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Trading Plans, How to create a trading plan
joules mm1
post Posted: Dec 8 2019, 08:28 PM
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Posts: 1,353
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#process #repeatability #stickability

https://twitter.com/TexasTechMBB/status/1201631062943645698



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. . . . . . . . everything has an art.....in the instance of the auction process, the only thing, needed to be listened to; price
 
nipper
post Posted: Dec 3 2019, 08:00 PM
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Posts: 6,959
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In Reply To: nipper's post @ Dec 1 2019, 08:39 AM

Some more:

QUOTE
Bob Farrell was a widely followed .. at Merrill Lynch. Wall Street people still speak of him reverently. Some of the greatest traders and investors .. referred to his rules on a frequent basis, and I suggest you do the same. Here are his rules with commentary from MarketWatch’s Jonathan Burton.

Markets tend to return to the mean over time


By "return to the mean," Farrell means that when stocks go too far in one direction, they come back. If that sounds elementary, then remember that both euphoric and pessimistic markets can cloud people's heads.

"It's so easy to get caught up in the heat of the moment and not have perspective," says Bob Doll, global chief investment officer for equities at money manager BlackRock Inc. "Those that have a plan and stick to it tend to be more successful."

Excesses in one direction will lead to an opposite excess in the other direction

Think of the market as a constant dieter who struggles to stay within a desired weight range but can't always hit the mark.

"In the 1990s when we were advancing by 20% per year, we were heading for disappointment," says Sam Stovall, chief investment strategist at Standard & Poor's Inc. "Sooner or later, you pay it back."

There are no new eras -- excesses are never permanent

This harkens to the first two rules. Many investors try to find the latest hot sector, and soon a fever builds that "this time it's different." Of course, it never really is. When that sector cools, individual shareholders are usually among the last to know and are forced to sell at lower prices.

"It's so hard to switch and time the changes from one sector to another," says John Buckingham, editor of The Prudent Speculator newsletter. "Find a strategy that you believe in and stay put."

Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways

This is Farrell's way of saying that a popular sector can stay hot for a long while, but will fall hard when a correction comes. Chinese stocks not long ago were market darlings posting parabolic gains, but investors who came late to this party have been sorry.

The public buys the most at the top and the least at the bottom Sure, and if they didn't, contrarian-minded investors would have nothing to crow about. Accordingly, many market technicians use sentiment indicators to gauge investor pessimism or optimism, then recommend that investors head in the opposite direction.

Fear and greed are stronger than long-term resolve

Investors can be their own worst enemy, particularly when emotions take hold. Stock market gains "make us exuberant; they enhance well-being and promote optimism," says Meir Statman, a finance professor at Santa Clara University in California who studies investor behavior. "Losses bring sadness, disgust, fear, regret. Fear increases the sense of risk and some react by shunning stocks."

After grim trading days, it's easy to think you're the patsy at this card table. To counter those insecure feelings, practice self-control and keep long-range portfolio goals in perspective. That will help you to be proactive instead of reactive.

"It's critical for investors to understand how they're cut," says the Prudent Speculator's Buckingham. "If you can't handle a 15% or 20% downturn, you need to rethink how you invest."

Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip names

Markets and individual sectors can move in powerful waves that take all boats up or down in their wake. There's strength in numbers, and such broad momentum is hard to stop, Farrell observes. In these conditions you either lead, follow or get out of the way.

When momentum channels into a small number of stocks, it means that many worthy companies are being overlooked and investors essentially are crowding one side of the boat. That's what happened with the "Nifty 50" stocks of the early 1970s, when much of the U.S. market's gains came from the 50 biggest companies on the New York Stock Exchange. As their price-to-earnings ratios climbed to unsustainable levels, these "one-decision" stocks eventually sunk.

Bear markets have three stages -- sharp down, reflexive rebound and a drawn-out fundamental downtrend

When all the experts and forecasts agree -- something else is going to happen As Stovall, the S&P investment strategist, puts it: "If everybody's optimistic, who is left to buy? If everybody's pessimistic, who's left to sell?"

Going against the herd as Farrell repeatedly suggests can be very profitable, especially for patient buyers who raise cash from frothy markets and reinvest it when sentiment is darkest.

Bull markets are more fun than bear markets

No Kidding




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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Dec 1 2019, 08:39 AM
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Posts: 6,959
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Thanks for these. John Mauldin has just posted a few:
....

