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5 Great Quotes From Jesse Livermore

  
Analysis, Education
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1. The only leading indicator that matters

Watch the market leaders, the stocks that have led the charge upward in a bull market. That is where the action is and where the money is to be made. As the leaders go, so goes the entire market. If you cannot make money in the leaders, you are not going to make money in the stock market. Watching the leaders keeps your universe of stocks limited, focused, and more easily controlled.

2. Patterns repeat because human nature hasn’t changed for thousand of years

There is nothing new on Wall Street or in stock speculation. What has happened in the past will happen again, and again, and again. This is because human nature does not change, and it is human emotion, solidly build into human nature, that always gets in the way of human intelligence. Of this I am sure.
All through time, people have basically acted the same way in the market as a result of greed, fear, ignorance, and hope. This is why the numerical formations and patterns recur on a constant basis.
I absolutely believe that price movement patterns are being repeated. They are recurring patterns that appear over and over, with slight variations. This is because markets are driven by humans — and human nature never changes.

3. Your first loss is your best loss. (more…)

IEA cuts 2014 global oil demand forecast by 60k to 1.29mbpd

  
  Education
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  • Cuts 2014 forecast for non OPEC oil supply growth by 250k to 1.5mbpd
  • Lower Russian projections drive estimates lower
  • OPEC crude supply fell in March by 890k to 29.62mbpd on Iraq, Libya & Saudi
  • Says market balances indicate OPEC will need to raise output in second half of year
  • OECD commercial oil stocks fell by 6.5m in Feb to 2.567tn barrels

Brent crude has been looking slightly cheaper on the cut in demand forecast and the 108.30/50 level is still the level that needs to be broken for a push up. 

Traders-Never Do These 5 Things

  
  Education
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There are things that we do as traders that set us back in our journey to success and lose us money. There are other things that traders do that just destroy themselves. Many of the following things are done daily by the 90% of traders that lose money in the market consistently. If we want to be a longer term winner trading the markets we have to take these lessons to heart and over come our natural instincts by doing the opposite.

  1. Instead of cutting a loss the trader holds it stressing over it for the rest of the day or a week. This destroys the trader’s mental capital and inflicts completely unnecessary emotional pain. The first loss it the best loss.
  2. A trader that trades their opinion instead of the price action has a lower success rate than someone who just trades price action. The vast majority of traders make money by following trends and chart patterns not their own opinion.
  3. A trader who puts on the one big trade that they think they just can’t lose on is usually the one that blows up their account. A trader must always have stops and must always manage risk regardless of their belief in any one trade.
  4. Believing that you are right about a trade and the market is wrong is a sure path to destruction. The market is always right because price is reality. How do we know when we are wrong? We lose money that is proof enough.
  5. A trader who endlessly searches for stock picks and predictions instead of  learning how to trade a robust method while managing their own mind and using risk management is doomed to failure.

The war against ‘insider trading 2.0’

  
Analysis, Education
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MUST READ

In India u can fight for Poverty or can try to stop Corruption…….But u can’t stop INSIDER TRADING-It’s our Challenge

Insider trading is a fluid concept. Until 1980, the practice was not illegal in the UK. Prior to then, tipping off favoured clients about market-sensitive company information was a stockbroker’s job description, rather than an illegal activity. Times have changed and so has the pace of financial markets.

In 2009, Samantha Bee, one of the cast members on The Daily Show, the satirical US television programme, said that “if I know about a stock’s activity the day before, it’s called insider trading. But if I know about a stock’s activity one second before, it’s called high-frequency trading.”

Now, however, Eric Schneiderman, the New York attorney-general, is waging war on what he calls “insider trading 2.0”. He is taking aim at the precise time sensitive information is delivered electronically.

Mr Schneiderman’s office is currently investigating the market data industry. In July, under pressure from Mr Schneiderman, Thomson Reuters suspended its practice of releasing consumer survey data from the University of Michigan (UoM) two seconds earlier to high-frequency trading clients who paid an additional fee. Clients paying for Thomson Reuters’ financial information terminals will continue to receive the data five minutes ahead of the general public, who have to make do with a press release. (more…)

Nassim Taleb's Six Rules For Succeeding In Life

  
  Education
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TalebSuccess in all endeavors is requires absence of specific qualities.
1) To succeed in crime requires absence of empathy,
2) To succeed in banking you need absense of shame at hiding risks,
3) To succeed in school requires absence of common sense,
4) To succeed in economics requires absence of understanding of probability, risk, or 2nd order effects and about anything,
5) To succeed in journalism requires inability to think about matters that have an infinitesimal small chance of being relevant next January, 
…6) But to succeed in life requires a total inability to do anything that makes you uncomfortable when you look at yourself in the mirror.

