One of the earlier articles I wrote for this blog was titled:  Trading strategies that work:  Trading false breakouts.  This is really a continuation of that article using examples from this past week.  These examples will use analysis (and in one case) a trading setup we described in the NAS Trading subscriber service.

Lets start with April Gold.  The service actually had a long position in Gold that we exited just prior to the massive collapse that occured on Wednesday, February 29th.  In the February 28th report, we stated (I have added yellow highlighting to the most relevant part):

“We were looking for a stronger close today in Gold after the probe below 2 day lows. Today’s price lows moved back into the longer term range, which to me means if we do break lower again it could create waterfall selling and bad fills on protective stops. As we are short-term or swing traders, we have given this market enough time for now. Lets Exit this position (price around 1769 as I right this) for now.”

This is how the market looked at that time:  If you are familiar with technical analysis, you see that this appears to be a textbook breakout followed by what many technical analysts would consider a “perfect” pullback.  however, we did not view it that way.  A pullback so soon after the breakout whose low had pulled into the prior trading range did not suggest a healthy market. Though I did not mention it in the report, 3 down days so soon after a breakout that consisted of only two up days was also concerning.  Lets see how things played out (Of course if you follow the gold market, you already know):

The massive down day that occurred on the 29th was  a massive stop-loss run or what I call “waterfall” selling.   Bernanke provided the catalyst, however It is highly unlikely the market would have reacted as severely if it was not in a vulnerable state.  What do I mean by a “vulnerable” state?  By this I mean that large numbers of weak longs have placed stop-loss orders in around the same place.  Now, in this case we did not set up a short trade. However, our analysis of the situation allowed us to sidestep this downdraft and exit our prior long trade with a profit.

Lets check out a trade in EUR.USD.  On the chart below, I have lableled the breakout level, as well as the level below which we believed the breakout would “fail” and catch weak longs off balance.  Here is what I wrote in the Blueprint report for March 2nd:

“EUR.USD also looks interesting. A break below yesterday’s low looks like it will put some pressure on speculators who got long on the breakout. Stop would once again be at the day’s high, and hold over the weekend only if the market looks to be closing below 1.3225.”

By the way, both the text and chart above are exactly how it appeared in the blueprint report.   On this trade we were looking for follow through on the day of our entry.  This is because if our premise for the trade is valid, stop-loss selling should push the trade in our favor. If this had failed to occur and the day had closed with a small profit or a loss, we would have exited the full position at that time.  Lets check out what ended up happening:

As you can see, we ended up getting a fairly nice one day ride on the short side.  The service has exited the short term portion of this trade, and will see if we can manage the other half for a longer term profit.

I hope this article will help in your analysis of breakouts and false breakouts.  If  you are interested in receiving a report each night that details similar opportunities in the Futures and Forex markets for the next day, check out our subscriber service.

Happy Trading!

is that traders and speculators tend to be “big idea” people.  We like to think about the future and how it “might turn out” and also the past, wondering “what might have been”.  In many cases the connection between past and future is bridged by our current market positions, or opinions.

For example, we might put on a trade and think, “This has a 2 to 1 risk to reward ratio,”  and then that static thought, or moment in time, tends to stick with us.  Yet tomorrow and each moment in time is unique and offers us new information.   It is very easy to get caught up in yesterday’s playbook, yesterday’s dreams, and to lose sight of the opportunities that exist now, in the present moment.

I have heard countless times that traders should, “focus on their mistakes and losses” in order to improve.  Is this true?  Well, for some people it might be.  I think it depends upon your innate personality.  Focusing on “mistakes” might be a good counterbalance for a trader who is prone to hyper-confidence, aggression, and over-trading.

Yet for others, focusing “mistakes” will simply reduce motivation and make it difficult to “pull the trigger” on the next trade.  This trader, instead, needs to focus on what they are doing right.   Or even better:  Forget that the past ever existed.

I personally fall into this later camp.   I don’t want to focus on mistakes at all.  In fact, I try to forget all about them.  Sure, I review the market and learn from results, but I don’t frame it in terms of mistakes.  Did I get out “too early” or “too late?” in that last trade?   Such notions are the present judging  past actions using information that was not available at that time.  In other words, it is completely unfair. For me, personally, that is just a demoralizing way of viewing things, so I don’t do it.

