08 May

Successful Traders and Chinese Handcuffs

Before I can properly show you how you too can become one of the successful traders, I need to share a story.

FishingI must have been in 6th grade when the little farming community grade school in South East Arizona had their annual school bazaar.  You know, the kind with bean bag tosses, balloon darts and my favorite, the fishing pond.

The fishing pond was simply a string that was tied to a stick on one end and a clip on the other.  All you had to do was give the vendor your ticket and stick the clip over the curtain.  The reason I love the fishing pond was that I was always rewarded with a prize when I pulled the clip back.  One of the prizes I won was a woven straw tube.  The bright colors formed diamond and diagonal patterns on the 5 inch tube. I had no idea what I had just won.  I felt that the fishing pond had let me down.  (more…)

08 May

Eight simple rules to avoid over-optimizing a trading strategy

 KeyPoint Market Analytics’ trading strategy seeks to uncover general market character.  Experience, along with a few simple guidelines helps us to accomplish this.

Optimization is the process of determining “optimal values” for the variable inputs that go into a trading strategy. These inputs include indicator parameters, time values, or price functions. Optimization of a trading strategy is necessary to determine precisely what is valid and what is not. Every trading strategy must therefore be optimized to some extent.

The most significant risk of any trading strategy development is “over-optimization”, also referred to as “data mining” or “curve fitting”. The process essentially mines historical data and attempts to identify rules and parameters that fit past data. Over-optimized trading strategies are typically characterized by at least one of (i) too many rules or conditions (ii) too few trade occurrences per rule (iii) erratic results with small adjustments in input parameters. Over-optimization will result in trading strategies where the historical performance far exceeds future performance.    (more…)

04 Apr

Joe Ross – Time Stops in Intraday Trading

TIME STOPS IN INTRADAY TRADING

At my seminars and in private tutoring I teach my students the concept of using time stops. I believe that you must use them in some form in all types of trading.

For the most part, traders stops based on money, ticks, pips or some percentage of their trading account. All of these are money management stops. In this respect, the level selected for the stop should take into consideration your risk tolerance.

However, very few traders use time stops in addition to money management stops. Time stops are trade management stops.

Using a time stop is quite simple. You apply a stop to your intraday positions which has nothing whatsoever to do with price. With a time stop, you decide how much time since entry is enough for your position to move in the direction you anticipated. (more…)

27 Mar

Trading with the Tomato Technique

In my last blog I mentioned that I had two quotes on my desk and promised to share that second quote with you in this edition.

First let me ask you a question …

What is the #1 Priority of Traders?

Think about it. As a stock or futures trader the answer probably determines your success with your trading strategies.
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02 Feb

The Great Improver???

When was the last time you looked at what you did and how you did it and asked if there was a better way? And if you did find a better way, even if it was based on something that had been created by someone else, would you still use it? Or would you feel you needed to invent something completely new? Is there credibility in an improvement or only in an invention? The answer may surprise you!

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02 Feb

The Chance of a Lifetime – Seth Godin

Everyone now and then I run across an article that really gets me thinking.  Seth Godin posted a blog on his site that was just one of those type of articles.  I have posted his full blog here and put his blog link at the bottom.  I hope you enjoy his posting as much as I did.

A friend asked me the other day, “…given the sorry state of so much in the world, what’s possible to look forward to?”

The state isn’t sorry. It’s wide open.

Interest rates are super low, violence is close to an all time low, industries are being remade and there’s more leverage for the insurgent outsider than ever before in history.

The status quo is taking a beating, there’s no question about it. That’s what makes it a revolution.

I said this nine years ago and I stand by it. In the years since I wrote this essay, people have started social movements, built billion dollar companies, toppled dictators, found new jobs, learned new skills and generally made a ruckus.

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30 Dec

The Great Wall of China, A Christmas Carol, and trading.

Glen Larson

President, Genesis – www.tradenavigator.com

This month’s newsletter discusses the Great Wall of China, A Christmas Carol, and how they relate to our careers, our daily lives and our trading. Many of you know of the Great Wall of China and how it was built in the third century BC. It was originally built by Ch’in Shih Huang-ti, the first emperor of a unified China during the Qin (Ch’in) Dynasty. This Great Wall is known to be at least 5,500 miles long (3,889.5 miles of actual wall) and has over 10,000 watchtowers. It has become a monument in stone that has survived a millennia. Over the Holidays I was thinking about the Great Wall of China and watching, A Christmas Carol. I couldn’t help but have a light bulb moment when I struck me how the two were related in our lives as traders.

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30 Dec

John Person – High Close Doji

Most traders live by the adage, “Buy Low & Sell high”; really great traders buy high and sell even higher. They also take advantage of selling short but simply stated, successful traders just want to trade on the right side of the market.

Blending the strengths and characteristics of Candlestick chart pattern recognition with a specialized Pivot Point filtering system I designed has helped me to stay on the right side of the market. This is what I have been teaching around the globe to private and institutional investors, professional traders, brokerage firms and various Exchanges.
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16 Nov

What’s the Time? The why and When of Market Turns

img1Intro from “Master Class II-Timing Gold”: Many seasoned advisers scoff at the notion that market timing even exists, let alone that it is possible. I call this and similar views, the “Columbus Doctrine”. This doctrine states that “If I don’t know how to do it; it can’t be done”. Columbus sparked the most historic moment in the doctrine’s long history when he actually sailed off the edge of the world (it was widely believed to be flat in 1452) and miraculously returned to Spain. His reward was riches, fame and honor. Though not the first to reach the Americas from Europe, that being Leif Ericson, Christopher Columbus is remembered on Columbus Day whilst poor old Leif languishes as a footnote in history. Even 7 centuries ago, a good PR agent was paramount!

Our theme picture today is the magnificent Sistine Chapel (1508-12) painting of the Prophet Daniel by Michelangelo. Daniel gave us the earliest documented solutions for the problems of universal “Time”. And I don’t mean hours and minutes!!

Market timing is one of those areas of market lore that attracts vehement and opposite responses. Some find it strangely seductive, whilst others loathe and dismiss the idea in its entirety.

So we have dedicated market timers on one side of the argument, and these folks believe that markets can be timed to the day, and we have the sceptics on the other side who find no use for market timing, plus of course all those whose ideas fall somewhere in the twain. Strangely, both groups are right, but not in the way they think, and today I will show you the real and valid benefits of market timing which I expect will be quite a foreign concept to most of you.

There are timing cycles in all markets. Many of them. Some inordinately long and of interest only to witchdoctors (economists), who will not live long enough to see the cycles repeated. Kondratieff Winters, Kuznets etc, are of no value to practical traders, even if the theory was true, which it’s not, and some so short that they amount to not much more than wiggly lines which in truth require a hefty dose of booze or other substance abuse to glean any insight.
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29 Sep

Perfection is the enemy of success

Perfection is the Enemy of Success.

Newsletter Sept 2011

“Practice Makes Perfect” or Vince Lombardi’s supposed quote, “Practice does not make perfect, but perfect practice makes perfect” admonitions are wrong. Yep, that’s what I’m discussing this month and how, many traders get caught in this trap. (more…)