TRADE WHAT IS NOT WHAT YOU THINK SHOULD BE

  
Analysis, Education
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tradewhatis

Trade what is… for in doing so your trading is based on fact, substance and reality.  It provides clarity, confidence, manageability, and useful feedback for consistent success where appreciation for winning, and respect for losing, keeps you in the game.

Do not trade what you think should be….for in doing so your trading is based on egotism, a false sense of foresight, the desire for validation and approval, and the “win at all cost” mentality, which  leads to confusion, anxiety, anger, and despair…not to mention the inability to trade another day.

Trading vs investing

  
  Education
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But let’s use a couple of examples:
– trading: I buy a basket of stocks this morning with the intention of reselling before the close
– investing: I build a portfolio of stocks with the intention to keep it a relatively long time, because I think that these stocks value will increase due to whatever reason, growth, value, the economy…

I also like the following classification, which I believe comes from Minsky:
– Profits on the position neither depend on price variation of the asset, nor on cost of carry: I am investing.
– Profits do not depend on price variation, but only on positive carry: I am trading.
– Profit depend on price variation of the asset: I am speculating.

The example and the definition are not equivalent, but they give a rough idea of what trading is and what investing is. The border between both activities can be blurry. But if you invest, you do not need a market. You can buy a bond with the intention of holding it to maturity. If you trade, you need a market to close the trades.

Trading Thought For Traders

  
  Education
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“When a market is going straight up, the natural inclination of many traders is to try calling a top. Active market players have  strong desire to be the market-timing genius that nails the precise  moment that a trend has come to an end. The attempt is understandable — but is it smart? In theory, you should be able to make a ton of money if you can do this with some precision, but  the reality is that this is usually more of an exercise in ego than
anything else — and it doesn’t tend to produce a big profit, either. What happens when people engage in this game is that they rack  up a series of losses as their trades are stopped out and they try again. The tendency is to justify the behavior by saying, “I was just a little early, but this time I’m going to nail it.” If you try long  enough, you will eventually be right, but what we never hear  about is how much money has been lost in the process. Would  you have better off simply staying with the trend and only selling  once you saw some weakness? In addition to the cost of losses  on premature short positions, there is another hefty price: the  profit you have lost by failing to stick with the trends. It is hard enough to keep pace with the market trend when you are long. It  is just plain impossible when you are obsessed with trying to call  a market turn. The combination of being on the wrong side of the
market, along with the opportunity cost of premature shorts, should give pause to anyone who is trying to time market turns.” –

1929 Wisdom

  
  Education
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From John Hussman:

Galbraith reminds us that the 1929 market crash did not have observable catalysts. Rather, his description is very much in line with the view that the market crashed first, and the underlying economic strains emerged later: “the crash did not come – as some have suggested – because the market suddenly became aware that a serious depression was in the offing. A depression, serious or otherwise, could not be foreseen when the market fell. There is still the possibility that the downturn in the indexes frightened the speculators, led them to unload their stocks, and so punctured a bubble that had in any case to be punctured one day. This is more plausible. “Some people who were watching the indexes may have been persuaded by this intelligence to sell, and others may have been encouraged to follow. This is not very important, for it is in the nature of a speculative boom that almost anything can collapse it. Any serious shock to confidence can cause sales by those speculators who have always hoped to get out before the final collapse, but after all possible gains from rising prices have been reaped. Their pessimism will infect those simpler souls who had thought the market might go up forever but who now will change their minds and sell. Soon there will be margin calls, and still others will be forced to sell. So the bubble breaks.”

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Stock Market Rules to Remember in 2014

  
  Education
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HNY-2014Technical analysis is a windsock, not a crystal ball. It is a skill that improves with experience and study. Always be a student, there is always someone smarter than you!

• “Thou Shall Not Trade Against the Trend.”

• Let volatility work in your favor, not against you.

• Watch what our “Politicos” do, not say.

• Markets tend to regress to the mean over time.

• Emotions can be the enemy of the trader and investor, as fear and greed play an important part of one’s decision making process.

• Portfolios heavy with underperforming stocks rarely outperform the stock market!

• Even the best looking chart can fall apart for no apparent reason. Thus, never fall in love with a position but instead remain vigilant in managing risk and expectations. Use volume as a confirming guidepost.

• When trading, if a stock doesn’t perform as expected within a short time period, either close it out or tighten your stop-loss point. (more…)

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