Newbie Lessons - All your questions answered

Sir Osisofliver said:

I will say that there was nothing intrinsically wrong with Storms basic principle of borrowing against your assets and margining in a double debt scenario. It's a strategy I've used myself and for clients. Where they fell down was a matter of timing and minimal risk management. If they had done something as simple as written a put option in March 08 to cover the portfolio, you'd never have been in your current predicament.

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Sir O don't you mean purchase a put option?

swm79 said:

hear hear... agreed

great thread loving your work Sir O. I've previously worked at a FP & Accounting firm and think you're doing a great job here. Not all FP's are bad... its just a few rotten apples that spoil it for the rest of us! (a previous collegue of mine being one of them!)

i think the biggest question is - when's the next chapter coming?????

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Um well I was up to technical analysis and techniques that I personally use. That's going to take a fair bit of time to do it justice (and numerous screenshots and attachments). On the upside my Market Analyst program is a lean mean charting machine at present after having been given a thrashing over the last couple of months

I'd really rather make it a collaborative effort that I can manage in bite sized pieces, so how about we take a poll on which tech tools to cover first?

NOTE: I will not be using current data - if I do I have to put those nasty disclaimers around the thread so I will be using data AT LEAST six months old for my examples.


1) MA's (moving averages)
2) Stochastics
3) Fibonacci and Elliot Waves
4) ?? Other

Cheers

Sir O

Trembling Hand said:

Sir O don't you mean purchase a put option?

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That's the second time I've done that

yes I mean PURCHASE a put option

Cheers

Sir O

Sir Osisofliver said:

In addition to Krusty's great comments

1) My condolances

2) What you do not know is what hurt you. Unfortunately those that know what you do not know are those you now cannot trust. If you cannot trust (ad I don't blame you if you don't) you therefore need to LEARN for yourself what it is that you don't know. The best person to look after your money IS YOU. You will not rip yourself off. (You owe it to yourself therefore to be educated enough to make the right decisions.

I will say that there was nothing intrinsically wrong with Storms basic principle of borrowing against your assets and margining in a double debt scenario. It's a strategy I've used myself and for clients. Where they fell down was a matter of timing and minimal risk management. If they had done something as simple as written a put option in March 08 to cover the portfolio, you'd never have been in your current predicament. What they didn't know HURT YOU.

Tips for the future.

• Budget well
• understand risk management
• do not become so scared of borrowing that you ignore it as an investment option

Cheers

Sir O

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in other words - "educate yourself"... you're going to look after your financial situation better than anyone else will. Granted you may not have the depth of information at your disposal, but in time you will be able to spot good and bad advice and choose which strategies work best for you.

Some points about SOME financial planners (i.e. the ones who DONT do their job properly, creating a bad name for everyone else )

Think about these things:

1. It is a simple but effective accident of history that means most customers don’t know they are being sold to, and that they are dealing with a commission-based salesperson. They think they are just being advised. Many advisers are very good at what they do, many are not. It’s pot luck. And as for getting sophisticated, relevant analysis of investment markets and techniques … forget it.
2. The basic technology being “sold” is a simple computer program called a platform or wrap account that passively administers investment portfolios and which wholesales to advisers for a couple of hundred dollars a year. Yet “advisers” charge thousands for it - a service that costs them almost nothing and is basically a device for selling other products (managed funds) for extra commissions.
3. Worst of all, every service in the industry – advice, administration and investment management – is billed as a percentage of the customers’ assets.

This is the greatest rort of all.

WITH THAT SAID - some FP's are great at what they do and are invaluable. Its just a matter of finding these ones... which for the newbie is harder than it sounds.

Hence this thread i guess...

Sir Osisofliver said:

Um well I was up to technical analysis and techniques that I personally use. That's going to take a fair bit of time to do it justice (and numerous screenshots and attachments). On the upside my Market Analyst program is a lean mean charting machine at present after having been given a thrashing over the last couple of months

I'd really rather make it a collaborative effort that I can manage in bite sized pieces, so how about we take a poll on which tech tools to cover first?

NOTE: I will not be using current data - if I do I have to put those nasty disclaimers around the thread so I will be using data AT LEAST six months old for my examples.


