Trading advice

Geeeezus!

Give the fella a break, he is obviously a genius like i am and there is no need for further explanation ...........


Take a number peasants or forward your money order to p.o box 4567 Geraldton WA for the Genius manual.

Thankyou.

Can always count on Nun to come in and break up the friction. I don't say any of this with any attitude, I'm blunt and honest. Maybe I'm right, maybe I'm wrong.

Over 1,500 posts in 8 months too

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I know it looks bad, but that's only one every 5 hours .

nunthewiser said:

Take a number peasants or forward your money order to p.o box 4567 Geraldton WA for the Genius manual.

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bs!!
You don't have a house or postbox :
Tell me which cave you are hiding in Sensei

Mr J said:

Can always count on Nun to come in and break up the friction. I don't say any of this with any attitude, I'm blunt and honest. Maybe I'm right, maybe I'm wrong.



I know it looks bad, but that's only one every 5 hours .

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Haha yeah, but going by the length of some of your posts, that means you just keep typing :

No but seriously, why do you post here? Just curious is all, if you don't care what people think, don't want to answer the request of how you trade, some say you don't contribute much, seems like a waste of time? What do you get out of it? You're already finding trading easy so its not like you need guidance or help, if anything, you could be helping alot of people by providing examples etc

Haha yeah, but going by the length of some of your posts, that means you just keep typing

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Most of my posts were in the first few months I was here, during my initial learning phase. Looking for information, out of interest, and for receiving feedback in discussion. I have a great interest in discussion, as it forces me to think and that alone is the best method of education that I've experienced. I've spent a lot of time reading a variety of forums, although I mainly posted at this one. I've posted less over the last couple of months because I get less from it, and it occasionally stirs.

I don't post my strategy because I think people need to find their own methods themselves, and also out of selfishness. I also tend to put things in an ambiguous manner, so I'm probably as likely to hurt someone as help them. Some of what I've posted in the trading section is light banter (such as in the "SPI chat" thread), but the majority of it I regard as constructive to discussion. Some people obviously disagree, and that's fine. I'm probably better off staying out of the trading section altogther.

brty said:

One of the best pieces of trading advice I ever heard was the following...

Assume you are incorrect when you put a trade on, let the market prove you are correct.

How this works in practise is that when I have implemented a position, if it does not go in my favour relatively quickly (according to the analysis) then take the position off. Yesterday I closed out 2 separate trades that were effectively going sideways instead of up. There are plenty of better opportunities out there.

By closing the trades because I assumed them to be incorrect from the start, I did not lose anything, yet if I had used the common 'stop loss' that most go on about, I could have lost a couple of thousand on the trades. Each of these trades had been in play for 1-2 weeks, yet the market had not proved the trades correct.

I do not use stop losses in the traditional sense, that is what 90%+ of traders do. However I do have risk mitigation in play.

brty

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First time looking in on this thread and I like it and will have more to say, hopefully as I work through.

This post took first attention because I also hop out of trades that become range bound or sideways without loss or gain. The key, "better trades elsewhere" is a good one.

I have been an active share investor for about 10 years. In the early years under paid advisors. Became unhappy with the performances so went it alone with the aid of investment newsletters in the beginning as well as hitting the books.

In hindsight the suggestion somewhere earlier in the thread of someone such as Nick Radge would be excellent for the beginner. You need someone to hold the hand so to speak at the start. I have for years followed a trader named Daryle Morley who has a weekly (Wednesdays Herald Sun, Melb) column of technical charting, he has been in the business for over 40 years and is very successful. Have attended one of his 2 days seminars and it was very well worth the $350 I paid at that time.

There is a lot of work getting there, you need to understand charting very well, you need also to check fundamentals carefully of any company you put your money into and the company needs to be in a sector of the market that is hotl. If those ingredients are not there you stand aside from the market till they return, I have been in cash for months waiting for the right trade to appear.

Most on the forums will know me as a gold bug. Why, because since 2001 it has been in a strong uptrend but has lots of ups and downs, so is fickle. The great thing about my studying gold is the wealth of intuitive experiience gained in understanding currencies and world markets, that IMHO is vital. eg. you will all realise that if the Dow jumps we jump.

I gained a huge amount from the Rich Man Poor Dad books but the best ever was called simply "Trend Following" published about 04, cant remember the writer and it is on loan at the moment to a fellow ASF'er who I met here on the forum.

Will close this post now but will talk in more detail and prepared to post recent and current trades up if it helps. I do not put the world on fire but have averaged a gain of 60% a year since I went it alone 6 years ago. This year I am on fire and we can look at that in more detail if anyone wants. Getting a bit late now for this old black duck.

cheers explod

explod said:

I

In hindsight the suggestion somewhere earlier in the thread of someone such as Nick Radge would be excellent for the beginner. You need someone to hold the hand so to speak at the start.

