Archives of “stock” tag

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Nikkei 225 closes higher by 1.59% at 22,945.50

  
Analysis, Global Indices
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Japanese stocks boosted by more upbeat Wall Street sentiment

Nikkei 15-07

The late surge by US stocks overnight is helping to give Asian equities a decent lift in trading today, though Chinese and Hong Kong stocks are weighed down by US-China tensions after Trump removed Hong Kong’s special status earlier in the day.

The Hang Seng is seen at flat levels now after trading in the red earlier while the Shanghai Composite has pared some losses to be down by 0.2% currently.
Elsewhere, US futures are still keeping more upbeat with S&P 500 futures up by ~0.8%.
That is keeping the likes of the aussie and kiwi more underpinned ahead of European morning trade, with AUD/USD flirting with the 0.7000 handle while NZD/USD is trying to crack back above its key hourly moving averages at 0.6552-69.

How Isaac Newton went flat broke chasing a stock bubble

  
Analysis, Education
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For practitioners of Schadenfreude, seeing high-profile investors losing their shirts is always amusing.

But for the true connoisseur, the finest expression of the art comes when a high-profile investor identifies a bubble, perhaps even makes money out of it, exits in time – and then gets sucked back in only to lose everything in the resultant bust.

An early example is the case of Sir Isaac Newton and the South Sea Company, which was established in the early 18th Century and granted a monopoly on trade in the South Seas in exchange for assuming England’s war debt.

Investors warmed to the appeal of this monopoly and the company’s shares began their rise.

Britain’s most celebrated scientist was not immune to the monetary charms of the South Sea Company, and in early 1720 he profited handsomely from his stake. Having cashed in his chips, he then watched with some perturbation as stock in the company continued to rise.

In the words of Lord Overstone, no warning on earth can save people determined to grow suddenly rich.

Newton went on to repurchase a good deal more South Sea Company shares at more than three times the price of his original stake, and then proceeded to lose £20,000 (which, in 1720, amounted to almost all his life savings).

This prompted him to add, allegedly, that “I can calculate the movement of stars, but not the madness of men.”

South Sea Company (more…)

Nikkei 225 closes higher by 0.06% at 22,001.32

  
Analysis, Global Indices
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Tokyo’s main index returns from the long weekend to finish near flat levels today

Nikkei 17-09

It’s a bit of a mixed bag in Asia as Japanese stocks are playing catch up to the events in Saudi Arabia so we’re seeing O&G stocks do the heavy-lifting in Tokyo, offsetting geopolitical tensions that are weighing on risk sentiment elsewhere.

Meanwhile, Hong Kong and Chinese stocks were more pressured due to domestic factors with the city protests still causing some unrest in the former while the latter is dragged down by disappointment that China did not lower its one-year lending rate earlier today.
The Hang Seng is down by 1.5% while the Shanghai Composite is down by 1.7% currently. The risk mood overall remains more cautious but nothing suggestive of major flows as we begin European trading. USD/JPY sits just a tad higher at 108.20 currently.

Parabolic Moves Up:

  
  Education
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These are stocks that jump 100%, 200% or more in a span of several days. The top of the pattern is marked by buying exhaustion and the best way to determine the exact top is to look out for the following candlestick patterns: doji, gravestone doji, long-legged doji, shooting stars, dark could covers, and bearish engulfings. All patterns are typically accompanied by the highest volume bar on the entire chart. Entering on the topping day may provide more profit, but it is riskier. The next day is considered the confirmation day in which the stock breaks down. The 2nd option for entry (less risk) is to enter at the very beginning of the breakdown.
parabolicmoves

Read Links and Update yourself

  
Education, LINKS
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  • China turns tables on AAA debt time bomb nations (Bloomberg)
  • Gold at new record high after Saudi reserves double (FT)
  • Germany and France examine two-tier euro (Telegraph)
  • So that’s why investors can’t think for themselves (WSJ)
  • Failed AAA-deal rated Rembrandt spurs outcry (Bloomberg)
  • Medvedev sees chance for new world order (FT)
  • Amid the crisis, Wall Street touted BP stock (Reuters)
  • Gold reclaims its currency status as the global economy unravels (Telegraph)

 

Trading Hints and Tips

  
  Education
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 tips-1

1. OPPORTUNITY. There are dozens of these every day, unfortunately you can’t buy them all, so only pick the top 10 and then narrow them down to 2 to 3.
 This is done by using your buying criteria which is part of your trading plan which you already have written down. (Hopefully you have one?)

