Thomas Carr is the CEO of an advisory and trader training service, designer of a MetaStock add-on toolkit, and partner in an investment firm. Known online as Dr. Stoxx, he is the author of Trend Trading for a Living and Micro-Trend Trading for Daily Income. His latest work is Market-Neutral Trading: Combining Technical and Fundamental Analysis into 7 Long-Short Trading Systems (McGraw-Hill, 2014).
Carr is an excellent marketer which, as might be expected, is the downside of this book. Without the tools that he sells, the reader cannot implement all of the book’s strategies. He may not even gain the confidence to trade any of them since Carr admits that “blindly following a set of systems” doesn’t work. When real money was on the line, he traded “in a very detached, mechanical fashion” and lost a lot of money—both in his own account and in a small fund for clients. By contrast, he made a lot of virtual money for the subscribers of his newsletters. The difference (aside from the obvious real vs. paper money distinction) was that he added discretion when making calls for his newsletters. He applied “God-given skills of discretionary analysis, skills that [had] been honed by years of apprenticeship under some of the great masters of the game, in addition to a long slog of real-time, real-money trading experience.” (p. 131) How does a trader learn the discretion that is necessary to make trading systems profitable? “You need to find a mentor who already has it and sit by their side for a while.” (p. 134) Yes, Carr is also a mentor.
Now that you know that, without a further outlay of funds to Carr, you won’t be able to trade all of the systems described in this book and that, even if you can trade them all, you will still lose money if you don’t overlay them with a large dose of discretion (gained only by spending still more money), what does this book have to offer? (more…)
Archives of “Short” tag
rssGeorge Soros :Great Investor & The Ultimate Trader
On September 16, 1992, Soros’ fund sold short more than $10 billion in pounds, profiting from the UK government’s reluctance to either raise its interest rates to levels comparable to those of other European Exchange Rate Mechanism countries or to float its currency.
Finally, the UK withdrew from the European Exchange Rate Mechanism, devaluing the pound. Soros’s profit on the bet was estimated at over $1 billion. He was dubbed “the man who broke the Bank of England”.
Stanley Druckenmiller, who traded under Soros, was the genius behind the idea. Soros just pushed him to take a bigger size. In this case, the bigger size was one of the reasons why this trade worked. What is more important here is to highlight their position size. They risked their entire YTD gain (they were up 12%).
Just to give you a perspective of how ballsy it is to risk 12% of your capital on one trade, consider the following simplified example:
Let’s assume that your trading capital is 200k and you want to buy a stock at $50 with a stop at 47; hence you risk $3 per share.
Risking 12% of your capital, means 12% * 200k = 24,000.
Divide 24,000 by the amount you risk per share ($3) to get the total number of shares you could afford to buy, which in this case is 8000 shares. (more…)
To Trade or Not to Trade
in trading activity alone does not make money, the right activity at the right time is what makes money. Many times the right thing, is to do nothing.
In your actual trading you have to do four things very well to make money.
You have to know when to get in.
Only enter trades that have the highest probability of success and the best risk/reward ratio. Buy the best monster stocks during up trends. Short the fallen leaders when the game changes and they are under the 50 day. Buy the monster stocks at the gift of the 200 day moving average. Short down trending junk stocks. Go where the trends are.
You have to know when to get out.
When your trade reverses through a key support get out. When the market trend changes get out of your long positions. When your stop loss is hit, get out. When the stock reverses and hits your trailing stop, get out.
You have to know when to stay in. (more…)
Discipline
Dramatic and emotional trading experiences tend to be negative. Pride is a great banana peel, as are hope, fear, and greed. My biggest slip-ups occurred shortly after I got emotionally involved with positions.”
Ed Seykota
I don’t buy what I like, I buy what I can sell later at higher price.
Unless you are Buffet and capable to accumulate enough shares to impact management, your shares are just pieces of paper and you should treat them like such.
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It’s the greed factor that corrupts the way people think in this business. Unfortunately, I needed a 6 fig loss to remind me how stupid greed can make a person. Needless to say, from here on, or until I recover some of these losses, trading will be disciplined.
To Trade or Not to Trade-The Biggest Question For Traders
In trading activity alone does not make money, the right activity at the right time is what makes money. Many times the right thing, is to do nothing.
In your actual trading you have to do four things very well to make money.
You have to know when to get in.
Only enter trades that have the highest probability of success and the best risk/reward ratio. Buy the best monster stocks during up trends. Short the fallen leaders when the game changes and they are under the 50 day. Buy the monster stocks at the gift of the 200 day moving average. Short down trending junk stocks. Go where the trends are.
You have to know when to get out. (more…)
Ten Trading Terms Used By Technical Analysts -Sound Like Sex Acts
In no particular order….