I don’t care what I thought yesterday or how much potential I thought a trade had.  What I care about is what the market is telling me right now.   As traders we operate with a very incomplete set of information, and we have to use our best judgement.  There is no room for navel gazing and rear view mirror thinking.

Life is reborn each day

I used to live near the ocean.  Sometimes, in the middle of winter and early in the morning, I would go to the beach and start walking while it was still pitch dark. (Often this was after being up all night trading).   Each step crackling bits of ice into the sand. Surf crashing furiously, cold wind stinging the face and burning my eyes.  A warm glow, then rays of light glisten and explode across waves.  Clouds glowing, then soaring with light.

The simple pleasure of this experience created some of the most powerful experiences of my life.  The opportunities today are ours to create.  Seize them!   Because win or lose, tomorrow is a new day, and the sunrise over the ocean will be there.

In our recent article, “Multiple time frame analysis:  Day trading after a breakout day”  We provided two templates or “road maps” for how to day-trade a market the day after it has had a powerful breakout on a daily time frame:

and

Last night, Gold and Sugar were perfectly set up to use this type of “Buy a small dip after a breakout” strategy.  As we outlined in today’s subscriber blueprint report:

“April Gold broke out from a tight consolidation today.  Lets look to buy around the 1753 level with a 15 point stop.   This is a large dollar value trade, remember the ½ size mini contract is also available.   Exit the trade if it the market is not closing above our entry price.”

“Sugar also had a nice looking breakout.   Lets look to buy in the 24.30 area.  Exit if it appears price is not closing above our entry point or a 50 tick stop.”

Now lets check out the intra-day price action that occurred today, first in April Gold, then in May Sugar:

As you can see, The pullback in April Gold fit the second template that we provided, as the pullback occurred before price broke out to new highs.  Our 1253 Buy area was about as perfect a turning point buy level as one could ever expect.

Now lets check out April Sugar:

The intra-day action in Sugar ended up following the first of the two templates provided above, as price broke out above yesterday’s high before starting the pullback pattern.  It turned out that the buy level outlined in the Blueprint report was more perfect than should ever reasonably be hoped for.  We suggested a buy level of 24.30, which ended up being one tick from the day’s low.

A few points about the above.  First, many trader’s first instinct will be to think that the stop loss levels suggested above are too large.  Certainly, traders can and do use smaller stops.  However, I want you to consider something:

The size of the maximum loss is not the same thing as the average expected loss on losing trades.   Notice that in our trade management rules, we had two stop-loss type exits:  One was the max point/tick loss, one was a time stop.   What this means is that If we took the above strategy and just looked at losing trades, It is likely that the majority of them will be exiting at a better price than our “maximum value stop-loss”.  Not only this, but many trades that “would have”  been stopped out if using a smaller stop end up being profitable trades.   This type of trade management approach is counter-intuitive, yet I have found with many strategies it can both increase profitability and reduce drawdowns.

Just one more “secret” that many traders have not caught on too:  You do not need real-time data or to be in front of a trading screen to make these kinds of day trades or swing trades!  In fact, I think the vast majority of short-term traders would have more success by setting trade management orders, and then putting some distance between themselves and the market.  It is staying with winning positions, not the, “watching, wishing, and hoping” that makes traders money.

Certainly, most trades will not work out as perfectly as what occurred today in April Gold and May Sugar.  Taking both losses and profits are a part of any trading strategy.  The point, however, is that a sound trading game plan or “blueprint” such as provided above can help to shift the odds in the individual trader’s favor.

Happy Trading!

In our February 14th trading NAS Trading blueprint report, we highlighted the following trade opportunity:

“Lets revisit the EUR.CAD trade:  Short around 1.3180 area, stop loss around yesterday’s high (1.3255 area).   Ideally we would like to see a retest of the 1.30 level for a swing position profit, so at least for now our intended risk is less than half our first objective.”

On February 16th, we updated with:

“Wouldn’t it be nice if all trades worked out as “textbook” or pain free as our EUR.CAD trade!  We shorted around the 1.3180 area, which ended up being near the high tick for the next two days.  As I write this price is about 1.3052   Lets officially close out ½ the position and see if we can let the remainder turn into a longer term trade.”  

