Challenging

It's been such a challenging week that carried over into the weekend. I'll have to admit, I have a low tolerance for a lot of things and stimulation and honestly really need a vacation from things. So, I may or may not post regularly, but as I feel like it.

Now that I have a better understanding, thanks to PW, on how to upload and embed trading videos into my blog, perhaps I'll do some trading sessions of me trading live, well, record it. It will, however, have to be a small enough file as I found the test file was 128 MB for a 3 min. video, which is HUGE.

When I do a regular video from my webcam, as opposed to CamStudio, a 3 min. video is just a fraction of the 128 MB and I could probably do a 20 min. video for that same amount of time. So, we'll have to see.

My kids do not have school tomorrow and they are asleep on the couch. Two dogs are outside. The other dog is inside under the couch. Most of the laundry is done, minus the rug the dog pooped on and some towels.

Test Video


Click to play
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Financial Clutter

Do you have financial clutter in your lives? I don't know about you guys, but I do.

I couple easy changes I made yesterday and today were to:

- Drop all features on my lan phone line that I wasn't using. This saves me $20/month.
- Reduce my cell minutes and text messaging on my plan because there was a gap of what I wasn't using. This saves me $30/month.
- When my eSignal comes up for renewal, that's about a savings of about $140/month.
- When my firewall and virus protection comes up for renewal, no need to renew as that's a free part of my internet provider's plan. That's a savings of $7.5/month.
- Do not renewal one of my news services as I rarely look at it. Savings of $7.5/month.

This is the cost of my gasoline bill a month that I get to save with it being basically transparent to me.

Financial clutter doesn't allow us to make room to receive more money.

As I rebuild my accounts, what plans are to pay off the smallest credit cards first as well as all the small bills, working my way up to the larger one time bills and debts. This enables me to have fewer bills to pay as well as gives me those success vibes/good feelings.

My Visa gives me back money everytime I spend $2500, so I need to transition all my bills to be paid with my Visa, as this may amount to me getting back one to two $25 Amazon gift certificates a month. This is another $300-600 back in my pocket.

As for my vitamins & supplements, finding these online rather than pay the much higher prices at the naturopaths could save me $100-200/month. There is no tax on what I'm buying and the shipment comes straight to my door, so I do not have to pay gas for the 50 mile roundtrip it takes me to pick all this stuff up bimonthly.

All I'm really doing is reallocating where I get things without it having to add more stress to my life.

As my children bring home toys from parties or get gifts, then we can take the older stuff they have and give them away. This becomes a good tax write-off, thereby putting more money in our pockets, as well as allowing others to benefit here. This gets rid of clutter from our home and keeps things from over accumulating. Way cool.

Videos

I found some free software that will allow me to make videos of my desktop, however, I'm thinking the 3 min. video file was too long as it was 121 MB in an .avi format. I know if it was in .wmv format, that would be a lot smaller. So, now I need to find software that will do the conversion -- it would be nice for free, too. I'm not sure if I can save the .avi file as a .wmv file or not. Will have to check into that.

As a commitment to myself, as I'm reading "The Courage To Be Rich" by Suze Orman, she talks about financial clutter and how that hinders us from being financially successful. I would have to admit, I'm not very organized financially or even in most areas of my life. This is not a good thing.

There was a time I was very organized, but that was pre-children and pre-marriage, when all I had to deal with was myself and I had no real financial obligation other than to pay for college, which it was mostly paid for anyway.

Could I go purchase the software for $30-100? Yes. But, then I would have more stuff. $30 here, $30 there, it all adds up. So, if anyone has any freeware that can do what I need, let me know. If you own software and want to give it to me, I'm not interested if you had to pay money for it because I do not want to violate any copyright or do anything illegal. Thanks anyway.

It would be great to show some of my trading in a video.

Underlying

The past few days has been a great learning experience for me, albeit, painful, but not the worst things.

Yesterday was my son's 5th birthday. Unfortunately, his dad failed to remember his only son's birthday and this greatly disturbed my son. For 2 days, he acted out at school and had a bit of an attitude at home. I wasn't quite sure why. He started a food fight. Mean to kids at school. Spit in a girl's hair. This is totally out of character to for him, as he's normally a very sweet kid with awesome social skills.