1) MA's (moving averages)
2) Stochastics
3) Fibonacci and Elliot Waves
4) ?? Other

Cheers

Sir O

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have you seen the ew debate thread??? its gonna be a war! hahaha

Sir Osisofliver said:

I'd really rather make it a collaborative effort that I can manage in bite sized pieces, so how about we take a poll on which tech tools to cover first?

1) MA's (moving averages)
2) Stochastics
3) Fibonacci and Elliot Waves
4) ?? Other

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Only the ones that "work", that should make it a short post.:

If its "Newbie Lessons" anything other than trends will have newbies zigging when they should be zagging.

Trembling Hand said:

Only the ones that "work", that should make it a short post.:

If its "Newbie Lessons" anything other than trends will have newbies zigging when they should be zagging.

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LOL - Didn't you know TH? They all work...for a given value of "work". sorry math joke.

I'll try and keep it clear, concise and explain what and why and hopefully leave the wars to other threads. Perhaps a request that if you wish to discuss the techniques in lots of detail you do so in other threads dedicated to discussion of those techniques?

Cheers

Sir O

Trembling Hand said:

Only the ones that "work", that should make it a short post.:

If its "Newbie Lessons" anything other than trends will have newbies zigging when they should be zagging.

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Nothing like a bit of Buffett rehtoric "I realized technical analysis didn't work when I turned the charts upside down and didn't get a different answer" aye TH????

True. EW might be a bit technical. maybe just a basic overview of what it is and the basics of of pin pointing waves...

swm79 said:

the basics of of pin pointing waves...

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with a wry smile..... "BASICS" of pin pointing waves.... haha

swm79 said:

with a wry smile..... "BASICS" of pin pointing waves.... haha

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Point taken. Lets leave Fib and EW to last shall we?

OK so MA's, Stochastics or Other Newbs?

Cheers

Sir O

Probably Moving Averages is an easy place to start

Sir Osisofliver said:

Point taken. Lets leave Fib and EW to last shall we?

OK so MA's, Stochastics or Other Newbs?

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It should be left at trends, up trends HH & HL, down trends LH & LL, Basic support and resistance.

It should be clear giving inexperienced "traders" oscillators will blind them to the only thing that matters - Trends. Just have a look at the amount of posts in the XAO thread with,

looks overbought here and is due for a bull back, have a look at the RSI/stochastic/MACD

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For the last 6 month and 1200 points.

i agree... otherwise you're giving a course in TA... there's too much depth and then you're going to ask "where do i stop?"

basic support and resistance with possibly a few (the main) indicators should be more than enough

if people want in depth analysis they should start looking for TA books rather than this thread

swm79 said:

i agree... otherwise you're giving a course in TA... there's too much depth and then you're going to ask "where do i stop?"

basic support and resistance with possibly a few (the main) indicators should be more than enough

if people want in depth analysis they should start looking for TA books rather than this thread

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OK Trends it is Newbs.....but not today...work to do

Cheers

Sir O

swm79 said:

if people want in depth analysis they should start looking for TA books rather than this thread

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plenty of TA mish mash in these threads to fill plenny of books , agree with TH re keeping it simple ...... seems to work the best

OK newbs Technical Analysis...

Noise versus data. I want to show all the newbs the difference between random events and non-random events. What we want to learn is what is non random, but we need to learn what non-random is before we can apply it, so I want all the newbs to do a simple experiment. Grab a piece of graph paper and draw a line down the center of the page and turn it on its side to create a T Bar.To look like this.... |----- Then grab a coin.

The probability of a head or tails is a 50:50 event. Not very random right? So based upon the math if you toss your coin 50 times, you will get 25 heads and 25 tails. Now start at the beginning of the T-Bar and toss your coin 50 times marking down each head and tail on your graph, up for heads, and down for tails in one long unbroken line.

What happens when you do this is that you will see that whilst the probability of a head or tails is a 50:50 event (and you may indeed see 25 heads and tails in this simple experiment) chaotic elements mean that you are very very unlikely to get a head, followed by a tail 25 times. (even though this is what the math predicts). In all likelihood you will receive a number of heads, followed by a number of tails in a random order.
Look carefully at your graph....does it start to look like a share chart with its up’s and downs? Welcome to random.

