How Much do you Know About Pain?

• We call these receptors Nociceptors and activation of these neurons in the periphery leads to a signal being sent towards the spinal cord. Those peripheral nerves eventually complex with the Dorsal Horn of the spinal cord and interface with the central nervous system to transfer the pain signal. This signal is then sent Ascending to the Thalamus where the pain signal is recognized and initiates a response (such as pulling your hand away from the hot stove). But that’s not the full story, the brain also sends signals back down Descending to modify the incoming signal and dampen it. Its this modifying that makes pain fade over time when you aren’t focusing on it—otherwise the brain would be overwhelmed by the repetitive signal and continuously think injury is still happening. Now let’s divide this process into its two parts, first up the Ascending pathway.

• As the Action Potential travels from the periphery towards the Spine it causes the influx of Calcium into the Presynaptic Neuron. This neuron is what carries the original signal to then transfer into the Spine for further traveling. Eventually we reach the Synapse where the finger-nerve and spine meet and we get the transfer of information via Neurotransmitters. In this case, two chemicals are released: Glutamate and Substance P (which literally stands for Substance Pain). Glutamate will activate two receptors (AMPA and NMDA) which are Excitatory and stimulate the continuation of the pain signal up to the brain. Substance P activates the NK1 receptor which enhances the frequency of the pain signal (the throbbing) and the intensity of the pain burst. So to simplify, Glutamate allows the signal to be passed up to the brain but depending on the strength of the original pain signal more or less Substance P is released which modulates the strength and attention-grabbing nature of it. Okay great, we sent the pain pathway up and it will get processed in multiple different parts of the brain. But the brain can’t have that signal stinging it so it must send information back down to dampen that pain signal. This is where that aforementioned Descending pathway comes in. Above you can see how the blue line reaches down out of the brain and back into the spine to turn ‘off’ the signal. This is the basis of Analgesia or pain relief.

• Okay so now we have to divide the action of the Descending pathway which acts to dampen and modulate the original signal coming into the brain. Now, normally at rest this Descending neuron is inhibited so any fresh incoming signal is not inhibited from the get go but once that pain signal does come in, we get the good stuff! In response to pain the brain releases substances called Endorphins which activate the mu Opioid Receptor (MOR) located on the Descending pathway. Now MOR are inhibitory in nature so they are inhibiting the inhibitory resting state of neurons, or in other words, are allowing the Descending neuron to activate. And this is an important fact to recognize, Opiates do not inhibit pain, they inhibit the physiology of the nervous system that prevents modulation of the pain signal.
  • Once the inhibition is inhibited, the Descending neuron is free to release two neurotransmitters onto the nerve that was carrying the original pain signal. Both Norepinephrine and Serotonin are released to activate their respective receptors which inhibit the release of Substance P and Glutamate thus decreasing the incoming pain signal. Likewise MOR receptors are found directly on the incoming nerve and further prevent the release of Glutamate and Substance P as well as being found on the Ascending neuron preventing the activation of the NMDA/AMPA and NK1 receptors. The result: dampened incoming signal and decreased pain sense being sent to the brain.

The Stars Align in the Shape of a Poppy

• By the time after the Crusades (11-13th centuries), we start to see the West’s fixation on Opium. For many reasons Europe didn’t develop many psychoactive plants to the same degree as more humid/hot climates like Africa, the Middle East, and India. This is why the importation of Opium (and also Marijuana) was such a trade commodity and staple in the development of Western medicine. During the Renaissance and the revival of Greek philosophy we start to see the re-fascination with Opium and by the 1600s we see merchants importing Laudanum into Europe for recreational and medicinal use. The standard use of Tincture of Opium (which is Opium dissolved in ethanol, a DEADLY combination) was a particularly favorite preparation which was prescribed to the lowest day-worker all the way up to kings.
  • The importation and use of Opium exploded in the late 1700s once the British conquered a major Poppy growing region of India. This region (western India and most of Pakistan) was originally slated to grow cotton like the American colonies but the region wasn’t wet enough to sustain the plant—it could however grow copious fields of Poppy plants to create Opium. Throughout the 18th century the British Raj became the largest exporter of Opium to Europe and after the discovery that Mercury and Arsenic may not be safe, Opium took over their duties. By 1780 almost all major remedies incorporated the use of Opium in some capacity and with the huge supply, it was incredibly cheap.