As I saw that his dad was wrapped up in his own world of mayhem and what not, thinking of himself only, and not abiding by the divorce decree, I invited a friend of ours, who has been a regular part of my children's lives for nearly the past year, to my son's birthday dinner, which consisted of my son, daughter, myself, and our friend, SK.

My son chose the same restaurant my daughter chose for her birthday, 6 weeks ago. Mind you, this is a more upscale, trendy, European bistro. This is not your typical McDonald's playland. And, normally kids to do eat at this bistro, as it's mainly for adults. But, I'd been taking my kids there since they were babies, and it's like a family place for us.

SK is getting his master's in social work, and a part of our church. He greatly loves the children and is a good, consistent male role model for the children. Anyway, SK's quick insights prior to the kids attending their own counseling sessions, helped me to talk with my son about his feelings. It was a good teaching opportunity for me to talk about making good choices, forgiveness, grace, and love. I so wanted to bash my ex, but that would've harmed my son, because my ex is his dad.

I love my son. The underlying cause of his negative behaviors was his way of handling his anger towards his dad. As I aknowledged my son's feelings and helped him to work through it, not discounting anything, but valuing and respecting him as a person, it helped him to release his anger and to extend forgiveness to his dad.

Similarly today as I battled my 8 yrs old daughter with defiance, lack of focus, emotionalism, it turned out she was very hurt and disappointed at yet another commitment that my ex is breaking with the kids. I had a similar talk with her that was structured more towards her as well as her age. It was much more challenging to speak to her, as she does not as easily let go as my son.

The point of sharing all this is several fold.

- All this mayhem DOES impact my energy. It creates a lot of negativity in my household, as well as chaos.

- When we see things happening in our trading repeatedly, we need to ask ourselves what are the underlying root causes for these habits & behaviors. Sometimes they can be easily figured out, and other times, they are very complicated.

- When our minds are clouded with all sorts of clutter, it's a challenge to even be able to identify the easiest of things in our trading. My daughter, a very intelligent little girl, couldn't even figure out that 28 was not between 10 and 20. Do you ever ask yourself after the fact why you did something in trading that was so easy that you should never have made that mistake? What was clouding your judgment?

Begin keeping a journal or a blog of your thoughts and analyze them. You may need to hire a professional therapist to help you. There is no shame in it. I'm doing that and I can see my own thought processes changing, getting stronger in very challenging circumstances.

Do not be a victim, rather be a victor and take control of your life.

Outside Help

Many of us will find that we need outside help with becoming successful. Here are some of mine:
  • Bible - great source of wisdom, tells me who God is, who created abundance and provides
  • My church - giving me spiritual support/helping me to remain in community
  • My kids - help me remember what makes me a good trader and why I trade
  • EMDR therapist - helps me identify psychological issues and get them physically and mentally/emotionally out of my system
  • Housekeeper - Keeps my home cleaned, so I can spend those precious hrs with my kids
  • Gardener - Keeps my yards looking wonderful, so my children and I can enjoy our time together
  • Accountant - Keeps up on tax laws, so I don't have to
  • Massage Therapist - helps loosens tight muscles, detoxes
  • Chiropractor - keeps my body free from subluxations (lots of sitting is hard on the body)
  • Small Yoga Classes - helps me to learn to focus, meditate, and increases flexibility, circulation
  • Dance Classes - to help me to not take everything so seriously and have fun
  • Cycling/Swimming/Walking/Running Trainer - Get the blood pumping, heart working
  • Weightlifting Accountability Partner - to strengthen my muscles
  • Personal Organizer - Helps me keep my paperwork organized, bills on track (most recently added)
  • Trading Coach - as needed, to refine my trading

These are all things I pay for on a weekly, bi-weekly basis or as needed. Could I forego or do most of this myself? Yes. However, time is money and it is stressful to heap all these things on you. One has to weigh the cost and the benefit. All these things are beneficial, as they help me in some aspect of trading. Can everyone afford all these things?

Remember what I said in my prior blog entry? Whether you think you can, or can't, you're right.

To some extent, we all create our own realities. I'm not into any New Age philosophy, but if you think you're a loser for a long enough period of time, then you'll make a lot of decisions that losers make. That's your reality. But, if you think you're a Champion Trader who is in it for the long haul, then you'll also step into that role and do that that type of trader does. It won't happen overnight, but little by little, you begin to take on those characteristics of a Champion Trader.

