Comments on: How a Trader Might Improve the Odds of Success http://tuckerreport.com Technical Analysis of the financial markets, and other thoughts on trading Tue, 15 May 2012 14:12:37 -0700 hourly 1 http://wordpress.org/?v=3.1.2 By: prem http://tuckerreport.com/articles/how-a-trader-might-improve-the-odds-of-success/comment-page-1/#comment-59734 prem Wed, 18 Apr 2012 01:32:20 +0000 http://tuckerreport.com/?page_id=1327#comment-59734 Markets can not be beaten.Only way investor can make solid money over & over is by taking speculation out of speculation.As long as investor has to predict the market direction & enty & exit have to be LASER PERFECT RIGHT, investor can expect cycle of birth & death---because system has NEGATIVE EDGE. And any game with negative EDGE becomes a casino where PLAYERS eventually lose. Volatility spikes occur in all time spans and THE only time one can SELL at higher than fair price is when all others are BUYING.No solid money can be made by buying/selling at the current market price--because if 10 million people trade YEN and have already voted with their money that THIS IS THE PRICE,then my opinion OR opinion of BANK OF JAPAN/BANK OF ENGLAND is worth big ZERO.ONE has to buy & sell OUT SIDE the NOISE to get better deal to GAIN MATHEMATICAL EDGE.Financial markets are FRACTAL in PRICES and time spans and RISES & FALLS have SYMMETRY to them.This is why any stock price chart looks the same whether it is 5 minute, 10 minute daily or monthly chart.In fact computer ITERATIONS can make perfectly looking charts which no human EYE can label NOT REAL.Cauliflower and all its smaller and smaller branches have same recurring shapes .ALL ASSET PRICES ARE FRACTAL VIEWED IN DIFFERENT PERIODS. My method is to sell OUT SIDE of 2.0 standard deviation and have stop loss at 3.0 SD. all based on current market price.All my stop loss ordes are in the form of reversal orders because prices visit the same levels over and over---this holds true for all market averages, currencies, commodities and most of stocks.Hedging long and short is perfectly legitimate business.Corporations, nations, cental banks, traders, market makers all HEDGE their risk at different price levels.OBJECTIVE is to make money from long & short positions entered at varying price levels as the market does its DAILY DANCE with out trying to guess the NEXT STEP in the dance.In a casino BE THE HOUSE, think like a MARKET MAKER on NEW YORK STOCK EXCHANGE and like a LIFE INSURANCE COMPANY. LET mathematics work for you.ALL ORDERS HAVE TO HAVE HIGHER THAN 2 to 1 ODDS in investors favor--only then there is LIGHT AT THE END OF TUNNEL. SIMPLE EXAMPLE of my trading method in CRUDE OIL---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Let us say that crude oil is at $100 and daily volatility is $ 1.50.Over thosands of episodes that means average daily move is 75 cents UP/DOWN. Of course on any day it can go up/down even $5 or more or less or CRASH.I would be seller when crude goes up $2.25 dollars with take profit $1 and STOP LOSS reversal order $ 1.SAME thing on the down side and all trading is COUNTER TREND and all orders are based on CURRENT MARKET PRICES---yesterdays prices are HISTORY and only GOD KNOWS NEXT MOVE---MORTALS HAVE TO SETTLE THROUGH KNOWN WISDOM--THE SCIENCES CALLED STATISTICAL METHODS--MATHEMATICAL ODDS.--ONLY GOD CAN CORRECTALLY PREDICT NEXT DAY PRICES. On the average I expect one out of seven orders getting executed and stop loss getting HIT one out of 20 chances.ALL non-filled orders are cancelled at the end of trading day when new orders are entered based on fresh market prices.No single position can have stop loss furthur than !% of account equity ---draw downs have to stay under 10% of account EQUITY.Every position has PREDETERMINED HARD STOP LOSS AND TAKE PROFIT--win or lose. WAIT FOR PRICE TO COME TO YOUR OPEN ORDER---never buy/sell at current PRICE---only exception is MARKET TSUNAMI where you liquidate all positions AT MARKET and cancel all open orders and take the week end off--STOP TRADING COMPLETELY. ALL TRADING IS COUNTER TREND--ALL TRADING IS SYSTEMATIC SCIENCE BASED TRADING--IT IS NOT DAY TRADING.VARYING PRICES DETERMINE WHEN YOU GET OUT/CLOSE.Banks do that,Exporters do that--even CENTRAL BANKS do the same--wait for prices to come to THEIR PRICES.WIN OR LOSE. Life insurance company does not worry if 20 