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Or perhaps even to just investigate a different approach. However, seeing that Nick has a SMSF specific plan, I contacted his website to see if a one month trial was available. Someone other than Nick replied, saying one month would not do the system justice, and that he would be in touch further. I have heard nothing and there has been no email to explain why.
This is disappointing and not in line with Nick's reputation.

There is a lot of work getting there, you need to understand charting very well, you need also to check fundamentals carefully of any company you put your money into and the company needs to be in a sector of the market that is hot

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I agree with combining both approaches. I recently fell in with buying a company from the chart, then only later appreciating that the rise in its share price was largely attributable to the fact that it was a take over target.
The ACCC decided against allowing the takeover and the SP fell 25% in an hour. I should have checked any news circumstances before buying the stock.

Mr J said:

I'm not bragging, I'm stating a fact.

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Surely terms like "simple" and "easy" are just subjective. Some people find running a marathon easy, other find tuning their own car simple... I cannot do either of that and think they are hard and complicated, but who am I to judge their own subjective opinion?

And to providing proof... I have only ever seen 3 or 4 threads that include actual proof via statements etc, and most of them were just done for bragging purpose anyway.

Although it would be great to see Mr J start a thread like "How I trade" for my own learning purpose.

Julia said:

I agree with combining both approaches. I recently fell in with buying a company from the chart, then only later appreciating that the rise in its share price was largely attributable to the fact that it was a take over target.
The ACCC decided against allowing the takeover and the SP fell 25% in an hour. I should have checked any news circumstances before buying the stock.

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Ouch! Got your hands burnt by a hot kettle! May be Sol Lew from Premier will come to your rescue on BRG.

Trading for a living is dead simple.

Step 1: have ten million dollars
Step 2: stick it in your bank account and earn interest

...you can't say squat about what's easy unless you know what someone is trying to do.

...seeing that Nick has a SMSF specific plan, I contacted his website to see if a one month trial was available. Someone other than Nick replied, saying one month would not do the system justice, and that he would be in touch further. I have heard nothing and there has been no email to explain why.

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I can attest that this is an abberation, since usually they're hell friendly - though I think Nick and Co are on holiday at the moment. I would guess that's why they were saying that a trial at the moment wouldn't be worth it - there won't be any updates until next year (the 7th? Something like that).

There is a $20 two-week trial available, which gives access to the whole thing, SMSF, Growth, power setups, charts, resources, history, everything.

TRUST INTUITION One of the best saying I have picked up is the adage "When in doubt, get out" I have since added one of my own, "When in doubt, do not go in"

Twenty five years ago in my employ I was part of a think tank research team. May task was to look at the problems files for a large organisation. The CEO told me one day to "let your mind do the work in time. Your difficult files, read towards the end of the day,then put them aside, next day the answers will usually be there." I found it was good advice.

A few years later I picked up a book called "The intuitive Edge" forgotten the author but published about 1978. One of the best insights was that our total life experience/learning feeds our intuition. If we have a concern/feeling for something it will be based on our past experiences, many forgotten, but not by our subconscious.

So if you have that feeling of doubt, act on it now, you can always re-valuate after the event and go back in for example.

Explod,

Very good advice for when you have experience, however for newbee traders/investors it can get you into trouble as they tend to hold a losing position because of a 'feeling' that their research showed it to be a 'good company'.

The quotes below, one of mine from yesterday, and your recent one, marry up together very well, but neither is 'programable'.

Assume you are incorrect when you put a trade on, let the market prove you are correct.

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So if you have that feeling of doubt, act on it now, you can always re-valuate after the event and go back in for example.

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One of the biggest mistakes made in trading is 'one size fits all', by this I mean some parameter based on 'x' days shows a positive expectancy when used over 200 stocks over the last 20 years etc etc. Clearly a simple look at the charts show that different stocks behave differently, any one stock also behaves differently over time. Every system that uses a static approach is flawed.

brty

well, great discussions for sure.

i agree with mr J.

and great discussions!

i think there are a million variables to consider.

if you can experience and learn from your experience, than, thats absolutely great, you're already a winner.

if you can experience then make the same mistake twice, then, well, you deserve it.

not just for trading, but for life in general.

