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Great Advice by Livermore in Reminiscences of a Stock Operator

  
  Education
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By far the most useful advice by Livermore in Reminiscences of a Stock Operator was to avoid tips like the plague. Similarly, Bacon warned:

DON’T look at anybody else’s selections of prices or handicaps before making your own selections and prices. That is a rule with no exceptions.

If you look at some other prices or selections first, the line you will come up with will be a sort of scrambling of his line and your line. Almost invariably, it will combine the weakest features of both. You’ll have the mistakes and trite opinions of his line and yours. But the possible ‘bright work’ and getting-away-from-the-public part of his figures and yours, will be discarded.

Personal Strengths and Weaknesses

  
  Education
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We all have different personal strengths and weakness.  Many people focus on transforming a weakness into a strength. While that is admirable, the reality is that it’s not always possible. Although I agree with the basic idea of brain plasticity, and I whole-heartedly agree with the idea of always striving for self-improvement, I also know that as humans we have a certain degree of natural-born temperament and not everything about us can be changed.

Although we can’t always build or change every weakness into strength, the good news is that we can always leverage our strengths, if we know how. And that is mighty powerful. It’s so powerful that if you leverage the right strengths in the right way they can do an excellent job of not just counter-balancing your weaknesses, but can propel you so far ahead  that those weaknesses pale in comparison.

One of the most powerful things you can do for yourself is identifying your natural strengths and then work to see how you can build on them. (more…)

Sun Tzu and Trading -Anirudh Sethi

  
Analysis, Education
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Image result for Sun Tzu and TradingThe money market is a considered to be a wrangle amongst purchasers and vendors on the estimations of organizations. That is the pleasant clarification. To outline it in another light – the share trading system is a war amongst purchasers and vendors, who each need to take the others cash. Money markets are harsh, and in the event that you don’t approach it with the manner of a disturbed general, you will lose. In the share trading system, pleasant folks complete last. Sun Tzu’s, The Art of War serves to highlight numerous parts of trading since trading the market is much similar to fighting. Sun Tzu’s Art of War is an exemplary bit of work that is broadly perused and connected to many fields, because of its major nature that is exceptionally versatile to numerous parts of our lives. In this post, I separated parts of the work and connected to trading and in doing as such plan to acquaint the critical trading ideas with you. I have likewise assembled and classified them for simple comprehension.

War as Art and So as Trade

The first Art of War is an assemblage of lessons composed and instructed by Sun Tzu, a 6th century B.C. Chinese General/Philosopher. Its insight is immortal and has developed in prominence. It is, truth be told, required perusing at each military foundation on the planet and can be found in most corporate meeting rooms. In this adjustment of the ace’s work of art, super trader Dean Lundell applies Sun Tzu’s lessons to the specialty of contributing – from outlining an individual trading plan to timing market moves, to gathering information from a worldwide data organize. Each wonderfully composed spread opens with a section from Sun Tzu and is then translated and clarified for its vital pertinence to trading stocks, bonds, fates, and items. Guided by Sun Tzu’s old shrewdness, tenderfoot, and expert traders can utilize these great military methodologies to overcome the market! Understudies of the market are continually fighting the feelings of dread and avarice. The Art of War can enable you to cut a way between these two feelings and lead you to a mental place that will always enable you to put your best foot forward. In this arrangement, I will address different poor trading propensities by excerpting and deciphering different sections. While my understandings are not intended to be authoritative by any extent of the creative energy I will likely make them think. They say the round of golf is not played on the green. It’s played between your two ears. Trading fates, Forex, alternatives, or stocks are similarly. Your psychological distraction must be adequate. If not, disappointment is unavoidable. At last, I trust you observe the teaching to be a theorist and not only your standard speculator.

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The Alpha Masters-Maneet Ahuja :Book Review

  
  Education
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Maneet Ahuja’s 2012 book The Alpha Masters: Unlocking the Genius of the World’s Top Hedge Fundsis now available in paperback. Somehow I missed the book when it first appeared, so in the spirit of “better late than never” I decided to write a few words about it here.

Most of the characters in this book are familiar: Ray Dalio of Bridgewater Associates, Tim Wong and Pierre Lagrange of Man Group/AHL, John Paulson of Paulson & Co., Marc Lasry and Sonia Gardner of Avenue Capital Group, David Tepper of Appaloosa Management, William A. Ackman of Pershing Square Capital Management, Daniel Loeb of Third Point, James Chanos of Kynikos Associates, and Boaz Weinstein of Saba Capital Management. Adding to the luminaries, Mohammed El-Erian wrote the foreword and Myron Scholes the afterword.

Many of their stories are familiar as well. So why does this book remain a compelling read?

It introduces us to a very bright, hardworking, resilient group of people. We see how their research leads them to formulate hypotheses, how they translate these hypotheses into market positions, how they push their advantage, and how they bounce back when their hypotheses don’t pan out.

