Archives of “Security” tag

rss

Four headlines hit at virtually the same time to undercut sentiment

  
  Analysis
#  #  #  #  #  #  #

Risk trades leg lower in a big way

Commodity currencies and stocks were caught in a quick downdraft after at least four headlines hit at virtually the same time:
  • Florida virus cases spike
  • Beijing moved to phase-2 containment on the latest virus outbreak, closing schools
  • Texas virus hospitalizations rose 8.3% to hit a record
  • Powell indicated that corporate bond buying probably won’t be aggressive and is more of a contingency
The S&P 500 is up just 0.45% after rising nearly 3% at the open.
Trump rant about Powell incoming…

World Health Organization: Declares coronvirus a public health emergency

  
  Analysis
#  #  #  #  #  #  #  #

WHO declares coronvirus a public health emergency

World Health Organization
  • Declares coronvirus a public health emergency
  • This is not a vote of no-confidence in China
  • does not recommend limiting trade and movement to to China virus outbreak
  • our greatest concern is the potential for the virus to spread to countries with weaker health systems
  • panel almost unanimously concluded that coronavirus is a global emergency
  • China has done tremendous things to limit the spread of the virus to other countries
  • never seen this type of mobilization in my life that that was being executed in China
  • Believes that the measures that China is taking will ‘reverse the tide’
  • On China WHO says ‘I have seen the capacity and I believe they will control this outbreak assumes possible’
Although the declaration of the coronavirus as a public health emergency, the officials from the World Health Organization are gushing about the China response to the virus, it’s containment and seem not to be concerned about the spread in China or in countries that are acting responsibly. Once again the biggest concern is countries with weaker health systems.

The price of of equities spike higher before the announcement then fell back down. We are currently trading near mid range of that volatile range.

Gold is moving off high levels as well currently trades at $1580.37. It is still up $3.70 on the day
In the forex market, the USDJPY has moved above back above its 100 day moving average as the up and downs continue in the pair off of news headlines.

Here is what’s on the economic calendar in Asia today – almost bare

  
  Analysis
#  #  #  #  #  #  #  #  #  #

2350GMT will bring data on weekly flows of securities (stocks/bonds bought/sold) from Japan.

Upon release these tend to have a negligible impact on forex (unless there is some reason for the market to be focused on them at the time).
Apart from some info due from South Korea and Singapore that’s about it.

Techniques to Control risk and Increase Safety

  
  Education
#  #  #  #  #  #  #  #
  • Before taking a position, know the amount you are willing to lose. -Marty Schwartz
  • If a stock drops 7% below my purchase price, I will automatically sell at the market–no second guessing, no hesitation.  -William O’Neil
  • You should always have a worst case point.  The only choice should be to get out quicker. -Richard Dennis
  • I have a mental stop.  If it hits that number, I am out no matter what. -Paul Tudor Jones
  • Combine that long-term objective with a protective stop that you move as the position goes your way. -Gary Bielfeldt
  • I set protective stops at the same time I enter a trade.  I normally move these stops to lock in a profit as the trend continues.  -Ed Seykota
  • Risk management is the most important thing to be well understood.  Under-trade, under-trade, under-trade is my second piece of advice.  Whatever you think your position ought to be, cut it at least in half.  My experience with novice traders is that they trade three to five times too big. -Bruce Kovner
  • Why risk everything on one trade?  why not make your life a pursuit of happiness rather than a pursuit of pain? -Paul Tudor Jones
  • Never risk more than 1% of your total equity on any one trade.  By risking 1% I am indifferent to any individual trade.  Keeping your risk small and constant is absolutely critical. -Larry Hite
  • The key is to lose the least amount of money when you are wrong. -William O’Neil
  • You have to minimize your losses and try to preserve capital for those few instances where you can make a lot in a very short period of time.  What you can’t afford to do is throw away your capital on suboptimal trades. -Richard Dennis
  • Most traders have a tendency to take risks that are too large at the beginning.  They tend not to be selective enough when they take risks. – Gary Bielfeldt
  • The object is always to minimize your risk. -Tom Baldwin
  • No matter what happens, I know my worst case.  My loss is always limited. -Tony Saliba
  • You might have a low-risk trade, but if you are afraid, you probably will not take it.

 

One Liners For Traders

  
  Education
#  #  #  #  #  #  #
  • Let winners run. While momentum is in phase, the market can run much further than might be expected.
  • Corollary to that rule: Do not exit winners without reason!
  • Be quick to admit when wrong and get flat.
  • Sometimes a time stop is the right solution. If a position is entered, but the anticipated scenario does not develop then get out.
  • Remember: if one thing isn’t happening the other thing probably is. Historically, this has never been good for me…
  • Be careful of correlations. Several positions can often equal one large position bearing unacceptable risk. Please think.
  • I am responsible for risk management, money management, trade management, doing the analytical work and putting on every trade that comes.
  • I am not responsible for the outcome of any one trade. Markets are highly random. I do not have a crystal ball. I am not as smart as I think I am.
  • Risk management is the first and last responsibility. I can make almost any mistake and be ok as long as I do not violate my risk management parameters.
  • Opportunity comes every day. Do not neglect the work. Must do analysis every day.
  • Opportunity comes every day. Get out of poor positions. Move on.
  • I am a better countertrend trader than a trend trader. Sometimes the crowd is right, and they will run me over at those times if I’m not quick to admit I’m wrong.
  • If you’re going to do something stupid, at least do it on smaller size.

STOP TRADING until you can answer YES to all QUESTIONS

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #

Managing Risk as a trader is the most important consideration and if you answer NO to any of the following questions, then STOP TRADING until you can answer YES to all of them:

  • Do you have a written trading plan that deals with risk management?
  • Have you calculated the risk that you are comfortable with in every trade?
  • Will you not place a trade, even though you have a healthy balance in your trading account, when you know that your risk exposure goes beyond the risk outlined in your trading plan?
  • Have you identified what your maximum position size will be?
  • Do you have a stop in place every time you trade?
  • Are you aware that risk management is not just about where you place your stop?
  • Will you be able to stick to your risk management rules under ALL trading conditions?

There are many ways to manage your risk but until you have a risk management process written into your trading plan and you stick to these risk management rules on EVERY occasion, then you have more work to do until you are on your way to being a successful trader. (more…)

Probability in Trading

  
Analysis, Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #

The indulgence of probability

Probability in day trading is an extremely flexible and equally subjective authority. It is one such aspect that provides for a comprehensive room in terms of making decisions and analysing the potential effects of the decision as well. It can be envisioned as a semi-mechanical process which is based on an automated system comprising of various probabilities that depict two possible results at the end of it all.

Application of the laws of probability to determine market curve

The laws of probability are majorly applied to the stock market arena in speculating the growth curve. One of the most common examples is the influence of present growth on a stock. For instance the laws of probability in stock market confers to the fact that a stock is expected to underperform following an adverse growth session since major players tend to reap in the benefits without further risk involvement.

The substantial loss is incurred since major proportions of the people seemingly think alike and want to either cash out with the profits they have made or simply by virtue of the fear of losing money. Either way the scenario is completely structured owing to the presumptuous thinking of the common people and the misguiding statistical analysis with probability at its core.

It is therefore easily understandable that probability plays a comprehensive role at the crux of shaping the stock market manoeuvres. Probability in day trading is completely speculative yet self-induced as well. In an easier and subtle language it can be envisioned as a pseudo element that helps to shape the movements. It is significantly a common entity that is extensively present at the back of the mind in each trader.  

Probability based trading (more…)

Go to top