• Poppy wasn’t only important to the British for its medicinal properties but also to bolster the huge amount of loss they were incurring in global trade to one trade partner—China. After she made contact with China in the mid-1500s, Britain starting to import HUGE amounts of tea as the Brits became literally addicted to the substance. By 1800 a full 15% of the ENTIRE British Empire’s revenue was being spent on importing tea, that’s 30 million pounds per YEAR, leading to a massive trade deficit. This means that more money was being sent to China literally enriching a foreign country while the British public was getting their fix on the black stuff. Oh and just in case you think things haven’t changed, Britain still accounts for 42.6% of the world’s tea consumption—seriously Brits, ever heard of coffee? Anyways, all this money leaving the British economy to be spent on non-Empire sustaining commodities was a major national security risk for the British. It would be different if they were importing gunpowder like the Dutch were or Silver as the Spanish had but literally they were consuming the riches they were spending the money on.
  • Remember too that the British were not in the best position by the turn of the 19th century—they had just lost their colonies in the Americas, involvement in the Napoleonic Wars killed a generation of men, and the push to develop industries over public health led to a focus on fast growth rather than smart growth. One of the results of the Napoleonic Wars was the British occupation of the Island of Java which developed a very potent Opium which was traded with Chinese merchants regularly. Soon British merchants realized they could rebalance the trade deficit by selling Javanese Opium into China but the small island was unable to produce enough Poppies to meet the demand. So Britain turned to another one of its colonies, India.

• India by the end of the 1700s was a bit of a challenge. The British hold on the subcontinent was firm but they couldn’t grow the cash crops they wanted. Indian cotton was nothing compared to Egyptian or Southern American (i.e. Virginia/North Carolina/Georgia) cotton and the Indian tobacco was known for being bitter. But by the 1770s the British government realized that Poppy was an easy crop to grow and the demand across the border with China was an easy market; British traders brought their cargo to small islands off the coast of China where it was sold for silver. Initially the Chinese didn’t mind the sale of Opium in their territory—when the British traders collected the silver from the sale they would almost immediately use it to buy Chinese goods, thus driving tax revenue for the Chinese government.

• But if you buy Opium, people are going to use that Opium. By the 1810s all trade with foreigners was restricted to just one port, Canton, and slowly the city started to develop a habit for the drug. The use of mind altering substances was curtailed pretty quickly for hundreds of years in China—the Ming Dynasty banned tobacco in 1640 and the Qing banned Madak (a powdered Opium containing tobacco) was similarly banned in 1729. But by 1790 more and more Chinese citizens were becoming addicted to the substance; what started as a recreational drug slowly became a crippling addiction that took hold over Canton. For a rigid society, the crippling Opiate addiction was a moral corruption for the Qing government and forced them to curtail Opium importation in 1780 and then an outright ban in 1796.

• Knowing just how devastating the Opium was having on the inhabitants of Canton, as well as how it spread further inland, British merchants kept peddling their drug. Older ships with larger hulls were converted into floating warehouses and parked just outside of navigable waters. Once set up, Opium smugglers would pull up, purchase the Opium and avoid any oversight by the Chinese government to prevent the sale of the drug. Following their mother country, American merchants started to sell Turkish Opium, an inferior variety, at a much cheaper rate leading to drug peddling competition with more and more tons of Opium being sent into China. This drove down the price of Opium considerably which ultimately increased the demand.
  • This demand eventually led to reversal of trade, meaning that more silver was leaving China to pay for Opium than the British were using to pay for Chinese goods. American and European traders could show up in Canton with holds full of Opium, sell it off for a profit, and then make a tidy silver profit to bring back to Europe. Likewise the importation of cheap machine-made cotton, furs, clocks, and steel into China driving down domestic profits.