I hope this example drives home a point:  Trading is not about obsessing if the next trade will be a winner or a loser, it is about having a plan to identify and capitalize on good risk-to-reward opportunities.  Not every trade will win, but if you can execute on a solid trading plan the odds will be shifted in your favor.

We use ADX and and a metric I call relative range to monitor volatility conditions on an intermediate term (ADX is used) and short term (relative range is used) basis.  In the chart above, we can see that both 7 and 14 period ADX have crossed below our low volatility threshold.  If we look at relative range, we see that the 1 day relative range is also below our threshold level (the lower dashed line).   These factors (and a few others) combined to indicate that an explosive breakout might be eminent.

For reasons we have outlined in the members area, we have a bias towards being long sugar (Market in backwardation, macro-fundamental reasons).

So, lets look at an intra-day chart and see how the breakout day and the day after the breakout day played out.

In the NAS Trading report, we suggested buying March sugar above 24.25 ( The green line).   This was really a textbook, pain-free type of intra-day breakout that all traders wish occurred all of the time!

The key to keep in mind is that if you pick a good breakout level to trade at (A level likely to be a valid breakout)  The big institutional speculators and funds will be looking to buy the market all day long and perhaps even into the next day to week.  This is because they can’t execute their large orders all at once, so they break them up and gradually build up to the position size that they want.

This takes time, and as funds do not have identical signals, as the market rises it triggers new buy programs.  This is exactly the type of intra-day wave that smaller, individual traders can take a ride on.

The two parallel black lines define the high and the low of the breakout bar.   So what about the day following the breakout?  How should traders assess market action?   One pattern I have noticed again and again is that after a solid breakout day, the first move is often a test of the prior high.   Quite often, this mini-breakout fails, and price ends up swinging below the prior low of the day.   Many short-term traders, eager to lock in a profit, are shaken out by this test downwards.

The upshot is that this “shakeout” is often a false breakdown that ends up reversing.  I believe this is for a few reasons.  First, on a legitimate breakout  the big funds are still not done buying from the prior day.  They re-enter the market, eager for a bargain.  Second, Shorts who are wrong are eager to get out near “break-even”.

Understanding of this very common intra-day pattern after a breakout day can help the short term trader in a number of ways.

1. First, taking a partial profit on the first break above the prior day (breakout day) high is not a bad idea.
2. Second, knowledge of the pattern can prevent short term swing traders from getting to easily “shaken out” of otherwise good trades.
3. Third, The break below the prior intra-day swing low can provide an excellent, low risk entry point for day traders and swing traders.

Just to review, the conceptual pattern for this intra-day setup is as follows:

Here is a variation of the pattern that is also effective. In this case, the market dips first (often to an intra-day support level from the breakout day) before rallying to a new high.

The black bar represents the breakout bar.  The red represents a very common pattern that occurs after successful breakout days.   The area of the chart marked (“Test below day’s low”) is the area where many short term traders are shaken out, which not surprisingly makes it a good entry point.   Does this occurr every time?  Absolutely not.  Sometimes the break above the breakout bar high takes off and never comes back.  Other times, the dip below the low never turns back up, and the breakout ends up failing.  However, this pattern does occur often enough that it pays for all short-term swing traders and day traders to be aware of it.

Happy Trading!

“After a dynamic swing up since mid December, the market has begun to map out trading range, as short term volatility and range has expanded.  yesterday saw a narrow range day after an attempted retest of the January high.   We now expect to see a retest down to at least the 1200 level.  Look to short this market (either overnight or at tommorow’s regular session open) with a 10 point stop.  If we are not stopped out, look to cover ½ the position on a 15 point gain or end of day tomorrow.”

The first chart above was provided as part of the report. The second chart is the price action that subsequently developed over the next two days.  Does it always work out so well?  No, of course not.  For example we recently whiffed on a heating oil trade.  Trading is a boxing match, not a little kid’s game of pinata.  However, “hit and run” trades like this are very satisfying.

It appears that the Fed  took  today’s action in an effort to lower the Libor rate, which is the cost of borrowing dollars held by overseas banks.    What is remarkable about the “fed swap line” is that it is a technique for the Fed to lend money to financial institutions that are largely outside of the regulatory authority of the US government.   Where did the Fed get the authority to do this?   It appears it does not need authority:   The Fed simply makes it up, or takes it.

