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Paul Ciana, New Frontiers in Technical Analysis (Book Review )

  
  Education
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New FrontiersThe six chapters in this book are written by six different authors: “Evidence of the Most Popular Technical Indicators” (Paul Ciana), “Everything Is Relative Strength Is Everything” (Julius de Kempenaer), “Applying Seasonality and Erlanger Studies” (Philip B. Erlanger), “Kase StatWare and Studies” (Cynthia A. Kase), “Rules-Based Trading and Market Analysis Using Simplified Market Profile” (Andrew Kezeli), and “Advanced Trading Methods” (Rick Knox).

Ciana provides some fascinating data about the preferences of those who use the Bloomberg Professional Service. For instance, Europe opts for log charts 47% of the time and Asia only 9% of the time. Asia prefers candlestick charts, the Americas bar charts. Worldwide the most popular technical indicators (excluding moving averages) are RSI, MACD, Bollinger bands (BOLL), stochastics (STO), directional movement index (DMI), Ichimoku (GOC), and volume at time (VAT). RSI is the clear winner, with a 44.4% worldwide preference; MACD comes in second at 22%. Some indicators have geographical ties. GOC has a 10.8% popularity rating in Asia as opposed to 2.5% in the Americas and 2.8% in Europe. VAT has a 5.3% rating in the Americas and only 1.8% in Europe and 1.6% in Asia.

VAT, for those who are unfamiliar with it, is something of a seasonal indicator. For instance, “from a historical perspective, VAT considers the volume that has occurred on that day over the past X years to create the average for that day. … From an intraday perspective, VAT creates an average of volume from the actual volume that occurred during that time-slice for the past X days. In both applications VAT can be projected into the future to get an idea of expected volume.” (p. 37)

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Advice To Traders From The Year 1923

  
  Education
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Your biggest enemy, when trading, is within yourself. Success will only come when you learn to control your emotions. Edwin Lefevre’s Reminiscences of a Stock Operator (1923) offers advice that still applies today.

  1. CautionExcitement (and fear of missing an opportunity) often persuade us to enter the market before it is safe to do so. After a down-trend a number of rallies may fail before one eventually carries through. Likewise, the emotional high of a profitable trade may blind us to signs that the trend is reversing.
  2. PatienceWait for the right market conditions before trading. There are times when it is wise to stay out of the market and observe from the sidelines.
  3. ConvictionHave the courage of your convictions: Take steps to protect your profits when you see that a trend is weakening, but sit tight and don’t let fear of losing part of your profit cloud your judgment. There is a good chance that the trend will resume its upward climb.
  4. DetachmentConcentrate on the technical aspects rather than on the money. If your trades are technically correct, the profits will follow. 
    Stay emotionally detached from the market. Avoid getting caught up in the short-term excitement. Screen-watching is a tell-tale sign: if you continually check prices or stare at charts for hours it is a sign that you are unsure of your strategy and are likely to suffer losses.
  5. FocusFocus on the longer time frames and do not try to catch every short-term fluctuation. The most profitable trades are in catching the large trends. (more…)

5 Wisdom Thoughts For Traders

  
  Education
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  1. Learn to think in probabilities. In some types of analysis, it’s easy to forget that any conclusion is only valid within the range of statistical probability. For instance, if we do valuation work, we might think that is the value, and just wait for price to converge. Technical tools make us face the reality in the market, and that is that markets are not very predictable, and are only predictable within a range of probabilities.
  2. Learn to cut your losses. It’s impossible to say what is the “most important” thing in trading or investing, but this certainly is a candidate. Many methodologies do not have any way of telling you when you’re wrong. For instance, if price is under your valuation and it goes down, the logical course of action is to buy more. At some point, declining prices carry a message, and technical tools can force us to respect that message.
  3. Understand how a market has been trending. This can be as easy as squinting at a price chart and see if it “goes up, down, or is pretty flat”. You don’t need moving averages or indicators to do this–simple visual inspection is enough. However (and this is a huge “however”), do not assume that a market that has been trending in the past will continue to trend in the future. That requires a few more steps.
  4. Understand when the rubber band might be stretched a bit too far. Markets tend to move in waves: directional movements will alternate with pullbacks or flat periods. Sometimes, a market goes a bit too far, too fast and can be set to snap back. Buying a market (or shorting) when it is overextended is chasing, and can open the trader up to some stunning losses. There are simple technical tools that will highlight when markets are perhaps a bit overextended, and can tell us to wait for more favorable conditions.
  5. Enforce discipline. Markets are random, but you cannot be random. The only way to get consistent results out of difficult and competitive markets is to always act with consistency and discipline. Technical methodologies encourage us to face market conditions and to immediately evaluate the results of our actions. There is no better way to drive toward consistent behavior.

Free 34 page technical analysis book to download

  
  Education
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I cam across this yesterday and though it might be interesting for some weekend technical analysis reading. I haven’t read it yet.

Its from the Market Technicians Association, the August issue of “Technically Speaking”.

Free download etc. etc. The link is here.

Whats in it? …

Free technical analysis book 08 August 2014

Seven Things Successful Traders Do

  
  Education
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1. Develop information avenues for market conditions and upcoming events

There are many factors that go into driving price action. Quite a few of these things are publicly known and broadcast far in advance. Find yourself a website that offers a calendar of upcoming economic events that can have an affect on currencies you trade. There is always the threat of getting whipsawed out of a position that looks pristine with the impact that news has on the markets.

