How Many Short Sellers-Born Bears has Read this Book ?
Archives of “January 2019” month
rss7 concepts that can make you a better trader
New traders spend lot of time on indicators, scans, or chart pattern. Lot of that effort is wasted. Instead they should focus on core concepts.
If you understand core concepts you will find understanding the market and techniques used by traders easier. All the indicators and techniques are based on some underlying core concept. Many times the people who promote some of these indicators do not understand the core concept or purposefully package their indicators as something that is anti thesis of a core concept.
If you are serious about your trading there are some concepts you must know in significant details. Those concepts will help you build a strong foundation on which you can build a trading system. There are seven concepts you should study:
- Momentum : If you understand this you will understand trends and mean reversion. You will understand why and how momentum works in the market. Most indicators are momentum based. Trend following and buying strength also works, so does mean reversion. They are all part of the momentum phenomenon.
- Market Breadth: Stock markets are composite markets. The overall move in market is an aggregate of moves of several hundred or several thousand stocks. So the level of participation in a move is important.
- Equity Selection: Because the overall market is a composite of many individual moves, it becomes critical to select right kind of stocks from the universe of stocks. Hence equity selection is extremely critical. You should know various ways in which one can select equities.
- Market Anomalies: Market anomalies are the distortions in the market. If you base your trading on a proven and statistically significant anomaly, you will be profitable. Absent that no amount of indicators will help you. A through understanding of anomalies will give you an edge.
- Market Microstructure: Market Microstructure is a branch of finance concerned with the details of how exchange occurs in markets. Understanding this will tell you how the market operates. The concept of market microstructre is very critical if you are trading very small time frames or are a day trader. Because to be successful on those time frame you need to find exploitable anomalies in market microstructure. You need to understand role played by market makers, automated programs, arbitragers, large fund buyers and so on. Their tactics and behaviour creates certain patterns
- Growth investing : Growth investors buy stocks of companies growing faster than the average company in the market.
- Value investing : Value investors buy stocks of companies which are cheap or out of favor.
These are the core concepts around which all trading strategies revolve.
I for India ,I for Italy :Just see Non Performing Bank Loans of Italy
Warren Buffett Talks Markets, Healthcare, IBM, And Self-Driving Cars: The Key Quotes From Berkshire's "Pilgrimage"
With the 52nd Berkshire Hathaway annual meeting – dubbed the “Woodstock for Capitalists” which is “unique in corporate America, a celebration of the billionaire’s image and success” – now in the history books, all that’s left are the quotes and avuncular aphorisms.
While Buffett and Munger covered a wide variety of topics, some headlines made a particular splash, such as Buffett’s statement that markets have a “casino characteristic” and that people “still succumb to speculative impulses”, while ignoring that a far more narrow subset of people will also get bailed out by the government when the speculative impulses lead to massive losses. Speaking of hypocrisy, Buffett also slammed Wells Fargo, of which he is the biggest shareholder, for failing to stop its employees from engaging in the bank’s scandalous cross-selling practices, saying you cannot “incentivize bad behavior”, even as it was Buffett’s support of current management and board that was key to ensuring the re-election of the entire board last month.
None of this had an impact on the thousands of shareholders and “value investors” who conducted their latest annual “pilgirmage” to see and hear the 86-year-old Oracle of Omaha.
Hundreds of shareholders lined up early outside downtown Omaha’s CenturyLink Center for the meeting. Several said they got there nearly five hours before doors opened around 6:45 a.m.“Every year it seems I have to come earlier,” said Chris Tesari, a retired businessman from Pacific Palisades, California who said he arrived at 3:20 a.m. for his 21st meeting. “It’s a pilgrimage.”
While a full breakdown of the day’s main events can be found in the following link, for those pressed for time here is a summary of the key quotes and highlights, courtesy of Reuters:
ON OBAMACARE REPEAL
- “Medical costs are the tapeworm of American economic competitiveness.
