Archives of “economics” tag

rss

What Best Technical Analyst Do ?

  
  Education
#  #  #  #  #  #  #

-Technicians believe that there is wisdom in price. That price has memory. That people who were inclined to buy at a certain price are somewhat likely to buy there again. Unless something’s changed, in which case their failure to re-buy (or buy more) at that formerly significant price level can be interpreted in an entirely new way – what was once an area of support on a chart becomes an area of resistance.

-Technicians believe that trends persist, in both directions, because market participants act on “news” at different speeds and act more boldly (or fearfully) the longer a particular movement in the markets goes on. This is why bull markets often end with a buying crescendo in the riskiest securities. Risk appetites grow as an uptrend persists, the desperation to participate gets stronger, it does not fade gently.

This is also why selling becomes more fierce when the market is at a 20% discount to its previous high than when it is at a 10% discount. “How could it be even more urgent to sell down 20% than it is down 10%?” someone would ask. Going by fundamentals, it isn’t. But investors only pay lip service to fundamentals. What they are more concerned with is owning less of the thing that looks stupid to own – and the lower it goes, the stupider it looks.

Unless you buy into the idea that rational behavior rules the investment markets. In which case, you’re reading the wrong writer 

-Technicians find truth in price, rather than attempting to parse the impossibly conflicted and intentionally obscured opinions of the commentariat. Technicians find meaning in the actual buying and selling activity happening today, not in the dusty old 10Q’s of 90 days ago or in the projected estimates being bandied about among the discounted cash-flow analysis crowd on the sell-side.

But above all, technicians respect the power of sentiment more than their fundamentalist counterparts. And sentiment, after all, is how valuations actually come to be – the P in the PE Ratio or the PEG Ratio or the P/B calculation. In the real equation, the only one that counts, the P is what pays, not the E, not the EG and certainly not the B. Buffett would tell you the B (book value) is what pays over time (the market going from a voting machine to a weighing machine). But Buffett can afford to ride it out, having permanent capital under management and an ocean of insurance premiums sloshing in over the transom every hour of the day. Most market players do not.

Ten traits of successful people

  
Education, Life
#  #  #  #  #  #
  1. Positive thinking. They think of success, not failure, regardless of how difficult the situation.
  2. Makes conscious decisions regarding what they’re after, and draw out specific plans to reach their goals.
  3. Action-oriented.
  4. Never stop learning.
  5. Being persistent and hard working.
  6. Analyze details and seek out all the facts.
  7. Focused, doesn’t let other people or things distract them from their goals. Learns to save money.
  8. Being innovative.
  9. Communicate with others effectively
  10. Integrity.

10 Cruel Rules of Traders

  
  Education
#  #  #  #  #  #  #  #

I) You will not buy low or sell high.

II) You will cut your winners and let your losers run.

III)  You will wish you owned more of what’s going up and less of what’s going down.

IV) You will be fearful when others are fearful.

V) You will fight the trend.

VI) You will not buy when there is blood in the streets.

VII) You will spend too much time worrying about low probability outcomes.

VII) You will invest for the long-term, or until we get a ten percent correction, whichever comes first.

IX) You will go broke taking small profits.

X) You will not just sit there, you’ll do something.

Patience in Trading

  
  Education
#  #  #  #  #  #  #  #  #

The most important lesson I’ve learned over the years of trading is staying patient throughout the journey. There will always be loosing trades as well as winning trades, the key is not being greedy as well as staying consistently patient with the market whilst gaining experience.

Re-reading books, trading scripts as well as regularly topping up knowledge of all the relevant price action technicalities is crucial, although I’d say the main attribute to achieving consistent results is not only sticking to your own specific trading plan and rules, but remaining patient and never giving up. The use of repeated trading affirmations can help dramatically with this.

In the world of trading, those who remain patient over the years and ‘slowly but surely’ carve out a positive equity curve will surely gain the vital skills needed to make trading a full time, long term career.

