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rss3 Invaluable Quotes from Reminiscences of a Stock Operator
“A man must believe in himself and his judgment if he expects to make a living at this game. That is why I don’t believe in tips. If I buy stocks on Smith’s tip, I must sell those same stocks on Smith’s tip.”
“The recognition of our own mistakes should not benefit us any more than the study of our successes. But there is a natural tendency in all men to avoid punishment. When you associate certain mistakes with a licking, you do not hanker for a second dose, and, of course, all stock-market mistakes wound you in two tender spots – your pocketbook and your vanity.”
…“One of the most helpful things that anybody can learn is to give up trying to catch the last eighth or the first. These two are the most expensive eighths in the world. They have cost stock traders, in the aggregate, enough millions of dollars to build a concrete highway across the continent.”
Leibovit, The Trader’s Book of Volume
Mark Leibovit believes that volume analysis is “the closest thing we have to a real working ‘crystal ball’” in the markets. (pp. 425-26) In The Trader’s Book of Volume: The Definitive Guide to Volume Trading (McGraw-Hill, 2011) he outlines the fundamentals of volume analysis and introduces the reader to a broad range of volume indicators and oscillators.
We have all heard the mantra that volume precedes price. As Leibovit writes, “Market price trends do not happen in a vacuum; rather, it is the behavioral or programmed responses of traders and managers that result in the volume shifts that precede a price move. As the crowd mobilizes, as reflected in the volume numbers, its size and conviction will determine the direction and strength of the price movement. As the conviction of the crowd falters and the volume numbers pull back and diminish, so too will this impact the timing and direction of the trend.” (p. 24)
In analyzing the relationships between price and volume under various market regimes Leibovit pays particular attention to divergences where volume doesn’t confirm price action and signals a possible trend change. But he doesn’t rely solely on easy-to-spot divergences. He also introduces the reader to volume overlays, including moving averages, MACD, and linear regression. These overlays can help the trader see volume trends over a longer time frame.
And, of course, there is the plethora of indicators and oscillators, some 33 in all. Thirteen apply to the broad market; the rest can be used in the analysis of individual securities. In each case Leibovit explains the indicator’s or oscillator’s formulation, its use in trend confirmation, its potential divergence with price, and its use with other indicators. He also illustrates its practicality with a sample trade setup and entry. He closes each section with trader tips.
Throughout the book the author stresses that there is no “one size fits all” solution to selecting the appropriate volume indicators and oscillators. Volume analysis is an art, not a science. It depends on the instrument being traded as well as the trader’s time frame.
But The Trader’s Book of Volume goes a long way toward taking the mystery out of volume analysis. In roughly 450 pages, amply illustrated with MetaStock charts, it offers concrete ways to use volume to improve trading results.
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3C's in Life
7 Best Books Bill Gates had Read In 2013
Bill Gates presents his seven top reads in 2013.
Commenting on the lack of novels on the list, Gates writes:
“It’s not that I don’t enjoy fiction. I’ve read The Catcher in the Rye a bunch of times-it’s one of my favorite books ever (and I enjoyed Salinger, the documentary that came out this year). I did read Gary Shteyngart’s Super Sad True Love Story, which was entertaining though it didn’t have as much science fiction as I expected.
But I read mostly nonfiction because I always want to learn more about how the world works. And reading is how I learn best.”
That’s an interesting statement coming from Gates, especially in light of recent posts on using literature to studydecision-making under ignorance.
With that said, Gates is an excellent source of reading material for me. His top reads of 2012 led me to order Behind the Beautiful Forevers, a book I added to my antilibrary. And his summer reading list, along with the recommendations of readers, encouraged me to read The Box, a surprisingly enjoyable read on the history of the shipping container. This book shows up again on the end of year list of his top reads.
Here are his picks, in no particular order:
“You might think you don’t want to read a whole book about shipping containers… But he makes a good case that the move to containerized shipping had an enormous impact on the global economy and changed the way the world does business. And he turns it into a very readable narrative. I won’t look at a cargo ship in quite the same way again.”
The Most Powerful Idea in the World, by William Rosen
“A bit like The Box, except it’s about steam engines… I’d wanted to know more about steam engines since the summer of 2009, when my son and I spent a lot of time hanging out at the Science Museum in London.”
Internatonal rules of manhood
1) under no circumstances may two men share an umbrella; unless at rugby, and your beer is getting wet, then, for the drinking period only, it is permissible
2) it is ok for a man to cry under the following circumstances a) when a heroic dog dies to save its master b) after wrecking your boss’s car c) one hour, 12 minutes, 37 seconds into “The Crying Game”
3) any man who brings a camera to a stag night may be legally killed and eaten by his mates
4) unless he murdered someone in your family, you must bail a friend out of jail within 12 hours
5) if you’ve known a bloke for more than 24 hours, his sister is off limits forever, unless you marry her
6) Moaning about the brand of free beer in the fridge is forbidden. However you can complain at will if the temperature is unsuitable (more…)
3 destructive habits every trader must avoid.
Three destructive habits that will kill your trading day, week, month, or career.
Not having a plan. Get a plan, who cares if it is bad, start with something. You can build off of it and refine it. You have to be willing to spend the time to make the plan yours. You do not start anything without some level of planning. Trading is hard; your brain spends a lot of time in fast forward, affecting your memory. You can slow it down by having a plan and increase your brains ability to remember. A plan makes it possible to improve. Most importantly, a plan gives you a chance at removing emotion.
Forgetting why you are trading. The purpose of trading is to make money. Every action should bend to that goal. That does not mean every trade makes money. It means every trade gets to closer. If you are looking for comfort, get a teddy bear. If you are looking to be right, play trivial pursuit. If you want excitement, drive fast.
Letting it go. It is really important to separate what happened from how you felt. The more distance between the two the less time it takes to learn from that situation. Admitting you made a mistake or are wrong are necessary for letting it go. Unlike life, you get no credit for admitting you are wrong, it is just a part of trading. Neither matter unless you take action.
Mahatma Gandhi among leaders most admired by CEOs globally
Mahatma Gandhi figures among the top three most admired leaders of the world, said a global survey of CEOs conducted by accountancy firm PwC.
While Winston Churchill tops the list of 10 most admired leaders, Gandhi figures in the third position after Steve Jobs (co-founder of Apple), said the 16th Annual Global CEO Survey.
As part of its annual survey, PwC said it recently asked 1,400 CEOs from around the world “which leaders they most admired, and what they most admired about their actions”.
“Some clear types emerged: warriors, (Napoleon; Alexander the Great) reformers (Jack Welch), leaders though adversity (Winston Churchill; Abraham Lincoln), leaders who caught the imagination of the masses (Mahatma Gandhi; Nelson Mandela) and consensus builders like Bill Clinton” PwC said in a statement.
Winston Churchill was the most popular choice of all CEOs with Steve Jobs admired in the most number of countries (37). (more…)
Top IPOs in 2000. Amazing how few remain:
