Technically Yours/ASR TEAM
Archives of “February 13, 2019” day
rssTuesday Humour-Really Mind Blowing
Sharpen Your Trading With Occam's Razor
Would you believe that a 14th century priest, and his concepts, can help make you a better trader? Well, English logician and Franciscan friar William of Ockham really can make you a better trader.
Ockham developed the concept commonly referred to as Occam’s Razor. Simply put, this principle favors the simple over the complex, when there is a choice to be made, or a path to be followed.
How can this apply to trading? A few different ways.
First, if you are a system trader, perhaps your approach has too many rules, too many parameters, or too much optimizing. While every parameter you add might make your system better historically, the more parameters you have, the less prone the system is to work going forward. Simpler concepts and simple rules tend to be based on fundamental market principles – ones that aren’t as likely to change.
Second, if you are a discretionary trader, you might trade off of news reports from Blue Channels and multiple other sources. Multiple news sources might give you more data, but does it really give you more knowledge? You might find that with multiple, conflicting pieces of information, you actually can’t trade at all – rather, you are a victim of “analysis paralysis.”
Third, maybe your trading office looks like the control room for the Space Shuttle. If you try to trade off all of the information shown on all the screens, you might just find yourself overwhelmed. It is better to stick to a few monitors of information, and know that information very well. The best traders don’t need a dozen monitors to trade well – usually 1 or 2 monitors is plenty.
Many new traders tend to think that that more complicated they make trading, the easier it will be to “solve” the markets. Instead, they should be listening to William of Ockham, and making things simpler. Simple, done correctly, can lead to more profits, and stand the test of time better than complicated approaches.
Trading Wisdom
|
Livermores Seven Trading Lessons
Lesson Number One: Cut your losses quickly.
As soon as a trade is contemplated, a trader must know at what point in time he’ll be proven wrong and exit a position. If a trader doesn’t know his exit before he takes the entry, he might as well go to the racetrack or casino where at least the odds can be quantified.
Lesson Number Two: Confirm your judgment before going all in.
Livermore was famous for throwing out a small position and waiting for his thesis to be confirmed. Once the stock was traveling in the direction he desired, Livermore would pile on rapidly to maximize the returns.
There are several ways to buy more in a winning position — pyramiding up, buying in thirds at predetermined prices, being 100% in no more than 5% above the initial entry — but the take home is to buy in the direction of your winning trade – never when it goes against you.
Lesson Number Three: Watch leading stocks for the best action.
Livermore knew that trending issues were where the big money would be made, and to fight this reality was a loser’s game.
Lesson Number Four: Let profits ride until price action dictates otherwise.
“It never was my thinking that made the big money for me. It always was my sitting.”
One method that satisfies the desire for profit and subdues the fear of a losing trade is to take one half of your profit off at a predetermined level, put a stop at breakeven on the rest, and let it play out without micromanaging the position. (more…)
Think -Plan -Execute
China told property risk is worse than in US
UH OH: China told property risk is worse than in US. “The problems in China’s housing market are more severe than those in the US before the financial crisis because they combine a potential bubble with the risk of social discontent, according to an adviser to the Chinese central bank. . . . ‘The housing market problem in China is actually much, much more fundamental, much bigger than the housing market problem in the US and UK before your financial crisis,’ he said in an interview. ‘It is more than [just] a bubble problem.’”
Steve Jobs: "there is a tremendous amount of craftsmanship between a great idea and a great product."
Traders Psychology-Cycles
Technically Yours/ASR TEAM/BARODA
Stock Market Quiz
What were the five oldest stock exchanges worldwide?
Antwerp Bourse 1460
Lyons Bourse 1506
Toulouse Bourse 1549
Hamburg Bourse 1558
London Royal Exchange 1571
What were the three oldest stock exchanges in the US?
Philadelphia Stock Exchange 1790
New York Stock Exchange 1792
Boston Stock Exchange 1834
What were the three oldest commodities exchanges in the US?
Chicago Board of Trade 1848
Kansas City Board of Trade 1856
New York Cotton Exchange 1870
What were the first publicly traded securities in the U.S.?
$80 million in U.S. Government bonds that were issued in 1790 to refinance Revolutionary War debt.
When where the beginnings of the New York Stock Exchange established and what was the name of the founding document?
In 1792, the Buttonwood Agreement, signed by twenty-four brokers and merchants on Wall Street, agreeing to trade securities on a common commission basis.
What was the first listed company on the New York Stock Exchange?
Bank of New York, which was the first corporate stock traded under the Buttonwood tree in 1792, and the first listed company on the NYSE.
Who were the 24 brokers who signed the “Buttonwood Agreement” on May 17, 1792, and became the first New York Stock Exchange members? Leonard Bleecker , Hugh Smith , Armstrong & Barnewall , Samuel March , Bernard Hart , Alexander Zuntz , Andrew D. Barclay , Sutton & Hardy , Benjamin Seixas , John Henry , John A. Hardenbrook , Samuel Beebe , Benjamin Winthrop , John Ferrers , Ephraim Hart , Isaac M. Gomez , Gulian McEvers , Augustine H. Lawrence , G. N. Bleecker , John Bush , Peter Anspach , Charles McEvers, Jr. , David Reedy , Robinson & Hartshorne