Most traders have only the ‘destination’ in mind, with the ‘journey’ aspect as secondary. This is the wrong approach. Without the long journey testing your patience, including all the difficulties and hurdles, the destination would be too easy to obtain and everyone would be doing it. This is why learning to trade can be seen as easy, however its the journey that most amateur traders find too difficult to sustain. This can all be overcome with the right trading mindset and understanding.

:Anything that comes quick goes quick. Patience is required for outstanding results.

A to Z : Weaknesses and Strengths of Traders

  
Analysis, Education
#  #  #  #

Ambitious

Makes and follows long term business plan

•Unambitious

Will ignore long term business plan

•Calm

Will handle times of market volatility and make smart decisions

•Worrying

Will panic when markets are volatile and make stupid decisions

•Cautious

Strictly follows Stop-Loss rules and Protects Trading Capital

•Rash

Will not be diligent with Stop losses and will risk trading capital

•Cheerful (more…)

A Short Note

  
Analysis, Education
#  #  #  #  #  #  #

“Jack Bogle likes “cheap” index funds. I don’t know why as they are risky and expensive considering the heavy losses, limited “work” involved and lack of skill. If a firm “manages” $1 trillion and charges “only” 20bp, that is $2 billion PROFIT every year even when returns are negative and retirement plans are wrecked! Lose investors’ hard-earned money? It’s the market’s fault not theirs, right? Get someone to make a list of stocks for a benchmark, buy them, and then endure many years below the high water mark! Who would invest in such a dangerous product as an index fund? No-one with fiduciary responsibility.”

Calamitous Consequences

  
  Education
#  #  #  #  #  #  #  #  #  #

Karl Marx died in March 1883, yet there has been a rebirth of the ideas he detailed on the inherent flaws of capitalism. Recently, Paul Tudor Jones gave a ‘Ted Talk’ about capitalism needing re-definition. My paper entitled ‘2014 and Beyond’ began with the sentence, “Modern day capitalism appears to need a different moniker”.  It is quite possible that future developments in capitalism will have profound and on-going influence on markets and valuations.

Let me first go on record and say that in the 135 years since Marx’ death, capitalism has been the single greatest engine for human advancement.  It has certainly been an outstanding way to organize the production and distribution of goods and services. Its free-market structure encouraged innovation, leading to new methods and products whose technological advancements allowed for globalization and the general shrinking of the world.  Entrepreneurship aided improvements to health and education, and was the cornerstone to economic progress. No other social construct in history has done more to advance the human condition, or lift more people out of poverty, than capitalism. 

A capitalist structure’s main quest is to ensure the real appreciation of capital.  Corporate leaders are incentivized to maximize shareholder value at almost any cost: the best means is to increase output per hour worked (productivity).   Can this be sustained forever? (more…)