Don't say you can't, or you can't afford. Be careful about the words you say to yourself, speak, think. And, be careful about the questions you ask yourself. A better question could be - "How will I be able to afford to pay for . . . ?" Your mind will actively begin to think of ways to answer that question -- "Start appropriately setting your stops." "Write a detailed trading plan." "Get rid of clutter in your office and organize it." "Eliminate toxic friends."

Receiving Words

Hopefully I didn't write about this before, but if I did, please forgive me for being redundant. One of the things I've been experiencing is that I received some words from a good trader regarding something I did in my trading on a handful of occasions. He said what I did was impossible, that no trader has ever done it. He even went to tell me that he talked with one of his broker friends and he said in his 35 yrs of being a broker, he's never seen anyone do what I did.

Granted, this was done in a practice, real time account. I made between $4-5K in one trading day on the ES several times with one contract. 1K = 20 points on the ES or 80 ticks. Yes, that would be 80-100 points on the ES in one day. Can that be done every day? No, but on many days, it could be if you had the right strategy and sat at the computer literally all day. That's basically what I did on those days.

Anyway, even after he told me it couldn't be done, the next day I did it, made just over $4K. He basically called me a liar without saying that I lied. He is one of the top 2 traders that I highly regard. So, I took what he said to heart and ever since then, I haven't even come close to another $4K day. I'll get up to $1K, maybe even $2K, but not past that.

See, when I didn't "know" it was "impossible" to get that amount, I was able to because there were no self-limitations. But, once I RECEIVED his words, it became a part of me and I was no longer able to do it.

Whether you think you can or can't, you're right.

Here are some of my mistakes --

1. I put this trader on a pedestal. I should know better because he had to share with me that some people regard him as a god in trading, which is totally blasphemous. He's not God.

2. I received his words and they became my words. When I did this, those words became living in me and have hindered me from trading well. All of a sudden, trading became more challenging.

Word of caution --

1. Do not put people on a pedestal. They are human and can fail/disappoint us. Some people will resonate with us more than others, and that is fine. Keep things in perspective. Keep learning.

2. Receive words that benefit you, that can help you grow, become better. So what if your dream sounds outlandish. If there is a will, there is most likely a way. No one has the right to tell you you can't.

3. Reject words, attitudes and people who cannot help you become better. Let those things just flow right past you.

4. Just because someone you may deem as better or a guru at something does not mean that you cannot excel beyond them.

I'll share some of how I trade and if you're able to take some of my strategies or whatever, fine tune them to really make them work for you, then, at the least, I expect you to share back with me so I can become better. It is no skin off my back, nor does it threaten me if someone who starts off lesser than me and becomes greater. It would be an honor to know that I had something to do with their success, and I gladly celebrate it with them.

So, now I'm working to figure out how to get those words/attitudes from this trader out of my mind and body.

Timeframes - Perspectives

I can't remember if I wrote about this or not, but though I use either a 1, 3, or 15 min. timeframe to trade, I do look at higher timeframes to see a bigger picture of what is going on. It's always a good idea to know what the big picture looks like for what I believe are obvious reasons.

If they are not obvious, then let's take a big look at the S&P over the lifetime beginning in the 1920s. Using a Monthly timeframe, what does this look like to you? I asked my 4 yr old son and he said it looked like a big M and that it wasn't finished.

So, I wonder if the market continues on down to the 700s, or to 1000ish, would it be surprising?

When do you suppose these numbers may make a difference? As a daytrader trading small timeframes, there is some significance, but since all my positions are in cash at the end of the day, the daytrader is a bit more flexible, IMO.

What if your timeframe for trading is in weeks or months, such as a long-term investor? Think those number may be MORE important? Sure, if you're LONG on positions and the market being @ 1271 and if it goes down to 700s, think it might be a problem? There's almost a 600 point difference there, and perhaps shorting might be better?

Using various timeframes allows you to see different patterns within patterns within patterns. Maybe on a monthly timeframe, you're right in the middle of a pattern, but on a Daily timeframe, you're reaching a resistance. This might be good to know unless you want to sit through a retracement, right?