The fundamental problem (Rather, one of the fundamental problems) with our economy is that the global credit bubble created a huge surplus of liabilities which are now literally suffocating, or crushing, the real productive economy.   The logical approach to solving this problem would be a massive, economy wide default on all kinds of liabilities.   Default is, after all, what usually happens when an individual or institution is not able to pay it’s debts.

The problem, of course, is that these debts are not just liabilities that can painlessly be made to disappear.  They are in turn assets held by banks (and insurance companies, pension funds, etc).   Remember that in the financial word, one parties liability is always another parties asset.

In other words, a massive default on debts would wipe out most all financial institutions that operate based upon the principles of fractional reserve banking.  This in turn would cause the collapse of most other  leveraged institutions.   The end result would be a highly probable collapse of all fiat-money currencies and the associated savings and financial assets held by Joe Public, and everyone else.

Printing money is the stealth, feel good alternative to technical default.  All  “Quantitative easing” and “The Fed’s swap lines to Europe” really are are techniques for central banks to jam money into the pockets of financial institutions.  Without such measures, it is quite possible that the entire system would come crashing down.

On the fiscal side, congress will soon be looking for ways to stuff money into consumers pockets, so that they too are better able to service debts.   (In political language – Republican tax cuts or the democrat’s  ”stimulus” spending).  All this easy, or “free” money will ultimately shrink the value of the dollar and all claims on real goods denominated in dollars.   In other words, it is a default by another name.

The danger, of course is that the Fed can end up going to far.  All that “easy money” needs to find a home, and ultimately the home for easy money (over the past 30 years) has largely been two places:

• Financial and real asset speculation
•  Goods and services largely paid for with easy money loans or government spending such as medical care, housing, and university education.   (Did you ever wonder why the costs in these “special” sectors seem completely divorced from the rest of the economy?)

In other words, the more reflationary policy steps  that the fed engineers, the more we must look for changing conditions that signal the reflation is working in the financial markets and the real economy.

What does this mean for Stock, futures, forex trading, and investing?   The markets provided our answer today:  Stock markets and risk assets want some inflation.   Why?

• Cheaper money for banks and corporations mean more profits.
• A devalued dollar means profits overseas are counted higher in dollar terms.
• The Devaluation of liabilities is a stealth transfer of wealth from debt holders to holders of equity, which by definition benefits stockholders.
• Cheap money via the swap lines with Europe suggests that the fed will ultimately backstop the European fiscal crisis, which will allow the first three things on this list to begin taking effect.

ALL of these things are good for market prices at a time when the great mass of investors have become very fearful of equity investing.    At NAS Trading, we see this as a recipe for potential opportunity.

Enough with the big picture thinking.   Lets use today’s action as a line in the sand.  So long as risk assets (such as the SP500) remain above today’s lows (Around 1200 as measured by the SP500 ETF “SPY”), we will assume that this latest policy is effectively influencing markets, and we should focus on being buying dips and getting long.  A signification breakdown below this level on a closing basis would call our hypothesis into question.

Happy Trading!

After a large price gap, the first point of reference is of course the opening price.  What should the trader look for?  What we want to determine is if the opening price is quickly rejected, or if it becomes a focal point of two way trade.  What I mean by this is, does price open and then immediately begin moving in one direction, or does price “criss-cross” back and forth over the opening range?   One observation we have made is that if the opening price becomes an area of two way trade, it is much more likely that the first breakout from the range will fail.  In fact, when two way trade occurs in the first 20 minutes, it is not that uncommon to see a more extended trading range for the duration of the morning session.  The best situation for a morning trade (regardless of if it is movement to fill a large gap, or momentum in the direction of the gap)  is to see that price stays almost completely on one side of the open, and is not able to retest or violate the opening price within the first 15-20 minutes of the day.  In fact, (for a long trade) the opening price should be at or very near the low tick of the day session (short sale trade reversed).

