Latest Posts

rss

Barista technique and Trading

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #

I start my day with a cup of coffee, everyday. A cup of freshly ground, and brew Espresso or Long Black is essential. I am not a coffee expert, but I am a coffee lover. I have my grinder and Espresso machine at home. Barista technique breaks down into three time scales and skill levels:

The first is the minute or so spent grinding and making the shot. The key here is acquiring the skills to make shots consistently. One should be able to turn out four or five in a row with virtually the same timing, volume, color, crema and taste. This skill is a physical thing, that is, it’s a matter of training and practice rather than learning.

The second is the time spent carefully tasting an espresso or series of espressos, identifying the flavor balance and defects, and making adjustments to ones pull or machines to correct them. The “dialing-in” process for a new blend usually requires a series of shots to get a satisfactory result, and can proceed over several days to fine tune it. To do this well, one needs to have experience in tasting and analyzing good espresso. One also needs to know how changes in extraction variables and machine settings affect the espresso’s taste.

The third is acquiring experience and informed preferences with a wide range of coffees, blends, espresso equipment, and alternative techniques. If you or someone you’re serving wants an espresso with a specific pallette of flavors; you will know how to provide it. Home roasting and blending helps in this. So does visiting good cafés and roasteries, and talking with the knowledgeable people there.

I see a lot of similarities to trading. What do you think? Start making coffee…

A simple Idea to improve your trading

  
  Education
  Tags

I feel certain that my discipline in executing each and every trade according to my trading methodology is the secret to my success. If you want to improve your trading, what you need to do is very simple. Before you enter any trade, imagine that you will have to explain this trade to a panel of your peers, by explaining to them the reason for your entry, your money, trade, and risk management guidelines, and why you exited the trade. Imagine having to explain why you chose this particular market and this particular time frame, along with how you set objectives for the trade, and how you determined where your initial protection would be. If you can truly do this, I strongly believe that you can be successful.

Check Your Finger Size If You Want To Be A Great Trader? Really Size Matters

  
  Education
#  #  #  #  #  #  #

Take a moment and look at your hands. Specifically, compare the length of your ring finger to the one you use to point.  Is the ring finger longer or shorter than your pointer, and by how much?  It turns out that the answer to that question can tell a lot about your mental abilities and appetite for risk. As ConvergEx’s Nick Colas details, a 2009 study of mostly male traders working in London found that the ones with longer ring fingers were generally more profitable than those with shorter ones. Traders with the largest fourth finger/second (pointer) finger ratios actually made 11 times more than those with the smallest. 

Via ConvergEx’s Nick Colas,

A 2012 study of entrepreneurs in Italy showed that highly successful female entrepreneurs tended to have longer ring fingers as well.  Researchers believe that the causal link between digits on your hand and in your bank account goes all the way back to the womb.  No, finger length is not the only thing that makes you successful in this business.  But it clearly doesn’t seem to hurt.

Occasionally I happen upon a theme for one of these notes that seems to stretch well into the distant horizon of the unbelievable.  This is one of those days.  Still, at ConvergEx we follow the data wherever it leads and we also have an abiding respect for the scientific process.  So buckle up – here goes.

The length of your ring finger relative to your pointer digit is a useful proxy for a whole host of personality traits and aptitude for the world of high finance.  So take a look at your hand, and check to see which is longer.

If your ring finger is longer than your pointer, then: (more…)

Kiev, Hedge Fund Masters

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

I took notes on Kiev’s book when I first read it, and I’m going to select four self-therapeutic passages from them for this post. I suspect that most of my notes are quotations, but I don’t think it’s important to check their accuracy, though I will provide page references.

* * *

By establishing a vision, you have promised to achieve something. The promise means you are giving yourself permission to begin to act in the realm of the impossible, to create all kinds of openings. In that one promise, you begin to abandon self-doubt and the need for approval. This way of being in the world lets loose huge reserves of energy and creates enormous possibilities. Yet none of this can happen until you take the first step forward in pursuit of a goal with no guarantee of outcome. (p. 218)

Living in the gap makes you vulnerable. Once you’re out there, on the cutting edge, you’ll suffer breakdowns as well as breakthroughs. Although it will not always be comfortable, living in the gap between where you are and where you want to be will make your days far more interesting and action packed than if you traded with the intention of avoiding pain and discomfort. (p. 229)