GET SMART! And not in the television show way HAHAHAA, far out.

p.s. I got no mates, im allowed to laugh at myself. lol.

quote, the loner/thinker

p.s.s I am not as smart as I once thought, although I am smart, but not as I thought. I may be a good alrounder, but when you want to specialise, then thats a different story..

p.s.s.s Its good to interact with the public, get different views, see what others think, then compile and pick and choose what you think is good knowledge. Its a bit like the bible, and religion, you have a billion people who have their own views on the subject, so, in other words, pick up the bible, read it, then make up your own little story, but remember the basics/roots/core.

i should write a book. Life Lessons and the Stock Market. hhHAhahahah

there he goes laughing at himself mindyou again.

YEHH BABY! cant wait to wake up to you every morning! hehe. oops sorry, wrong subject.

i mean, then again, forget all that, its useless. geeeeeeeeeeesus
come on man, just pess the submit reply button farrr out

:dunno: :guitar: :bananasmi:shoot: :swear: :freak3: :holysheep:

I am really serious. But, please, let me be not serious on sundays.

ThingyMajiggy said:

:dunno: :guitar: :bananasmi:shoot: :swear: :freak3: :holysheep:

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Yep, that just about sums up trading.

I'm in the process of building another trading system. (ANY EXAMPLE I GIVE HAS NOTHING TO DO WITH MY SYSTEM).

Note the use of the word "system", as opposed to strategy. It's an important distinction. A strategy might be to trade on a specific technical signal or combination of signals.

Eg In a strongly rising market, use a 5 day and 21 day EMA and trade the crossover points....In a sideways trending market use a Stocastic Oscillator and MA combo for Buying signals etc.

A system is much much more, and a system benefits the most from extensive backtesting. A system removes a lot of the emotional responses. Should I hold on for a bit longer? is answered when the back-testing of your system over several hundred trades gives you a strong indication that your system is correct. (anything less than 500 + trades is not IMO an adequate test of the system).

So what makes up a system as opposed to a strategy? Ask yourself the following questions...

How do I find my trades?
Lead generation/capture - Most systems incorporate, in some form or another, the criteria to quickly and easily create a list of potential trades. Stocks that meet the criteria are in, stocks that don't, do not waste our precious time eliminating them from a larger data set. This then allows you to concentrate and be more efficient at selecting the best trades your system generates.

How much money should I put into an individual trade?
Risk management & positional sizing - No system has no risk. No system is so perfect that you get a 100% success rate. This is why we don't put all our funds into a single trade position, but instead diversify it across a number of trades. What however is the "correct" number of positions to take? What is the correct size of the position to take? There should be a rule in your system to determine this.

When should I enter and exit my positions?
A good system will have rules for both your entry and exit criteria. This is what removes a lot of the emotional mistakes that people make.

How do I limit my losses?
Your system should have rules that determine the maximum equity loss you are prepared to absorb.

How do I know my system will work?
This is the purpose of back-testing and live testing. back-testing tells you if your system has a positive expectancy. Live testing allows you to work out any kinks associated with slippage, liquidity and other cosiderations that may be unique to your system (use of leverage for example). If at the end of live testing your system has a positive result you can then determine how much of your trading assets should go towards the system. This is also dependent upon how your system is designed - it may be designed to work in sideways trending markets, strongly up or down trending markets, or when certain conditions are present (what interest rate you will pay on borrowed funds for example).

Without these basic characteristics...you have a strategy (and as far as I am concerned you are gambling)...not a system suitable for putting your hard earned dollars towards.

Most of my systems have a 80% + win/loss ratio and a 5+ Cents Gain/Cents Loss ratio.

Cheers

Sir O

Solid advice in regards to building a trading system as opposed to a strategy. what programs do you use for your system testing?

Mark Douglass' book highlights running 20 completed live trades once you have built your trading system and you are testing it with live money. Trade small during that time and make sure the backtested system results are in line with your live trading results. At this stage you'll be able get a feel for whether or not your live trading system has a positive expectancy.

Sound advice.

WilliamP said:

Solid advice in regards to building a trading system as opposed to a strategy. what programs do you use for your system testing?

Mark Douglass' book highlights running 20 completed live trades once you have built your trading system and you are testing it with live money. Trade small during that time and make sure the backtested system results are in line with your live trading results. At this stage you'll be able get a feel for whether or not your live trading system has a positive expectancy.

Sound advice.

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It varies according to the style of system I am running. Mostly I use plain old boring MS Excel to evaluate the system. (This would be after I have determined my lead generation, and simply determining the price data fluctuation effects).

I usually run 500+ trades through the back-testing and about 40 trades through the small scale live testing. (yes you only use a small protion of the funds - that's just common sense).

If everything works well and is in line with the back testing data (allowing for slippage, brokerage and other sundries), it'll go full scale.

Cheers

Sir O