Archives of “o neil” tag

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A Lesson on the "As if " Principle

  
  Education
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clip_image002In the 1880s, the psychologist William James developed and began teaching his “As If” principle of life. This might not make any sense to some of you, but it works. For example, if you want to be courageous, try to act courageously. If you want to be a nice guy, start putting a smile on your face and be friendly. If you want to be a great trader, then think like the great traders before us. You cannot be a great trader without first thinking that you are one. You get it?

A person that constantly thinks that he or she will fail in trading, cannot learn how to trade, or just simply has feelings that he or she will “never make it”, will inevitably fail. Think, act, and be like Jesse Livermore, Bernard Baruch, Nicolas Darvas, Gerald Loeb, Richard Wyckoff, William O’Neil, Jim Roppel, Steve Cohen, and many, many others. They play (played) to win and that’s how you should play: play to win. (more…)

WILLIAM O'NEIL'S STOCK TRADING COMMANDMENTS

  
  Education
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Last Night ,Completed reading  Trade Like An O’Neil Disciple by Gil Morales and Dr. Chris Kacher. One of the chapters, with a wealth of information, is “Our Bill of Commandments” wherein the authors discuss William O’Neil’s (think IBD) stock trading commandments. I thought it would be worthwhile to list them here.

1.  Never Get Carried Away With Yourself.  “The basic idea is that one should remain impervious to the illusions and trappings of wealth, as they often lead one to become carried away to the point where excess of one sort or another ultimately leads to one’s demise” (265).

2.  Never Operate From a Position of Fear.  “If you are fearful in the markets, either as a result of taking a recent loss or some other mistake, or even as a result of being nervous about the level of risk you are taking, then you are putting yourself in the position of making and unclear and hence incorrect decision” (265).

3.  You Learn More From Your Enemies Than You Do From Your Friends.  Make sure you take the criticism’s of others and use them to your advantage by recognizing that the more others criticize the more you value your own beliefs, trading or otherwise.

4.  Never Stop Learning and Improving. Always focus your mistakes and searching for ways to correct them.  That way you will not be as tempted to make the same mistake again. 

5.  Never Talk About Your Stocks.  This is purely an ego taming exercise.  While I personally believe it is ok to discuss technical analysis and stocks that may be on a watchlist there is really no benefit in bragging about success and hiding your failures.  It is ok to be wrong. 

6.  Don’t Get Giddy at the Top.  Bigger charts (such as the WEEKLY) are the best barameters for giddiness.  By watching over extended big charts, the trader’s emotions can be better managed thereby avoiding jumping on the caboose as the train is set to take a break from its recent trip.

7.  Use Weekly Charts First, Daily Second, and Ignore Intra-day Charts.  No need to focus on the noise at the expense of listening to the still, small voice of Mr Market. 

8.  Find The Big Stock.  Look for stocks under accumulation and then begin buying in preparation for distribution.

9.  Be Careful Who You Get Into Bed With.  Although not a trading rule per se, keeping good, solid company outside the charts, can help you be the best trader inside the charts.  “Trust and integrity between two people are the most important variables in life and in business” (269).

10.  Always Maintain Insane Focus. Focus “is what makes life worth living, and by relentlessly pursuing our passions we attain the state of insane focus that in turn drives high levels of success” (269).

No matter what you think of O’Neil and his trading strategy, one thing is for certain his commandments are applicable to all of us both in and outside the charts. 

101% ,Buy this Book too …..Read Trading/Pyschology Books it will be good for u !!

Minervini, Trade Like a Stock Market Wizard-Book Review

  
  Education
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Mark Minervini, U.S. investing champion in 1997, averaged a 220% return per year from 1994 to 2000 for a compounded total return of 33,500%. Yes, we all know that these astonishing figures coincided with a major bull market, but how many traders came anywhere close to his record during this period?

In Trade Like a Stock Market Wizard: How to Achieve Superperformance in Stocks in Any Market (McGraw-Hill, 2013) Minervini shares his SEPA (Specific Entry Point Analysis) trading strategy. It’s essentially a trend following/breakout strategy that screens for such variables as earnings surprises and relative strength and that looks for catalysts driving institutional interest. It relies on both fundamentals and technicals. Its focus is on youthful small- to mid-cap stocks.

There are strong echoes of Bill O’Neil, Ben and Mitch Zacks, Richard Donchian, even Jesse Livermore in Minervini’s work. That he borrows from such luminaries is not surprising. Having dropped out of school at the age of 15, he subsequently became “a fanatical student of the stock market. … Over the years,” he writes, “I’ve read an incredible number of investment books, including more than 1,000 titles in my personal library alone.” (p. 3) (more…)

Trade Like an O'Neil Disciple:Must Buy -Must Read !

