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China will limit short-selling on market reopen on Monday

China will not allow short selling on their stock markets when they reopen for trade on Monday 3 February 2020

The information comes via unnamed sources cited at Reuters . saying China’s regulator (China Securities Regulatory Commission (CSRC)) had issued a verbal directive to brokerages to not permit clients selling borrowed stocks.
  • It was not clear if the suspension – which was first reported on Sunday by Chinese media outlet 21st Century Business Herald – would be extended beyond Monday, one of the sources said.
Over the weekend Adam outlined various other stabilisation measures being taken in China:
  • China unveils economic measures in effort to promote calm with markets set to re-open
On the PBOC cash injection, its not as big as it seems:
  • PBOC to inject cash funds today
Its going to be an “interesting” welcome to the new year for financial markets in China today.

How Trump has trapped himself in China talks

He needs to be both tough-on-China and friendly to markets, but he can’t be

He needs to be both tough-on-China and friendly to markets, but he can't be
President Trump faces a dilemma.
If he stays tough on China, he risks hurting markets and in his mind, the Dow Jones Industrial Average is a top barometer for his Presidency.
If he softens on China and signs a deal that rolls back tariffs while getting little in return, he risks getting outflanked on an issue that has united Americans and has Democratic candidates talking tough.
The core belief among market participants is that he will cave on China and try to spin his deal as a good one — similar to what he did on NAFTA. That would keep markets happy.
But Trump may be considering another playbook. Top advisor Peter Navarro doesn’t believe that tariffs will hurt the domestic economy and he’s undoubtedly told Trump that the effects are overrated. At the same time, Trump invited Powell to the White House for an impromptu meeting on Monday and it may have been to feel out how the Fed would react to a deal falling apart.
Trump may believe that markets and the economy will hold up fine if he stays tough on China and Powell cuts.
The line from today’s Reuters report that really stands out to me is this:
Trump and U.S. Trade Representative Robert Lighthizer recognize that rolling back tariffs for a deal that fails to address core intellectual property and technology transfer issues will not be seen as a good deal for the U.S., a person briefed on the matter said.
I don’t think Trump has made up his mind but I do believe he’s weighing both courses of action.

Week ahead: US jobs, China trade, Opec ,Wimbledon

A high-stakes meeting between the presidents of the US and China will set the tone for markets heading into the new week, as the world’s two most important economies seek a resolution to a long-running trade dispute.

Also on tap in the US, investors await data on the labour market and manufacturing sector in a holiday-shortened week. Elsewhere, Opec members will meet to iron out oil production plans.

Here’s what to watch.

Economic data and the Fed

A fresh round of key US economic data due next week will probably factor into the Federal Reserve’s decision on interest rates in late July.

At the top of the list is the labour department’s monthly jobs report. Economists polled by Thomson Reuters anticipate an increase of 158,000 non-farm payrolls in June, which would reflect an uptick in hiring compared to the 75,000 jobs added in the prior month. The unemployment rate is expected to remain at a near 50-year low of 3.6 per cent.

Investors will also be able to parse the latest surveys from the Institute for Supply Management on the US manufacturing and services sectors, as well as reports on auto sales, factory orders and the nation’s trade balance.

The Fed’s policy-setting committee will reconvene on July 30-31, and investors expect the central bank to lower its target rate for the first time since the 2008 financial crisis amid soft inflation and uncertainty over global trade. The market has priced in a 100 per cent chance of a rate cut, with 30.2 per cent odds that officials will approve a cut of 50 basis points, according to CME Group’s FedWatch Tool which monitors Fed funds futures.

New York Fed president John Williams and Cleveland Fed president Loretta Mester — a non-voting member of the Federal Open Market Committee — are scheduled to speak at separate events on July 2. (more…)

A Good Trade -One Liner

  • A good trade is based on your trading plan; a bad trade is based on emotions and beliefs.
  • A good trade is based on your own personal edge; a bad trade is based on your opinion.
    • “A trader should have no opinion.  The stronger your opinion, the harder it is to get out of a losing position.”  -Paul Rotter
  • A good trade is made using your own time frame; a bad trade changes timeframe due to a loss.
  • A good trade is made in reaction to current price reality; a bad trade is made based on personal judgment.
    • Your plans can make you money because you’re not trying go predict what will happen; you’re adjusting in real time to what is happening.
    • Always trade in the direction of the longer-term trend of your time frame where the easiest money is located.
  • A good trade is made after identifying and trading with the trend; a bad trade fights the trend.
    • “The answer to the question, ‘What’s the trend?’ is the question, ‘What’s your timeframe?”  -Richard Weissman
  • A good trade is made using the trading vehicles you are an expert in; a bad trade is when you trade unfamiliar markets.
    • In the markets you will see that money flows from those who have not done their homework to those who have”

5 Minutes of Daily Conditioning

Deciding to be a profitable financial trader is the first step in becoming one. Trite you say? Not really. Missing this one step or doing it out of order xplains why 90% of brokerage accounts go to zero within the first year, many doing so in the first 4 months!

