Posted by saravana prakash at 2:55 AM on Sunday, October 19, 2014
Posted by saravana prakash at 5:12 AM on Saturday, October 18, 2014
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 cannot 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 cannot 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 cannot 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.
Posted by saravana prakash at 1:30 AM on Sunday, October 12, 2014
Posted by saravana prakash at 7:33 PM on Tuesday, October 7, 2014
Posted by saravana prakash at 6:06 AM on Sunday, October 5, 2014
As you can see from the above we have this pattern of economic crashes occurring approximately every 7 years so what should we make of all of this?
Posted by saravana prakash at 8:45 PM on Saturday, October 4, 2014
A big part of trading is a probability game. The market can move any directions and many times against all logic and fundamentals for a period of time. An edge in trading is the ability to have winning probabilities on your side.
Most people cannot distinguish between luck and skill when it comes to forecasting the market. At the best, I am right 50% on the timing of the trade but I am making money on >80% of the trades.
I acknowledge I do not know how to predict the market timing with certainty. The process of trading is replete with errors and thus one has to cater for it.
Apparent randomness in the market is so complex that it cannot be managed with my finite mind.
So here are some ways that help me to handle the random behavior of the market:
1. The first edge I have is to have the underlying fundamentals of the company. Although the stock may move short term against me but longer term it will be in my favour if the analysis of the fundamental is right. Thus, the probability is on my side assuming that my fundamental analysis is correct at least 70% of the time.
2. I use a set of technical indicators to determine the short-term trend and sentiments of the market. It is a relative simple system that I had used for probably more than 10 years.
Technical system does not need to be too complicated. Many technical systems will be correct >60% correct of the time if you apply it consistently. Normally, I use leading indicators ( price actions, patterns, and candlesticks ) and it is confirmed by the lagging indicators which are stochastic and MACD. There are some subjective judgments made when comes to trend lines, support and resistance. If the system is too complicated, you will not be able to apply it consistently.
The problem is that once you have the indicators, many people tends to second guess the indicators again. Emotions of greed and fear are at play. Once you deviated, the technical system with all its winning probabilities is no longer valid.
If you have a sound system, it does not matter whether any particular trade makes a profit or a loss. What matters is that the probabilities over time are in your favor. You must remember that no system is perfect, and prepare for losses along the way. You should measure yourself on whether you followed your rules and executed your system, for both winning and losing trades.
3. Use options to hedge. tame the volatility, buy time and reduce the emotions to allow you to follow the technical system. I found this to be very helpful and effective. Many people use options to leverage to enhance the performance. I use options mostly to hedge my trade to tame volatility and buy time to allow the fundamentals to work.
4. Keep your position size equal in your trade. For stock with higher volatility, the position size can be adjusted lower and vice versa. Statistically, it will allow winning probability, as fundamentals and technical analysis will be weighted to your favor. However, if the position size is not balance, a losing trade with a high position size will upset the portfolio performance although you may be >70% right on the fundamentals and technical analysis.
5. Strictly apply risk control rules. It is part of the whole trading plan. In a losing trade, many traders are like a deer in a highway facing a crash. They freeze when they see the crash charging towards them. Instead of stopping loss or readjust positions according to the system, they hope that this time it will be different. Many pray to God to give them a last chance. But “HOPE” is dirty four-letter word in trading. You need to follow your rules for getting out. Even if you are wrong and got whipsawed by the market, at least you will be preserving your capital.6. Finally keep a journal. It is tedious work but it will be a great help. It will help you to know whether you are following the trading plan. One day, I will write in details on how I record my trades. It is a customized system using Excel. The journal should be customized to your style of trading. Keep it simple. Allow critical information like reasons for entering the trade, profit /loss %, number of days held, reasons for adjustments and getting out.
Posted by saravana prakash at 6:43 PM on Friday, October 3, 2014
Investing in gold is no joke, and a lot of information associated with it can confuse people. Since the gold market is an extremely volatile market, caution and a lot of research are needed when investors decide to commit to gold investing.
Although using the services of an experienced gold broker makes the task of gold investing easier, it’s still necessary for investors to get a good grasp of investing, especially when making decisions for their own resources. Remember, only you have control over your assets so consider these tips to avoid whenever you decide to buy or sell gold.
This is a common beginner’s mistake. Just because everyone is buying or selling physical gold or stocks doesn’t mean you should do the same thing. Remember why you bought gold investments in the first place. Did you buy it for the exact purpose of covering your assets in times of high inflation? Then you should never sell it unless absolutely necessary. Did you decide to buy so you can sell when the prices are good? Then you must study the price movements yourself and decide whether it’s the best time to keep or sell gold. Bullion Vault’s live price chart shows that today’s gold spot price costs around $1,240 per ounce. If you bought gold in the year 2000 where prices are only at $280 per ounce, now’s a good time to sell gold.
Overpaying for gold
Never pay high premiums for gold. The rule of thumb is to never pay more than 5% of the price of spot gold. If your broker is asking for more than 5%, you should look for another one who doesn’t rip off his or her clients.
Choosing “hot” gold stocks
If you’ve decided to invest in gold stocks instead of the real thing, make sure to choose companies with a good long-term plan. Don’t invest in stocks just because they’re “currently” hot right now. The keyword is “currently.” Don’t go for it and instead look for “long-term” ones. For example, is mining company X going to produce a significant amount of gold in the next few years? Are and mine only in safe areas? How about its technology? Is it currently looking for new ways to mine gold because, according to experts, the world is reaching a peak gold status? These are only some of the things that investors should consider when looking for gold mining stocks. Remember; research everything, from a company’s historical background to its future plans for development.