You don't have to understand why prices are moving to profit from them. The best way to learn to trade is by trading.
Archives of “Investment” tag
rssTraders Must Follow These Rules
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…)
15 Steps Must For Traders
- Commit to doing the work to become a successful trader.
- Study the top resources for trading success.
- Decide what level of annual returns you want to make on average.
- Decide the maximum capital draw down level you can tolerate and accept.
- Become a reactive trader not a predictive trader, learn how to trade price action.
- Focus on a system with a winning risk/reward ratio. Bigger winning trades than losing trades.
- Build and back test a trading methodology that is profitable over many different market environments and meets your requirements.
- Write a trading plan that quantifies entries, exits, positions sizing, and your rules.
- If you have the personalty to trade this system and plan with real money then proceed.
- Eliminate the risk of ruin by never losing more than 1% of trading capital on any one trade. (more…)
According To Psychologists : 20 Facts -Why Traders Lose Money in Market ?
- Men trade more than women. And unmarried men trade more than married men. 5
- Poor, young men, who live in urban areas and belong to specific minority groups invest more in stocks with lottery-type features. 5
- Within each income group, gamblers under perform non-gamblers. 4
- Investors tend to sell winning investments while holding on to their losing investments. 6
- Trading in Taiwan dropped by about 25% when a lottery was introduced in April 2002. 7
- During periods with unusually large lottery jackpot, individual investor trading declines. 8
- Investors are more likely to repurchase a stock that they previously sold for a profit than one previously sold for a loss. 9
- An increase in search frequency [in a specific instrument] predicts higher returns in the following two weeks. 10
- Individual investors trade more actively when their most recent trades were successful.11
- Traders don’t learn about trading. “Trading to learn” is no more rational or profitable than playing roulette to learn for the individual investor.
These 13-cent stamps beat the U.S. stock market
Are stocks always the best long-term investment?
Maybe not.
When some obscure Hawaiian stamps from 1851 go up for auction later this month, they are expected to fetch from $50,000 to $75,000 each.
And if they do, that will mean they have almost certainly been a better financial investment — probably a much better investment — over the past 165 years than the U.S. stock market.
The 13-cent so-called “Missionaries” were used by Christian missionaries in the Hawaiian islands to send letters home. At the time, Hawaii was an independent kingdom. The Associated Press reports that the stamps are part of a 77-stamp collection being sold by Bill Gross, the bond market guru. Ten such “Missionaries” in near-mint condition are being sold.
If the stamps sell for $50,000 each, that will represent a compound annual return of 8.1% over the initial 13-cent purchase price. If the stamps sell for $75,000, you can raise that to 8.4%. (more…)
George Soros- “The Master of Speculation”
Soros: “The Myth”
Soros’ “The Alchemy of Finance” is a seminal investment book… it should be read, underlined, and thought out page-by-page, concept-by-idea. He’s the best pure investor ever… probably the finest analyst of the world in our time.”
-Barton Biggs
Soros: “The Reality”
“My father will sit down and give you theories to explain why he does this or that. But I remember seeing it as a kid and thinking, Jesus Christ, at least half of this is B.S., I mean, you know the reason he changes his position in the market or whatever is because his back starts killing him. It has nothing to do with reason. He literally goes into a spasm, and it’s his early warning sign.”
-George Soros’ son, Robert
George Soros on Himself
“My approach works not by making valid predictions but by allowing me to correct false ones.”
-George Soros
Soros and Exits
“When George is wrong, he gets the hell out. He doesn’t say, ‘I’m right, they’re wrong.’ He says, ‘I’m wrong,’ and he gets out, because if you have a bad position on, it eats you away. All you do is think about it — at night, at your home. It consumes you. Your eye is off the ball completely. This is a tough business. If it were easy, meter maids would be doing it.”
– Alan Raphael (Ex-Soros CIO)
Warren Buffett Nails It On The Importance Of Luck In Life
WARREN BUFFETT: Well I came up with that a long, long time ago to describe the situation that – I was lucky. I was born in the United States. The odds were 30 or 40-to-1 against that. I had some lucky genes. I was born at the right time. If I’d been born thousands of years ago I’d be some animal’s lunch because I can’t run very fast or climb trees. So there’s so much chance in how we enter the world. And –
LIU: And you were always aware to make sure your children and their grandchildren, and your grandchildren would be grounded.
WARREN BUFFETT: Yes. And we’re not – how you came out of the womb has really nothing to do with what kind of person you are. You decide what kind of person you’re going to be. It does decide whether maybe you never have to do an item of work in your life and maybe determine whether you’re fighting uphill all of the time, but where in my life, in my eyes is we’re all created equal, and but we don’t all have an equal opportunity by a longshot. And my kids really work every day in trying to even up the scorecard.
Luck plays a big role in life. But you also get to choose how you’re going to use that luck and whether you want to try to make more of your own luck.
David Halsey,Trading the Measured Move -Book Review
David Halsey throws out the old notion of a measured move: that you copy an AB move up (or down) and paste it on a retracement low (or high) of C to get your price target D. In Trading the Measured Move: A Path to Trading Success in a World of Algos and High Frequency Trading(Wiley, 2014) he substitutes Fibonacci levels.
He uses three trade setups: the traditional 50% retracement measured move (MM), the extension 50% MM, and the 61.8% failure. When a trade is entered, its target is 123% from a swing high or low (and sometimes from a breakout) that is followed by a retracement (50% in the traditional setup). That is, the target is AB + 23%. Halsey shows both successful and failed MM trades on charts—unfortunately usually grey bars on a black background, which makes them hard to decipher.
The measured move trade setups are not stand-alones. Halsey discusses the use of multiple time frames, seasonality, NYSE tools, tick extremes and divergences, and gaps. He also discusses how to manage positions and take profits, advanced (actually, pretty basic) risk management, trading psychology, and having a trading plan and journal. (more…)
"Markets have consistently experienced once in a 100-year events every five years" – Paul Tudor Jones
Lessons From Dorsey Wright’s Thomas Dorsey
“Investment philosophy is really about temperament, not raw intellect. In fact, proper temperament will beat high IQ all day.” – Michael Mauboussin
Last week the Wall Street Journal ran a profile of Thomas Dorsey, the president of Dorsey Wright & Associates, an investment firm that focuses on momentum and trend following strategies.
I had a few people send me this story asking for my thoughts.
Early in my career, when I thought I knew everything, it was easy to dismiss an investment philosophy that differed from my own because I thought I had it all figured out. (more…)