It is useful to note when an activity becomes tedious, dull, and routine and leads to withdrawal and avoidance. This is the time to consider whether you are facing obstacles and are retreating behind your survival needs or whether these feelings signify that you have reached your goal and now need to raise the stakes. (p. 236)

The development of mastery is, in a sense, an existential and experiential methodology, directed at what is and what can be. You invent your own future through commitment to a goal, identifying what is necessary to produce specific results, and learning how to handle the unknown. (p. 247)

The “Greek Issue”-Fascinating flowchart

  
Analysis, Education
#  #  #  #  #  #  #  #

It is wrong to think that contagion stems only from Grexit. An excessive compromise with Greece could result in moral hazard, particularly in relation to structural reforms. This could undermine the medium-term stability of the euro area. The tail risk is that Greek politicians try to leverage too much the fear of Grexit “contagion risk”. We complete our analysis by looking at the vulnerability of other euro peripherals and the ex-post tools to limit contagion.

Helpful Lessons

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #

Helpful Lessons1. Remain Flexible – do not let your bias (”The Market MUST Go Down”) cloud the reality of what’s happening

2. Seek High Probability, Low Risk Set-ups
(In this case, we had the trend, resistance, and a doji working in our favor, and were risking 2 points to play for 8 points)

3. Take Your Stop-Loss when the Trade Fails
(You would have been in a worse situation if you stubbornly held short into the sudden 10-point rally)
(In fact, some of the largest swings occur AFTER a high-probability set-ups has failed … I call this “Popped Stops”)

4.  “Anything Can Happen” in the Market (Mark Douglas)
Even the best set-ups can … and sometimes do… fail and that’s perfectly fine as long as you control risk.
Don’t blame FII’s ,Global Market  or Mutual Funds – trading is a game of probabilities instead of certainties.

Study each day to learn more concepts and do your own end-of-day analysis of the charts to make yourselves even better traders!

Trade To Win, Not To Lose!

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

When athletes are consumed by not losing rather than by winning, the game is over, often before it has even started. The same precept applies to trading. As crazy as it sounds, most traders aren’t making the money they could be — and the reason, I’d argue, is the fear of losing it. Traders are far too worried about giving money back. This paralyzing phobia can transform talented, elite professionals into disappointing underperformers.

How many times have you been up in a trade and started to think about the money? Your head tells you to bank it quickly and then play it safe. After all, you made your mark for the day, or even the week, so your job is complete. That’s not the mark of a trader; that’s the mark of an accountant. 

Trading is an occupation based on fleeting moments of opportunity. They’re here one second, gone the next and entirely out of anyone’s control. The best traders love this, and even crave it. When the action is on, they’re prepared and trained to strike hard, as they have no idea when the next great trade will appear. 

It’s akin to fishing: You can be out on the water all day and not get a bite, but when you hit a school of tuna, you better have your rods ready and baited to maximize the opportunity. All that matters, ultimately, is how many pounds of fish you caught, not how long it took to reel them in. 

The key is to force yourself to step outside your comfort zones.

  1. Develop guidelines that will require you to increase your position size.
  2. Should you fail to follow your rules you must impose severe consequences.

The goal is not to change your personality or eliminate your fear, but rather the purpose is to get you out of the comfort zone of hording money.

Money in itself is useless, unless it is put to use!

Passive Investing Propaganda

  
Education, Video
#  #  #  #  #  #  #  #  #  #  #  #  #  #

My points to consider:

1. If you have an investment that is not working, or one that is beating you with heavy fees, then you have made a choice. If you don’t want that–stop. If you don’t stop you can always watch a video like this, blame someone else, and refuse to take any personal responsibility. Ignorance is no excuse. It’s your life. Take control.

2. Passive investing (i.e. indexes, buy and hold, etc.) might appear as an option, but how would you feel if you have been buying and holding the Japanese Nikkei 225 since 1989? Not very good is my bet.

3. I teach trend following. The trend following traders in my work illustrate trend following success, but my work is not an advertisement for anyone except me. Can trend following funds charge fees? Yes. However, in their defense the trend following performance numbers in all of my books are ‘after fees’.

4. Brokers are bullshit. If you like bullshit then you get what you want out of life by listening to brokers.

5. This video promotes the efficient-market hypothesis (EMH). Academics promote EMH like there is no tomorrow. Two big reasons? Many of these academics have rock solid tenure at the best universities and also make millions selling EMH text books. Everyone has a motivation, but I will hold my books up against this video every day of the week.

Go to top