year old boy drops dead and it has to PAY---it knows that stastical edge IS ON ITS SIDE year after year.A PAWN SHOP which buys gold 50 dollars an ounce cheaper than current price and sells at 50 dollars premium to current price and HEDGES THE INVENTORY can never go out of business--unless OWNER becomes speculator and starts thinking that GOLD IG GOING TO THE MOON and he is IMMORTAL. MARKETS NEVER CHANGE--HUMAN BEHAVIOUR NEVER CHANGES--CHARTS NEVER CHANGE--and in following the crowd ONE BECOMES THE CROWD---Nifty 50s stocks have always LOST in any decade in every country in every corner of the planet & performance LAGS relative to market averages---and WISDOM is some place else--and it is in SCIENCES--only SCIENCE is the TRUTH--all else is PROPAGANDA with an AGENDA. ALL TRADING IS ALWAYS COUNTER TREND--NO EXCEPTIONS--NIRVANA IS STASTISTICAL POSITIVE MATHEMATICAL EDGE WITH RISK CONTROL--do not worry about any individual position LOSS--keep your eyes ON THE ROAD--there is a tree but THEN there is FORREST OUT THERE TOO and clear skies ABOVE. SUCCESS IS NEVER FINAL and FAILURE IS NEVER FATAL--just have MATHEMATICS ON YOUR SIDE AND KEEP GOING OVER AND OVER AGAIN & AGAIN.Take profit & stop loss are always 50% of MOVE/DISTANCE since we already know that after 50% retracement numbers of contracts GAINING/LOSING is roughly equal in all futures/commodities/currencies/stocks.THIS method can be applied to stocks/currencies/commodities.VOLATILITY is always mean reverting.HIGH VOLATILITY is CLUSTERED and WILD DAY IS FOLLOWED BY WILD DAY & makes MEAN REVERSION bring money to bottom line. CURRENCIES never go down to ZERO---since there is buying power parity. SWISS ELITE can say/feel that they are a different BREED but the truth is that 90% of their trade is with EURO UNION & over longer terms swiss frank has to meet its relation ship to EURO over the realty of purchasing power parity. . FOR ANY TRADER success is never final & failure is never fatal--some of the smartest traders have blown HEDGE FUNDS,PRIVATE & PUBLIC BANKS,CORPORATIONS & CENTRAL BANKS---BARING BANK survived financing for Napolean and also financing wars against him and 400 years of european wars--but could NOT SURVIVE NICK LEESON. TRADING is a WAR and each battle is A WAR WITH IN THE WAR--First rule is SURVIVING & RISK CONTROL only then ONE lives another day to gain grounds. THE DAY trader admits that NO ONE HAS BEATEN THE MARKETS EVER(including JESSE LIVERMORE,the greatest speculator who graced this earth) he/she starts making money using NON-DIRECTIONAL STRATEGIES----sad part is that MAN has never learnt any thing from history.HISTORY is same movie being played in the same movie theater forward & backword with the same ENDINGS---only the cast of characters changes & movie is self directed by all in the cast. THE WHOLE DRILL IS TO MAKE MONEY FROM RANDOM MOTIONS OF PRICES OF THE UNDERLYING WITH OUT HAVING TO GUESS THE NEXT MOVE OF THE UNDERYING. . Markets can not be beaten.Only way investor can make solid money over & over is by taking speculation out of speculation.As long as investor has to predict the market direction & enty & exit have to be LASER PERFECT RIGHT, investor can expect cycle of birth & death—because system has NEGATIVE EDGE. And any game with negative EDGE becomes a casino where PLAYERS eventually lose.
Volatility spikes occur in all time spans and THE only time one can SELL at higher than fair price is when all others are BUYING.No solid money can be made by buying/selling at the current market price–because if 10 million people trade YEN and have already voted with their money that THIS IS THE PRICE,then my opinion OR opinion of BANK OF JAPAN/BANK OF ENGLAND is worth big ZERO.ONE has to buy & sell OUT SIDE the NOISE to get better deal to GAIN MATHEMATICAL EDGE.Financial markets are FRACTAL in PRICES and time spans and RISES & FALLS have SYMMETRY to them.This is why any stock price chart looks the same whether it is 5 minute, 10 minute daily or monthly chart.In fact computer ITERATIONS can make perfectly looking charts which no human EYE can label NOT REAL.Cauliflower and all its smaller and smaller branches have same recurring shapes .ALL ASSET PRICES ARE FRACTAL VIEWED IN DIFFERENT PERIODS.
