rss

4 Stages ..

Stan Weinstein’s concept of stage analysis as outlined in his excellent book entitled Secrets For Profiting In Bull and Bear Markets.  I decided to read Mr Weinstein’s book and find out what these stages are.  Here is what I discovered:

STAGE 1:  This is the basing area where a stock is losing downside momentum.  Buyers and sellers are starting to move in equilibrium and although the stock is not taking off it is not selling off either.  The buyers are not asking for a discount of the price but are buying what the holders no longer want.  This stage could last weeks to months so there is no need to jump in just yet. 

STAGE 2:  The advancing stage begins when the stock in question starts to break higher from the basing area.  This stage usually has a retest to the break-out area before the real move starts.  There begins here a pattern of higher lows best described as two steps forward and one step back.  These pullbacks provide a good risk/reward opportunity for the astute trader.

STAGE 3:  The top area is stage 3 where the good trending stock finds its eventual end.  The upward advance loses momentum and consolidation sets in.  The mirror image of stage 1 starts to take shape once again.  There are sharp moves and high volume in this stage and it is best to refrain from trading here as the reward/risk ratio is stacked against you.

STAGE 4:  The declining phase is the fourth and final phase as the factor’s that maintained the stock’s previous momentum are no longer present and the sellers step in.  The trader is advised to never go long in this stage or hold on to any winning positions.  It is time to exit. If a downtend begins then you can start to look at shorting the stock for the same reasons you went long: trend and momentum.

The market is really very simple in its design and structure; it is the trader who makes it difficult.  Although not all markets and stocks are text book examples of the four stages, the disciplined trader would be wise to consider whether or not the stages may be playing out in a current position or one being considered.  There may just be a very good reason why both Shannon and Weinstein have best selling books on the same subject.

Least Resistance

A man ought not to be led into trading by tokens. He should wait until the tape tells him that the time is ripe. As a matter of fact, millions upon millions of dollars have been lost by men who bought stocks because they looked cheap or sold them because they looked dear. The speculator is not an investor. His object is not to secure a steady return on his money at a good rate of interest, but to profit by either a rise or a fall in the price of whatever he may be speculating in. Therefore the thing to determine is the speculative line of least resistance at the moment of trading; and what he should wait for is the moment when that line defines itself, because that is his signal to get busy. ——-REMINISCENCES OF A STOCK OPERATOR by Edwin LeFevre

Thirty Trading Rules for Traders

1. Buying a weak stock is like betting on a slow horse. It is retarded.
2.
Stocks are only cheap if they are going higher after you buy them.
3.
Never trust a person more than the market. People lie, the market does not.
4.
Controlling losers is a must; let your winners run out of control.
5.
Simplicity in trading demonstrates wisdom. Complexity is the sign of inexperience.
6.
Have loyalty to your family, your dog, your team. Have no loyalty to your stocks.
7.
Emotional traders want to give the disciplined their money.
8.
Trends have counter trends to shake the weak hands out of the market.
9.
The market is usually efficient and can not be beat. Exploit inefficiencies.
10.
To beat the market, you must have an edge.
11.
Being wrong is a necessary part of trading profitably. Admit when you are wrong.
12.
If you do what everyone is doing you will be average, so goes the definition.
13.
Information is only valuable if no one knows about it.
14.
Lower your risk till you sleep like a baby.
15.
There is always a reason why stocks go up or down, we usually only learn the reason when it is too late.
16.
Trades that make a lot of intellectual sense are likely to be losers.
17.
You do not have to be right more than you are wrong to make money in the market.
18.
Don’t worry about the trades that you miss, there will always be another.
19.
Fear is more powerful than greed and so down trends are sharper than up trends.
20.
Analyze the people, not the stock.
21.
Trading is a dictators game; you can not trade by committee.
22.
The best traders are the ones who do not care about the money.
23.
Do not think you are smarter than the market, you are not.
24.
For most traders, profits are short term loans from the market.
25.
The stock market can not be predicted, we can only play the probabilities.
26.
The farther price is from a linear trend, the more likely it is to correct.
27
. Learn from your losses, you paid for them.
28.
The market is cruel, it gives the test first and the lesson afterward.
29.
Trading is simple but it is not easy.
30.
The easiest time to make money is when there is a trend.