This doesn't just apply to the price chart, but also on things like the RSI, Volume, MACD, and whatever other indicators you may be using. If RSI is well into overbought on the 15 min., but it's in oversold on the 3 min., it may have issues attempting to push up much more, so be looking for perhaps a reversal or at the least a pullback.

It's always good to look from different perspectives. And, once again, if you have in your trading plan to look at certain timeframes, consistently do that. If you looked at every single timeframe there is, that becomes overwhelming, and then you cannot make a decision as to what to do.

Practice vs Funded Trading vs Backtesting

Let me differentiate the difference between what I mean by practice and funded trading, as people have different definitions for this.

All trading is REAL for me, whether it is funded or not. If I do not take trading seriously when I make a trade, it is engraining things I do NOT want to engrain and it will come out in my trading.

The ONLY difference between my funded and practice trading is one is funded with actual money and the other not. Everything, and I mean EVERYTHING is the same. This means, I do the practice trading real time, whether it be swing trading or daytrading whatever timeframes.

Keep in mind, practice does not make perfect. Perfect practice makes perfect.

I follow my trading strategy, which is a part of my trading plan.

A question was asked by a reader whether in my $200 accounts whether they are practice or real. Some of the trades I made (entry/exits) were funded trades. Some were not.

BACKTESTING - for me, this is not done real time and these are more drills for me. Often I will go through a lot of data in a very short amount of time, also trading using my trading strategy. For example, I could trade 6 months worth of Daily data points in 2-3 hrs. This is a Drill or what I would deem backtesting and is not done real time. This could also be done on intraday data, such as going back 1-3 days using 1-15 min. charts.

I use a combination of backtesting and practice trading to test out strategies before implementing them with real money. How many trades is this? In reality, it is hundreds of trades. I really take no stock in getting even 50 trades correct, as this does not test my strategy in a myriad of market conditions.

A lot of times when people backtest or practice, I find they do things during this types of trading they would never do funded. STOP DOING THAT! The more closely you can simulate real life, the better it is. It's even better if you can't tell the difference between funded and non-funded.

Why is that important? When you don't think things are on the line, one tends to be a bit more relaxed, making better decisions.

To address have I in reality taken a $200 account to the amounts that I have listed? Not in the past year. I hope I don't have to totally go into this, but it takes great focus and discipline to do this, and my divorce has really messed with my mind. Sometimes I make awesome trading decisions, but consistency is key.

Noticed - Law of Doubling

Since I couldn't sleep this evening, not quite sure why, I decided to just get up and see how the futures were doing this morning. Things are looking pretty negative in Asia and Europe. Currently at 2:45 am MST, there is bearish divergence of the RSI and things are hovering at the 50 EMA on the 15 min. chart.


Today would be a great day to trade, however, it's my son's 5th birthday and I promised his teacher as well as him I'd help out in his class as well as bring wonderfully healthy donuts to class. It was suggested that was better than cupcakes full of frosting.


One of the things I do not get is I make very healthy baked goods filled with wonderfully natural ingredients that are whole, healthy, gluten free and refined sugar free, yet tasty and doesn't leave you feeling hopped on on sugar, but rather a sense of good well-being. I'm not allowed to bring stuff like that in, but I can bring store bought cupcakes ladened in refined sugar, processed white flour. Go figure. Something about liability and kids being allergic to stuff.


Honestly, does that really make sense?


Anyway, I digress. Things have gotten busy with my children and their school and they are the priority over keeping up my trading blog. My kids started gymnastics last week. In a couple weeks, they will be starting soccer, and at the end of September, swimming. On top of their homework, school projects, and these sports, I think it's enough. Thought about integrating teaching them piano, but, that may be too much.


Anyway, it seems in the last day, my $200 trading account blog entries have been quite popular. The key here is if you can really manage your emotions, have a good trading strategy that can get you the profits, you can really take a small account to a very large account in a relatively short amount of time.


The one thing about the $200 accounts is as you get the accounts larger, what I didn't understand nor did was I could've done the law of doubling instead of actually investing more time to trade. Not sure if I wrote this down or not in the $200 accounts, but until the accounts exceed $25K, if you use margin, you cannot daytrade more than 3 times in a 5 consecutive period.


Now, as you might notice, I did trade more than that. What I found is that certain brokers will allow you to do that if you have an all cash account, meaning, it is not a margin account. So, those $200 accounts are strictly cash accounts and I converted them to margin accounts after they exceeded $25K.