My method is to sell OUT SIDE of 2.0 standard deviation and have stop loss at 3.0 SD. all based on current market price.All my stop loss ordes are in the form of reversal orders because prices visit the same levels over and over—this holds true for all market averages, currencies, commodities and most of stocks.Hedging long and short is perfectly legitimate business.Corporations, nations, cental banks, traders, market makers all HEDGE their risk at different price levels.OBJECTIVE is to make money from long & short positions entered at varying price levels as the market does its DAILY DANCE with out trying to guess the NEXT STEP in the dance.In a casino BE THE HOUSE, think like a MARKET MAKER on NEW YORK STOCK EXCHANGE and like a LIFE INSURANCE COMPANY. LET mathematics work for you.ALL ORDERS HAVE TO HAVE HIGHER THAN 2 to 1 ODDS in investors favor–only then there is LIGHT AT THE END OF
TUNNEL.
SIMPLE EXAMPLE of my trading method in CRUDE OIL—————————————————————————————————————————————————————————————-
Let us say that crude oil is at $100 and daily volatility is $ 1.50.Over thosands of episodes that means average daily move is 75 cents UP/DOWN. Of course on any day it can go up/down even $5 or more or less or CRASH.I would be seller when crude goes up $2.25 dollars with take profit $1 and STOP LOSS reversal order $ 1.SAME thing on the down side and all trading is COUNTER TREND and all orders are based on CURRENT MARKET PRICES—yesterdays prices are HISTORY and only GOD KNOWS NEXT MOVE—MORTALS HAVE TO SETTLE THROUGH KNOWN WISDOM–THE SCIENCES CALLED STATISTICAL METHODS–MATHEMATICAL ODDS.–ONLY GOD CAN CORRECTALLY PREDICT NEXT DAY PRICES.
On the average I expect one out of seven orders getting executed and stop loss getting HIT one out of 20 chances.ALL non-filled orders are cancelled at the end of trading day when new orders are
entered based on fresh market prices.No single position can have stop loss furthur than !% of account equity —draw downs have to stay under 10% of account EQUITY.Every position has PREDETERMINED HARD STOP LOSS AND TAKE PROFIT–win or lose.
WAIT FOR PRICE TO COME TO YOUR OPEN ORDER—never buy/sell at current PRICE—only exception is MARKET TSUNAMI where you liquidate all positions AT MARKET and cancel all open orders and take the week end off–STOP TRADING COMPLETELY.
ALL TRADING IS COUNTER TREND–ALL TRADING IS SYSTEMATIC SCIENCE BASED TRADING–IT IS NOT DAY TRADING.VARYING PRICES DETERMINE WHEN YOU GET OUT/CLOSE.Banks do that,Exporters do that–even CENTRAL BANKS do the same–wait for prices to come to THEIR PRICES.WIN OR LOSE.
Life insurance company does not worry if 20 year old boy drops dead and it has to PAY—it knows that stastical edge IS ON ITS SIDE year after year.A PAWN SHOP which buys gold 50 dollars an ounce cheaper than current price and sells at 50 dollars premium to current price and HEDGES THE INVENTORY can never go out of business–unless OWNER becomes speculator and starts thinking that GOLD IG GOING TO THE MOON and he is IMMORTAL.
MARKETS NEVER CHANGE–HUMAN BEHAVIOUR NEVER CHANGES–CHARTS NEVER CHANGE–and in following the crowd ONE BECOMES THE CROWD—Nifty 50s stocks have always LOST in any decade in every country in every corner of the planet & performance LAGS relative to market averages—and WISDOM is some place else–and it is in SCIENCES–only SCIENCE is the TRUTH–all else is PROPAGANDA with an AGENDA.
ALL TRADING IS ALWAYS COUNTER TREND–NO EXCEPTIONS–NIRVANA IS STASTISTICAL POSITIVE MATHEMATICAL EDGE WITH RISK CONTROL–do not worry about any individual position LOSS–keep your eyes ON THE ROAD–there is a tree but THEN there is FORREST OUT THERE TOO and clear skies ABOVE.
SUCCESS IS NEVER FINAL and FAILURE IS NEVER FATAL–just have MATHEMATICS ON YOUR SIDE AND KEEP GOING OVER AND OVER AGAIN & AGAIN.Take profit & stop loss are always 50% of MOVE/DISTANCE since we already know that after 50% retracement numbers of contracts GAINING/LOSING is roughly equal in all futures/commodities/currencies/stocks.THIS method can be applied to stocks/currencies/commodities.VOLATILITY is always mean reverting.HIGH VOLATILITY is CLUSTERED and WILD DAY IS FOLLOWED BY WILD DAY & makes MEAN REVERSION bring money to bottom line.
CURRENCIES never go down to ZERO—since there is buying power parity.
SWISS ELITE can say/feel that they are a different BREED but the truth is that 90% of their trade is with EURO UNION & over longer terms swiss frank has to meet its relation ship to EURO over the realty of purchasing power parity.

