Exclusive Interview with Nick Stott, creator of the SureFireThing Camarilla Equation

camarilla. cam·a·ril·la. A group of confidential, often scheming advisers; a cabal.[Spanish, diminutive of cámara, room, from Late Latin camera. See chamber.]

Nick Stott is a tall, unassuming gentleman, of middle years, and the tasteful trappings of a man who enjoys success, but has not let it go to his head. We tracked Nick Stott down to an exclusive bar in the fashionable district in which he lives with his wife and children. Nick granted us a few minutes out of his busy schedule to talk about the SureFireThing Camarilla Equation and how he discovered it.

CE: So Nick, how did you come to invent the Camarilla Equation?

Nick Stott: The SureFireThing Camarilla Equation - let's use proper names, shall we? (smiles). Basically, it sprang from my interest in Fibbonacci levels and a branch of technical analysis called 'Market Profiling'. I was working as a bond trader back in the 80's, and started to notice that there were regular patterns emerging every day, differing only in scale. In the evenings at home, I managed to gather enough data to produce what I felt was a statistically significant model of what was happening. Although Fibbos are actually (in my opinion of course!) rather unreliable until after the event, they did lead me to notice something else, something much more interesting in fact. It was only after many long nights and a sudden thought that Market Profilers were actually concentrating on the less important implications of Steidlmayer's work that it all fell into place, and it was then fairly simple to reduce it down to a calculation that mapped nicely onto the factual data. I must admit to being surprised at how good and consistent it was, especially across many different instruments. It doesn't require any paramaterisation, and works as well on a liquid stock as on a soyabean futures contract. In my eyes, it's almost like the 'golden mean' of trading.

CE: Sorry, what's the 'Golden Mean'?

Nick Stott: Ah. Since classical times, builders and artists have used a ratio of height to width that is essentially... pleasing to the eye. I like to think the SureFireThing Camarilla Equation works in pretty much the same way - it is all about believability - at what point will the majority of traders stop believing it can continue the move, and close their trades, causing a reversal...After all, everybody is watching the same chart! (Note - Nick Stott had a classical education at a top flight school)

CE: I see. Do you sell the equation?

Nick Stott: I'm a busy man, so I don't have time to promote or market the Equation myself, so all licensing is through a company who run www.surefirething.com, and they sell an online version. Works well for both parties, I feel.

CE: Have you licensed it anywhere else?

Nick Stott: No. Why would I? I'm aware that other companies or people attempt to sell 'versions' of a 'Camarilla' equation, but I really can't be bothered to chase them up - considering how complex the maths is I'd be surprised anyway if they had found the same formula as I did. Their versions don't work as well as the real deal, I'm told. Caveat Emptor, I'd say!

CE: Excuse me?

Nick Stott: Caveat Emptor - Its Latin. "Let the buyer beware"

CE: OK! Point taken. One final question - why did you call it the 'Camarilla Equation'?

Nick Stott: Ha! Everyone asks me that. And by the way, it's the 'SureFireThing Camarilla Equation' - I don't want to be associated with all the crackpots and chancers out there trying to cash in. Sorry, where were we? Oh yes - when I first started trading, I thought (as a lot of people do!) that the markets were controlled by a secret 'insiders club' of .. er ..powerful organisations who manipulated prices for their own benefit. I remember that at the time I was smugly sure that this was so, and was excited to be joining (as I then thought!) this secret 'cabal' (Big smile!). Of course, as I learned more about the markets, I realised that this was nonsense, and that the markets are far too big to be effectively controlled, even by gigantic financial corporations - I was still getting creamed, even working for the Bank. However, it still looked to me as though there was a pattern in what was supposed to be the 'random walk', a pattern that matched very closely what I imagined a 'secret society' would try to implement in order to maximise their revenues - you know, take it up so they can bring it down, and vice versa. The obvious conclusion, of course is that if you have enough participants, statistically they start to behave in broadly model-able 'over-ways', and this leads to the patterning that the equation is so good at generating. Thus it seemed like a perfect name for it - the word 'Camarilla' is based on the latin word for room (camera), and it means basically a small clique of 'advisors' who try to manipulate the person in power for their own ends. Frankly, it was just a joke, and I am always surprised at how seriously everyone took it. I wish now I'd thought of a better name, because I'm so bored with answering that one, and of course, 'Camarilla' turned out not to be trademarkable... Happy?

CE: Very, but just one more final final question! How complicated is the equation?

Nick Stott: (lights a cigarette) Well it won't fit in a few lines of code if that's what you are asking. The process is actually quite convoluted. I'd rather not go into any further details, I'm sure you understand.

CE: Of course. Just one final final final question! How effectively does it predict the next day?

Nick Stott: Mmmm. It doesn't predict anything. I'm not a fortune teller. All it does is tell you what to do IF certain things happen tomorrow. If I could see into the future I'd have not picked up the phone when you called! (laughs). Now I really have to go, I'm afraid.

CE: Thanks for your time, Nick, and nice meeting you. Have a nice day.

Nick Stott: You're welcome, old chap.

Postscript - we were pleased to meet a second time with Nick Stott, during which the great man answered many of our questions about stop losses and exiting trades. Nick Stott also showed us the original 1989 newspaper, framed on the Stott office wall, on which you can still just make out where he scribbled the equation all those years ago. Nick Stott's notebooks and data references have been placed into storage for posterity, and he tells us that one day, he may open a trading institute where such wonderful historical memorabilia is displayed.

Typical Nick Stott Quote -

"If it aint broke, dont fix it!

Nick Stott quote 2 -

"Do the same dance as everyone else, just learn how to sit down BEFORE the music stops!"

Another Nick Stott Quote -

"Most traders go broke because they can't adapt. They think they have found the 'secret', and may even make money for a while, but then suddenly it stops working. They don't adapt, they just keep on trying the same old (now non-functional) trick until they run out of cash. The reason I'm Nick Stott and you are not is that I adapt on a daily basis. Adapt or die!"

Nick Stott Cigarette Quote -

"Give me a Marlborough Light and I'll tell you what the Hang Seng is going to do tomorrow. Give me a pack and I'll throw in the Dow too".

Nick Stott on Candlestick trading-

"I love watching candlestick traders going cross-eyed trying to spot a pattern in their crazy little lists of 'reverse anvils' and 'widows turn arounds' and so on. Stare too closely and the forest disappears into a quilt of trees!"

And finally, Nick Stott on the crash of 2000

"Told you so."