Wisdom from Legendary Traders

“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).
————————————————————————————————————
“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).
——————————————————————————————————

“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).
——————————————————————————————————
“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).
——————————————————————————————————
“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).
——————————————————————————————————
“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).
——————————————————————————————————
“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).
——————————————————————————————————

“I am looking for the strongest stocks in the market, in terms of both earnings and the technical picture”
-David Ryan (Multiple time winner in the stock division of the U.S. Investing Championships).
——————————————————————————————————

“Most of my success has been due to my hanging on while my profits mounted. There is the big secret”.
-Arthur W. Cutten (Gained wealth and prominence, early in the 20th century, as a commodity trader, mostly in the wheat market.
——————————————————————————————————
“I think the secret is cutting down the number of trades you make. The best trades are the ones in which you have all three things going for you: fundamentals, technicals, and market tone”.

– Michael Marcus (In a ten-year period, he multipled his company account by an incredible 2500 times).
——————————————————————————————————

“Whenever I enter a position, I have a predetermined stop. I know where I’m getting out before I get in”.
-Bruce Kovner (One of the world’s largest traders in the 1980’s. Made profits of over 300 million trading for himself).
——————————————————————————————————
“I try to assemble facts and decide what kind of scenario I think will unfold”.

-Bill Lipschutz (One of the most successful currency traders ever).
——————————————————————————————————

“Virtually every successful trader I know ultimately ended up with a trading style suited to his personality”.

-Randy McKay (Turned $2000 into $70,000 his first year of trading. Went on to double digit million dollar gains).
——————————————————————————————————

“The biggest misconception is the widespread belief that it is easy to make a living trading in the stock market”.
-Stuart Walton (Fantastic stock trading track record in the 1990’s).
——————————————————————————————————
“If you decide to trade for a living, you have to treat it just like any other business endeavor and go into it with a plan”.

-Mark D. Cook (Great annual returns trading the markets).
 

Yes, We are Unique

I remember the quote from Bernard Baruch :

“It is much harder to sell stocks correctly than to buy them correctly.” Because of the emotional aspect of trading, if a “stock went up, the average investor would hold because he wants more gains – he’s exhibiting greed. If the stock declines, he also holds on and hopes the stock will come back so he can at least sell and break even – he’s hoping against hope.”

Traders & Readers are sending us mail and writing that we are Born Bears.

-101% its wrong thinking.We write/recommend and trade according to levels only.Not interested in Economy ,Inflation figure,Monsoon or Corporate Results and basically I dont trust any Corporate !!

No Tantra ,No Mantra & No Yantra.

No Astrology !!

Just power of chart and our Vision.

Today our market forecast has confirmed it, nth time.

Refer to this exclusivity in our web-site.

As per the forecast market was weak till 10-35, then recovered to +ve zone uptill 1-35 and as per the unique forecast, collapsed from 1-35 only to dwindle down heavily till end. 

After 5185, our next Nf Hurdle was 5215, it went upto 5202.  On downside after it broke our 2nd support at 5146, we alerted all our Subscribers to Sell

 everything and Short market for a possible break 5114 where after it would be a bloodbath.  You all know NF collapsed to 5058, 150 points loss from the top.

Weak Opening, V recovery from 10-35, and from 1-30 bear-attack… so don’t have any long position in market.

Expected Bank NF will crash upto 9650.But it tumbled upto 9540 level….(Our Subscribers knows…..many more things )

Now u all tell if anything else is left in this market. That’s why our recently concluded Subscription enrolment was such an astounding hit.

All our subscribers / readers are busy in counting

their earnings while all Bulls ,Blue Channel (Analysts ),Website Analysts are singing


 

Technically Yours

Anirudh Sethi/Baroda/India


Checklist for Day Traders

Here’s a list I came up with for the forgotten man, the hundreds of thousands of traders in stocks, futures and options.

Before the Trade

1. Do you know the name and numbers of all your counterparts, especially if your equipment breaks down?

2. When does your market close, especially on holidays?

3. Do you have all the equipment you’ll need to make the trade, including pens, computers, notebooks, order slips, in the normal course and in the event of a breakdown?

4. Did you write down your trade and check it to see for example that you didn’t enter 400 contracts instead of the four that you meant to trade?

5. Why did you get into the trade?

6. Did you do a workout?

7. Was it statistically significant taking into account multiple comparisons and lookbacks?

8. Is there a prospective relation between statistical significance and predictivity?

9. Did you consider everchanging cycles?

10. And if you deigned to do a workout the way all turf handicappers do, did you take into account the within-day variability of prices, especially how this might affect your margin and being stopped out by your broker? (more…)

10 Different Types Of Traders. Which One Are You?

Here are a list of ten types of traders I have observed on social media. We have all likely been more than one of these types at some time or another while trading. But we need to focus like a laser on the only real reason we should be trading: to make money and once we have made it, to keep it.