Not all brokers will allow you to do that, so you must check with them to see if you can do that or not, otherwise, you will not be able to grow your account as quickly. But, hey, even if it took you 1.5 yrs to take a $200 account to $30K, that's still quite some return, don't you think?


However, since trading those accounts, I've learned a lot more stuff. My technical analysis has changed someone, as well as my knowledge. Tweaked, might you say.


One of the things about trading options is you always have option buying power. Now, I don't know if you exceed $100K whether this is still valid or not or if you have some million dollar account, as none of my accounts exceed those right now. They will one day.


What I've found is leverage is very important in being successful. I'm finding though options allows me greater leverage than stocks, I'm finding futures, if you can properly manage your risk, has even greater leverage. Granted, I do not know of a place where you can open a $200 Futures account, but even for just a mere $2500, you can open a futures account and begin trading that money.


My philosophy is even if you have the money, it does not mean you have to trade the whole amount. Right now, I'm still on trading 1 contract. 1 contract in 1 hour of trading, I can typically make more in that 1 hr that can provide for my living.


A question was asked to me by another trader do I take that money out to actually live on? Right now, I do not. Though I have more funds, since I am overall still fairly new to futures, I think it's best to only have a minimal amount to trade with and see what I can do with it over the span of a few months. And, by that time, if all goes well, the account size should be decent size to where withdrawing should not make much of a dent. That's my plan.


Where do I get my funds to live on? They are from my other trading accounts.


Do you need to make thousands in a day to live on? Well, if you "lose" thousands in a day, the answer is yes. Meaning, if you basically mismanage your trades. Yes, "stuff" does happen, but most of the time, it's really due to mismanaging your trades, like not setting your stops (for profits and costs) or not correctly setting your stops, trading emotionally or when you are distracted.


Otherwise, if you manage your risk well, look for quality trades, just in the demonstration to another trader just in a 1/2 hr period, I was able to with 3 trades take $350 off the table, less the $11.97 in commissions it cost me. This was while chatting with him. More could've been taken off the table, but I didn't. I was following my trading plan and that's what it allowed me. Nothing great happened in the market during that time, like it was not making any big moves. In fact, it was just consolidating.


If you trade for 40 weeks for only 1/2 hr a day, making $350/day, that's $70K. Could you live with that, only risking $500 for each trade? That would give you 12-weeks of vacation. What if you wanted to trade for 1 hr a day, making $700/day, that would be $140K/yr. Many people do not even make close to $70K, much less $140K/yr, especially on such little work.


What if you wanted to make more than that, but you didn't want to spend more than an hr or half an hr a day trading? Instead of using 1 contract, double the number of contracts to 2. So you could make $140K/yr in just a half hr a day with 2 contracts.


Now, I'm not suggesting anything, but for myself personally, I would want to make sure that I was really, really good at trading one contract before moving onto 2 contracts. How many trades is that? I'm thinking anywhere from 2 weeks (which I think is too short) to 2 months is a good timeframe. If one can every day for let's say 1 month take $350 in half an hr or so, then in month 2, you can use 2 contracts for that same period of time. When you get really good at 2 contracts, double your contracts to 4.


So, instead of making $700 in half/hr, you're now making $1400 in half/hr and that equates to $280K/yr. You haven't increased the amount of time you spend trading, just the size of your position. You didn't increase the size of your position until you became really good at the smaller size and doing that consistently. You managed your risk in every single trade by appropriately setting your stops and getting out of costing trades quickly.


Just for grins, starting with a $2500 Futures account that allows you $500 per contract to trade the emini's, let's take a look at what could happen in 1 yr.



Oh, why are there 13 months? This is not a baker's dozen of months. There are 52 weeks in a year and if you divide it by 4, it turns out to be 13 equal months. Maybe someone was superstitious and didn't want 13 months, so they made this confusing 30, 31, and 28/29 days thing. Yes, someone can educate me on this if they'd like.

Those 3 months of "vacations" would include all federal holidays, so you can count every 20 consecutive days you trade. Whatever, right?

How I have this broken down is assuming it takes you an average of 4 trades a day to make $200 ($50/trade) and each trade costing $3.99/contract roundtrip, the final figure after 10 months of 4 weeks/month, you'd have nearly $4M. That's assuming you don't take any money out during that time, but even if you did, that's what you would've made.