"Several different versions of Dennis Gartman’s rules are floating around the internet. This one is my favorite. Note that Dennis is first and foremost a trader, so these are rules for traders but also offer insight to investors".

QUOTE
1. NEVER, EVER, EVER ADD TO A LOSING POSITION: EVER!:
Adding to a losing position eventually leads to ruin, remembering Enron, Long Term Capital Management, Nick Leeson and myriad others.

2. TRADE LIKE A MERCENARY SOLDIER:
As traders/investors we are to fight on the winning side of the trade, not on the side of the trade we may believe to be economically correct. We are pragmatists first, foremost and always.

3. MENTAL CAPITAL TRUMPS REAL CAPITAL:
Capital comes in two forms... mental and real... and defending losing positions diminishes one’s finite and measurable real capital and one’s infinite and immeasurable mental capital accordingly and always.

4. WE ARE NOT IN THE BUSINESS OF BUYING LOW AND SELLING HIGH:
We are in the business of buying high and selling higher, or of selling low and buying lower. Strength begets strength; weakness more weakness.

5. IN BULL MARKETS ONE MUST TRY ALWAYS TO BE LONG OR NEUTRAL:
The corollary, obviously, is that in bear markets one must try always to be short or neutral. There are exceptions, but they are very, very rare.

6. "MARKETS CAN REMAIN ILLOGICAL FAR LONGER THAN YOU OR I CAN REMAIN SOLVENT":
So said Lord Keynes many years ago and he was... and is... right, for illogic does often reign, despite what the academics would have us believe.

7. BUY THAT WHICH SHOWS THE GREATEST STRENGTH; SELL THAT WHICH SHOWS THE GREATEST WEAKNESS:
Metaphorically, the wettest paper sacks break most easily and the strongest winds carry ships the farthest, fastest.

8. THINK LIKE A FUNDAMENTALIST; TRADE LIKE A TECHNICIAN:
Be bullish... or bearish... only when the technicals and the fundamentals, as you understand them, run in tandem.

8. TRADING RUNS IN CYCLES; SOME GOOD, MOST BAD:
In the “Good Times” even one’s errors are profitable; in the inevitable “Bad Times” even the most well researched trade shall go awry. This is the nature of trading; accept it and move on.

9. KEEP YOUR SYSTEMS SIMPLE:
Complication breeds confusion; simplicity breeds elegance and profitability.

10. UNDERSTANDING MASS PSYCHOLOGY IS ALMOST ALWAYS MORE IMPORTANT THAN UNDERSTANDING ECONOMICS:
Or more simply put, "When they’re cryin’ you should be buyin’ and when they’re yellin’ you should be sellin’!"

11. REMEMBER, THERE IS NEVER JUST ONE COCKROACH:
The lesson of bad news is that more shall follow... usually hard upon and always with worsening impact.

12. BE PATIENT WITH WINNING TRADES; BE ENORMOUSLY IMPATIENT WITH LOSERS:
Need we really say more?

13. DO MORE OF THAT WHICH IS WORKING AND LESS OF THAT WHICH IS NOT:
This works well in life as well as trading. If there is a “secret” to trading... and to life... this is it.

14. CLEAN UP AFTER YOURSELF:
Need we really say more? Errors only get worse.

15. SOMEONE’S ALWAYS GOT A BIGGER JUNK YARD DOG:
No matter how much “work” we do on a trade, someone knows more and is more prepared than are we... and has more capital!

16. PAY ATTENTION:
The market sends signals more often than not missed and/or disregarded... so pay attention!

17. WHEN THE FACTS CHANGE, CHANGE!
Lord Keynes... again... once said that “ When the facts change, I change; what do you do, Sir?” When the technicals or the fundamentals of a position change, change your position, or at least reduced your exposure and perhaps exit entirely.

18. ALL RULES ARE MEANT TO BE BROKEN:
But they are to be broken only rarely and true genius comes with knowing when, where and why!




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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

Said 'Thanks' for this post: henrietta  joules mm1  
 
joules mm1
post Posted: Nov 22 2019, 12:47 PM
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Posts: 1,353
Thanks: 359


in the mail from www.thechartist.com
if youre new to trading/investing, commend you take a gander at Nick's work (successful funds manager and top educator, free stuff too)
50 Bite Size Trading Tips and Tricks

1. Don’t try to read into other people’s trading decisions.
2. By all means like a stock, but don’t try to be best friends with it forever. Instead, spend time nurturing positions that are being kind to you.

