we're going to hypothetically predict the outcome of the E-mini futures market for, say Monday from the open to the close. So now, the first thing I'm going to do, Tim, is I'm going to hand you two sealed envelopes. The sealed envelopes, each contain a randomly chosen photograph. These photographs are chosen-in the computer program that I use, I choose them randomly from a library of 30,000 images that are chosen locally. Recently, I started using Google Image Search so there are millions, billions even, of photos to choose from.
So you have no idea what the images are. They could be anything at all. That's the part of the protocol that addresses the knowing what you're trying to predict aspect of this whole thing. You have no idea what the photographs are going to be. All right, you got that so far?
Tim Bourquin: Got it. So it could be a car and a lion. Who knows?
Greg Kolodziejzyk: It could be anything. Who knows? Just the fact is that you don't know what those images are going to be.
Now, in the back of each envelope, I have written randomly. I have written either buy or sell. So one of the envelopes is written "buy" on the back of it and the other one is written "sell" on the back of it, and you're not allowed to see which envelope has which association written on the back of it.
Now, I'm going to tell you that on Monday afternoon, after the market closes, at exactly 2:16 Mountain Standard Time, I'm going to show you one of those two pictures in one of the two envelopes, and the picture that I'm going to show you was the picture that was associated with what the market actually did that day. So if E-mini closed up for the day from 7:30 to 2:15, I'm going to show you the picture in the envelope that was marked "buy" on the back. If the market closed down for the day, I'm going to show you the other picture in the other envelope. You got that so far?
NEXT PAGE: What the Experiment Entailed|pagebreak|
Tim Bourquin: Got it, got it.
Greg Kolodziejzyk: Okay. So now, what I'm going to ask you to do is I'm going to ask you to just close your eyes and relax, and I want you to sort of get into this kind of relaxed meditative non-thinking state, and typically that might take a couple of minutes of just really relaxing, getting comfortable in the chair, closing your eyes, blanking out all thoughts if that's even possible. Just try to really get into this sort of relaxed state.
And what I'm going to ask you to do is I'm going to ask you to imagine now, with your eyes closed, I want you to imagine yourself. I want you to imagine yourself tomorrow at about 2:15 in the afternoon, and you're sitting at your chair, imagining what the chair feels like.
Now, imagine me handing you an envelope, one envelope, one of those two envelopes. I'm handing you the envelope. Imagine opening the envelope and pulling a picture out. What do you see? What's the first thing that pops into your head?
Tim Bourquin: So you're asking me now?
Greg Kolodziejzyk: Yeah. We could actually do it.
Tim Bourquin: No, no. I thought maybe you were asking me the question. But this was the question you were asking the people that were doing this for you?
Greg Kolodziejzyk: This is the description of one trial. So I want you to imagine yourself coming up with the-so, okay, for the purposes of this example, let's say that you come up with this random thought. Because you don't know what the picture is, right? You have no idea what it is. So if you have any ESP abilities at all, this is where they're going to come out because you're going to be coming up with some completely random idea about what that picture is. And it's usually the very first thing that pops into your head. That's usually the thing that's actually the most valuable piece of information that you're going to come up with.
But let's say you have this sort of memory of your great grandfather who was a five-star general or something like that, just an example. So you just kind of remembered looking at his five-star symbol and so you draw a star on the page. That could be something typically what you'd come up with. It could be anything at all. It could be a memory of a color. You could think of a color. Now, the more random these thoughts, the better.
If you think the thought is related to something that you're currently doing or looking at, say you're cold and you think of something cold, no, that's not valid because I'm feeling cold and I just wrote cold down because I'm feeling cold right now or whatever. Or I just had a peanut butter sandwich for lunch and I'm thinking of peanut butter. That's not valid either.
The more surprised you are about your perceptions, the more important they are. So you come up with some wild thing that's way out of the left field and you go, "How on earth did I even think of that right now?" That is very, very valuable stuff. You want to actually put an underliner on that. Write it down on a new piece of paper. Draw whatever it is you're thinking of.
And now what you're going to do is you're going to hand me your drawing, and I'm going to take your drawing and I'm going to open it up and I'm going to take a look at both of those pictures that neither one of us have seen so far. I'm going to look at those pictures and then compare both of those pictures to what you had drawn on your piece of paper. I'm going to attempt to try to pick which one most closely matches your transcript.
So I'm looking at both pictures and let's say we've got a picture of a starfish for one picture let's say, and let's say the other picture is the picture of an egg or something like that. Well, obviously, the starfish matches your five-star general star that you drew on your paper so I'm going to go, "Okay. Well, it's the picture of the starfish. This is the picture that I think that Tim is going to see tomorrow at 2:16."
NEXT PAGE: Looking for Statistical Probabilities|pagebreak|
Tim Bourquin: What if it's like a loaf of bread and egg? Then what do you do?
Greg Kolodziejzyk: So what I typically did is I would rank my confidence in how close my transcript matched one of the two pictures. In that particular case, it would get a really low ranking. And when I analyzed the outcome of all of those trials and sort of analyzed the prediction of all those individual trials-buy, sell, buy, sell, buy, sell, whatever-I would take into consideration my ranking, my confidence ranking on those, so higher ranking.
So in this particular case, from zero to four, on a scale of zero to four, I'd give this one a four because you drew a star and the picture is a starfish. Now, what you said, you drew a picture of a loaf of bread and neither picture is a picture of a loaf of bread, that happens a lot. Of course, as you can imagine, like I said before, the research has found the effect size is very, very small. So periodically you're going to draw a picture of a star and you're actually going to get a star in your picture, but most often you're going to draw a picture of a loaf of bread. One picture might have brown in it, and the other picture won't, so you'll choose the photograph that has some brown in it and you'll give it a low confidence score of 1 or something like that. Are you following me so far?
Tim Bourquin: Got it. How many times did you have to do this though to get what you felt was statistics? Well, maybe we're not looking for statistics anymore because we're talking about ESP here, but how many times did you have to do this?
Greg Kolodziejzyk: We actually are looking for statistics. That was actually part of what I was doing.
Let me finish off the example, though, first before we come back to that question. So what we have now is we actually have a prediction, because in order for you to see the picture with the star on it, with the starfish on it tomorrow, I know the market so I turn the picture over and I see "buy" written on the back of that picture. I know the only way you're going to see that picture tomorrow is if the market goes up, because if the market goes down tomorrow, you have to see the picture of the egg. Do you follow that?
Tim Bourquin: Okay, got it.
Greg Kolodziejzyk: So I've come up with a prediction. I know the market is going to go up tomorrow because the only way you're going to see the picture of the starfish is if the market goes up tomorrow. So I can take a long position tomorrow morning at the market open and hold it all day, close the trade at the end of the day, and then look back at the day and say, "Did I make money? Did the market go up?" If the market went up, then I have to show Tim the picture of the starfish and that completes the entire cycle. If the market went down, I would have to show you the picture of the egg.
Tim Bourquin: And is this idea that people would get better at it because you showed them what the actual picture was?
Greg Kolodziejzyk: Well, possibly, although research hasn't really found that there is any kind of a getting better period. You're as good as you get right out of the box kind of thing. Practice doesn't actually make you better at doing this.
Tim Bourquin: Okay. So there's no tapping into this better. You either have it or you don't.
Greg Kolodziejzyk: Yeah, you either have it or you don't. That's exactly right. But that whole feedback process, that whole feedback step completes the process, because I asked you, when you closed your eyes and when you imagined yourself in the future at 2:15 tomorrow, I actually asked you to try to predict what you're looking at, what you're looking at at 2:15 tomorrow.
So at 2:15 on Monday, you have to be looking at something in order for this all to work. So if you have any ability at all to predict even the tiniest little glimpse of a future event, then this is where it's going to happen. If you don't look at anything at 2:16 tomorrow, then you're going to see nothing.
NEXT PAGE: Turning Off Your Conscious Thoughts|pagebreak|
Tim Bourquin: You're right. Okay, understood. So if you're talking about predicting the future in some sense, that future has to happen.
Greg Kolodziejzyk: Exactly. And see, what we're doing is we're not actually predicting the outcome of the S&P 500 for tomorrow. We're predicting what picture you're going to see. Because if I asked you to predict the outcome of the E-Mini for tomorrow, well, you're going to using your thinking brain and you're going to think about, "Oh, gosh, what did it do yesterday? What's the economy like?" You're going to come up with a thinking answer and that's not what we're trying to do here. We're trying to access your ESP and the only way to do that is trying to hide the question that's being answered so I'm going to ask you something different.
Instead, I'm going to associate the two potential future outcomes, which is up and down. I'm going to associate those to two random photographs, which you have no idea what they are. Instead, I'm going to ask you to predict what picture you're going to look up tomorrow instead of asking you what the market is going to be tomorrow.
Tim Bourquin: Got it. All right. Somebody has to associate it. It's associated in your mind. Because otherwise, you could be predicting a random event that nobody knows what it is. So you're associating it to yourself and that's where that connection is.
Greg Kolodziejzyk: Exactly. The association between the pictures and the market, that's happens behind the scenes. That's what the mechanism does in order to take your intuitive prediction about your picture and actually convert that into a way that we can trade the E-Mini and actually make money doing it.
Tim Bourquin: Got it. Okay. So talk to me then about the number of times you had to do this for each trade.
Greg Kolodziejzyk: Right. So it's typically numbered between 12 and sometimes I went all the way up to 300 trials for a trade. And to do 12 trials for one trade, that might have taken me 20 or 30 minutes or more worth of work. My computer program would set up all 12 trials in advance, so that is all 12 pairs of images and the computer program would automatically assign buy, sell, buy, sell randomly to each photo in each pair. So that was all done in advance.
And then I would take 20 minutes of the day and get into this sort of really relaxed meditative state, and I would actually imagine myself at the end of the trade period, whatever that was. In this case, in our example, it would be Monday afternoon at 2:15. I would imagine looking at my very first feedback image, which would be the one image of the very first two pairs in the first trial that was associated with what the market actually did that day. And I would write down my thoughts about what that picture could possibly be, and I would turn the page on my little notebook and I would imagine the second picture that I'm going to look at, and I would imagine the third picture and fourth, fifth, go all the way out and do 12 images.
And then, at that point, I would go in and actually do the analysis where I would look at both images and compare both images for each trial for whatever I had drawn for that trial, and I would choose which picture I think that I'm going to see and assign it a confidence score. And then when I finish doing that with all 12 sets of images, all 12 trials, I would push a button on the computer. The computer program would automatically go and add up all of the confidence rankings and notch them up to the buy/sell predictions in every single case and come up with a total.
Say we had one prediction over another prediction by 50% or something like that, and there was sort of a threshold that I used so I'm looking for-I was actually looking for a statistically significant number of predictions, a buy or a sell over the other one, in order for me to actually go and do a trade. And if I saw that happening, then I push another button on the computer and the computer would actually automatically go and answer that trade for me, whatever direction it was that the computer program had picked. Again, I don't even know what that is. I don't know what the market is and I also don't even know what the prediction was. I don't know if it was up or down.
NEXT PAGE: What Are the Odds?|pagebreak|
Tim Bourquin: And who did you get to do the remote viewing while you were doing this?
Greg Kolodziejzyk: Well, I was doing all of that. I was doing the remote viewing. I was doing the comparison. I was doing everything.
Tim Bourquin: Okay. So, you yourself, were looking at these pictures. It wasn't other people looking at the pictures and then deciding.
Greg Kolodziejzyk: It was me myself looking at the pictures. It was me myself doing the remote viewing, looking at the pictures, doing everything.
Tim Bourquin: All right. So somebody else would write the buy or sell on the envelope so that you didn't have any idea which pictures were associated with which.
Greg Kolodziejzyk: No. The envelope was just part of our manual example description of an ARV trial. The photographs were chosen by a computer program and they were embedded into the computer program. They are digital photographs. So that's all digital. It was all done by the computer program and automated by the computer program.
The stuff that I actually did was all of the remote viewing for all of the trials and all of the actual analysis process where I'm comparing each remote viewing drawing to each pair of pictures and actually choosing which one I'm going to see and assigning it a confidence score. That's all the work that I actually did. All the rest of this stuff was managed by the computer, including the actual trade entry and the trade exit.
Tim Bourquin: Okay. So let me ask you this. You mentioned and we talked about the expectation of you getting 60% correct trades is 1 in 31,000. But it seems to me statistically-I mean I was a political science major. What do I know? But I mean over 265 trades it does seem statistically probable that you could get 60% right, a whole lot less than 1 in 31,000. Am I wrong on that?