In addition to arbitrarily deciding to be a profitable financial trader, a more powerful and lasting way is to use psychological conditioning on yourself so that you CONSISTENTLY decide that you are a profitable trader Here’s my interpretation of the method for doing this that I learned from the famous success guru I alluded to in my comments two blogs back.

First, write out the sentence below on a piece of paper.

“FROM THIS MOMENT FORWARD, I AM A PROFITABLE TRADER”.

Second, consider the pain you have experienced before because you have not consistently thought of yourself as a profitable trader. Imagine experiencing that again in the present and future. Do this for 30 seconds. Notice how you feel as you do that. (more…)

Jesse Livermore: Original Trend Follower and Great Trader

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The unofficial biography of Jesse Livermore was Reminiscences of a Stock Operator published 1923. Below are selected quotes:

  • Another lesson I learned early is that there is nothing new in Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again.
  • I told you I had ten thousand dollars when I was twenty, and my margin on that Sugar deal was over ten thousand. But I didn’t always win. My plan of trading was sound enough and won oftener than it lost. If I had stuck to it I’d have been right perhaps as often as seven out of ten times. In fact, I have always made money when I was sure I was right before I began. What beat me was not having brains enough to stick to my own game- that is, to play the market only when I was satisfied that precedents favored my play. There is a time for all things, but I didn’t know it. And that is precisely what beats so many men in Wall Street who are very far from being in the main sucker class. There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. No man can always have adequate reasons for buying or selling stocks daily- or sufficient knowledge to make his play an intelligent play.
  • It takes a man a long time to learn all the lessons of his mistakes. They say there are two sides to everything. But there is only one side to the stock market; and it is not the bull side or the bear side, but the right side.
  • There is nothing like losing all you have in the world for teaching you what not to do. And when you know what not to do in order not to lose money, you begin to learn what to do in order to win. Did you get that? You begin to learn!
  • I think it was a long step forward in my trading education when I realized at last that when old Mr. Partridge kept on telling the other customers, Well, you know this is a bull market! he really meant to tell them that the big money was not in the individual fluctuations but in the main movements- that is, not in reading the tape but in sizing up the entire market and its trend.
  • The reason is that a man may see straight and clearly and yet become impatient or doubtful when the market takes its time about doing as he figured it must do. That is why so many men in Wall Street, who are not at all in the sucker class, not even in the third grade, nevertheless lose money. The market does not beat them. They beat themselves, because though they have brains they cannot sit tight. Old Turkey was dead right in doing and saying what he did. He had not only the courage of his convictions but the intelligent patience to sit tight.
  • ?the average man doesn’t wish to be told that it is a bull or bear market. What he desires is to be told specifically which particular stock to buy or sell. He wants to get something for nothing. He does not wish to work. He doesn’t even wish to have to think. It is too much bother to have to count the money that he picks up from the ground.
  • To tell you about the first of my million dollar mistakes I shall have to go back to this time when I first became a millionaire, right after the big break of October, 1907. As far as my trading went, having a million merely meant more reserves. Money does not give a trader more comfort, because, rich or poor, he can make mistakes and it is never comfortable to be wrong. And when a millionaire is right his money is merely one of his several servants. Losing money is the least of my troubles. A loss never bothers me after I take it. I forget it overnight. But being wrong- not taking the loss- that is what does damage to the pocketbook and to the soul.
  • What I have told you gives you the essence of my trading system as based on studying the tape. I merely learn the way prices are most probably going to move. I check up my own trading by additional tests, to determine the psychological moment. I do that by watching the way the price acts after I begin.
  • Of all speculative blunders there are few worse than trying to average a losing game. My cotton deal proved it to the hilt a little later. Always sell what shows you a loss and keep what shows you a profit. That was so obviously the wise thing to do and was so well known to me that even now I marvel at myself for doing the reverse.
  • The loss of the money didn’t bother me. Whenever I have lost money in the stock market I have always considered that I have learned something; that if I have lost money I have gained experience, so that the money really went for a tuition fee. A man has to have experience and he has to pay for it.
  • In booms, which is when the public is in the market in the greatest numbers, there is never any need of subtlety, so there is no sense of wasting time discussing either manipulation or speculation during such times; it would be like trying to find the difference in raindrops that are falling synchronously on the same roof across the street. The sucker has always tried to get something for nothing, and the appeal in all booms is always frankly to the gambling instinct aroused by cupidity and spurred by a pervasive prosperity. People who look for easy money invariably pay for the privelege of proving conclusively that it cannot be found on this sordid earth. At first, when I listened to the accounts of old-time deals and devices I used to think that people were more gullible in the 1860’s and 70’s than in the 1900’s. But I was sure to read in the newspapers that very day or the next something about the latest Ponzi or the bust-up of some bucketing broker and about the millions of sucker money gone to join the silent majority of vanished savings.
  • There are men whose gait is far quicker than the mob’s. They are bound to lead- no matter how much the mob changes.