3. Beware the Beginner's Cycle. The want to be right will cause you to collect courses and books and will only be a costly and frustrating exercise. The secret is elsewhere.

4. Actually, there is no secret. It’s all in the maths.

5. Losses when trading are inevitable, but losses should always be limited.

6. Have a prepared trading plan so you don’t rush into bad decisions. Time spent planning will help you avoid catastrophic losses, riding the emotional roller coaster, and other unnecessary headaches.

7. Get off your high horse. Your ego will eventually cost you dearly.

8. Validate your strategy before you risk your capital.

9. Don’t waste your time on other trader’s successes. The only person you’re competing against is yourself.

10. Ignore any broker that tells you to buy when there is blood in the streets. You can be sure it’s not theirs.

11. Outsource to people who do the stuff they’re better at so you can do the stuff you’re better at.

12. Make haste slowly. Ensure you have a validated strategy that has an edge and ensure you have a full understanding of the journey ahead of you. The markets will always be there. What won’t be there if you’re in too much of a hurry is the capital in your account.

13. Understand positive expectancy. When you see it, you’ll get it.

14. Ask someone you trust if you are unsure.

15. Risk a small amount of capital on each trade.

16. Sentiment will drive the market, or a stock, a lot further than logic ever will.

17. Only fools claim to know the future.

18. Don’t be a dick for a tick. Saving a few cents here and there will only cost you dollars later on.

19. You can’t control the market. Don’t waste your time by watching every trade tick along.

20. Find a strategy that makes sense to you.

21. Be curious and keep a trading diary. Don’t be scared to learn something new.

22. Explore new ideas and opportunities often.

23. Let go of things you can’t change. Concentrate on things you can.

24. There is no point questioning the market.

25. The market will pay you when it’s ready. You just need to be there when it does.

26. Find a strategy you actually enjoy following.

27. Realize that the harder you work, the luckier you will become.

28. Risk not thy whole wad. There is a reason why compounding is the 8th Wonder of the World.

29. However good or bad a situation is now, it will change. Accept that positive expectancy sometimes takes time to show its hand.

30. Realize that being right does not equate to profits.

31. 45% of trades will tend be profitable. 45% will tend be losses. 10% will be breakeven. Your job is to make the winners count.

32. Make mistakes, learn from them, laugh about them, and move along.

33. Successful trading is not a sprint. Buffet didn’t earn his reputation in a single year �" or decade.

34. The only thing you can control is the amount of money you’re willing to lose on each trade.

35. Don’t over think things. Simple works best. Complex will eventually break.

36. Understand why your strategy makes money.

37. If you can’t pull the trigger it’s usually because you don’t trust the strategy you’re using. Stop and re-evaluate.

38. Trends can’t not exist.

39. The biggest hurdle to overcome is between your ears.

40. Don’t fear the market. It can’t actually hurt you. You can hurt you though.

41. The object of gaining a trading education isn’t knowledge; it’s to enable action.

42. Never move a stop backward. You’re mind is screwing with you.

43. Rules you can’t or won’t follow are of no use to you.

44. Your initial reaction to any adverse situation is usually wrong.

45. Risk and volatility are not the same. Volatility can increase returns. Risk can increase losses.

46. Think long term with regard to strategy application. Performance and trade outcomes in the short term are random.

47. The keys to success are consistency, discipline and patience. They cannot be bought.

48. Every stock that goes bankrupt exhibits a sustained downtrend first.

49. Any strategy is only as good as the person using it.

50. Take responsibility for every decision you make.

Good trading!


