General Comments
So, after laying out the early steps and missteps of my trading journey (here and here), I left you yesterday when I was a technical analysis junky. Let's begin there, and I'll explain how I came to some very hard conclusions about technical analysis. (Apologies in
General Comments
Yesterday I wrote a bit about my path to becoming a trader, focusing heavily on my background. That post might have been pretty light on application and concrete market tie ins, so I want to focus today on a few of the things that I think helped me find my
Breakout
I have written before about volatility compression, which is the tendency for markets to make cleaner, more directional moves after the volatility has contracted on the same timeframe. Triangles and/or inside bars often mark areas of volatility compression; this is one way that a simple chart pattern can point
Individual Traders
[dc]I[/dc]'ve seen a lot of charts floating around talking about the "big reversal" in grains, and specifically corn. I think there are a few important lessons here, so allow me to share a few thoughts. First, the reversal argument typically looks something like this:
General Comments
[dc]I[/dc]'ve been thinking a lot lately about why I do and believe the things I do as a trader. I would like to write a post here that might be a bit more narrative than much of what I write (and I promise "narrative"
Readers Questions
Reader Dan asks, in response to this post: Good article. A few questions/comments. Define "cut losses quickly?" If you are trading pullbacks and you set a stop loss that would signify the pattern has failed, would that not be "cutting losses quickly"? I can see
General Comments
Trader-Socrates asks, in response to this post of relative strength leaders: What kind of RS do you use? What timeframe you mean by "short-term" RS? I am sure, that you know, that research shows, that short-term (up to several month) is mean reverting. Would love to hear your
Relative Strength
[dc]O[/dc]ne of the very real problems stock traders face is knowing where to focus their attention. Some traders are restricted to certain sectors or sets of stocks, but, even then, quantitative screens can be a useful first step. For traders who have access to the entire universe
Readers Questions
Nathan asks: Does volume play any role in your analysis? Do you look at increased volatility in conjunction with increased volume? Also, since the spot FX market does not have any volume, does the volume in the futures FX carry any significance? Good question, Nathan. Short answer is no, I
General Comments
Instinct can beat analysis. Read this. (Harvard Business Review) At one time, I did a lot of quantitative work on fundamentals. Not surprisingly, what most people think works in "fundamental land" doesn't work as well or, in many cases, quite like we are taught (same is
Individual Traders
[dc]M[/dc]any years ago, a friend of mine shared an encounter he had with a successful investing club. This club was not like many of the others—they didn’t pool their money to trade stocks, do fundamental research, or, in fact, do any research of any kind.
General Comments
[dc]I[/dc]t is certainly easy to find examples of real charts beside randomly generated charts--whether on websites and in books--and most traders know, by now, that it is very difficult to tell which charts are real and which are random. The conclusion that some people draw is that,