General Comments
It pays to think deeply about markets, how they move, risk, opportunity, and how it all plays out in the grand scheme of probability. We can and should spend a lot of time crafting our trading plans, understanding our risk tolerance, and monitoring our adherence to those plans. But, in
General Comments
Financial markets are highly uncertain, and every decision we make is ruled by the iron fist of probability. For traders and investors, statistics, whether expressed explicitly or learned implicitly from long contact with the market, are one of our most important tools for understanding the market. In my last post,
Market Math
It is easy to calculate statistics, and it seems like, more and more, we are bombarded with market statistics from every side. The problem is that many of those statistics are false or misleading and making market decisions based on those statistics can be hazardous to your financial health. Truly,
Guest Blog
Here is something a little different today: a guest blog from David Blair, the Crosshairs Trader, who like all of us wears many hats. He is a trader, blogger, and educator who spends a lot of time thinking about elite performance and how to get there in trading, and shares
Market Math
There is a lot of talk about the "historic bull market" we are in. Fundamental analysts raise valuation concerns, while technicians point to a myriad of factors, usually making the claim that we are in an unprecedented bull market and due for a reversal. This is simply not
Psychology
Rhythm is important. Without the rhythm of the tides and seasons, there would be no life on Earth. When the rhythmic pulse of our heartbeat, breathing, or neural activity is disrupted, we suffer greatly. Rhythm moves in us and through us, and we know it--children in Brazil beat samba rhythms
General Comments
There must be a thousand ways to lose money trading, and most of them are bad ways. Many traders, especially newer traders, are paralyzed by fear of loss. Many traders go "on tilt" due the frustration of losses, and throw good money after bad, sometimes wrecking trading accounts
General Comments
We are seeing a potential divergence in the performance of US and European stocks. European stocks are showing overtly bearish patterns, lead by clean breakdowns out of weekly bear flags in France and Germany. US stocks have certainly suffered, but the best shorts are likely to be in Europe. There
General Comments
A lot of people are focusing on the recent small cap underperformance today. Let's take a look at a little bit of history; here is a chart of the Russell 2000 index (representing small and mid cap stocks), with a line underneath showing its relative performance relative to
General Comments
We are awash in opinion and speculation. Every trader is writing blog posts or tweets about why the market will go up or down, and citing any number of factors. To my way of thinking, simple is better. There is only one thing that matters, and that is whether the
Failure Test
I've focused quite a bit here on quantitative aspects of trading and market analysis, and I've also just scratched the surface of the thorny subject of intuition. Today, I want to look at something slightly different: how we can use some subjective elements in our analysis,
Failure Test
US Stocks stand at an important potential inflection. Structurally, we have seen much support for US stocks to emerge as the global relative strength leader, should stocks break out into another rally leg, and it is important to temper any natural bearishness. Yes, much of 2014 has been confusing, and