 2. BUYING and SELLING. I have a pre planned strategy which I have developed by trial and error; this was achieved by learning by my trading mistakes  and the mistakes of others.
 3. PATIENCE.This is definitely a virtue worth developing. Sometimes the market is going up in the right direction, but is not going as fast upwards as you  would like.  Be patient and use a “stop loss” to lock in those profits. However small they may be.  Also don’t always be in a hurry to “buy that next share” just because you have that money burning a hole in your pocket.  Do your homework and then you have chosen the right share for the right reasons and not just because it looked good 

 4. STRESS.If it is hurting! Don’t do it, cut your losses or be content with a small profit and get out. (more…)

Trade with Discipline

  
  Education
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1. never EVER add to a losing position. EVER! If it’s not working, why add good money to bad? At this point, you are in damage control mode. It’s another thing if you are trying to pyramid into a position. For example: You go into a trade with 1/3 size, add another 1/3 and add the final 1/3 in an attempt to build a full position in a stock you feel strongly about. I do not mind that. But adding money to a full position which is not working is a BIG NO in my book! You never want any ONE trade to ruin your entire week or month folks. DISCIPLINE!

2. NEVER ever compromise your stop loss. I know a nice ran away bull market makes everyone think that’s okay to remove the stop loss or lower the stop loss to much lower levels because eventually the stock will bottom and rebound. BE EXTREMELY CAREFUL guys! This is absolutely NOT what we are trying to do as traders. This is basically turning your trades into investments just because you cannot handle the pain of a small loss. It is much easier to dig yourself back form a 2-3% loss than a 10-15% loss. Hindsight is always 20-20 and most of you will say “gosh, i shoulda stuck to the original stop”. Trust me, life will be much less stressful taking occasional small stop losses along the way then being stuck in “hold and hope” mode.

Lessons for Stock and Options Traders

  
  Education
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lessonsNow, you ask, what does this have to do with stock and options trading?  Just as in every day life and in the case of CFIT, stock and options traders must remain focused on the current trade or risk opening themselves up to any number of mistakes.  These mistakes can include (but are in no way limited to)the following:
1) allowing impulsiveness to take over your trading rules, thus taking a trade that does not meet your criteria
2) not taking a trade signaled by your system because your focus is elsewhere (more…)

Jason Zweig’s Rules for Investing

  
  Education
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1. Take the Global View: Use a spreadsheet to track your total net worth — not day-to-day price fluctuations.

2. Hope for the best, but expect the worst: Brace for disaster via diversification and learning market history. Expect good investments to do poorly from time to time. Don’t allow temporary under-performance or disaster to cause you to panic.

3. Investigate, then invest: Study companies’ financial statement, mutual funds’ prospectus, and advisors’ background. Do your homework!

4. Never say always: Never put more than 10% of your net worth into any one investment.

5. Know what you don’t know: Don’t believe you know everything. Look across different time periods; ask what might make an investment go down.

6. The past is not prologue: Investors buy low sell high! They don’t buy something merely because it is trending higher.

7. Weigh what they say: Ask any forecaster for their complete track record of predictions. Before deploying a strategy, gather objective evidence of its performance.

8. If it sounds too good to be true, it probably is: High Return + Low Risk + Short Time = Fraud.

9. Costs are killers: Trading costs can equal 1%; Mutual fund fees are another 1-2%; If middlemen take 3-5% of your cash, its a huge drag on returns.

10. Eggs go splat: Never put all your eggs in one basket; diversify across U.S., Foreign stocks, bonds and cash. Never fill your 401(k) with employee company stock.

Trading With A Plan

  
  Education
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A planned trade is one that is guided consciously, filtered according to a variety of criteria that are designed to provide a positive expectancy. The opposite of a planned trade is an impulsive one, in which traders enter markets before explicitly identifying what they are doing and why. The difference between planned and unplanned trading is one of intentionality: being proactive in taking controlled risks vs. being reactive to what has already occurred in markets. Even the most intuitive and active trader can trade in a planned manner, if many of the elements of planning are achieved prior to entering positions.

So what are these elements of planning? The ideal trade identifies:

1) What you’re trading – Why are you selecting one instrument to trade (one stock, one index) versus others? Which instruments maximize reward relative to risk?

2) How much you’re trading – How much of your capital are you going to allocate to the trade idea versus other ideas?

3) Why you’re trading – What is the rationale for the trade? Why does the trade idea provide you with an “edge”?

4) What will take you out of the trade – What would lead you to determine that your trade idea is wrong? What would tell you that the trade has reached its profit potential?

5) Where you will enter the trade – Given the criteria that would take you out of the trade, where will you execute your idea to maximize the reward you’ll obtain relative to the risk you’ll be taking?

6) How you will manage the trade – What would have to happen to convince you to add to the trade, scale out of it, and/or tighten your stop loss? (more…)

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