The Most Insightful Articles ABout Trading and Investing!

[ronblack]

I have read meany insightful articles but each has a piece of the puzzle. The puzzle is just too large to fit in an article.

This is probably one of the most important articles I have read recently. Should try to read between the lines. I think the author is issuing a warning. If this is true, are the rest of us just plain trading idiots?

http://www.priceactionlab.com/Blog/...edict-market-moves-by-seeing-into-the-future/

 

[Zr1Trader]

Quote from oldtime:

That was back in the days of the SF stock exchange.

Right now you should be long gold, long silver, long AAPL, long rough rice.

But you can't do that because you are smart.

So basically you are a trend follower. Thats fine. I was just kind of confused on how one learns to be stupid. The stupidest thing I could think of was buying high and selling low

 

[Handle123]

Quote from SnakeEYE:

indicators are for trading size,essentially.

I use indicators cause I can see from across the room if I need to get off the treadmill and take a trade, been trading long enough to understand what the indicator should be doing when price does something else. But I have studied indicators for so long and use most of them in ways that not written in most books that I have found patterns that few know. Indicators can show some unusual patterns that Price never displays, but unless traders spends huge amounts of time studying charts and relationships with indicators, they will never see them by running backtests.

Sort of being miles away from a forrest and yet by going in much closer, you then see the trees.

 

[SnakeEYE]

Quote from Handle123:

I use indicators cause I can see from across the room if I need to get off the treadmill and take a trade, been trading long enough to understand what the indicator should be doing when price does something else. But I have studied indicators for so long and use most of them in ways that not written in most books that I have found patterns that few know. Indicators can show some unusual patterns that Price never displays, but unless traders spends huge amounts of time studying charts and relationships with indicators, they will never see them by running backtests.

Sort of being miles away from a forrest and yet by going in much closer, you then see the trees.

Yeah, i noticed a couple of things too.You could get the entries a bit better,if you displace stochastic 2 periods backwards,for e.g.It could save a couple of ticks.A penny make a pound.

 

[bearmountain]

Quote from Zr1Trader:

I was just kind of confused on how one learns to be stupid. The stupidest thing I could think of was buying high and selling low

being stupid takes much practice -

 

[icarus618]

Quote from jack hershey:

There are many ha ha momments one encounters when reading books. Some really great ones I remember and often use as humor when I am with other skilled traders.

1. the biggest haha was in reading "The Predictors". These PhD's (quants) were trading live money to prove in a system they were trying to develop and design. One afternoon well into the book's recitation by a guy named Bass, they sat down to change their trading approach because they had just learned that in markets there is a bid and ask. They had not beem told this and didn't know about it.

2. Another haha for me is the beginniing of a book called "Trend Following" or Trendfollowing" I can't remember which. After many pages I called the finance department of Prentice Hall to find out how they decided to publish such a book. In the beginning of this orange covered book the author states that a particular person is a terrific example of making money. The guy was making hardly any of the market's offer. The ha ha of this book is that the author slipped past the whole of Prentice Hall this strange heresay based text that had nothing at all to say and it said it anyway.

3. The absolute funniest of all is from MIT and paid for by the NSF. It is a long paper that DID actually appear in the Journal of Finance. Here is the humor. The authors are looking for signals of patterns (10 kinds they chose first of all) in markets. To look, they feel they have to eliminate market noise first. They promptly throw out two things: the "noise" and the "signals". As a result they see that signals from chosen patterns occur about once every five years. The humor is that they got more money from NSF after this and even funnier, the Journal of Finance actually published their work. One of their subsequent papers proved that Hedge Fund and big bank traders sweat more when they are trading than when they are not trading. They correlated the sweating with two things both humorous to me: fear and anxiety.

4. Anopther humorous article appeared in 1790. It had a real ha ha in it. The person avered "based on his experience" that it was better to let profits run and if in a loss situation to close out the transaction as soon as possible. This was well after the tulip wars.

I'm glad you are looking for ha ha's most people never get to that skill level, ever.

haha...nice.

 

[elitetradesman]

Quote from Handle123:

Another tidbit, indicators should not be used until you can just trade Price Action. Indicators are for experienced traders. Everybody reads book on indicators, and most lose using them, "ta-da", and most books don't far enough on to use them with Price action. Just cause some indicator is giving a signal, what is Price also doing?

As a beginner, what should I use if I can't use indicators? Are you suggesting candle sticks or some patterns?

 

[jack hershey]

Quote from elitetradesman:

As a beginner, what should I use if I can't use indicators? Are you suggesting candle sticks or some patterns?

This is a ha ha thread but I will digress to where you have digressed after Handle digressed.

You are a pre-beginner. I can see you are NOT building your mind by using repetition since you have nothing to repeat.

Handle built his mind the hard way as he told you. He is using the forest and trees approach. For boy scouts, forestry merit badge recommends learning how to ID different trees and make plaques that show the fully differentiated differences and uniqueness of trees.

The leadership training location of BSA is on a single donnor's gifted reservation. Schiff Scout Reservation outside of Menham, NJ) A prominent tree that grows there is the tulip tree. Its leaf is used as the patch of leader trainers and attendees. Tulip wood under another name (yellow poplar or basswood) is the principal ingredient in the manufacture of padded furniture.