Place this graph above your computer terminal as a reminder that what we seek is non random events. Now this experiment is based upon a very simple single event 50:50 probability and yet it very quickly begins to appear much more complex. Now think about the market and how many things may influence a specific share price. Interest rates, commodity prices, general market conditions, consumer confidence, unemployment, Project development timelines etc etc etc. With each of these things you will have several different viewpoints that can influence the share price (or several different probabilities) about what will happen, those that think up, down, stay same; those that try and pre-empt the market and are looking at some point in the future etc etc. All these things can create noise. If you want to learn to trade successfully have a clear understanding of the difference between noise (random data events) and trend (non-random data events).

So what is non random?

When we look at share price data, we want to ensure that we are using the highest quality statistical data that we can find. Something that is non-random and can be distinguished from noise needs a high quality data set. For this reason the only chart I ever use is referred to as a HLC bar chart (or Bar chart for short) and includes a data point for HIGH LOW OPEN CLOSE, which gives us those four data points in a single data event. Looks like this...



The left hand point is the open, the top of the bar is the intraday high, the bottom of the bar is the intraday low and the right hand point is the closing price. It’s a wealth of data and one of the highest quality statistical data streams available displayed in a very simple to understand data array. This isn’t the only way to display these points of data, you can have candlesticks, Kagi’s, Gann Swings, Line graphs etc etc. For me this is the right balance between simplicity and quality of data. It’s also the most common...but it’s the most common for a reason. If you want to discuss different displays and how you think a Gann Swing is the bees knees of display methods, or why you prefer a simple line chart, please take that discussion out of this thread.

Up Bar’s Down Bars, Inside Bars, Outside Bars *hic*

Up Bar is a bar with a higher high and higher low than the previous bar. The bars marked off are in an uptrend. Notice how the close is higher than the open until what turns out to be the last bar of the trend where the close is lower than the open. There were more sellers then buyers on the last bar.

Down Bar is a bar with a lower high and lower low than the previous bar. The bars marked off are in a downtrend. Notice how the close is lower than the open until what turns out to be the last bar of the trend where the close is higher than the open. There were more buyers then sellers on the last bar.

Inside Bar, also called a narrow range bar, is a bar with the high that is lower than the previous bar and low that is higher than the previous bar. Some traders do not consider an inside bar that has either an equal high or an equal low as an inside bar, others do. Inside bars usually represent market indecision. As on any bar, the closer the open and close are to each other shows just how undecided the market is as neither the buyers or sellers are in control. Buyers are in control on the inside bar marked on the chart because the close is at the top of the bar.

Outside Bar, also called a Wide Range or Engulfing Bar, is a bar with a high that is higher than the previous bar and with a low that is lower than the previous bar thereby engulfing the previous bar. Since the open and close are close together on the marked bar, neither the buyers or the sellers are in control and the market is undecided which way to go.

When the open is in the bottom quarter/third of the bar and the close is in the top quarter/third of the bar, it is said to be bullish engulfing with the buyers in control. When the open is in the top quarter/third of the bar and the close is in the bottom quarter/third, it is said to be bearish engulfing with the sellers in control.

More to come guys...
Cheers

Sir O

P.S. Would one of you sterling Mod's edit this post to add the graphics into the right place? Cheers

If i sell shares today, when do i expect the money to fall into my account. They said 3 days. So therefore the monies will be in on friday or Monday? Not sure if today is counted?

antzlovinit said:

If i sell shares today, when do i expect the money to fall into my account. They said 3 days. So therefore the monies will be in on friday or Monday? Not sure if today is counted?

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T + 3 Today is not counted. So if you do a transaction today (being Tuesday) it will be in your account on Friday. (Barring failure)

Cheers

Sir O

Thanks Sir O. This thread is great - very informative. I am looking to start some trading on my own (have been using an alert system to date). Will keep checking in with your lessons. Thanks again

Sir O: THANKYOU, and also I love you and want to seks you up.

The basic trend stuff you posted on the 7th has really helped. Funny how you can keep seeing the edge of something that everyone else knows and never quite get it until someone stops and uses small words.

LH HH LL HL .... ahhhh. At last you guys make sense.

PS:

Up Bar is a bar with a higher high and higher low than the previous bar. The bars marked off are in an uptrend. Notice how the close is higher than the open until what turns out to be the last bar of the trend where the close is lower than the open. There were more sellers then buyers on the last bar.

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Re: the bolded bit - is this necessarily the case when the close is lower, is it something you get from the data shown here, or is it something you have to read off the volume graph that's not shown above?