- Blowoff Top
- Bottom Bounce
- Shorting Against The Box
- The Piledriver
- Inverse Hammer
- Kissing The Trendline
- Rolling A Position Forward
- Getting “Cramered”
- Churning
- Spread Trading
Above Terms u had Read many times written by Technical Analysts & Blue Channels Anchors + Analysts
You don't even need to beat the market to make a billion
Forbes on 2016 hedge fund performance
The average hedge fund returned 5.6% last year compared to 12% for the S&P 500 but that doesn’t mean the managers of the SPY ETF earned the most.
Forbes put together a list of the hedge fund managers who earned the most in 2016 and the results probably won’t surprise you. The familiar names are there and the paychecks are out-of-sight.
- James Simons – Renaissance Technologies $1.5 billion
- Michael Platt – BlueCrest $1.5 billion
- Ray Dalio – Bridgewater $1.4 billion
- David Tepper – Appaloosa $750 million
- Ken Griffith – Citadel $500 million
- Dan Loeb – Third Point $400 million
- Paul Singer – Elliott $400 million
- David Shaw – DE Shaw $400 million
- John Overdeck – Two Sigman $375 million
- David Sieger – Two Sigman $375 million
- Michael Hintze CQS $325 million
- San Druckenmillier – Duquesne $300 million
- Brett Ichan – Ichan Capital $280 million
12 Truths-Traders Should Know
1. Stock prices run in cycles. Periods of re-pricing are usually quick and powerful and then they are followed by trendless consolidation.
2. Stocks are very highly correlated during drastic selloffs and during the initial stage of the recovery. In general, correlation is high during bear markets.
3. Bull markets are markets of stocks, where there are both winners and losers. When the market averages consolidate, there are stocks that will break out or down, revealing the intentions of institutional buyers.
4. In the first and last stage of a new bull market, the best performers are small cap, low float, low-priced stocks.
5. Try to trade in the direction of the trend. It is not only the path of least resistance, but also provides the best profit opportunities. Have a simple method to define the direction of the trend.
6. Traders’ attention (and market volume) is attracted by unusual price moves. Sudden price range expansion from a consolidaiton is often the beginning of a powerful new trend.
7. Opportunity cost matters a lot. Be in stocks that move. Stocks in a range are dead money. (more…)
The 7 Psychological Mistakes Traders make
Trading too big to “get back to even”.
Going “all in” on one trade that they believe they just can’t lose.
Being on the wrong side of an asymmetric trade. Being short options for possible small gains if right but big losses if wrong. In the long term eventually this blows up.
Fighting a trend over and over again, a trend that a trader or investor can not even believe is very dangerous because shorts look better the higher a stock goes and longs look like they are getting a bargain the lower the stock sinks.
In a losing trade the trader starts thinking “add more to a losing position” instead of “I need to cut my loss short”.
The trader believes they are right and the market is wrong.
Traders are trading markets they do not even fully understand and a trader must fully understand the risk and leverage involved in currencies, futures, options, and commodities to prevent possible blow ups due from ignorance.
If a trader can tightly control risk and position sizes this will get them closer to getting in the club with the 10% of winning traders.
Jesse Livermore – A Great Trader?
There are however, significant question marks over Jesse Livermore’s trading record. He bankrupted himself more than once during his career. Then, having made one of the biggest inflation adjusted stock-market coups in history shorting the markets in 1929, he had lost it all by 1934.
Reasonable observers – for the sake of argument I shall include myself in this group – would not try to claim that Livermore was a flawless trader. Livermore is, however, remembered, while most of his trading contemporaries are long forgotten.
Livermore’s continuing fame arises from several significant factors:
- Livermore was a skilled reader of the now defunct ticker tape. In more modern terms, we would say that he was skilled in using price/volume data to predict where a stock’s price was heading.
- Not only did he read the tape successfully, amazingly he told the public how he did it. Trading concepts that we now call support, resistance and momentum can be clearly identified from Livermore’s work.
- The idea of giving up the day job and making a living on the markets is as attractive now as it was in Livermore’s day.
- Livermore stayed in the public eye when, in 1935, following a drunken argument, his ex-wife shot and injured Livermore’s oldest son Jesse Jr.
- Livermore successfully sold the idea to small time traders that they should ride their winners and sell their losers. Although many of them failed to heed his advice for psychological reasons (and continue to fail today, for the same reasons,) even the least educated of today’s traders are aware of this powerful method.
- Livermore lost one of the largest personal fortunes in history. Everything he had taken from the stock-market, he gave back. In the end, just like the bit-players, he failed to obey his own favorite rule – sell your losing trades.
Despite the question marks over his career, even today a trader can make money in the markets using Livermore’s methods. More recent trading gurus – such as Martin Zweig and Alexander Elder – owe a debt to Jesse Livermore for the methods they either use or publicize. There is no other figure in the history of the markets whose methods continue to figure so strongly in market trading than Jesse Livermore’s.