Once these conditions have been met, the trader should look to trade in the direction that price has moved in the first 15-20 minutes of the day.    The stop-loss can be a point or so below the opening price of the day session, as if we are correct in our analysis, price should not venture below that level.  The ideal situation is to then hold the trade for the duration of the morning session.   Only if our end-of-day analysis  suggests that a swing trade is warranted should this type of trade be held for the remainder of the day.
If you have read many of our other articles, you already know that we are  big on pre-planning trades and setting entry orders well in advance of execution.   With this strategy, this approach is not completely possible, as it requires analysis of the opening range before taking a trade.  However, the trader still needs to be 100% clear on what they are looking for and how they will enter the trade to avoid confusion or hesitation.  The trader can’t worry about being perfect.   It is important to keep in mind that the best trades will yield 10, even 15 points, while losses should be kept significantly below this level on any one trade.   In fact, the size of profits can really be surprising, so if it appears this trade has set up, don’t be too eager to take profits or too stressed out about taking a loss.  One good score can make up for a number of smaller losses or errors.

]]> http://nastrading.com/emini-day-trading-combining-gap-strategies-with-opening-range-analysis/feed/ 1 http://nastrading.com/trading-strategies-that-work-morning-momentum-short-squeeze-in-emini-es-futures-contract/ http://nastrading.com/trading-strategies-that-work-morning-momentum-short-squeeze-in-emini-es-futures-contract/#comments Mon, 24 Oct 2011 20:19:26 +0000 NAS Trading http://nastrading.com/?p=3469 This trade combines an understanding how other traders trade  with a quantified study of daily price behavior.

We know from one of our member-only studies that the best time to trade breakouts in the emini contract is after a morning gap up “surprises” the market.  Well, it turns out this same setup works very well for even shorter term (morning session only) day trades.   Because we are looking to exit the trade by the completion of the morning trading session (For us that is the first two hours of the trading day)  We can remove the overbought filter that we found to be effective for day holds.

Lets start by considering what futures contracts actually represent, and what backwardation and contango mean.  (By the way, stick with me on this.  It might seem a bit dry, but if you are new to trading futures contracts or commodity ETFs, It should vastly expand your knowledge in just 10 minutes).

At the end I tie it together and explain how the forward curve is relevant to commodity speculators, investors, and traders.

Futures prices for commodities represent the supply and demand balance for a particular commodity contracted to delivered or sell at a future date.   One of the clearest ways to view this is with a graph that displays what is called the forward curve.   The forward curve is a graphical representation of the current price of each futures contract over a period of time.   Here is an example:

The graph above displays the current price of each Natural Gas contract all the way out to the November 2016 contract.  So, for example, if we look at the far right side of the graph, it looks like Nov. 2016 natural gas is priced at about  $6.8/mmbtu.

This means that a user of natural gas (say a power company) can purchase a November 2016 contract at about this price and lock in the cost of his future natural gas purchases.  A natural gas producer (such as the companies WMB or CHK) can also lock in their prices, though in their case they are locking in the price they are able to sell natural gas at in the future.   This ability to “lock in” future  prices of commodities allows both commodity producers and users make rational decisions over time and to focus on their core businesses (Exploring for energy or generating and distributing electricity)

Forward prices (as represented by futures contracts) play another critical role:  They allow for the efficient allocation of scarce resources over time.   How?

Lets think about the forward curve for a moment as it relates to a Natural Gas producer.   At any given time, the producer (Lets create a fictional company named NAS Nat Gas Co.) has the option of either selling current Natural Gas production in the spot market  or of putting it in storage and selling it at a future date.   How does the NAS Nat Gas Co. trader make this decision?

Well, the trader at NAS Nat Gas Co.  knows how much it costs to store natural gas either because the company owns the storage facilities itself, or it is able to get a quote from a storage facility owner.  He then takes this information and compares the cost of storage against the sale price he can lock in at different future contract maturity dates.

Lets say (for the sake of example)  the price of the Natural Gas futures contract that expires in 6 months is $1.5 higher than the spot price, and the storage cost is equal to $.50 for the volume represented by one futures contract.   In other words, the scheduler has found that by storing Natural Gas for six months, he can lock in an additional $10,000 revenue per contract on his sale of National Gas.  (The NG futures contract is priced such that each $1 price increment is equal to $10,000).

The NAS Natural Gas Trader will compare this return to what is available in the spot market AND to other futures contracts.  If he finds that this is the most profitable option, he will make the trade.   If the spot market proves to be the most profitable, he will not use a futures contract, but will rather just sell the current natural gas supply in the cash (immediate delivery) market.