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11 Rules for Chart Watchers

  
  Education
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LOOKING-CHARTRule 1 – If you cannot see trends and patterns almost instantly when you look at a chart then they are not there. The longer you stare, the more your brain will try to apply order where there is none.

If you have to justify exceptions, stray data points and conflicting evidence then it is safe to say the market is not showing you what you think it is.

Rule 2 – If you cannot figure out if something is bullish or bearish after three indicators then move on. The more studies you apply to any chart the more likely one of them will say “something.” That something is probably not correct.

When I look at a chart and cannot form an opinion after applying three or four different types of indicators – volume, momentum, trend, even Fibonacci – I  must conclude that the market has not decided what it wants to do at that time. Who am I to tell it what it thinks?

Rule 3 – You can torture a chart to say anything you want. Don’t do it.

This is very similar to Rule 2 but it there is an important point to drive home. You can cherry pick indicators to justify whatever biases you bring to the table and that attempts to impose your will on the market. You cannot tell the market what to do – ever.

Rule 4 – Be sure you check out one time frame larger than the one in which you are operating (a weekly chart for a swing trader, a monthly chart for a position trader).

It is very easy to get caught up in your own world and miss the bigger picture getting ready to smack you. It can mean the difference between buying the dip in a rising trend and selling a breakdown in a falling trend.

Rule 5 – Look at both bars (or candles) and close-only line charts to see if they agree. And look at both linear and semi-logarithmic scaled charts when price movements are large. (more…)

Trading Quotes and Advice

  
  Education
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  • ‘Successful trading comes down to this: overcoming your personal psychological barriers and conditioning yourself to produce feelings of self-trust , high self-esteem, unshakable conviction, and confidence which will naturally lead to good judgement and winning trades based on a proven methodology’ – Courtesy of James Buzzard.
  • “If everything feels under control, you are not going fast enough” -Mario Andretti, 1978 Formula One World Champion.
  • “If you sit by the river long enough, a dead body will sooner or later float down there” – Japanese Proverb.
  • ‘Buy High, sell Higher AND Sell low, buy back lower’, – Anonymous.
  • ‘The most important rule of trading is to play good defence, not great offence.’ –
  • Paul Tudor Jones.
  • “When the facts change, I change my mind. What do you do, sir?” – John Maynard Keynes.
  • “Holding cash is uncomfortable, but not as uncomfortable as doing something stupid.” – Warren Buffet
  • “Trade the market, not the money…if you exercise your strategy with discipline, the money will follow.” – Courtesy of Umar Ali.
  • “If you ACCEPT the risk of the trade and SHARE SIZE appropriately then you should be able to trade in a relaxed and optimum state of mind.” – Courtesy of Tom Willard.
  • “The trend is your friend” – – Courtesy of Umar Ali.
  • ttitude; Success, Failure, working hard.
  • “Mentally write off the work you do, as soon as you have done it” – Courtesy of Robin Farrell.
  • “There are old traders and there are bold traders, but there are very few old, bold traders.” – Ed Seykota
  • “Falling knives have to land somewhere…..” – Courtesy of Aidan Philipson.
  • ‘The dictionary is the only place where success comes before work!’- Vince Lombardi.
  • “Luck is what you have left over after you give 100 percent” – Langston Coleman.
  • ‘Traders (Leaders) are made, they are not born. They are made by hard effort, which is the price which all of us must pay to achieve any goal that is worthwhile.
  • It’s easy to have faith in yourself and have discipline when you’re a winner, when you’re number one. What you got to have is faith and discipline when you’re not a winner.’ – Vince Lombardi.
  • “I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. 26 times, I’ve been trusted to take the game-winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed.” – Michael Jordan
  • ‘What sets successful traders apart?……Most people think that winning in the markets has something to do with finding the secret formula. The truth is that any common denominator among the traders I interviewed had more to do with attitude than approach’. – Jack Schwager.
  • “There is little difference in people, but that little difference makes a big difference. That little difference is attitude. The big difference is whether it is positive or negative.” – Robert Collier.‘Ours is not to reason why, ours is but to sell and buy.’ – Courtesy of Mark Moskowitz.
  • “Success is the sum of small efforts – repeated day in and day out.” – Robert Collier.
  • “A professional writer is an amateur who didn’t quit.” – Richard Bach
  • “Golf is a game played on a 5 inch Course- the distance between your ears.” – Bobby Jones.
  • “…It’s all to do with the training: you can do a lot if you’re properly trained…” – Queen Elizabeth II.
  • “The person who goes farthest is generally the one who is willing to do and dare. The sure-thing boat never gets far from shore.” – Dale Carnegie.
  • “You are – face it – a bunch of emotions, prejudices, and twitches, and this is all very well as long as you know it. Successful speculators do not necessarily have a complete portrait of themselves, warts and all, in their own minds, but they do have the ability to stop abruptly when their own intuiition and what is happening Out There are suddenly out of kilter. – Adam Smith, The Money Game.
  • ‘“Everyday my trading skills are getting better and better”. I repeat it like a daily mantra’ – Purportedly attributed to Emile Coue.
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