Let’s Look at the Drugs a Bit

• Above is a chart that shows the binding affinities of select Opiates to the Mu receptor. The smaller the number is, the more tightly they bond. Now affinity is different than potency—potency is a measure of how much drug (in g) is required to produce the same effect. So even though morphine has a higher affinity than fentanyl, fentanyl has a MUCH more potent effect (which is why it can be so dangerous, you only need a little). Now many of the opiates cause the same effect so I want to spend more time on what makes them all so different:
• First up we have the 5-Ring Morphinians which are derived from the natural product Morphine. These structures have 5 component parts: an aromatic benzene ring (A), a completely saturated bridge ring (B), a partially unsaturated ring with an alcohol attachment (C), a piperidine heterocycle above the rest of the structure (D) and finally a ether linkage between the top and bottom of the structure to keep it fairly rigid (E). Truthfully we are only going to focus on two locations—firstly the top alcohol (red circle) can be methylated to form Codeine, a natural Prodrug of Morphine. A Prodrug is one that is biologically inactive but goes through an initial metabolism once ingested that makes it active.

• In fact it’s this initial metabolism of Codeine that makes it very interesting. In order for Codeine to exert any pain relief it needs to be converted to Morphine which actually exerts the desirable properties. This is done by the liver enzyme CYP2D6 which is a pretty minor pathway for Codeine—only about 10% of the Codeine is actually converted to Morphine to have some action. Because of this 2D6 dependent pathway we have to be careful about administering drugs that might inhibit the 2D6 pathway because that would mean we are preventing codeine from being active. Drugs like Fluoxetine (Prozac) and Paroxetine (Paxil) are strong 2D6 inhibitors and so if we administered Codeine to someone taking this drug they’d never get any benefit from the Codeine. In addition there are genetic/ethnic differences that pharmacists can account for such as 2D6 activity. If you are someone with very little 2D6 activity then you would also not convert Codeine to Morphine and thus get no action from the drug—this may be a reason why some people say Codeine doesn’t work for them. Another reason could be that they are Rapid Metabolizers and quickly convert the Codeine to Morphine and thus get a massive hit quickly after ingestion—in that cause you’d need a much smaller dose than another person for the same effect.

• A different drug that is the opposite of Codeine is Hydromorphone (Dilaudid) which has a Ketone on ring C. This ketone and the lack of the double bond on this ring increases the lipophilicity of the drug and increases its ability to penetrate into the brain and thus have a greater effect. In fact Hydromorphone is 5-10x more potent than Morphine due to its greater ability to penetrate into the brain and increased receptor affinity for the mu receptor. Because the A ring OH is not capped with a methyl group, we don’t need to rely on 2D6 to metabolize Hydromorphone into an active drug form which again increases the activity of this drug compared to Codeine.
• So combine these two structural changes—the capped OH on ring A as seen in Codeine and the increased affinity found with the ketone in Hydromorphone and we get Hydrocodone (Norco, Lorcet). Well in this case you’d get a drug that has very good affinity for the mu receptor (better than codeine) BUT is still reliant on the small 2D6 pathway for activation (worse than morphine). In this regard only about 10% of Hydrocodone is active at a time. We can see this effect in the relative doses for equivalent effect: to match the effect of 30mg of Morphine, we’d need only 7.5mg of Hydromorphone (more active) but need 200mg of Codeine (less active).

• This brings us to our last drug of this class, Oxycodone which has a special OH group found on Ring B. What you’ll notice is that Oxycodone has that capped OH on ring A so it requires metabolism through 2D6 just like Codeine and Hydrocodone. When it is uncapped it becomes Oxymorphone which has 3 times as much effect as Morphine BUT that extra OH makes Oxycodone an exclusive Mu receptor agonist. Unlike the other drugs which may go to other receptors causing side effects (more on this later).

• Next up I want to look at some Mu opioid receptor Antagonists or those than inhibit the function of the opioid receptor. Looking at the first two drugs, Naloxone and Naltrexone, we can see that they have the structure similar to Hydromorphone so they would have incredible brain penetration and affinity for opioid receptors BUT they contain that funky Nitrogen tail. Now normally there is a short methyl tail that is required for the function of Morphine but by adding a bulkier tail the drug is able to fit inside the receptor but prevent activation. What’s most important about these two drugs is that they have much more affinity for the receptor than other opiates. We can see this effect in the graph above: when no Naloxone is present, Fentanyl occupies the opiate receptor about 75% of the time. But as soon as Naloxone is administered that number drops swiftly (within minutes)--this is because Naloxone has a higher affinity for sitting in the receptor than Fentanyl. Think of it like the bully Naloxone coming up and pushing the poor defenseless Fentanyl off the swings so the bully can play on it (except in this instance Fentanyl is causing an overdose and we need to save someone’s life).