It's basically taking 1 point on the ES per trade if all your trades are profitable. This really is more an average because you may be making $275, but give back $75 to net $200.

So, you're not a actually working harder or longer, you're just working smarter. Sound like a plan?

Investor's Mind


This is from Tim Syke's which I thought some of my reader's could relate to.

Patience vs. Hope

What is the difference between patience and hope in trading?

Patience is waiting for the pattern to complete, not getting anxious, being calm, cool, collected in your trading.

Hope is when your trade goes against you and you "hope" that it comes back. GET OUT!!!!

Patience

Today because I was doing a number of different things and not feeling so good -- having a lot of headaches lately, that I didn't get to begin trading at 6-6:30 am as I normally do. Went to bed way too late last night, helping my daughter study for a test, but just should've gotten all this stuff done earlier. All avoidable.

Today on one contract having just stayed in, one could've taken at least 28 points off the table from the beginning of the day to near the end. That's on the ES (S&P emini's). This is trading off the 15 min. chart. On a smaller timeframe, like the 3 min., about triple the points can be made. On a 1 min. timeframe, probably 100 points could've been gotten at least, and that's not getting in every single time.

However, for most of us, 100 points on the ES is not necessary to live on with 1 contract. For many of us, getting 4-10 points on the ES daily is more than sufficient on 1 contract to earn a living. If you wanted to do 3 contracts at 4 points total for the day, that's $600. If you worked 9 months of the year (40 weeks, 5 days a week), that's $120K/yr. Imagine, that's 12 weeks of vacation at a $120K/yr salary, working around 1/2-1 hr a day those 200 work days. Not bad, don't you think?

The Life I Want

I'll have to admit, I'm a workaholic. But, as I continue to adjust to being a single parent, I'm learning a great deal. My trading coach told me to live the life I have dreamed. My dream has been to have the family I want, to have freedom with my time. There are other parts to this dream, but I'm a very relational person.

What have I been doing the past 3 weeks since my last post. Every day I've traded, but never for full days. I've incorporated during trading hours to workout every day for 1-2 hrs at the gym or at the yoga studio. It's in my planner.

I've figured that I do not need to trade the whole 6.5 hrs of the market. Most of the time, I can make what I need and more within the first hr of trading, often within the first half hour.

I realized that my organizational skills with administration are very lacking, so I finally hired a person to come help me organize all my paperwork, bills, etc.

Since focus, being calm, relaxed really helps me in my trading, I hired a psycho therapist to help me deal with my divorce, as well as help me in my trading, to deal with any negative emotions conscious or subconscious that could hinder my life and trading.

I've started back at weekly deep tissue massages to help me further relax. Been consistent with yoga classes, and when my gym canceled the classes I needed, I went out to find a yoga studio that does the classes I need at the times I need.

My divorce really wreaked a lot of emotional havoc, and I didn't realize that there were many broken parts of me that needed healing. It's like all these years I perpetuated unsafe, unhealthy behaviors and communication, which resulted in many bad things happening to me.

It really will take time to rebuild my accounts. Not sure how long. Something I decided last week was that I realized time with my children is so short. What good would it be to amass millions and sacrifice my time with them? So, I've decided I'm not going to do that. If I can amass a lot of money without sacrificing my time with my kids, I will, otherwise, paying the bills, becoming debt free, rebuilding my accounts, providing, will be enough.

As I become emotionally stable and continue to develop my skills, trade well with a little money and begin to build my accounts, I will be able to be sharper, less hindered to make more money quicker regardless of what is happening. It's really about developing resiliency. My skills are more than enough to make me a multi-millionaire. What hinders me is my emotional state.

Stress has been a huge thing for me, and it's now doing things to reduce my stress load. I'm learning and getting help where I cannot do things, or maybe I can do things, but it's to free up time.

I've also incorporated things like LAUGH DAILY into my goals, as laughing releases hormones to help me feel better, be healthier. I got an accountability partner for my eating and exercise.

Consistency is so important. As I learn to consistently deal with conflicts in a calm, cool, collected manner, appropriately dealing with things, not allowing things to fester, my trading will get better, and it is getting better.

Take care of first things first, and that's what I'm doing.

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