  
  Education
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Here is my brief review. Detail review will follow later.
In a year around 40 to 50 books on trading are published, I read most of them, there are very few which have actionable trading ideas and can help you enhance your trading skills. Trade Like an O’Neil Disciple: How We Made 18,000% in the Stock Market is one of the best books I have read in recent years. I am already reading it second time and taking extensive notes.
If you are growth/ IBD/ momentum/ CANSLIM kind investor you will find practical ideas and some new ways of entering and exiting trades. You will also learn how explosive returns are possible under right circumstances using those methods.
The book also goes in to details of short selling and has couple of good short selling strategies.
The book is not for beginners and those looking for simple methods without much effort, you need to have some foundation about growth and momentum investing before appreciating and understanding it.
A must buy for growth/momentum investor who want explosive returns…..

Trading Books -Every Trader Should Read

  
  Education
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The Market Wizards Series – Jack Schwager:  Chances are you will find these books on the shelf of any serious trader.  They are without a doubt the most comprehensive collection of interviews with superstar traders ever published.  However, their dirty little secret is that although they capture perfectly a moment in time, they are extremely dated and will give you almost no insight into today’s markets or how to trade them. Their value now is in showing how even the greatest traders initially struggled and often blew up (repeatedly) before becoming successful.

Stan Weinstein’s Secrets For Profiting in Bull and Bear Markets – Stan Weinstein: This book was the first to quantify one of the most important concepts in trading; the four stages in which stocks move, which are the basing, advancing, topping, and declining stages.  Despite the fact that the cover of this book has not been updated since it was published in 1988, stage analysis is still relevant today.

How to Make Money In Stocks – O’Neil:  As an unnamed trader friend of mine recently said, all you need to do is review the charts in the first 150 pages of this book and you will be good to go.    These charts along with O’Neil’s annotations, give you a great foundation to understand the patterns stocks form before they go on massive runs.

Reminiscences of a Stock Operator – Edwin Lefevre:  Tough call on this book, only because I don’t think it is the Rosetta Stone of trading books like it is often described as.  The language is dated and colloquial, which though strange, is actually part of its charm. There are definitely some foundational lessons for trading in this book, but you as the reader have to do the historical conversion in your head from venue’s like “bucket shops,” to today’s market. (more…)

Ten Ways to Trade Like the Legendary William J. O’Neil:

  
  Education
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  1. Do not diversify broadly, instead focus on the leading stocks in the best industry groups.
  2. Cut any loss when the stock is down 7%/8% from your buy point.
  3. Buy stocks that are going up in value, not down.
  4. Add to a position as the stock goes up in value from your buy point not at lower prices.
  5. Buy stocks near their highs for the year not their lows.
  6. Study price charts to discover how the best stocks behaved historically in price action.
  7. Trade in the right direction based on the trend of the general market.
  8. Buy the best stocks in the market as they break out of properly formed bases or when they bounce off their 50 day moving averages.
  9. Do not be influenced by others, trade your plan.
  10. Buy stocks with the best earnings and sales growth at the right time using charts.

Ten Ways to Trade Like the Legendary Bill O’Neil

  
  Education
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If  one of the greatest traders in the world told you how to buy and sell the best stocks for the most profits would you listen? Well we have a chance to do just that with Bill O’Neil’s book “How to Make Money in Stocks”. His lifetime of research on how the market actually works is in his book.  Not his opinions but through studying the markets as a scientist would.

Not only did O’Neil’s firm study the best performing stocks of the past 100+ years but the AAII tested his system among fifty others for 12 years in real time and it won!

From January 1998 through December 2010, the American Association of Individual Investors has conducted an independent, real-time study of over 50 leading investing strategies, including CAN SLIM. The results show that IBD’s CAN SLIM strategy outperformed all other strategies, gaining +2,487.3% while the S&P 500 rose just 29.6%.

“After surveying all the top performing equity managers in the United States, Bill O’Neil was number one. His track record is second to none. And I’ve always wanted to work for the best.”

