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     holycow
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Username: holycow
Post Number: 3026
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| | Monday, August 20, 2007 - 04:34 pm: |  
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From Market Wizards.
Always understand the risk/reward of the trade as it now stands, not as it existed when you put the position on. Some people say, "I was only playing with the market's money." That's the most ridiculous thing I ever heard.
-Bill Lipschutz
You don’t have to get in or out of a position all at once. Avoid the temptation of wanting to be completely right.
-Jack Schwager
I basically learned that you must get out of your losses immediately. It's not merely a matter of how much you can afford to risk on a given trade, but you also have to consider how many potential future winners you might miss because of the effect of the larger loss on your mental attitude and trading size.
-Randy McKay
I take the point of view that missing an important trade is a much more serious error than making a bad trade.
-William Eckhardt
Large profits are even more insidious than large losses in terms of emotional destabilization. I think it's important not to be emotionally attached to large profits. I've certainly made some of my worst investments after long periods of winning.
-William Eckhardt
Investing is a negative game emotionally. If you’re playing for the emotional satisfaction, you're bound to lose, because what feels good is often the wrong thing to do. When all the criteria are in balance, do the thing you least want to do.
-William Eckhardt
You should spend no time at all thinking about those roseate scenarios in which the market goes your way, since in those situations, there's nothing more for you to do. Focus instead on those things you want least to happen and on what your response should be.
-William Eckhardt
It’s important to distinguish between respect for the market and fear of the market. While it's essential to respect the market to assure preservation of capital, you can't win if you're fearful of losing. Fear will keep you from making correct decisions.
-Howard Seidler
Make sure you have an edge. Know what your edge is. And have rigid risk control rules.
-Monroe Trout
I focus my analysis on seeking to identify the factors that are strongly correlated to a stock’s price movement as opposed to looking at all the fundamentals. Frankly, many analysts still don't know what makes their particular stocks go up and down.
-Stanley Druckenmiller
It’s not whether you’re right or wrong that's important, but how much money you make when you’re right and how much money you lose when you’re wrong.
-Stanley Druckenmiller
Soros is the best loss taker I've ever seen. He doesn’t care whether he wins or loses on a trade. If a trade doesn't work, he's confident enough about his ability to win on other trades. There are a lot of shoes on the shelf; wear only the ones that fit. If you're extremely confident, taking a loss doesn't bother you.
-Stanley Druckenmiller
If there's a large move on significant news, either favorable or unfavorable, the stock will usually continue to move in that direction.
-Richard Driehaus
The critical ingredient is a maverick mind. Focus on trading vehicles, strategies and time horizons that suit your personality. In a nutshell, it all comes down to: Do your own thing (independence); and do the right thing (discipline).
-Gil Blake
The ability to change one's mind is probably a key characteristic of the successful investor. Dogmatic and rigid personalities rarely, if ever, succeed in the markets. The markets are a dynamic process, and sustained investment success requires the ability to modify and even change strategies as markets evolve.
-Jack Schwager
To use a life insurance analogy, most people who become involved in the stock market don't know the difference between a 20 year old and an 80 year old. Investing in the market without knowing what stage it is in is like selling life insurance to 20 year olds and 80 year olds at the same premium.
-Victor Sperandeo
Once a price move exceeds its median historical age, any method you use to analyze the market, whether it be fundamental or technical, is likely to be far more accurate. For example, if a chartist interprets a particular pattern as a top formation, but the market is only up 10% from the last low, the odds are high that the projection will be incorrect. However, if the market is up 25% to 30%, then the same type of formation should be given a great deal more weight.
-Victor Sperandeo
The key to investment success is emotional discipline. Making money has nothing to do with intelligence. To be a successful investor, you have to be able to admit mistakes. I trained a guy to trade who had a 188 IQ. He was on “Jeopardy” once and answered every question correctly. That same person never made a dime in trading during 5 years!
-Victor Sperandeo
Most people lose money because of lack of emotional discipline
-the ability to keep their emotions removed from investment decisions. Dieting provides an apt analogy. Most people have the necessary knowledge to lose weight—that is they know that in order to lose weight you have to exercise and cut your intake of fats. However, despite this widespread knowledge, the vast majority of people who attempt to lose weight are unsuccessful. Why? Because they lack the emotional discipline.
-Victor Sperandeo
In my opinion, the greatest misconception about the market is the idea that if you buy and hold stocks for long periods of time, you'll always make money. Let me give you some specific examples. Anyone who bought the stock market at any time between the 1896 low and the 1932 low would have lost money. In other words, there's a 36 year period in which a buy-and-hold strategy would have lost money. As a more modern example, anyone who bought the market at any time between the 1962 low and the 1974 low would have lost money.
-Victor Sperandeo
Perhaps my number one rule is: Don't try to make a profit on a bad investment, just try to find the best place to get out.
-Linda Bradford Raschke
I believe my most important skill is an ability to perceive patterns in the market. I think this aptitude for pattern recognition is probably related to my heavy involvement with music.
-Linda Bradford Raschke
Only by acting and thinking independently can an investor hope to know when an investment isn't working out. If you ever find yourself tempted to seek out someone else's opinion on an investment, that's usually a sure sign that you should get out of your position.
-Linda Bradford Raschke
You can't listen to the news. You have to go with the facts. You need to use a logical approach and have the discipline to apply it. You must be able to control your emotions.
-Blair Hull
The most surprising thing I have discovered is how ready people are to fool themselves. People's perceptions of reality and true reality are not the same thing.
-Robert Krausz
HC
"... he ain't no chart addict, but a TA junkie"
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holycow
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Username: holycow
Post Number: 3027
Registered: 08-2004
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| | Monday, August 20, 2007 - 04:35 pm: |
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20 Golden Rules
1. Forget the news, remember the chart. You're not smart enough to know how news will affect price. The chart already knows the news is coming (ain't that the truth).
2. Buy the first pullback from a new high. Sell the first pullback from a new low. There's always a crowd that missed the first boat.
3. Buy at Support, Sell at Resistance. Everyone sees the same thing and they're all just waiting to jump in the pool.
4. Short rallies not selloffs. When markets drop, shorts finally turn a profit and get ready to cover.
5. Don't buy up into a major moving average or sell down into one. See #3.
6. Don't chase momentum if you can't find the exit. Assume the market will reverse the minute you get in. If it's a long way to the door, you're in big trouble.
7. Exhaustion gaps get filled. Breakaway and continuation gaps don't. The old traders' wisdom is a lie. Trade in the direction of gap support whenever you can.
8. Trends test the point of last Support/Resistance. Enter here even if it hurts.
9. Trade with the TICK not against it. Don't be a hero. Go with the money flow.
10. If you have to look, it isn't there. Forget your college degree and trust your instincts.
11. Sell the second high, buy the second low. After sharp pullbacks, the first test of any high or low always runs into resistance. Look for the break on the third or fourth try.
12. The trend is your friend in the last hour. As volume cranks up at 3:00pm don't expect anyone to change the channel.
13. Avoid the open. They see YOU coming sucker
14. 1-2-3-Drop-Up. Look for downtrends to reverse after a top, two lower highs and a double bottom.
15. Bulls live above the 200 day, bears live below. Sellers eat up rallies below this key moving average line and buyers to come to the rescue above it.
16. Price has memory. What did price do the last time it hit a certain level? Chances are it will do it again.
17. Big volume kills moves. Climax blow-offs take both buyers and sellers out of the market and lead to sideways action.
18. Trends never turn on a dime. Reversals build slowly. The first sharp dip always finds buyers and the first sharp rise always finds sellers.
19. Bottoms take longer to form than tops. Fear acts more quickly than greed and causes stocks/futures/currencies to drop from their own weight.
20. Beat the crowd in and out the door. You have to take their money before they take yours, period.
HC
"... he ain't no chart addict, but a TA junkie"
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holycow
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Post Number: 3028
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| | Monday, August 20, 2007 - 04:38 pm: |
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16 Trading Rules - source unknown
1. Never, Ever, Ever, Under Any Circumstance, Add To A Losing Position... not ever, not never! Adding to losing positions is trading's carcinogen; It is trading's driving-while intoxicated. It will lead to ruin. Count on it!
2. Trade Like A Wizened Mercenary Soldier: We must fight on the winning side, not on the side we may believe to be correct economically.
3. Mental Capital Trumps Real Capital: Capital comes in two types; mental and real, and the former is far more valuable than the latter. Holding losing positions costs measurable real capital, but it costs immeasurable mental capital.
4. This Is Not A Business Of Buying Low And Selling High; It is, however, a business of buying high and selling higher. Strength tends to beget strength, and weakness, weakness.
5. In Bull Markets One Can Only Be Long or Neutral , and in bear markets, one can only be short or neutral. This may seem self-evident; few understand it however, and fewer still embrace it.
6. "Markets Can Remain Illogical Far Longer Than You Or I Can Remain Solvent." These are Keynes' words and illogic does often reign, despite what the academics would have us believe.
7. Buy Markets That Show The Greatest Strength; Sell Markets That Show The Greatest Weakness: Metaphorically, when bearish we need to throw rocks into the wettest paper sacks, for they break most easily. When bullish we need to sail the strongest winds, for they carry the farthest.
8. Think Like A Fundamentalist; Trade Like A Simple Technician: The fundamentals may drive a market and we need to understand them, but if the chart is not bullish, why be bullish? Be bullish when the technicals and fundamentals, as you understand, them run in tandem.
9. Trading Runs in Cycles; Some Good; Most Bad: Trade large and aggressively when trading well; trade small and ever smaller when trading poorly. In "good times," even errors turn to profits; in "bad times," the most well researched trade will go awry. This is the nature of trading; accept it and move on.
10. Keep Your Technical Systems Simple: Complicated systems breed confusion; simplicity breeds elegance. The great traders we've known have the simplest methods of trading. There is a correlation here!
11: In Trading/Investing, An Understanding Of Mass Psychology is Often More Important Than An Understanding of Economics: Simply put, "When they are cryin', you should be buyin'! and when they are yellin', you should be sellin'!"
12. Bear Market Corrections Are More Violent And Far Swifter Than Bull Market Corrections: Why they are is still a mystery to us, but they are; we accept it as fact and we move on.
13. There Is Never Just One Cockroach: The lesson of bad news on most stocks is that more shall follow... usually hard upon and always with detrimental effect upon price, until such time as panic prevails and the weakest hands finally exit their positions.
14. Be Patient With Winning Trades; Be Enormously Impatient with Losing Trades: The older we get, the more small losses we take each year... and our profits grow accordingly.
15. Do More Of That Which Is Working and Less Of That Which Is Not: This works in life as well as trading. Do the things that have been proven of merit. Add to winning trades; Cut back, or eliminate losing ones. If there is a "secret" to trading (and of life), this is it.
16. All Rules Are Meant To Be Broken.... but only very, very infrequently. Genius comes in knowing how truly infrequently one can do so and still prosper.
HC
"... he ain't no chart addict, but a TA junkie"
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holycow
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Post Number: 3029
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| | Monday, August 20, 2007 - 04:40 pm: |
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10 Rules For Successful Trading
Rule #1: Learn before you leap
A common mistake made by many novice traders is to jump into the markets without knowing what they're doing. They don't take the time to observe how the markets operate before risking their money. If you plan on trading a system, paper trade it first and learn your systems limitations and strengths. Test! Test! Test! your strategies. Be honest with yourself and your trading methodologies.
Rule #2: Cut losses, let gains run
"Cut your losses short and let your gains run" is an old saying repeated by many traders and for good reason. Another common mistake made by many new traders is to hold onto a losing positions for too long thinking that the market will turn around. There is also a tendency to liquidate out of winning positions too quickly.
Rule #3: Discipline is crucial
Disciplined traders who stick with a tested trading plan or system will find more profitability over those who trade inconsistently (i.e. with emotion), which defeats the purpose of having a system or trading plan in the first place.
Rule #4: Focus on the process
Focusing on the process of trading instead of making profits may sound like a contradiction, but traders say this is vital because losses are an inevitable part of trading. those who focus only on making money are likely to lose because they can't cope with inevitable downturns in their investments. You will not be able to accurately predict market direction every single time. There is no such thing as a perfect system. Remember Rule #2 and Rule #3.
Rule #5: Know your exit
Traders should know where they intend to exit their position before entering any market. This will help to take second-guessing out of the equation and reduce the chances of emotion coming into play. Knowing where to cut your losses or lock in profits is a crucial part of any trading system/strategy.
Rule #6: Manage your money
Professional traders recommend risking a set percentage of capital and never altering that percentage. The successful management of losses is a critical to any trading system/strategy. Trade your account within it's means, expecting the worse case scenario. Proper risk management and consideration of "staying power" are necessary components of successful money management. Live to fight another day!!
Rule #7: The trend is your friend
Rather than trying to predict market tops and bottoms, many traders recommend going with the flow.
Rule #8: Don't trade emotions
Keeping a calm state of mind is crucial when playing the markets. Does this sound familiar? Remember to stick to your plan and free yourself of emotion and second-guessing.
Rule #9: Consider who loses
Know your "enemy". For every winner there has to be a loser. It is obvious that everyone wants to win at trading. If you are initiating a position (long or short) in a market, who is taking the other side of your position? For example, trend traders might make profits in a market from hedgers who usually sell into a rising market and buy into a falling market.
Rule#10: Remain humble
Last but not least, remain humble. Those who believe they're smarter than the rest of the market and confuse luck with skill probably won't last for long.
Resource: from August 1999 issue of "Futures" magazine, by Mike Mosser
HC
"... he ain't no chart addict, but a TA junkie"
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holycow
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| | Monday, August 20, 2007 - 04:44 pm: |
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William O'Neil's 19 Common Mistakes
1. Stubbornly holding onto losses when they are very small and reasonable
2. Buying on the way down in price, thus ensuring miserable results
3. Averaging down in price rather than up when buying
4. Buying large amount of low-priced stocks rather than smaller amounts of higher-priced stocks
5. Wanting to make a quick and easy buck
6. Buying on tips, rumours, split announcements, and other news events, stories, advisory-service recommendations, or opinions you hear from supposed market experts on TV
7. Selecting second-rate stocks because of dividends or low price earning (P/E) ratios
8. Never getting out of the starting gate properly due to poor selections criteria and not knowing exactly what to look for in a successful company
9. Buying old names you're familiar with
10. Not being able to recognize and follow good information and advice
11. Not using charts and being afraid to buy stocks that are getting into new high ground in price
12. Cashing in small, easy to take profits while holding the losers
13. Worrying too much about taxes and commissions
14. Concentrating your time on what to buy and once the buy decisions is made, not understanding when or under what conditions the stock must be sold
15. Failing to understand the importance of buying quality companies with good institutional sponsorship and the importance of learning how to use charts to significantly improve selection and timing
16. Speculating too heavily in options or futures because they're thought to be a way to get rich quick
17. Rarely transacting "at the market" and preferring to put price limits on their buy and sell orders
18. Not being able to make your mind when a decision needs to be made
19. Not looking at stocks objectively
HC
"... he ain't no chart addict, but a TA junkie"
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holycow
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Username: holycow
Post Number: 3270
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| | Thursday, September 27, 2007 - 04:51 pm: |
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The Ten Trading Commandments
Todd Harrison
1. Respect the price action but never defer to it.
The action (or "eyes") is a valuable tool when trading but if you defer to the flickering ticks, stocks would be "better" up and "worse" down—and that's a losing proposition.
2. Discipline trumps conviction.
No matter how strongly you feel on a given position, you must defer to the principles of discipline when trading. Always attempt to define your risk and never believe that you're smarter than the market.
3. Opportunities are made up easier than losses.
It's not necessary to play every day, it's only necessary to have a high winning percentage on the trades you choose to make. Sometimes the ability not to trade is as important as trading ability.
4. Emotion is the enemy when trading.
Emotional decisions always have a way of coming back to haunt you. If you're personally attached to a position, your decision making process will be flawed. Always take a deep breath before risking your hard earned coin.
5. Zig when others Zag.
Sell hope, buy despair and take the other side of emotional disconnects (in the context of controlled risk). If you can't find the sheep in the herd, chances are that you're it.
6. Adapt your style to the market.
At various junctures, different investment approaches are warranted and applying the right methodology is half the battle. Identify your time horizon and employ a risk profile that allows the market to work for you.
7. Maximize your reward relative to your risk.
If you're patient and pick your spots, edges will emerge that provide an advantageous risk/reward. Proactive patience is a virtue.
8. Perception is reality in the marketplace.
Identifying the prevalent psychology is a necessary process when trading. It's not "what is," it's what's perceived to be that dictates supply and demand.
9. When unsure, trade "in between."
Your risk profile should always be an extension of your thought process. If you're unsure, trade smaller--or paper trade--until your identify your comfort zone.
10. Don't let your bad trades turn into investments.
Rationalization has no place in trading. If you put a position on for a catalyst and it passes, take the risk off—win, lose or draw.
HC
...with charts will travel
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holycow
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Post Number: 3340
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| | Thursday, November 08, 2007 - 02:32 pm: |
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... no rules to post, but to raise these rules as a guide for those who are thinking of buying or selling...
HC
Look at a man's acts; watch his motives; find out what pleases him: can the man evade you?
... the essence of chart reading
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