- “Our health costs have gone up (incredibly) and will go up a lot more … that is a problem this society is having trouble with and is going to have more trouble with. It almost transcends (political party).
- “If you talk about the world competitiveness of American industry, (health costs are) the biggest single variable where we keep getting more and more out of whack with the rest of the world.
- “(The Obamacare repeal) is a huge tax cut for guys like me … either the deficit goes up or they get the taxes from someone else.”
ON BERKSHIRE’S DURABILITY
- “I can’t think of anything that can harm Berkshire in a material, permanent way except weapons of mass destruction.
- “If that ever happens, there’ll be more to worry about than the price of Berkshire.”
CHARLIE MUNGER ON PUERTO RICO (more…)
Amateurs versus Professionals (Video )
US President Election -This certainly sums it up
Thought For A Day
My Favorite Quotes On Doing The Impossible-Video
Three Keys to Trading Success
The successful trader is creative. I think it’s fair to say that his approach is a short-term trend-following method. His way of evaluating the market trend, however, is unique. He is definitely not just looking at the same old 14-period oscillator that comes pre-programmed in most charting applications. Similarly, he has clear stop points and price targets, but these are defined in a unique way, based upon the market conditions he’s observing. This “out-of-the-box” thinking style is common to successful traders, I’ve found. They look at markets in unique ways that help them capture shifts in supply and demand. to find a way of trading that you can make your own. You’re more likely to stick with a method that fits with how you think (and that fits with your skills) than if it’s something you’ve blindly copied from others. Our trader believes in his method, and that gives him the brass ones to hang in there during relatively lean periods.
2) The successful trader is always seeking improvement. If our trader is already successful, why does he need to talk with Henry? He knew that, by sharing his ideas, he would learn a great deal about the strengths and weaknesses of his trading. Sure enough, Henry found that the average size of the trader’s losers was larger than it needed to be. A simple modification of stop-loss rules improved the system’s performance meaningfully. Similarly, by putting a filter on the system–only taking trades if certain conditions were met–the average profit per trade went up significantly. That could aid position sizing. The trader knew he had something good, but good wasn’t good enough. He wanted better.
3) The successful trader is persistent. One thing I want to stress: the trader’s methods were very sound–and Henry found ways to make them better–but they were not perfect. Out of about sixty months analyzed, fourteen were losers. The drawdowns were not hellacious, but there were periods of flat performance and drawdown. What that means is that a successful trader needs to have the confidence to ride out these periods of poorer performance to get to the periods of success. That is one reason why it’s so important
Use losers to learn a lesson and strengthen your trade execution
Losing trades can be the best ‘teacher’ you’ll ever have. However, just as with winning trades, it’s important to note that there will be a normal statistical variance of losing trades within any trading edge. So, you should not fall into the mental trap of thinking that EVERY losing trade you have was a major failure or that it means something is ‘wrong’ with your trading method or trading ability. Sometimes, perfectly good trade setups will fail, as that is just part of the game we call trading, so you just have to accept these trades and move on…assuming that you stuck to your trading strategy and the trade wasn’t taken out of greed, revenge or fear (over-trading).
The losing trades that you NEED to learn from and that you can learn a lot from, are those ‘stupid’ losing trades that you unfortunately did take out of greed, revenge or fear…and I know you know what I’m talking about here. After the trade is finished, you can record in your trading journal what you did wrong and why the trade was a failure; use these types of losing trades as a lesson and dissect what went wrong, you can then use this information to strengthen commitment to sticking to your trading strategy and plan.
The aim here, is to hopefully not make the same ‘stupid’ trading mistake twice, after all, your hard-earned money IS on the line every time you enter a trade. As you learn from ‘stupid trades’ it should help build your confidence because you will begin to see the power of remaining disciplined and consistent in trading, and you will start to see that you CAN trade successfully if you just stop making stupid trades.