Greg Kolodziejzyk: No. The statistic actually is not correct. So I got 60.3% correct trades of 285 trades. That results in a Z-score of 3.5, which is 3.5 standard deviations from chance, odds against chance of 1 in 4299.
Now, the other number that you're getting is all of the individual trials over the years, there were 5300 trials over the years, and of those, I got 53% of those trials right. So again, every trade is made up of a number of trials. So the 285 trades consisted of 5677 trials. Although 60% of the trades were correct, only 53% of the trials were correct. However, 53% of 5677 results in a Z-score of 4 standard deviations from chance, which is odds against chance of 1 in 31,000.
Tim Bourquin: So I guess my question then would be any scientist would say, "Well, you need to duplicate this over a couple of different times with different people trying this." Have you ever thought about that or had somebody else tried to see if you could replicate this?
Greg Kolodziejzyk: I freely offered the information out there for anybody who wants it for all of the 15 years, 13 years that I've been doing this. There have been a few people that have taken this and applied it on their own and they have been successful. But for the most part, I've just found that people kind of try it and maybe they encounter their first failure and then they just quit, I think. So nobody has really stuck with it like I have over the years.
Tim Bourquin: And are you still doing this today?
NEXT PAGE: What Greg Trades These Days|pagebreak|
Greg Kolodziejzyk: No, I'm not doing it anymore. When I stopped at the end of 2011, I kind of decided to sort of close the door on that whole chapter. Because as we previously had discussed, Tim, I don't consider this a standalone trading methodology. There are no stops. My equity curve over the 13 years as you can imagine with only 60% correct trades was kind of all over the place. You drawdown is a little bigger than what you would really ideally want it to be.
So I currently trade. I day trade the E-mini and gold futures contracts, and I've developed an indicator based on the market profile, and it basically plots a histogram on my screen of price and volume. I'm looking for areas of congestion. I identify a trading range for the day and I trade breakouts from that range, and I trade reversion to the mean within that trading range for the day.
And then on top of that, I use sort of a really quick and easy form of ARV to sort of filter out my general bias for the day, and that's what I'm currently doing. So I'm actually applying a full back-tested trading methodology and combining that with my intuitive impressions about what the market is going to do using a real simple form of ARV, and that's what I'm currently doing right now.
Tim Bourquin: Okay. I might have to take that to mean that because this theoretically could be a trading strategy on its own but you've found using more technical, more traditional technical analysis that you're more confident in that than you are in the ESP method. Is that a fair statement?
Greg Kolodziejzyk: That's a fair statement. I mean the effect size that I measured, as we've talked about, is pretty small. Over the 13 years measured, the effect size is really significant. But does it make a standalone trading system? I don't really think it does. I think you really should become more efficient as a trader and manage the drawdowns and the risk/reward ratio. I think you really need to combine it with some traditional technical method.
Tim Bourquin: Of course, I'm going to get this from people saying, "Well, there was something else at play." What was your takeaway after doing this for many years? Is it that traders can follow their gut and be better traders? Is it that "Look, there's just something here that was interesting to find out but not really useful to me long term?" What's your state on this right now?
Greg Kolodziejzyk: Tim, I think it's really important for people to be open to accepting that the human brain is capable of some pretty incredible things. And just because our physics models that describe our universe don't allow for this kind of information transfer from the future to the past doesn't mean that it doesn't exist. It simply means that our models are wrong. And because we have no idea how something like ESP actually works, also, that does not negate that it exists as a real phenomenon.
I think that ESP is a powerful component of intuition, and I think it is important to be aware of that and to be open to its possibilities, both as a trader and as a human being.
Tim Bourquin: This interview was about that part of it, but I would like to talk just for a few minutes about this trading strategy you're using now if that's okay.
Greg Kolodziejzyk: Oh, sure. Yeah.
Tim Bourquin: All right. So you explained that you're using a histogram of sorts to make trading decisions. Can you just get a little deeper into that and what you're doing?
NEXT PAGE: Greg's Trading Methodology|pagebreak|
Greg Kolodziejzyk: Yeah. What it is, it's kind of based on market profile where what I'm doing is I'm building a histogram and software of all the price activity over the last three days. For the ES market, it's three days; for gold, it's slightly less than three days; and these are sort of optimized variables based on whatever the market is that I'm trading.