• Buprenorphine is similar but it is a Partial Agonist instead of being a full antagonist. Buprenorphine is not a 5-ring Morphinian byt a 6-ring Oripavine that has a few different modifications. The biggest additions is that it has the bulky Nitrogen tail found in full Antagonists but it has this funky C ring tail which fights the antagonism. The result is a tug of war between the antagonism of the Nitrogen tail and the agonism of this new C-ring tail resulting in Partial agonism—so if you took Buprenorphine you’d notice a markedly decreased pain relieving ability but importantly there is a ceiling effect, its much harder to overdose on Buprenorphine than other full agonists. In addition in the second graph we can see that Buprenorphine has the greatest affinity for the receptor than our other agonists which prevents someone from taking a more potent opiate while taking Buprenorphine. In this case the bully is already sitting on the swing and scaring away the other kids thus preventing them from having a turn (and potentially causing an overdose). This does mean that if someone was taking a more potent drug (like Fentanyl) and then took Buprenorphine, it would cause withdrawal just like Naloxone or Naltrexone.

• Speaking of withdrawal, let’s take a look at how that happens. Remember that the pain signal is caused by the activation of AMPA and NMDA receptors from the peripheral nerve. AMPA is a type of receptor called a G-Protein Coupled Receptor or GPCR which in this case is linked to an Excitatory G-protein which leads to the activation of the nerve. When AMPA is activated, the G-protein (Ga) activates an enzyme called Adenylate Cyclase (AC) which increases the production of pro-activity cAMP—or in simpler terms—when AMPA is activated, it leads to an increase in levels of pro-pain molecule cAMP. The Opioid receptor is also a GPCR but it is linked to an inhibitory G-protein which prevents the action of Adenylate Cyclase and thus leads to a decrease in cAMP levels. So Opiates prevent pro-pain cAMP signaling from continuing.
  • In the second graph we can see how tolerance forms. Initially (A), Adenylate Cyclase and cAMP levels are not affected by having opiates even though their ability to push along the pain signal is blocked. After a few hours, the leftover cAMP is degraded and cAMP levels start to drop significantly (B). In response to these levels going down, the activity of Adenylate Cyclase starts to increase and increase (C) which raises the level of cAMP. This rise in Adenylate Cyclase activity opposes the action of the opiate which necessitates the need for increased doses of Opiates and is why tolerance forms. As sustained inhibition of Adenylate Cyclase continues, the body upregulates Adenylate Cyclase activity to create more cAMP and to combat this we increase the dose.
  • Now what if after years of taking an Opiate we suddenly administer Naloxone, an Opiate antagonist. Well after weeks to months of taking an Opiate, the level of Adenylate Cyclase activity is WAY above baseline. When you administer the antagonist, suddenly Adenylate Cyclase is able to produce a TON of cAMP that normally is blocked which leads to a MASSIVE amount of downstream signaling. The result is intense nausea and vomiting, stomach cramps, fever, anxiety, insomnia, and cravings. Thankfully the withdrawal process ends after about 72 hours but is one of the worst experiences someone can go through which is why proper down-tapering of Opiates is extremely important.

A Change in Trade Policy

• One of the “problems” for the British traders was how clamped down trade was with China. By 1800 all trade was limited to just Canton and the Hong was a strict master of trade. Foreigners were not allowed to appeal decisions made by the Hong and only Chinese traders could sell goods further inland than Canton. Traders chafed against this extreme oversight and sent hundreds of letters to the Hong requesting special dispensations which were summarily denied. Things changed significantly in 1834 when the Chinese trade was de-monopolized away from the East India Company allowing any private trader to get involved in the Eastern trade.

• In August of 1834, the British sent Lord William John Napier to Macau as superintendent of Chinese trade with the explicit order to follow all Chinese regulations. Thinking he knows best, Napier decided that the restrictive Chinese trade system was too restrictive and sent a letter to the Viceroy of Canton. This was unheard of—NO foreign traders were allowed to speak directly with Chinese officials and the Viceroy refused to accept it. So why not double down by ordering two British ships to BOMBARD two Pearl River forts as a show of force? Luckily Napier died of Typhus almost directly after else it would have resulted in a full blown war.
• In 1839 the Qing government appointed Lin Zexu as the Opium czar to completely eradicate the Opium trade from China. Lin banned the sale of Opium in China completely, set up rehabilitation centers for those affected by the drug, and put addicts to work to distract them while detoxing. Lin demanded that all Opium supplies must be surrendered to Qing authorities and any Chinese citizen disobeying the order would be punishable by death. He even went as far as closing the Pearl River Channel, trapping British traders in Canton and seizing their Opium warehouse stockpiles.
• The replacement for Napier was Admiral Sir Charles Elliot who protested the seizure of the Opium stockpile but knew that they could do nothing. He ordered all Opium ships to flee and prepare for battle which caused Lin Zexu to beseige a group of traders inside a Canton warehouse. Elliot convinced the traders to cooperate with the Chinese government and surrender their stock, saying that the British government would compensate for the lost Opium (which he had no authority to do). During April and May 1839 the British (and American) traders to surrender 20,000 chests of Opium which was burned for three days outside Canton. Following the burning, trade resumed to normal except no more Opium was allowed. Like many other instances of the government removing legitimate sale of a drug, the black market increased markedly.
• In July 1839 a new scandal rocked the British-Chinese trade system; two British sailors became drunk and beat a man death outside of his village. In response, Superintendent Elliot arrested the two men and paid compensation to the villager’s family for the loss of the man but Elliot refused to hand over the sailors to the Qing government. Lin Zexu saw this as a blatant disregard for Chinese law—afterall traders needed to understand that they can’t just come to China and violate Chinese law as they saw fit. Elliot offered to hold a trial on a British ship in front of Chinese officials to show that the men would not get off free. This incident would start the smoldering.
  • On September 4th, Elliot sent two ships to Kowloon to buy food and provisions from Chinese peasants. While approaching the harbor, three Chinese war junks gave permission to the two British ships to trade but that permission was rescinded by the commander of Kowloon fort. Elliot fumed against the slight and said that if the British were not allowed to trade by 3pm, he would fire on the fort. 3pm passed and the British opened fire on the fort causing the Chinese junks to return fire. The fighting continued for 7 hours until nightfall and Elliot had to prevent the British officers from pressing the attack, thus ending the Battle of Kowloon. Having driven off the Chinese ships, the British purchased the supplies they needed while the Kowloon commander claimed that both ships were sunk and 50 British sailors killed.
  • The reaction in Britain was about as much as you expect. Prime Minister Palmerston sent out letters to the Governor General of India to prepare marines to invade China and another letter to the Chinese Emperor telling him that Britain would send a military force. He sent a letter to Superintendent Elliot to set up a blockade on the Pearl River and capture Chusan Island. He also instructed Elliot to accomplish the following objectives:
    • Demand the respect as a British envoy from the Qing Government.
    • Secure the right for British law to be doled out on British subjects
    • Get recompense for destroyed British property, especially the illegal drugs that they destroyed
    • And most important, End the Canton System thus opening up China to free trade for the first time, ever.

• Do you want to trade more frequently but lack time to sit in front of a monitor during market hours?
• Do you want higher returns than what you can generate with buy and hold in your retirement account?
• Do you have reliable trading systems for the bull, sideways, and bear market types?
• Are you looking for a series of relatively uncorrelated opportunities to trade nearly every day?
• Would you be comfortable putting on short positions?
• Do you already follow the markets closely?
• Are you capable of entering simple trade orders?
• Would you like a more systematic approach to trading?
• Are you disciplined enough to follow the rules – even though you may not feel entirely comfortable?
• To trade successfully, do you really know what else you need in addition to HAVING good trading systems?