From Bloomberg Nov 4, 2011:
From BBC March 4, 2003:
He might be rich, but let’s face it: he is one manipulative character. |
Archives of “financial instruments” tag
rssFive Market Scenarios
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Five market scenarios that place you at the most risk.
- 1.Bad Markets – A good pattern won’t bail you out of a bad market, so move to the sidelines when conflict and indecision take hold of the tape. Your long-term survival depends on effective trade management. The bottom line: don’t trade when you can’t measure your risk, and stand aside when you can’t find your edge.
- Bad Timing – It’s easy to be right but still lose money. Financial instruments are forced to negotiate a minefield of conflicting trends, each dependent on different time frames. Your positions need to align with the majority of these cycles in order to capture the profits visualized in your trade analysis.
- Bad Trades – There are a lot of stinkers out there, vying for your attention, so look for perfect convergence before risking capital on a questionable play, and then get out at the first sign of danger. It’s easy to go brain dead and step into a weak-handed position that makes absolutely no sense, whether it moves in your favor or not. The bottom line: it’s never too late to get out of a stupid trade.
- Bad Stops – Poor stops will shake you out of good positions. Stops do their best work when placed outside the market noise, while keeping risk to a minimum. Many traders believe professionals hit their stops because they have inside knowledge, but the truth is less mysterious. Most of us stick them in the same old places.
- Bad Action – Modern markets try to burn everyone before they launch definable trends. These shakeouts occur because most traders play popular strategies that have been deconstructed by market professionals. In a sense, the buy and sell signals found in TA books are turned against the naïve folks using them.
Trading Quotes
“Time is your friend; impulse is your enemy.” John (Jack) Bogle - “When reward is at its pinnacle, risk is near at hand.” John (Jack) Bogle
- “Rule no. 1 is never loose money. Rule no. 2 is never forget rule number one.” Warren Buffett
- “Look at market fluctuations as your friend rather than your enemy. Profit from folly rather than participate in it.” Warren Buffett
- “I paraphrase Lord Rothschild: The time to buy is when there is blood on the streets.” David Dreman
- “It is absurd to think that the general public can ever make money out of market forecasts.” Benjamin Graham
- “The whole secret to winning and losing in the stock market is to lose the least amount possible when you are not right.” William J. O Neil
- “It is not whether you are right or wrong that is important, but how much money you make when you are right and how much you lose when you are wrong.” George Soros
- “If you want to have a better performance than the crowd, you must do things differently from the crowd.” John Templeton
- “My first rule is not to lose money. Losing an opportunity is minor in comparison, because there are always new opportunities around the corner.” Burt Dohmen
- “Experienced traders control risk, inexperienced traders chase gains.” Alan Farley
- “Most traders take a good system and destroy it by trying to make it into a perfect system.”
- “Trade what you see, Not what you think”
- “A Technician is an Artist and Technical Analysis is the Super Skill of discovering sharp and compact Charts and Patterns depicting Trends and Targets with Precision and Perfection.”
- “Identifying the “Rhythmic Flow” of Financial Instruments for skimming the crème, quietly and consistently is the fascinating nature of the Technician’s profession.”
- “Like any craft, such as piano playing, perfection may be elusive – I’ll never play a piece perfectly, and I’ll never buy the low and sell the high – but consistency is achievable if you practice day in and day out.”
- “You never need to chase a trade. The market has plenty of opportunities. The money runs out before the opportunities do.”
- “Good trading is a peculiar balance between the conviction to follow your ideas and the flexibility to recognize when you have made a mistake.”
- “Always understand the risk/reward of the trade as it now stands, not as it existed when you put the position on.”
- “At all levels of play the secret of success lies not so much in playing well as in not playing badly.”
“Time is your friend; impulse is your enemy.” John (Jack) Bogle Govt. Opening New Front in the "War on Wall Street," WSJ Reports
Federal prosecutors are conducting a preliminary criminal probe into whether several Wall Street banks misled investors about their roles in mortgage-backed deals, The WSJ reports.
The banks in the early stages of scrutiny are: JPMorgan, Citigroup, Deutsche Bank and UBS. Under similar preliminary criminal scrutiny are Goldman and Morgan Stanley, as The WSJ reported yesterday.
As our guest Todd Harrison, CEO of Minyanville.com, explains, these probe leaks are part of a larger, growing attack against Wall Street. (See: The War on Capitalism)
The focus of the inquiry are mortgage-backed collateralized debt obligations or CDOs and whether banks misled investors about these bets.
So why the focus on these specific derivatives?
“Presumably what’s closest to home, no pun intended, for a lot of people is their mortgages and foreclosures that we’re seeing,” Todd tells Aaron in the accompanying segment. “So those are the instruments that kicked Main Street in the groin pretty much. That’s where the line was drawn for a lot of the populace anger to really start to percolate.”
Harrison, who warns against the unintended consequences of Wall Street reform in an earlier segement, says policymakers risk going down a “slippery slope” by attacking financial instruments they don’t understand in an effort to score political points.
Traps and Pitfalls
Realistically, there are many ways to lose money in the financial markets and, if you play this game long enough, you’ll get to know the most of them intimately. Fortunately, a survivalist plan empowers you to avoid many of the traps and pitfalls faced by other traders. Above all else, learn the five market scenarios that place you at the most risk.
- Bad Markets – A good pattern won’t bail you out of a bad market, so move to the sidelines when conflict and indecision take hold of the tape. Your long-term survival depends on effective trade management. The bottom line: don’t trade when you can’t measure your risk, and stand aside when you can’t find your edge.
- Bad Timing – It’s easy to be right but still lose money. Financial instruments are forced to negotiate a minefield of conflicting trends, each dependent on different time frames. Your positions need to align with the majority of these cycles in order to capture the profits visualized in your trade analysis.
- Bad Trades – There are a lot of stinkers out there, vying for your attention, so look for perfect convergence before risking capital on a questionable play, and then get out at the first sign of danger. It’s easy to go brain dead and step into a weak-handed position that makes absolutely no sense, whether it moves in your favor or not. The bottom line: it’s never too late to get out of a stupid trade.
- Bad Stops – Poor stops will shake you out of good positions. Stops do their best work when placed outside the market noise, while keeping risk to a minimum. Many traders believe professionals hit their stops because they have inside knowledge, but the truth is less mysterious. Most of us stick them in the same old places.
- Bad Action – Modern markets try to burn everyone before they launch definable trends. These shakeouts occur because most traders play popular strategies that have been deconstructed by market professionals. In a sense, the buy and sell signals found in TA books are turned against the naïve folks using them.