  1. Greedy Traders: They trade too big and risk too much because their only goal is the easy money. They usually end up blowing up their account.
  2. New Traders: They have no idea how the markets work so their only goal should be knowledge. New Traders do well to stay students until they have done their homework. Rushing in to make money without risk management, a winning method, the right mind set, and a trading plan will result eventually in failure 100% of the time.
  3. Arrogant Traders: Their only goal is to prove they are right and satisfy their fragile egos. Arrogant traders will lie, delete tweets and posts, never admit when they are wrong. When they are wrong they will hide it under a cloak, when they are right they will scream it from the roof tops.
  4. Trend Traders: Their only goal is to ride a trend and make money. Trend traders will buy high and sell much higher, they will short and cover much lower. They look like genius’ and prophets in a trending market either way it trends but they look like they can’t even trade in choppy or whipsawing markets. In the long term they do very well.
  5. Scared Traders: Their only goal is to not lose their capital. Scared traders will immediately close losing trades and also immediately take profits. They are very stressed out in trading due to not understanding the nature of trading itself or just can not handle the uncertainty or risk. They either need to do their homework to develop their faith in or if they have done the homework trading may just no be for them. (more…)

Top 8 Ways To Lose All The Money In Trading

 tradingloss8 – Put all of your efforts into finding the perfect technical indicator. Once you find this magical indicator, it will be like turning on a water faucet. Go all in. The money will just flow into your account!

7 – Make sure to visit a lot of stock trading forums and ask them for hot stock tips. Also, ask all your friends and family for stock tips. They are usually right, and acting on these tips can make you very rich.
6 – Watch what other traders do and be sure to follow the crowd. After all, they have been trading a lot longer than you so naturally they are smarter.
5 – Pay very close attention to the fundamentals of a company. You MUST know the P/E ratio, book value, profit margins, etc. Once you find a “good company”, consider going on margin to pay for shares in their stock. (more…)

Do Stocks Fall Faster than They Rise?

Think about it1) Markets fall faster than they rise — and options traders know this. Otherwise, arbitraging this difference would be a meal for a lifetime.

2) Market participants perhaps anticipate that the realized volatility during a bear market is greater than a bull market. However, the problem with this analysis is one might expect to see an upward sloping volatility yield curve in out-of-the-money puts (during bull markets), and yet that does not usually occur based on my tests. Conversely, right now have a downward sloping yield curve in out of the money calls — which confirms the hypothesis that market participants anticipate slower price rises in the future. [Note to quants: I am not confusing delta, gamma and vega. I’m using options to predict terminal price at expiration.]

3) For most humans, fear of loss is a stronger emotion/motivator than the pleasure of gain (greed). This is well documented in the psychology and behavioral finance literature. Hence, ceterus paribus, capital market participants (who have a net long position) will, as a group, pull their rip cord faster — to flee from risk — than they will embrace the possibility of profit.

Amos Hostetter :Invaluable Trading Principles

  1. Try to find a long term trend and ride it up. Stay with the trend and don’t be tempted to grab a quick profit. Patience is one of the most important traits of a trend follower.
  2. Be careful not to be shaken out by market fluctuations. Instead try to sit tight as long as there are no warnings showing up. Prices that come back so that your initial gain halves are not necessarily a reason to sell.
  3. Big wins can only be achieved with major trends. Find them and don’t hesitate to buy at high prices when you may think it is too late. A market is never too high to buy or too low to sell.
  4. Necessary is of course a stop loss near the entry point. A stop is the easiest way to put your capital at work on a trend, because otherwise you are too often and too long stuck in a trading market which goes nowhere or worse in a falling market.
  5. Absolutely forbidden is averaging down or fighting the market trend.
  6. To think that a market is cheaper now after prices came down and therefore must offer a better chance than it did when prices were higher, will put you in the wrong stocks at the wrong times.
  7. Never try to sell at the top. The trend may continue. Sell after a reaction if there is no rally.
  8. On the other hand don’t expect the market to end in a blaze of glory. Look out for warnings.
  9. Tape reading can tell you only that something is wrong. Don’t try to analyze the flow of transactions as the tape shows them in too much detail.
  10. Don’t look for breaks. Look out for warnings.
  11. Pyramid stocks only if the initial investment shows a gain.
  12. Look out for normal market behavior. If a market doesn’t act right, don’t touch it.
  13. If in a bear market a complete demoralization develops suddenly it may be a sign for a starting bull market.
  14. Observation of the market gives the best tips of all. Follow your experience to exploit them, while sticking to facts only.