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Recipe for catching a reversal:

recipesIngredients: For this recipe you will need one (1) well-known or “classic” technical chart pattern on a daily time frame, preferably near the high or low of the mid-term price range. When your pattern of choice has been observed, you will then need to collect at least two (2) or more instances of public expressions of sentiment which confirm the prognostication of said pattern: pre- or post-market media bytes, business news website headlines, confident/fearful declarations on your favorite trading forum, or any other variety of before-the-fact assumption.

Preparation: When the above ingredients have been secured, wait for a daily close which would confirm “ripeness” of the pattern. Next morning, enter a stop order at the confirmation price in the opposite direction of pattern breakout to initiate position. If stop is triggered, immediately enter protective stop at prior low/high.

Parboiling: If market moves quickly in your favor, take profits on at least a partial portion; mentally “set aside” closed profit for re-entry if market pulls back towards initial entry price with next few days. If pullback manages to hold above prior high/low, re-enter full position at your discretion.

Cooking: Set protective stop for entire position at breakeven and let sit undisturbed for a few days or more if possible.

Presentation: Dish is ready when “failure” point of pattern is breached; serve at market or with trailing stop, whichever you prefer.

Recipe for catching a reversal:

Ingredients: For this recipe you will need one (1) well-known or “classic” technical chart pattern on a daily time frame, preferably near the high or low of the mid-term price range. When your pattern of choice has been observed, you will then need to collect at least two (2) or more instances of public expressions of sentiment which confirm the prognostication of said pattern: pre- or post-market media bytes, business news website headlines, confident/fearful declarations on your favorite trading forum, or any other variety of before-the-fact assumption.

Preparation: When the above ingredients have been secured, wait for a daily close which would confirm “ripeness” of the pattern. Next morning, enter a stop order at the confirmation price in the opposite direction of pattern breakout to initiate position. If stop is triggered, immediately enter protective stop at prior low/high.

Parboiling: If market moves quickly in your favor, take profits on at least a partial portion; mentally “set aside” closed profit for re-entry if market pulls back towards initial entry price with next few days. If pullback manages to hold above prior high/low, re-enter full position at your discretion.

Cooking: Set protective stop for entire position at breakeven and let sit undisturbed for a few days or more if possible.

Presentation: Dish is ready when “failure” point of pattern is breached; serve at market or with trailing stop, whichever you prefer.

Three Ways to Know You Shouldn’t Trade

  The question of whether someone really should not be a trader is one that’s not often brought up in discussions between market participants. It’s almost as if the baseline assumption is that the sole criteria is that you want to trade. While I’m a believer in the view that just about anyone can learn, there are limits to that. Ignoring the obviously physical and mental disabilities, here are the ones I think are most important.

Lack of Impulse Control
If you cannot keep yourself from acting on impulse – meaning making snap decisions without a plan – then you’re likely not going to do well in trading. Successful trading means applying a consistent edge. That, in turn, requires a plan that is being followed, not making random trades when the mood hits.

There is probably some confusion here when the subject of gut instinct comes into play. Here’s the deal, though. If you’ve only just started trading, you have no gut instict. That comes from long experience. If you’re a rookie making gut trades, for your own good you should stop now. Any success you’ve had to this point is almost certainly a function of luck, not skill.

A Troubled Emotional State
We all go through periods when we’re in a mixed up emotional state. It could be relationship issues, family difficulties, the death of a loved one, stress at work, or any number of other things that put you off your game. These are not good times to trade. Granted, trading can be an escape from the emotional strains in some cases, but that’s only if the trader can consistently execute their normal work and strategy without it being impacted by what’s going on in the rest of their life.

Trading has a way of really exposing emotional problems, even among the most stable of individuals. If you’ve already got some mental strains going on, trading is likely to either make it worse, or to see you feed on that emtion in destructive ways – like trading angry. It is best to stay clear of the markets when these sorts of things happen if there’s any chance of spill-over or distraction.

Looking for a Quick Buck
Trading is not a get rich quick program. Any systems or broker ads that lead you believe otherwise are being deceptive. As any trader who’s been around more than a year will tell you, trading is a marathon, not a sprint. If you come into the market looking to make a fast killing you are almost certainly going to blow your trading account up because you’ll end up taking much too much risk. Basically, you’ll be a gambler rather than a trader. (more…)

Presenting The 10 Most Spectacular Financial Speculations Of The Past 300 Years

Sometimes it seems like the investment community operates on the assumption that the world started in 1929 – or at least that the financial booms, busts and speculators preceding the 1920s are irrelevant to the modern investor. We think this is misguided. Just consider that this common worldview ignores an age where speculators lived in sprawling mansions on Fifth Avenue (as opposed to apartments in the same place measuring about 1/100th the size)! We imagine that there’s a lot to learn from looking at the past 300 years as opposed to the past 80. With this in mind; here we present what we believe to be the best trades of all time.