Let me digress further to enable you to become rich in about 21 days. Follow the 8 rules for trading from day one and on day 22 you have 2 million plus in profits plus 6 accounts @ 40 ES contracts each. The 8 rules occupy about 1/2 a page.

By repeating the 8 rules over and over, their use becomes a fully differentiated set (of inferences) in long term memory so that each time you sense something in the market, then you pair it one to one with the inference in your mind's long term memory and you behave to make the money the market is offering.

To become effective and very astute, put each rule on a separate page at the top of the page and hand write in the details of the rule.

Put your notes in a three ring binder and add prints of charts that illustrate each of the 8 rules.

During the 21 days on the way to 2,000,000 dollars in your accounts, you have plenty of time to do this. After 21 days you only make about 150,000 dollars a day.

Doing all of the above on ET in this thread would be a digression from the ha ha search going on. But we could use it as a HA HA for all the folks who did not do it. I will return here in 22 days for the HA HA.

If you wish I will add how to use indicators instead of only the 8 rules content as an alternative. I do both anyway so it is no trouble for me.

Lets make day 1 the day a person posts the word document containing the 8 rules. Then we can switch from ha ha to ah ha type posts.

 

[Lucrum]

Quote from tradingjournals:

What are the most insightful articles you have ever read about trading and investing on the web? The type of articles that gave you the "ha ha" moment, a breakthrough in your thinking about trading/investing, or simply significantly reinforced something very important you already knew about investing/trading.

Oh that's easy. It was the "How to start a fake $100 journal and still blowup".

 

[taq]

The best article I ever read on trading

I Look Back Now and Wonder

I wasn't sure where to put this, so the powers that be can move it if they see fit. I put it here for anyone who is just starting out and wondering what it really takes to become part of that elite club of profitable traders.

I lurk on several trading forums. I join a few and make a few posts. One thing that I rarely see is the painful path one took to becoming successful. So for all you beginners here is what becoming successful took. For my fellow brethren that are already in the club have a good laugh.

The markets had always lured me as a kid. I would read the paper and make predictions. Sometimes they were right; sometimes not. Then one day I got that famous commodity-trading flyer, sent my money off and took the plunge.

My first stab at trading was commodities and I started with $5k in 1991. I was using the strategy as outlined by the guru. The account was gone within a few months. Well that didn’t work. I thought, people do this everyday and make money why not me.

So off to the library. I read every book the Memphis library had on trading and investing. I paper traded the strategies I found while I built my bankroll back up. I learned exits, set-ups, position, expectancy, market psychology, and portfolio management. I soon realized that I was reading the same thing over and over no matter which book I checked out.

Time to build my strategy. I am ready to do this. I bought a new computer, Metastock Pro 6.0, and opened an account with $30k. Its 1995, and this is my shot. By 1997 I was toast again. The family life went to hell in a hand basket, and I thought I could trade through the difficult times. The result was an account with a balance of $2500.

Back to the drawing board. Took care of the personal stuff. Lived like a monk raising capital. Worked nights and watched the market during the day. Took a second job on the weekends to raise more money.

Then one day out of the blue, the little red and green candles started to make sense. I saw patterns develop over and over in the same spots. I placed a trade and made a profit. But I had done this before. I removed the MACD from my charts. Placed another trade and made a profit. Maybe I am on to something. Removed the channel indicator that I stumbled across. I could still see the action and new what the MACD was doing and where the action was in the channel without them even being on the chart. I even stopped drawing trend lines.

It was just me and the screen. I planned every trade. I knew exactly when, where, and why I entered and exited. I was patient. I became a predator. Lurking and waiting. I took every shot the market gave me. If it started to go wrong, I got out quick and waited. If the market did not give me an opening, oh well. There is always tomorrow.

By the fall of 1999, I was consistently profitable and have been ever since. For those that are waiting for the sales pitch, there isn’t one. For those that are waiting for me to expose some great secret, well there isn’t one of those either.

What I will give you are a few simple pointers that I learned the hard way. And the sad part is, most will stilll learn these the hardway.

1)Take everything you read with a grain of salt. That includes this post.

2)Never pay for a system. It is just not that easy.

3)If something comes up in your life that is distracting, stop trading.

4)Plan every aspect of your trade down to the smallest detail, and plan for every possible outcome.

5)Develop your own strategy. Don’t let someone tell you that you can’t trade a simple moving average if you truly believe you can.

6)Test the strategy in the market that you will be trading. If you like the results, trade it in another totally unrelated market and see if it still holds up.

7)Paper trading is ok, but there is nothing that truly tests the strategy like hard earned cash.

8)You will have to make sacrifices in order to make it. I still do. In the middle of my learning period I was working 18 hours a day during the week and 12 on the weekend.

9)You are responsible for everything when it comes to trading. That includes stop running, bad fills, limit moves, your PC crashing. I mean everything. See #4

10)And last but probably most important, don’t be afraid of failure. Just do like Edison and go, “Well that didn’t work”.

Good trading to you all.