Archives of “February 2019” month

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Trading Wisdom

  
  Education
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  • The fewer decisions that you can make during the trading day, the better off you will be.
  • All exit strategies should be based of your initial entry.
  • 75% of trades test out best by taking your profits quickly.
  • Shorter the time frame, the less justification for trailing stops.
  • Trend followers often pay up to ensure they get a position.

Livermores Seven Trading Lessons

  
  Education
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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…)

China told property risk is worse than in US

  
Analysis, Economy, Education
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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.’”

Stock Market Quiz

  
  Education
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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 

Think -Prepare -Act

  
  Education
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Trading can be difficult at times, especially when the market is a mess. But there are two simple things to remember: know when to sell, when not to, and cut your losses so you can stay in the game.

Even if you make a lot of mistakes in your trading business, you’ll still be net profitable at the end of the year if you simply do two things right; cut your losing trades as soon as they hit their stops and let your winners ride until there is a technical reason to sell. The challenging part, of course, is applying this in actuality, not only understanding it theoretically.

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