Listening to analysts and advisers can provide insight on circumstances you may have overlooked. On the other hand, you want to be careful about basing your trading decisions on the information provided by one or two other people. Each trading you decision you make needs to be the right one for you, for your strategy, for your profitability. There are a lot of analysts out there and not all of them have a good grasp on what they are talking about.
 

2. Strive for consistency to generate repeated, positive results

Humans are creatures of habit. Working to turn your habit into instinct will provide a significant edge in your trading analysis. How do you do that? Repetition. A trader must continuously practice their method, edge, and trading circumstances to make it a natural extension of themselves. One could look at a martial artist as a metaphor for this practice. The martial artist practices, practices, and practices more to make their maneuvers an extension of their person so they don’t have to think about them when the time arises. Traders should do the same to incorporate their trading plan and practices into successful execution. (more…)

Top 10 Most Expensive and Cheapest Stock Markets

  
Analysis, Education
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… look at the table ranking the top and bottom 10 countries by PE10 valuation. The bottom features a couple of usual suspects (Russia and Greece), although in the case of Greece you might argue that earnings are now structurally lower so the PE10 is less useful for that particular market. At the top end, it’s likewise many usual suspects: America and a selection of high growth Asian countries (and Japan). While there are some similarities between those at the top and bottom it’s hard to make a broad sweeping statement which generalizes the two groups  – 
Expensive and Cheap Global Stock Markets

Traders Must Follow These Rules

  
  Education
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More important than any entry system….Money management and trading psychology are much important

Keep Losses Small…

Trade with stops

Trade in the direction of the trend

Doubling down is a sure way to lose money and blow up

Trade with a complete plan knowing exactly what to buy/sell…how much to buy/sell and know exactly when the trade does not work… (more…)

Why 95 % Traders Lose ?- Anirudh Sethi

  
Analysis, Education
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What if I told you that there is one thing that you can do as a trader? What if I said that all professional traders have one key habit in common. Further, what if I told you this secret habit allows the future to be anticipated by these expert traders and allows these traders to trade in a manner than traders? Traders using this habit understand what to expect from the markets and this habit gives a decided advantage that forex traders don’t have, confidence in their trading systems to these traders. Keep reading to see how you may create this habit yours that is key.

Would you like to know what this secret habit is?

This habit is not adopted by many traders though this secret habit is by far the single best predictor of trading success.

This is the one thing that all successful traders have in common. This one habit is known by many dealers but adopted by a few traders. Consequently, these few dealers are often the most prosperous traders on Earth and constitute the 3.7percent of profitable forex traders. Adopting this habit is the most important thing you can do for your trading.

This is a secret as it allows this group of forex traders to trade relaxed, anticipate the future and remain confident that traders hold dear.

That successful forex traders share, this one habit is this: their trading strategies are back tested by successful traders. They take the time to pour over market information using one of three testing methods. Successful forex traders have the ability to keep a more relaxed approach as they’ve seen their trading system perform over the years – often over the course of thousands of market scenarios and transactions. Armed with the data these consistently successful forex traders have the ability to anticipate the future. Maintaining a quiet assurance, successful forex traders have information to support their trading knowing that they will prevail in the markets have seen their trading platform work previously, and they know it is going to work later on. (more…)

Mental Fitness Tips that Every Trader Should Know -Anirudh Sethi

  
Analysis, Education
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Mental Fitness for Traders makes no thought of your money related conditions. All material introduced inside is not to be viewed as venture exhortation, but rather for general enlightening purposes as it was. Trading stocks, fates, Forex, and choices do include chance, so alert should dependably be used. We can’t ensure benefits or flexibility from misfortune. You accept the whole cost and danger of any trading you attempt. You are exclusively in charge of settling on your own speculation choices. Trading achievement is needy more on the dealer’s enthusiastic state than on the system utilized, paying little respect to how vigorous it might be. We are people so having feelings like fear and voracity is ordinary in our everyday life yet not in trading when we are trading we need to act like machines or robots. Regardless of whether you’re a specialist trader or only a tenderfoot, a great tip can measurably affect your main concern. A couple of the world’s best Forex dealers we’re made a request to uncover the best three hints, traps, and strategies that assist them trade gainfully. The great ones are found and developed. The Bad ones… well, you see achievement is just a couple of basic orders, honed each day; while disappointment is essentially a couple of blunders in judgment, rehashed each day. Up to 75-80% of traders are, for the most parts. Make a bigger number of misfortunes than benefits. With such low achievement rates, stock trading may be among the more unsafe calling around. Be that as it may, the 20%+ that do profit reliably, appears to take after the same mental chain of considerations and we thought it may be fascinating to represent some of those musings here for the advantages of our pursuers.

Passion for Trading

The larger topic of good trading propensities is the absence of feelings. The less passionate you are, the more effective you can apply your psyche. When you put your brain to trading you have a tendency to pose more inquiries, actually! A few things that may ring a bell when you make inquiries could be:

Does this flag demonstrate a long or short position?

  • How is the market, in general?
  • How huge would a position it be advisable for me to take?
  • What would I be able to manage?
  • Are more individuals discussing my stock now, than prior?
  • Is the market assumption evolving? Which way?

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