Nick



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. . . . . . . . everything has an art.....in the instance of the auction process, the only thing, needed to be listened to; price

Said 'Thanks' for this post: nipper  henrietta  
 
joules mm1
post Posted: Jun 3 2014, 08:12 PM
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Posts: 1,353
Thanks: 359


graduated.gif


Market Masters: How To Find A Trading Style That Suits Your Personality
June 01, 2014

http://www.seeitmarket.com/market-masters-...sonality-13617/

QUOTE (joules mm1)
I think this to be true:

QUOTE (Jon Boorman)
"Traders [must] find a methodology that fits their own beliefs and talents. A sound methodology that is very successful for one trader can be a poor fit and a losing strategy for another trader.[/i]




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. . . . . . . . everything has an art.....in the instance of the auction process, the only thing, needed to be listened to; price

Said 'Thanks' for this post: arty  
 
joules mm1
post Posted: May 10 2014, 02:08 PM
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Posts: 1,353
Thanks: 359


https://twitter.com/AsennaWealth/status/464915406910533632
QUOTE (Assad Tannous ‏@AsennaWealth 4h )
Surround yourself with emotionally stable traders.Traders that dwell on trivial issues act like an anchor on your trading progress.






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. . . . . . . . everything has an art.....in the instance of the auction process, the only thing, needed to be listened to; price
 

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joules mm1
post Posted: Apr 20 2014, 11:59 AM
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Posts: 1,353
Thanks: 359


QUOTE (Dr. Brett)
One need not be quantitatively oriented to become an idea factory.
A hard-nosed review of losing trades will often identify where you
have either misread markets or traded them suboptimally.
Either is fertile ground for learning and adaptation.


QUOTE
Discipline and process orientation are necessary for
success, but they are not sufficient. As any business in
a fast-changing market knows, it is not enough to
execute stale ideas faithfully.


Dr. Brett

QUOTE (Dr. Brett)
Identify who is already sharing their work:
when someone is continuously innovating,
they are not threatened by the idea of sharing innovations.


Dr. Brett



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. . . . . . . . everything has an art.....in the instance of the auction process, the only thing, needed to be listened to; price
 
joules mm1
post Posted: Apr 7 2014, 11:07 AM
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Posts: 1,353
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http://traderfeed.blogspot.com.au/2014/04/...ng-culture.html



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. . . . . . . . everything has an art.....in the instance of the auction process, the only thing, needed to be listened to; price

Said 'Thanks' for this post: arty  
 
joules mm1
post Posted: Mar 19 2014, 10:20 AM
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Posts: 1,353
Thanks: 359


good article by Brett Steenbarger

http://traderfeed.blogspot.com.au/2014/03/...ading-edge.html

link





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. . . . . . . . everything has an art.....in the instance of the auction process, the only thing, needed to be listened to; price
 
joules mm1
post Posted: Mar 3 2014, 08:38 PM
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Posts: 1,353
Thanks: 359


In Reply To: joules mm1's post @ Mar 3 2014, 08:04 PM

QUOTE
asx stock competition....

at least some parts that can be practised, it's free and worth the 'what-if' effort

https://myasx.asx.com.au/home/myasx.do


what exactly could you practise?

first and most obviously: size! that is, money management...

timing

you can use the time in the comp to find habits, that is, you can forward test ideas rather than backwards validate (curve fit)

you can test yield strategies

you can test pattern strats, again, forward testing with limited scope is still useful if you can create a habit

creating habits is better than creating discipline because you internalise a habit and fight discipline
it is the nature of the auction process to weed the weakness in you....thus, well formed well proven functions that
become habits are far superior to disciplines even tho they may appear the same, one calls for resisting while habit calls for
taking action unconsciously.......habits are oft thought to be detrimental, whereas in reality it is the inception that is detrimental

you can practise good book keeping

logging realtime patterns

logging realtime volume movements, how did price move (was it a U-day or an n-day for the price and what's the implication?)
does the volume show more sales to the bid or more purchases to the offer? was their more selling at the close of the day compared to the opening swing?
which side is trying to gain dominance and at what time of the day?....plenty of generic charts with volume to break down....mostly you can get that info from someone like comsec (yes, i know the datafeeds are not concurrent across all providers, yet) you can gleen enough from high-volume stocks to get an inside feel
of what the auction is trying to achieve.....

when making a trade, so as to make it have onus, write a quick email to yourself, like a diary entrance with brief notes on your reasons
....make the paper trade have some meaning.....this is the best way to use these types of competitions...give it some gravitas othewise you cannot get any sense of the actual trade....this way you have created a history and can see what habits you already have that need to be worked on....

another site for pattern recognition http://chartgame.com/

....just ideas smile.gif



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. . . . . . . . everything has an art.....in the instance of the auction process, the only thing, needed to be listened to; price
 
 


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