Ray Dalio’s Long-Term Debt Cycle Charts

  
Analysis, Education
#  #  #  #  #  #  #  #  #  #  #

The following speech was delivered by Ray Dalio of Bridgewater at the Federal Reserve Bank of New York’s 40th Annual Central Banking Seminar on Wednesday, October 5, 2016.

~~~

It is both an honor and a very special opportunity for me to be able to address such a large and esteemed group of central bankers at such an interesting time for central bankers. I especially want to thank President Dudley and Vice President Schetzel for inviting me to forthrightly share my perspective as an investor and my unconventional template that I believe sheds some light on the very unconventional circumstances that we face.

It is no longer controversial to say that:

• …this isn’t a normal business cycle and we are likely in an environment of abnormally slow growth

• …the current tools of monetary policy will be a lot less effective going forward

• …the risks are asymmetric to the downside

• …investment returns will be very low going forward, and (more…)

Nassim Taleb’s Risk Management Rules of Thumb

  
  Education
#  #  #  #  #  #  #  #  #  #

Rule No. 1- Do not venture in markets and products you do not understand. You will be a sitting duck.

Rule No. 2- The large hit you will take next will not resemble the one you took last. Do not listen to the consensus as to where the risks are (that is, risks shown by VAR). What will hurt you is what you expect the least.

Rule No. 3- Believe half of what you read, none of what you hear. Never study a theory before doing your own observation and thinking. Read every piece of theoretical research you can-but stay a trader. An unguarded study of lower quantitative methods will rob you of your insight.

Rule No. 4- Beware of the nonmarket-making traders who make a steady income-they tend to blow up. Traders with frequent losses might hurt you, but they are not likely to blow you up. Long volatility traders lose money most days of the week. (more…)

How to Develop Yourself as a Trader -Anirudh Sethi

  
Analysis, Education
#  #  #  #  #  #  #  #

There is a well-known axiom in business: “Neglect to plan and you intend to fall flat.” It might sound chatty, yet the individuals who are not kidding about being fruitful, including traders, ought to take after these eight words as though they were composed of stone. Ask any trader who profits on a reliable premise and they will let you know, “You have two options: you can either efficiently take after a composed arrangement, or come up short.” Mastering the specialty of Forex trading is not as basic as it appears. Each and every day the number of retail traders in the internet trading group is expanding at an exponential rate because of its outrageous level of benefit potential. The master traders at Saxo have secured their money related opportunity in life just by trading the live resources in the market. Be that as it may, keeping in mind the end goal to profit in the internet trading world, you have to know how to deal with your Forex trading account available. Not at all like the expert traders, the tenderfoot traders in the monetary business bounce into the web based trading world without thinking about the market subtle elements and in this way they lose an immense measure of money. In this article, we will examine how to wind up noticeably an expert trader in the Forex trading world. On the off chance that you have a composed trading or venture design, congrats! You are in the minority. While it is still no undeniable certainty of achievement, you have disposed of one noteworthy barricade. On the off chance that your arrangement utilizes imperfect procedures or needs planning, your prosperity won’t come promptly, however at any rate you are in a position to diagram and adjust your course. By archiving the procedure, you realize what works and how to abstain from rehashing expensive slip-ups.

Acknowledging Direct Resources for Profit

In order to develop yourself as an expert Forex trader, you have to consider trading as your business. On the off chance that you take a gander at the expert traders in the money market then you will see that each and every one of them is trading the live resources in their Forex trading account with an extraordinary level. Much the same as the expert specialist the master in the monetary business likewise has a strong trading plan to trade the live resources in the market. A large portion of the fledgling traders in the budgetary market consider trading as a get rich speedy plan and at last, loses money in the internet trading world. So on the off chance that you genuinely need to wind up plainly an expert trader at that point ensure that you build up a trader’s attitude and consider trading as your business. Trading is a business, so you need to regard it in that capacity on the off chance that you need to succeed. Perusing a few books, purchasing an outlining program, opening an investment fund and beginning to trade is not a strategy for success – it is a formula for calamity. Once a trader knows where the market can possibly respite or invert, they should then figure out which one it will be and act as needs are. An arrangement ought to be composed of stone while you are trading, yet subject to re-assessment once the market has shut. It changes with economic situations and modifies as the trader’s aptitude level moves forward. Every trader ought to compose their own arrangement, considering individual trading styles and objectives. Utilizing another person’s arrangement does not mirror your trading qualities. Such a large amount of the reason numerous traders fall flat is that they never seek after trading the correct route, as an execution teach. They don’t have an organized procedure of learning. They don’t have the instruments to legitimately replay, audit, and right there trading. They don’t have guides to good example great trading rehearses. They don’t learn methodologies with genuine edges and rather trade arbitrary examples on outlines or features existing apart from everything else. They don’t have enough funding to survive their expectations to absorb information. They don’t discover the trading markets and styles that best fit their specific qualities.

(more…)

Go to top