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Arbitrage Movie Trailer: Film About Hedge Fund Manager Played By Richard Gere

  
Education, Video
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Directed by Nicholas Jarecki, it stars Richard Gere, Susan Sarandon, Brit Marling, Tim Roth, and Nate Parker.  The trailer looks like it also features a cameo by CNBC’s Maria Bartiromo.  The movie will be released on September 14th, 2012.

Gere plays a hedge fund manager who is desperate to sell his trading empire before the depth of his fraud is exposed, but he makes an error that forces him to turn to an unlikely person for help.
The trailer makes it look like the film is less about finance and more about a drama and homicide case.  The film’s tagline is Arbitrage: Power is the Best Alibi.
Embedded below is the movie trailer for Arbitrage:

 

Nassim Taleb’s Risk Management Rules

  
  Education
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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.

Rule No. 5- The markets will follow the path to hurt the highest number of hedgers. The best hedges are those you alone put on. (more…)

7 Things Every Trader must have

  
  Education
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1) Strategy – There are so many different strategies: value, growth, momentum, short selling, etc. Find one that fits your personality and do your best to master it. The fastest way to learn is to study success. In other words, find someone who is successful at the strategy you like, and then mimic them with your own style. Another key is to recognize when the market environment is not conducive to your strategy, and make the proper adjustments.

2) Confidence – If you don’t have confidence, you have very little chance of succeeding. This doesn’t just apply to trading, it applies to EVERYTHING in life (business, athletics, relationships, etc.). With regards to trading, you have to believe in what you are doing and not be afraid to make mistakes. The key is to learn from them, make adjustments, and constantly reevaluate your progress.

3) Product Focus – There are so many different trading vehicles: futures, commodities, currencies, stocks, bonds, options, etc. It’s ok to dabble in a few things at first, but eventually you need to find out what product works best for you, focus on it, and MASTER it. As they say, don’t be a “jack of all trades and master of none.”

4) Know Your Time Frame – You must find a time frame that fits your personality. If you are too nervous, maybe short-term trading isn’t for you. Everyone wants to make tons of money in the market really fast, but keep in mind that is not a healthy approach. Most people with this mindset tend to be “boom and bust” traders. They make a bunch of money and eventually blow up. If you are truly passionate about trading and hope to be in the game for a long time, I recommend focusing on a slow and steady approach. (more…)

20 One Liners From :The Little Book of Market Wizards by Jack Schwager

  
  Education
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  1. They have the resilience to come back from early losses and account blow ups.The_Little_Book_of_Market_Wizards_large
  2. They focus on what really matters in trading success.
  3. They have developed a trading method that fits their own personality.
  4. They trade with an edge.
  5. The harder they work at trading the luckier they get.
  6. They do the homework to develop a methodology through researching ideas.
  7. The principles they use in their trading models are simple.
  8. They have mental and emotional control is key while winning or losing.
  9. They manage the risk to avoid failure and pain.
  10. They have the discipline to follow their trading plan. (more…)

10 Things that Great Traders have Declared Independence From –

  
  Education
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  1. Great traders do not have to be right about any one trade, their success is based on winning more than they lose on a large amount of trades.
  2. Great traders do not need trade ideas from other traders, they trade a system and method independent of others opinions.
  3. The best traders are independent of holding on to losing trades stubbornly trying to prove they are right, they cut losses.
  4. The best traders are not prisoners of their emotions they can make clear headed decisions due to trading like it is a business not an ego trip.
  5. Rich traders became rich because they had systems that allowed winning trades to be free to run as far as they would go. They are independent of price targets.
  6. Rich traders trade independently from BLUE CHANNEL sentiment.
  7. Great traders trade charts independently of market sentiment.
  8. Great traders trade independently of talking heads on financial television.
  9. Winning traders are independent of market gurus they have proven systems and methods.
  10. Great traders are free from the risk of ruin because they never risk more than 1% to 2% of their total capital on any one trade.

Ed Seykota on Trading Heat

  
Analysis, Education
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Ed Seykota:

Seasoned traders know the importance of risk management. If you risk little, you win little. If you risk too much, you eventually run to ruin. The optimum, of course, is somewhere in the middle.

Placing a trade with a predetermined stop-loss point can be compared to placing a bet: The more money risked, the larger the bet. Conservative betting produces conservative performance, while bold betting leads to spectacular ruin. A bold trader placing large bets feels pressure — or heat — from the volatility of the portfolio. A hot portfolio keeps more at risk than does a cold one. Portfolio heat seems to be associated with personality preference; bold traders prefer and are able to take more heat, while more conservative traders generally avoid the circumstances that give rise to heat. In portfolio management, we call the distributed bet size the heat of the portfolio. A diversified portfolio risking 2% on each of five instrument & has a total heat of 10%, as does a portfolio risking 5% on each of two instruments.

Our studies of heat show several factors, which are:

1. Trading systems have an inherent optimal heat.

2. Setting the heat level is far and away more important than fiddling with trade timing parameters.

3. Many traders are unaware of both these factors.

Profiting from Market Trends- Tina Logan (Book Review )

  
  Education
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When the market accommodates, trend trading can be highly lucrative. The trick, of course, is to divine the market’s often fickle moods. Tina Logan sets out to help the trader identify and exploit the “good times” in Profiting from Market Trends: Simple Tools and Techniques for Mastering Trend Analysis(Wiley, 2014).
The book is divided into two parts. The first, trend development, has chapters on trend direction, trend duration, trend interruptions, early trend reversal warnings, and later trend reversal warnings. The second part, putting trend analysis to work, deals with the broad market, bull markets, bear markets, and monitoring the market trends; it also includes a case study of the current bull market. Throughout, the text is illustrated with TC2000 (Worden Brothers) charts.
Let’s look at the chapter on early trend reversal warnings to get a sense of the book as a whole. Logan summarizes the warnings in a table. In an uptrend they are: a bearish climax move such as a key reversal or an exhaustion gap, bearish divergence, failure to break a prior peak, change of slope—rising trendline, break of tight rising trendline, approaching a strong ceiling, and bearish candlestick reversal pattern. The warnings in a downtrend are the reverse. (more…)

Jim Chanos on Taking Risks Early

  
  Education
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I took the biggest risk of my life at age 33 and I was terrified.

With a wife and two kids, a mortgage and almost nothing in the bank, I left my management position at a broker-dealer and dropped my Series 7. I essentially bolted from the business I had been in for a decade, giving up my license and my livelihood on a bet that I could be doing better for my clients as their advisor and make a lot more money once I was happy and the pit in my stomach dissolved.

And thank god it worked. I’m not sure what I would have done if it hadn’t.

In hindsight, I wouldn’t change much about my timing and all of what I had gone through to get things things right in the end – it was the real-world education of a lifetime. However, if I could change one thing, maybe it would be not waiting so long and staying with a profession that I truly hated. It probably would have been a lot less stressful had I pulled the ripcord in my twenties, before the babies and the bills.

Oh well.

Jim Chanos, one of the most successful investors of all time, began his career on The Street as a banker and then a brokerage firm analyst. The conflicts inherent in those roles drove him to seek out something more and that’s when he became a hedge fund manager. You see, Chanos was interested in the pursuit of truth and, what’s more, a way to make money from the discovery of truth before others could find it. The name of his firm, Kynikos Associates comes from the Greek word for cynic (and it can also mean ‘dog-like’, another apt metaphor for a fund that relentlessly hunts down meaning in the public information that others cannot see).

Here the legendary manager offers some advice to young professionals about timing their risk-taking: (more…)

Morgan Housel’s 9 Financial Rules

  
  Education
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1. Nine out of 10 people in finance don’t have your best interest at heart.
2. Don’t try to predict the future.
3. Saving can be more important than investing.
4. Tune out the majority of news.
5. Emotional intelligence is more important than classroom intelligence.
6. Talk about your money.
7. Most financial problems are caused by debt.
8. Forget about past performance.
9. The perfect investment doesn’t exist.

Building Winning Algorithmic Trading Systems-Kevin J. Davey :Book Review

  
  Education
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On balance expert systems trump human experts, hence the drive to make trading more systematic and mechanical. The problem is that Building Winning Algorithmic Trading Systems, the title of Kevin J. Davey’s new book (Wiley, 2014), can be tough. Davey recounts his sometimes gut-wrenching journey “from data mining to Monte Carlo simulation to live trading” and provides traders with useful information that will help them avoid his mistakes.

The author joins a rather small fraternity of systems developers who have shared their thoughts, for better or worse, with the reading public. I think here—and this list is in no way meant to be exhaustive—of Howard Bandy (Quantitative Trading Systems), Tushar Chande (Beyond Technical Analysis), Urban Jaekle and Emilio Tomasini (Trading Systems), Perry Kaufman (Trading Systems and Methods), Robert Pardo (The Evaluation and Optimization of Trading Strategies), and Thomas Stridsman (Trading Systems That Work).

The strength of Davey’s book is that it covers the entire process of designing, developing, testing, trading, and monitoring a system. It also includes Easy Language code for three sample strategies, and on the password-protected companion website (the password is given in the book) there are five helpful spreadsheets.
(more…)

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