Now, WHY was the 6 month forward contract priced in a way that made it profitable for the NAS Natural Gas Co. to sell this contract?   It is our example, so we will make up a reason:

In this case, it is because PNY (A natural gas power company) has a heavy need for gas six months from now, and has been bidding up the price all morning.  The Trader at NAS Natural Gas Co. has a computer program that looks for these types of arbitrage situations.  Because NAS Nat Gas Co. has the benefit of very low storage costs, he was able to get to this trading opportunity ahead of other natural gas producers (Remember, this is all just a simplified example to clarify how this works).

There you have it.  If you followed this example, you understand how forward prices work to effectively allocate scarce resources over time.  Forward prices created an incentive for NAS Nat Gas Co. To sell their gas production at the moment in the future where it was most needed.

How does this all relate to commodity speculators, traders, and investors?  There is good news:  The slope of the forward curve gives price signals not just to commercial interests, but also to speculators. It can provide a strong clue as to whether a long or short position will (all else equal) be profitable in a given market.

Lets look at a specific situation in Nat Gas over the past year.   Here is a weekly price chart of Nov 2011 Natural Gas:

As you can see, the Nov 11 contract started the year at $5.185, and is currently at about 3.681, for a price decline of $1.324.  This  is equal to a loss of  $13,340 per contract.   How did the spot price perform during this time?   Lets look at a price chart of the spot price:
The Natural Gas spot price started the year at 4.54, and is currently at 3.63.  For a loss of $.91, or $9,100 per volume equivalent of one futures contract.

Notice that the November futures contract lost over $4,000 more (For an equal volume of Nat Gas) than the spot price over the same period of time!   This was entirely do to the Decline in the forward premium as the contract approached its expiration date.  This happens because as time passes, the futures price converges on the spot price.  At the expiration date the “Futures” contract is no longer in the future, it is the present and therefore equal to the spot market.

In other words, if there is a significant premium in forward contracts and the spot price does not move at all, the futures contract will suffer a price decline equal to the forward premium.

Think about this for a minute.  What it basically means is that if one sells short a contract in steep contango (contango is when forward prices are higher than the expected future spot price, and the curve slopes upward), the actual price of the underlying commodity does not even need to go down in order for the short seller to profit.

Lets look at the current market:

Currently, the Nat Gas spot price is about 3.63.  Lets look at my quote board for the Nat Gas contract going out to March 2012:

Look at the Jan 12 Futures contract.   It is currently selling for $3.923, or $.293 more than the current spot price.   This means that if the spot price does not change at all from now until the January contract expires, the contract will lose $2,930 in value.   Talk about a headwind for long positions!

Is there a catch?  Yes, absolutely.  The forward curve can and does change.  Also, Any event that alters the supply/demand situation (such as a supply disruption or an unexpectedly  cold winter) can send the price of the January 12 futures contract soaring.   For this reason it is important for speculators to always have a planned risk limit on each and every trade.  Basically, the speculator wants to get in and take advantage of the slope of the forward curve, while protecting himself from any adverse price spikes.   In a sense it is not all that different from selling option premium (for those of you who are familiar with that concept).

An inverse situation applies when forward contracts are trading at a discount to the expected spot price.  This is called backwardation.   Research has demonstrated that most all of the net return generated by holding futures contracts long occurs in contracts that are trading at a discount to the spot price.   The dynamics are exactly the same as in the above Natural Gas example, only in reverse.

Lets look at Sugar.  The current spot price for Sugar #11 is 31.05.   The march 2012 contract is priced at 27.66.  (The Sugar #11 contract is priced such that each .01 = $11.20).  This means that the March contract is priced at a 3.39 discount to spot.   In other words, if the spot price does not move at all from now until this contract expires, the Contract will gain about $3,800 in value!   That is quite a tail wind for any long positions, and provides a clue as to why research has demonstrated that any return earned from holding futures contracts (on average) occurs in markets that are in backwardation.

The bottom line:

• Speculators should be biased towards long positions in contracts that are in steep backwardation, and short positions in contracts that are in steep contango.
• The forward curve should never be the only factor a trader looks at, however it is something worth studying and tracking in each market the trader is active in.

• ETF investors:  DO NOT invest in commodity ETFs when the underlying commodity is in steep Contango!  The negative roll yield can put a colossal headwind on any potential return.  In fact, at times it can be so severe it almost seems that the losses are guaranteed.  Just look at a long term price chart of VXX (VIX ETF) or UNG (Natural Gas ETF) to see how true this really is.

Further reading: