Posts Tagged ‘trading’
My 20 Rules for Trading
Asset Protection and Wealth Creation Strategies – Trading 101
I usually try to catch three or four trend changes a year, which might generate 50-100 trades, and often come in frenzied bursts.
Since I am one of the greatest tightwads that ever walked the planet, I only like to buy positions when we are at the height of despair and despondency, and traders are raining off the Golden Gate Bridge. Similarly, I only like to sell when the markets are tripping on steroids and ecstasy, and are convinced that they can live forever.
Some 99% of the time, the markets are in the middle, and there is nothing to do but deep research, looking for the next trade. That is the purpose of this letter. Over the four decades that I have been trading, I have learned a number of tried and true rules which have saved my bacon countless times. I will share them with you.
Don’t over trade. This is the number one reason why individual investors lose money. Look at your trades of the past year and apply the 90/10 rule. Dump the least profitable 90% and watch your performance skyrocket. Then aim for that 10%. Over trading is a great early retirement plan for your broker, not you.
Always use stops. Risk control is the measure of the good hedge fund trader. If you lose all your capital on the lemons, you can’t play when the great trades set up. Consider cash as having an option value.
Don’t forget to sell. Date, don’t marry your positions. Remember, pigs get slaughtered. Always leave the last 10% of a move for the next guy.
You don’t have to be a genius to play this came. If that was required, Wall Street would have run out of players a long time ago. If you employ risk control and stops, then you can be wrong 40% of the time, and still make a living. That’s little better than a coin toss. It you are wrong only 30% of the time, you can make millions. If you are wrong a scant 20% of the time, you are heading a trading desk at Goldman Sachs. If you are wrong a scant 10% of the time, you are running a $20 billion hedge fund that the public only hears about when you pay $100 million for a pickled shark at a modern art auction. If someone says they are never wrong, as is often claimed on the Internet, run a mile, because it is impossible.
This is hard work. Trading attracts a lot of wide eyed, naïve, but lazy people because it appears so easy from the outside. You buy a stock, watch it go up, and make money. How hard is that? The reality is that successful investing requires twice as much work as a normal job. The more research you put into a trade, the more comfortable you will become, and the more profitable it will be. That’s what this letter is for.
Don’t chase the market. If you do, it will turn back and bite you. Wait for it to come to you. If your miss the train, there will be another one along in hours, days, weeks, or months. Patience is a virtue.
When I put on a position, I calculate how much I am willing to lose to keep it. I then put a stop just below there. If I get triggered, I just walk away. Only enter a trade when the risk/ reward is in your favor. You can start at 3:1. That means only risk a dollar to potentially make three.
Don’t confuse a bull market with brilliance. I am not smart, just old as dirt.
Tape this quote from the great economist and early hedge fund trader of the thirties, John Maynard Keynes, to you computer monitor: “Markets can remain illogical longer than you can remain solvent.” Hang around long enough, and you will see this proven time and again (ten year Treasuries at 2.4%?!).
Don’t believe the media. I know, I used to be one of them. Look for the hard data, the numbers, and you’ll see that often the talking heads, the paid industry apologists, and politicians don’t know what they are talking about (the Gulf oil spill will create a dead zone for decades?).
When you are running a long/short portfolio, 80% of your time is spent managing the shorts. If you don’t want to do the work, then cash beats a short any day of the week.
Sometimes the conventional wisdom is right.
Invest like a fundamentalist, execute like a technical analyst.
Use technical analysis only, and you will buy every rally, sell every dip, and end up broke. That said, learn what an “outside reversal” is, and who the hell is Leonardo Fibonacci.
The simpler a market approach, the better it works. Everyone talks about “buy low and sell high”, but few actually do it. All black boxes eventually blow up, if they were ever there in the first place.
Markets are made up of people. Understand and anticipate how they think, and you will make a lot of money.
Understand what information is in the market and what isn’t and you will make more money.
Do the hard trade, the one that everyone tells you that you are “Mad” to do. If you add a position and then throw up afterwards, then you know you’ve done the right thing. This is why people started calling me “Mad” 40 years ago.
If you are trying to get out of a hole, the first thing to do is quit digging and throw away the shovel. A blank position sheet can be invigorating.
Making money in the market is an unnatural act. We humans are predators and hunters evolved to track game on the horizon of an African savanna. Modern humans are maybe 5 million years old, but civilization has been around for only 10,000 years. Our brains have not had time to make the adjustment. In the market, this means that if a stock has gone up, you believe it will continue. This is why market tops and bottoms see volume spikes. To make money, you have to go against these innate instincts. Some people are born with this ability, while others can only learn it through decades of training. I am in the latter group.
by John Thomas, The Mad Hedge Fund Trader
It’s FreeWeek at EWI: Get Complimentary Commodity Forecasts, Video Analysis, Trading Lessons and More!
Greetings,
Elliott Wave International has just announced the beginning of their popular commodity FreeWeek event, where non-subscribers can test-drive some of their most popular premium services.
Now through noon Thursday, October 27 (Eastern time), you’ll get complete access to all of EWI’s most-promising daily, weekly and monthly opportunities in the world’s leading commodities, plus all the charts, world-class analysis, video forecasts along with a treasure chest of trading lessons and more! (Subscribers normally pay $49/month for these services.)
FreeWeek is one of EWI’s most popular programs, and it’s perfect for anyone curious about EWI’s subscription services. Please don’t hesitate to tell your friends about the exciting opportunity FreeWeek provides.
Regards,
Alan
About the Publisher, Elliott Wave International
Founded in 1979 by Robert R. Prechter Jr., Elliott Wave International (EWI) is the world’s largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private investors around the world.
EWI’s Newest Service Picks ETFs: Interview with the Editor
EWI’s Wayne Stough adds another Flash opportunity service to the line-up: ETFs
By Elliott Wave International
Every trader or active investor at times wishes they could pick the brain of a pro that has “pulled the trigger” on real-money trades before.
EWI Director of Analysis Wayne Stough is one of these pros. For several years, several times per month, he’s been alerting his Flash service subscribers to opportunities in futures markets.
And now, there is a new addition to the Flash service line-up: ETF Opportunity Flash. We caught up with Wayne in his office and asked him a few questions:
Q: What method do you use when looking for high-probability trade set-ups?
Wayne Stough: My main approach is The Elliott Wave Principle. I look for clean, precise wave counts — usually ones that other analysts can confirm, so there is a general consensus on market direction. Once the market meets my other criteria for a high-confidence trade, I send out a Flash recommendation to my subscribers.
Q: How do you define a “high-confidence” trade?
WS: That’s a good question, because no market forecast is ever guaranteed, whether you use Elliott or some other forecasting method. Having said that, there are definitely moments when probabilities (or odds, if you will) strongly suggest a particular move. For example — and this is just basic Elliott — the Wave Principle says that markets move in a series of five waves in the direction of the larger trend (labeled on a chart 1, 2, 3, 4, 5) and three waves against the trend (labeled A, B, C). Also, there are certain proportions between these waves that markets often adhere to. So whether I’m counting a 1, 2, 3, 4, 5 pattern in a rally or a decline (i.e., in a bull or bear market), I focus on where the fifth wave should end, according to Elliott wave guidelines.
Once I’ve identified that price termination point, it becomes a matter of waiting for the market to get there. Fifth waves come at the end of the pattern and are usually weaker than third waves. So once I see certain technical indicators diverging (e.g. the RSI), my confidence grows: We are near the end of the pattern, and prices are about to reverse. That’s just one example of a high-confidence situation. But I do suggest a protective stop with every new Flash alert, in case the forecast doesn’t come true.
Q: Are you aiming for a particular percentage gain?
WS: Absolutely. When I send a Flash alert, I’m typically looking for a 3-to-1 ratio, at a minimum.
Q: Does that always work out?
WS: No. I monitor the recommendation for warning signals that let me know when a different scenario is unfolding in the charts. In those cases, I send out another Flash alert suggesting to lower or raise the stop-loss level, or exit the recommendation entirely.
Q: They say you love the S&P Mini as a trading vehicle. Why?
WS: I’d put it differently. I have traded the S&P for a long time, I understand that market’s nuances, and I like the leverage and volatility. But while the S&P comes naturally to me, I’ve also made many Flash recommendations on other markets, like gold and currencies. So, a better way would be to say that I love any market that gives me the desired risk-reward ratio. Now I’m also “looking for love” among various ETFs.
Special Introductory Offer: Get ETF Opportunity Flash now and have 2nd month FREE. Details.
Q: If traders expect a bear market, should they still consider Flash Services?
WS: Absolutely. I think we’re at the cusp of something very big in the stock market. And this is the time to act. Just keep in mind that speculating in severe bear markets (or during extreme volatility) carries additional risks. So be sure you do your research and know how your financial instruments behave under these conditions. And anyone who chooses to trade in this environment must only risk the money they absolutely can afford to lose.
Q: Who do you think should consider subscribing to EWI’s Flash Services — including the newest addition, the ETF Flash?
WS: Anyone who has some risk capital but not enough time or experience to find their own opportunities. Anyone who understands and accepts the fact that when you bet your money, there will be winners and losers. (Sometimes more of one than the other.) Anyone who knows better than to risk all their capital on a single recommendation; the old “all eggs in one basket” situation. I think in terms of quarters: I want all my subscribers smiling at the end of a quarter.
EWI ETF Opportunity Flash service now brings you potential high-probability opportunities in exchange-traded funds (ETFs). Don’t miss this special offer.
This article was syndicated by Elliott Wave International and was originally published under the headline EWI’s Newest Service Picks ETFs: Interview with the Editor. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
Free Email Trading Course
Free Email Trading Course
… compliments of INO.com and MarketClub
Benefit from the knowledge of MarketClub co-founder Adam Hewison and other trading experts, with this FREE series of educational emails and online content.
Probably the best forex trading systems in the world
Today, Tuesday 13th July 2010, at 9 AM EST, trading systems of more than 40 champion traders from all around the globe and so much more, will be disclosed.
The systems, interviews, videos and live trading presentations of Mark McRae’s current SureFire Trading Champion V2 top guns, and all the previous champions, will be accessible to only a few and you have been invited to join that elite group – effective TODAY!
Not only have these “over achievers” notched up staggering gains, they each have fully disclosed their systems.
- Videos on how the champions make their trades
- Detailed descriptions of the method or system that each champion uses
- A lively member’s forum, where members discuss and improve where they can on any system together
- Interviews with the champions and other veteran traders
- Live trading webinars hosted by champions and veteran traders and suitable for newbie’s and advanced traders alike
- An exclusive library of learning material, videos and more
- Access to EAs not found anywhere else, that have been exclusively developed for use of member’s only by in-house expert programmers
- A community of like- minded traders who assist and learn from each other every day
http://www.surefireforextradingchallenge.com/
Here’s a recap of the leaked information that started tongues wagging and astonished everybody:
# Banned System Video
An insider cracks it into the top twenty and then went on to reveal his method that is so staggeringly easy, yet hit the bulls-eye and landed him a top spot.
# 1,306.50% PM System
A recent Trading Challenge winner revealed how he made 1306.50% in just 1 Month. He proved, yet again, that a successful trading system needn’t be complicated.
# Live Trading
A SureFire Trading Champion on 3 consecutive challenges, showed why he was able to do it. He is caught on video as he sets out to tame the markets.
# Secret Of Trading
Master Webinar host Ty Young, on display as he mentors member’s in a one of his many Live trading sessions. Some of these can last between 8 to 16 hours!
# The Master
A powerful interview with veteran trader Alan ‘Pipsqueak’ DeWett, as he gave his whole system away. This is the same system that he bagged $50,000.00 with last year alone!
# The Wall of winners
Portions of interviews, with every champion trader, provided valuable insight into their thoughts and perspectives.
Its all up for grabs…9AM EST. One more thing before I go…
Mark is only allowing a small group of new traders in. He has shut the doors to new applicants before and is set to do it again as soon as you and a few select others join him and his team. He could close the doors anytime. He does this to keep support for
each member at the highest level possible and maintain exclusivity.
With a site this valuable, not just anybody gets the nod, so now is YOUR chance to take your trading to the highest level.
http://www.surefireforextradingchallenge.com/
Make sure you don’t pass up this chance!
All the best
Alan
P.S. This site is GOLD. What the members are exposed to here you just can’t find anywhere else. This is the rarest of invitations to get in and rub shoulders with the best of the best. Join up- Join the best:
http://www.surefireforextradingchallenge.com/
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Information, charts or examples contained in this
email is for illustration and educational purposes
only. It should not be considered as advice or an
endorsement to purchase or sell any security or
financial instrument. We do not and cannot give
investment advice. On certain occasions we have a
material link to the product or service mentioned in
the email. This may be in the form of compensation
or remuneration.
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Complimentary ‘stock mastery training’
If you missed the deadline for Bill Poulos’s Market Mastery
Protege Program last night, I’m sorry, but you’re too late,
because enrollment is currently closed.
However, I have a bit of good news for you.
Bill just gave me a fantastic 62 page trading report he calls:
“Market Mastery Profit Plans”
How Stock Market Insiders Profit in Today’s Economy
He’s giving this away to thank you for participating in his
Market Mastery Protege Program release.
In this report, Bill teaches you the 5 ‘recession proof’ trading
‘attack plans’ that you can use TODAY to enhance ANY trading
method at ANY time in ANY market…
You’ll also learn:
** The 4 “cornerstone components” Wall Street insiders have used
for decades to dramatically put the odds of success in their
favor, and how you can do it, too (page 25)…
** The 4 “emotion stabilizers”, inspired by Einstein, that
finally help keep “fear & greed” out of the picture once & for
all (page 55)…
** How to drastically reduce your “time in the trenches” trading
stocks by spending only 20 minutes a day. This discovery makes
it all possible (page 56)…
** …and a whole lot more, as he reveals the critical & crucial
strategies you need to maximize your profit potential in these
volatile markets…
It’s entirely complimentary & “on the house”. No name or email
required to get it.
Here’s the direct access link:
http://www.marketmastery.com/z/?i=773362&l=f56
Enjoy!
Good Trading,
Alan
Stock Market Mastery Protege Program closes today!
OK.
This is it.
The enrollment page for 35+ year trading veteran Bill Poulos’s
Market Mastery Protege Program closes TODAY, Tuesday, at 11:59pm
Eastern (New York time).
If you get this message in time, you can probably still get in
here:
http://www.marketmastery.com/z/?i=773362&l=f55
As a final reminder, remember that:
* You get the entire Market Mastery Protege Program home study
course that reveals how to spot the 4 “profit pockets” that can
occur on almost ANY stock chart, again & again…
* You get 8 bonus group coaching sessions, which have sold in
the past for $5,000…
* You have 60 days to try out the course. Don’t like it? Send it
back. No questions asked…
* It all breaks down to about $2.74 per day…
If you’re ready to become an independent master trader, join get
in here today:
http://www.marketmastery.com/z/?i=773362&l=f55
Good Trading,
Alan
p.s. As of this writing, Bill’s real-time inventory counter
shows 14 copies remaining.
Stock Market Mastery Protege Program Ends Tomorrow!
Bill Poulos has decided to close enrollment into his Market
Mastery Protege Program TOMORROW, Tuesday, June 22nd, at 11:59pm
Eastern (New York time).
So if you want “in”, hurry and reserve your copy here:
http://www.marketmastery.com/z/?i=773362&l=f49
He even put up a countdown timer on the enrollment page so
you know exactly when it closes.
If you’re “on the fence” about joining Bill as a new student of
his Market Mastery Protege Program, here are some things to keep
in mind:
* The home study course reveals everything you need to know to
spot the 4 “profit pockets” that can occur on almost ANY stock
chart, including:
- The Profit Pipeline Method…
- The Trend Validator Method…
- The Velocity Method…
- The Countertrend Cash Method…
* If you enroll TODAY, you get 8 bonus group coaching sessions,
which have sold in the past for as much as $5,000. This is a
HUGE bonus, and frankly, it’s unheard of.
* The whole thing breaks down to about $2.73 per day over a
year. I think that’s the best deal you’re EVER going to find for
this much handholding in the markets.
* Finally, if you truly don’t think this is for you, Bill is
giving you a full 60 days to take it for a “test drive”. Don’t
like it? Send it back. Simple!
If you’re reading this message in time, you might still be able
to join him here:
http://www.marketmastery.com/z/?i=773362&l=f49
Good luck and Good Trading,
Alan
p.s. If you see a “Sorry, Sold Out” message, then you were too
late. Just add your name to the waiting list & you’ll be
notified if the program is ever released again.
More “Market Mastery” insights revealed (new video)
UPDATE: Bill Poulos just posted a brand new live interview video
he did with his son, Greg, where he answers the top questions
about his Market Mastery program that he received during his 3
training sessions last week.
He reveals some pretty interesting stuff.
You can watch it here:
http://www.marketmastery.com/z/?i=773362&l=f54
Good Trading,
Alan
p.s. Remember, Bill’s closing his Market Mastery enrollment page
this Tuesday at 11:59pm Eastern (New York time), so if you have
any interest in discovering how to spot the 4 “profit pockets”
that can occur on almost ANY stock chart, be sure to check out
his new video here:
‘Market Mastery’ trading indicators revealed
Attention dear fellow traders,
This is interesting…
Bill Poulos just released another new trade video that shows his
Market Mastery program in action yet again, but this time on
NVDA, racking up some nice profit potential in June on a sweet
short trade:
* 10 percent on the first half…
* 8 percent on the second half…
…all in a handful of days, in just 20 minutes or less a night.
NICE.
** Pay attention when you watch this quick 3 minute, 46 minute
trading lesson because you’ll see the indicators that he uses,
which I don’t believe he’s ever published before outside his
“inner circle” of students.
See it here:
http://www.marketmastery.com/z/?i=773362&l=f53
Enjoy!
Good Trading,
Alan