“In terms of long-term track record, yes. He has the best numbers. If you go back 20-25 years and you stack all the guys together that have been in the market that long, Bill’s got the highest returns. Higher than Peter Lynch. Higher than Buffett. It’s fantastic. I’ve painstakingly studied each of the firm’s market calls from I think it was 1968 onward because I wanted to see exactly where O’Neil was saying buy and sell. It just struck me, this accumulation/distribution and follow-through day technique works great because he’s never missed a major bull or a major bear market.”-Chris Kasher

  1. Do not diversify broadly, instead focus on the leading stocks in the best industry groups.
  2. Cut any loss when the stock is down 7%/8% from your buy point.
  3. Buy stocks that are going up in value, not down.
  4. Add to a position as the stock goes up in value from your buy point not at lower prices.
  5. Buy stocks near their highs for the year not their lows.
  6. Study price charts to discover how the best stocks behaved historically in price action.
  7. Trade long based on the trend of the general market.
  8. Buy the best stocks in the market as they break out of properly formed bases or when they bounce off their 50 day moving averages.
  9. Do not be influenced by others trade your plan.
  10. Buy stocks with the best earnings and sales growth at the right time using charts.

Quotes From Legendary Traders

  
  Education
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“I absolutely believe that price movement patterns are being repeated; they are recurring patterns that appear over and over. This is because the stocks were being driven by humans- and human nature never changes”.

-Jesse Livermore (Considered by many to be the greatest stock market operator ever. Made 100 million dollars in 1929 stock market crash. Made several other multi-million dollar fortunes in his trading career).
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“You have to cut your losses fast. The secret for winning in the stock market does not include being right all the time. The key is to lose the least amount possible when you are wrong”.

-William J. O’Neil (In my opinion, the best stock market operator in the world today. Has made an incredible fortune trading the stock market. O’Neil is the founder of Investors Business Daily. Much of my stock market education and training has been from William J. O’Neil).
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“Whatever method you use to enter a trade, the most critical thing is that if there is a major trend, your approach should assure that you get in that trend”.

-Richard Dennis (Turned 400 dollars into a fortune of at least 200 million dollars by using his remarkable trading skills).
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“I am primarily a trend trader. In order of importance to me are: (1) the long-term trend, (2) the current chart pattern, and (3) picking a good spot to buy or sell”.

-Ed Seykota (One of the greatest traders of all time. Turned 5000 dollars into an incredible 15 million dollars or more).
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“The most important rule of trading is to play great defense”.

-Paul Tudor Jones (An amazingly consistent and successful trader. In 2006, earned a whopping 750 million dollars).
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“Being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong”.

-Bernard Baruch (Fantastic trader who earned ten’s of millions of dollars in the first part of the 20th century).
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“The greatest safety lies in putting all your eggs in one basket and watching that basket”.

-Gerald M. Loeb (Amassed many millions in the stock market during his long career).
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Books on short-selling

  
  Education
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1) How to Make Money Selling Stocks Short by William O’Neil (Wiley, 2005) – [Technical, Swing & Position Trading]
2) Sell & Sell Short by Dr. Alexander Elder (Wiley, 2008) – [Technical, Day Trading]
3) The Art of Short Selling by Kathryn Staley (Wiley, 1997) – [Fundamental]
4) Sold Short by Manuel Asensio (Wiley, 2001) – [Fundamental]
5) Sell Short: A Simpler, Safer Way to Profit When Stocks Go Down by Michael Shulman (Wiley 2009) – [Macro]

The best way to become an effective short seller is by making it a habit of studying hundreds and even thousands of charts every week. Train your eye to see the setups, the accompanying volume, how the MA’s line up, etc. The only way to do this is with practice. Short-selling can become very profitable due to the simple fact that stocks drop faster than they rise (in most cases) and for me, it typically only takes about 1-3 days to make a decent profit of 10% or more.

Trade only the best setups to increase your odds. I do recommend the use of stop losses above key resistance areas due to the fact that losing short positions can cause serious damage if left unattended.

Cut your losses short, no questions asked

  
  Education
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The majority of unskilled investors stubbornly hold onto their losses when the losses are small and reasonable. They could get out cheaply, but being emotionally involved and human, they keep waiting and hoping until their loss gets much bigger and costs them dearly.”
William O’Neil
The key to trading success is emotional discipline. If intelligence were the key, there would be a lot more people making money trading… I know this will sound like a cliche, but the single most important reason that people lose money in the financial markets is that they don’t cut their losses short.”
Victor Sperandeo
Some people say, “I can’t sell that stock because I’d be taking a loss.” If the stock is below the price you paid for it, selling doesn’t give you a loss; you already have it.
William O’Neil
When I became a winner I went from ‘I figured it out, therefore it can’t be wrong’ to ‘I figured it out, but if I’m wrong, I’m getting the hell out, because I want to save my money and go on to the next trade.’”
Marty Schwartz

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