Trends- Reversals- Cycles

Many assume the continuation of trends beyond their turning points. Such thinking is evident in the news. The opposite view is the statistical lack of trends and the assumption of reversion to the mean. However trends exist in a random or due to macro effect such as government (mis)policy or herding, none of which can be ignored except to one’s detriment. The pure quantification of price makes discernment of the change of cycles hard to see except in retrospect, thus other forward and current input seem worthy to consider. There are tells to macro effects if they can be discerned. The random trends also may have their characteristics. Philosophers like to define their terms, and traders also need to define their time frames to clearly state the issues. This seems to be a common point of misunderstanding in debates on these issues.

 

Conviction

convictionConviction implies a settled state of opinion and the inertia of a decision already made; this simply leads to a kind of prejudice towards one market direction or another. But let’s face it: assumption is always the path of least effort. And when has the market ever rewarded the followers of that path? It’s far better to strive to be continually skeptical and yet boldly decisive when the moment requires. The difference may seem limited to semantics, but I think the interaction between our perceptions and the market should be a continually active process, and that includes methodically denying ourselves the allure of false comforts that accompany an unyielding sentiment.

Stephen Covey: Small TRIBUTE

Stephen Covey passed away,Leaves his 7-HABITS ever for all of us

Haven’t read the book yet? Here’s a summary of what he believes are the 7 Habits of Highly Effective People:

Habit 1 – be proactive®

This is the ability to control one’s environment, rather than have it control you, as is so often the case. Self determination, choice, and the power to decide response to stimulus, conditions and circumstances

Habit 2 – begin with the end in mind®

Covey calls this the habit of personal leadership – leading oneself that is, towards what you consider your aims. By developing the habit of concentrating on relevant activities you will build a platform to avoid distractions and become more productive and successful.

Habit 3 – put first things first®

Covey calls this the habit of personal management. This is about organising and implementing activities in line with the aims established in habit 2. Covey says that habit 2 is the first, or mental creation; habit 3 is the second, or physical creation.

Habit 4 – think win-win®

Covey calls this the habit of interpersonal leadership, necessary because achievements are largely dependent on co-operative efforts with others. He says that win-win is based on the assumption that there is plenty for everyone,and that success follows a co-operative approach more naturally than the confrontation of win-or-lose.

Habit 5 – seek first to understand and then to be understood®

One of the great maxims of the modern age. This is Covey’s habit of communication, and it’s extremely powerful. Covey helps to explain this in his simple analogy ‘diagnose before you prescribe’. Simple and effective, and essential for developing and maintaining positive relationships in all aspects of life.

Habit 6 – synergize®

Covey says this is the habit of creative co-operation – the principle that the whole is greater than the sum of its parts, which implicitly lays down the challenge to see the good and potential in the other person’s contribution.

Habit 7 – sharpen the saw®

This is the habit of self renewal, says Covey, and it necessarily surrounds all the other habits,enabling and encouraging them to happen and grow. Covey interprets the self into four parts: the spiritual, mental, physical and the social/emotional, which all need feeding and developing.

Recipe for catching a reversal:

sexy-chef
Ingredients: For this recipe you will need one (1) well-known or “classic” technical chart pattern on a daily time frame, preferably near the high or low of the mid-term price range. When your pattern of choice has been observed, you will then need to collect at least two (2) or more instances of public expressions of sentiment which confirm the prognostication of said pattern: pre- or post-market media bytes, business news website headlines, confident/fearful declarations on your favorite trading forum, or any other variety of before-the-fact assumption.
Preparation: When the above ingredients have been secured, wait for a daily close which would confirm “ripeness” of the pattern. Next morning, enter a stop order at the confirmation price in the opposite direction of pattern breakout to initiate position. If stop is triggered, immediately enter protective stop at prior low/high.
Parboiling: If market moves quickly in your favor, take profits on at least a partial portion; mentally “set aside” closed profit for re-entry if market pulls back towards initial entry price with next few days. If pullback manages to hold above prior high/low, re-enter full position at your discretion. (more…)

Consistent And Discipline

In order to realize the full potential of your trading systems it is critical that you take every trading entry, adjust every stop, and close out every trade as and when your system says you should do. This takes extreme confidence in your trading systems, good robust reliable technology, and the mental discipline to stick to your trading plan whatever happens.
An underlying assumption about being consistent and disciplined is that you have a pre-defined plan for every situation you may face in your trading, so that you know how you are defining what being consistent is. Your plan needs to include at least the following items: (more…)

If You Have to Be Right, Trouble Ahead

“I confess, I think about the future. So do my colleagues. If someone who’s spent decades investing doesn’t have an opinion about what lies ahead, there’s something wrong. I believe our clients want us to apply the benefit of our experience in gauging and reacting to the opportunities and risks that lie ahead.
But I have a mantra on this subject, too: “It’s one thing to have an opinion; it’s something very different to assume it’s right and act on that assumption.” We have views on the future. And they can cause us to “lean” toward offense or defense. Just never so much that for the results to be good, our views have to be right.”
–Howard Marks, Oaktree Capital Management January 10, 2012

Marks is not a technical trend follower, but wise words about not worrying about being right.
The Dead saw it too:
Drivin’ that train
High on cocaine
Casey Jones you better
watch your speed
Trouble ahead
Trouble behind
and you know that notion
just crossed my mind

 
Trouble with you is
The trouble with me
Got two good eyes
but we still don’t see
Come round the bend
You know it’s the end
The fireman screams and
The engine just gleams