DON’T TRADE EVERY DAY

Do not trade every day of every year. Trade only when the market is clearly bullish or bearish. Trade in the direction of the general market. If it’s rising you should be long, if it’s falling you should be short.

Jesse Livermore

This is a corollary of trade only when you have an edge. Don’t take part in the market unless you have an edge. And for most trading strategies, the edge comes from market trends.

In a bull trend, the market tends to rise. A trading edge is possible if you look to buy.

In a bear trend, the market tends to fall. If you are looking to sell, you might gain a trading edge.

When the market has no clear tendencies, it’s much harder to gain an edge. If that’s the case, be sure not to overtrade.

Remember that you are a trader, not a worker. A worker shows up for work every day. A trader shows up only when there’s money to be made.

The 14 Trading Lessons From “What I Learned Losing A Million Dollars”

  1. The potential of initial and temporary success only exists in trading. You can’t just call yourself a brain surgeon and get lucky while messing around in someone’s head. And just stepping on stage and trying to give a violin concert if you have never touched a violin before won’t end too well either.
  2. Right, wrong, win and lose are inappropriate terms for describing the participation in the markets. In 20/20 hindsight, decisions might be good or bad but not right or wrong. With regards to the markets, only expressed opinions can be right or wrong. Market positions are either profitable or unprofitable.Image result for What I Learned Losing A Million Dollars
  3. There are as many ways to make money in the markets as there are participants.  But there are only very few ways to lose.
  4. A light-bulb manufacturer understands that 2 out of 10 bulbs will not work; a fruit seller knows that some apples will be foul. Those losses are expected. In trading, we don’t expect to lose when we enter a trade. Unexpected losses are hard to deal with.  Acknowledging that losses are part of the game and accepting the losses are two very different things.
  5. In trading, losses are treated as mistakes and from early on, we have been taught that mistakes are bad and have to be avoided.
  6. If you know exactly how much you are going to win, but don’t know how much you can lose, you are denying losses.
  7. Trading is an activity without a beginning and an end. In an activity without an end, you can always make decisions and change your decisions based on the current situation. A football game, a roulette spin or blackjack have defined beginnings and endings; after the game is over, you can’t change anything. You have to accept the outcome. It’s not open for interpretation; you (your team) have lost or won. In trading, the “game” (activity) never ends and your trade (potentially) never ends. Because your trade doesn’t end, your loss is never final and it could always turn around.
  8. Rules are hard and fast. Tools have some flexibility. Fools neither have rules nor tools.
  9. A scenario might have been an acceptable trade based on someone else’s rules. Profitable opportunities will occur that you won’t participate in. Your rules will only enable you to engage in some of the millions of opportunities.
  10. You can’t calculate the probability of having a winner. You can only calculate how much you are going to lose. All you can do is manage your losses and not predict your profits.
  11. People usually pick the exit point as a function of their entry point and it’s usually some arbitrary Dollar amount.
  12. People rationalize a trade idea by expressing the trade in terms of the money odd’s fallacy – “it’s a three to one reward-risk ratio! I’ll risk $500 to make $1500”. The reward-risk ratio gives no information about the likelihood of winning a trade.
  13. People who ask, “Why is the market up or down?” don’t want to know why.  They only want to hear the reasons that justify their losing position.
  14. The last moment of objectivity for the roulette player is the moment before he places his bet and the wheels starts spinning. After that, he can’t do anything anymore to lose more money. For the market participant, the last moment of objectivity is the moment before he places his trade. But after that, he can still do a lot to lose more money. That’s why all your decisions and plans have to be made pre-trade.

10 Trading Mistakes !

tradingmistake1

  1. Refusing to define a loss.
  2. Not liquidating a losing trade, even after you have acknowledged the trade’s potential is greatly diminished.
  3. Getting locked into a specific opinion or belief about market direction. From a psychological perspective this is equivalent to trying to control the market with your expectation of what it will do: “I’m right, the market is wrong.” [private] (more…)