It doesn't work for every market. So far, I really found it only works for bonds, E-minis, and for gold. But over the last three days, I'm taking all of the prices that traded over the last three days, and I'm taking the total accumulated volume for those prices and creating a histogram, and I'm plotting that histogram information as horizontal lines on a candlestick chart. The lines vary in density from the most traded price with the highest volume to the least traded price with the highest volume.
So you can imagine a trading chart with a variety of differently shaded grey lines, horizontal lines behind the price parts, and I'm looking for areas where a whole bunch of lines are all compressed together into one tight group and that kind of indicates this is an area of congestion, an area of a lot of activity and that price range over the last three days. And if the price is outside of that range and comes back into that range, there's a very good chance that the price is going to stick around there for a while.
Traders over the last few days either went long or short with those prices. If the price moved away from that and it comes back into that area, they're more likely to go back in and do something, either close their trade if it was a loser or maybe buy more contracts if it was a winner or something like that.
So price has the tendency to go back into those areas and stay there. It trades back and forth in those ranges. I use that as the definition of a support and resistance to define a trading range. I take short trades at the top of the range and long trades at the bottom of the range. And then when price breaks out of a range, one of those congestion zones, then I trade a breakout trade. That's basically what I do. I close my trades at the end of the day.
Tim Bourquin: Yeah. Okay. So you're a pretty strict day trader then.
Greg Kolodziejzyk: Yes.
Tim Bourquin: Okay. All right. And then how many trades a day do you typically take?
Greg Kolodziejzyk: Well, some days none; some days up to five trades. So it really depends. Right now the market has been moving around quite a bit, and so those lines, the horizontal lines are sort of spread out all over the page. So there are no trades on a day like this. But typically, I would trade maybe three days out of five, I would say. And of those three days, the days that there are trades, I'll maybe trade three times a day, I'd say on average.
NEXT PAGE: To Learn More About ARV|pagebreak|
Tim Bourquin: All right. Well, we've kind of described some services here. I keep an open mind about these things. Whether or not somebody who is listening will take this with a grain of salt, they'll take at least just-like any of the other traders I've interviewed, I always say you take one or two things that maybe you can add to your own thoughts about your trading, and if that's what you're doing within the 45 minutes or 30 minutes or an hour, whatever the interview is, then it's been worthwhile for the listeners.
Greg Kolodziejzyk: Sure, I hope so. Yeah.
Tim Bourquin: Now, do you talk about your trading at all? I know you got a blog where you talk about some of your marathon and travel and training and things, but do you talk about your trading at all?
Greg Kolodziejzyk: No, I don't.
Tim Bourquin: All right. Well, just if somebody wants to go to your blog and just find out about you in general, give us the website address.
Greg Kolodziejzyk: If your listeners are interested in more information, more detailed information about this whole ARV process, they can go to remote-viewing.com. So that's remote-viewing.com. I've got all kinds of information in there, statistics. They can download a recent paper that was published in the Journal of Parapsychology that I published just recently about my 13-year experiment and get into all the nitty-gritty details of the statistics and the numbers and all that stuff if they're inclined to do so, but yeah.
Tim Bourquin: That's great. Well, listeners, we'll link to that in the transcript as well.
I guess, Greg, just one last question that I would have, and I think I know the answer, but I don't want to put my bias on it. When you tell people about this, you're in a cocktail party and they kind of ask you about your background and things, what's the general reaction? Is it "You're crazy?" Are people open to it? Are they curious? What's the general reaction?
Greg Kolodziejzyk: It's 50-50. It is. 50% of the people are open to it immediately and go, "Yeah, yeah. I can see that. I can see that. I can see that." And 50% of the people are skeptical. I completely understand both groups, because, as I said, back in 1995 I was one of those skeptical people.
So I really understand that. And I understand for me, for people like me and for you, people like you, we need the statistics, we need the science and we need the numbers, and that's why I conducted this experiment over the last 13 years in the way that I did because it was something that I needed as well.
Tim Bourquin: All right, Greg. Terrific! Thanks very much for your time today. I appreciate it.
Greg Kolodziejzyk: You bet.
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