.
FOR ANY TRADER success is never final & failure is never fatal–some of the smartest traders have blown HEDGE FUNDS,PRIVATE & PUBLIC BANKS,CORPORATIONS & CENTRAL BANKS—BARING BANK survived financing for Napolean and also financing wars against him and 400 years of european wars–but could NOT SURVIVE NICK LEESON.
TRADING is a WAR and each battle is A WAR WITH IN THE WAR–First rule is SURVIVING & RISK CONTROL only then ONE lives another day to gain grounds.
THE DAY trader admits that NO ONE HAS BEATEN THE MARKETS EVER(including JESSE LIVERMORE,the greatest speculator who graced this earth) he/she starts making money using NON-DIRECTIONAL STRATEGIES—-sad part is that MAN has never learnt any thing from history.HISTORY is same movie being played in the same movie theater forward & backword with the same ENDINGS—only the cast of characters changes & movie is self directed by all in the cast.
THE WHOLE DRILL IS TO MAKE MONEY FROM RANDOM MOTIONS OF PRICES OF THE UNDERLYING WITH OUT HAVING TO GUESS THE NEXT MOVE OF THE UNDERYING.
.

]]> By: Harry http://tuckerreport.com/articles/how-a-trader-might-improve-the-odds-of-success/comment-page-1/#comment-25115 Harry Thu, 21 Jul 2011 18:26:33 +0000 http://tuckerreport.com/?page_id=1327#comment-25115 Market profile looks at past data to determine price acceptance and rejection areas. If past data is no longer relavent then market profile is no better than a regular price chart. Market profile is not forward looking, nothing is. The next second in the future is completely unknown. Market profile looks at past data to determine price acceptance and rejection areas. If past data is no longer relavent then market profile is no better than a regular price chart. Market profile is not forward looking, nothing is. The next second in the future is completely unknown.

]]> By: Luiz http://tuckerreport.com/articles/how-a-trader-might-improve-the-odds-of-success/comment-page-1/#comment-24253 Luiz Sat, 02 Jul 2011 17:36:42 +0000 http://tuckerreport.com/?page_id=1327#comment-24253 Hey Doug, this is a great article. I have been successful over the years with theta positive trading strategies in the Brazilian stock market. It makes me feel good when I check my trading account every year end, and realize that it has grown around 30%, year after year, consistently. What makes me feel even better, is that theta positive strategies (i.e. ATM covered calls) are sort of stress and time-free strategies. I don´t need to monitor the market all day, as I have my stops properly set. The power of compound interest should not be neglected by any trader, even when the rate does not seem attractive at first. Regards, Luiz. Hey Doug, this is a great article.

I have been successful over the years with theta positive trading strategies in the Brazilian stock market.

It makes me feel good when I check my trading account every year end, and realize that it has grown around 30%, year after year, consistently.

What makes me feel even better, is that theta positive strategies (i.e. ATM covered calls) are sort of stress and time-free strategies. I don´t need to monitor the market all day, as I have my stops properly set.

The power of compound interest should not be neglected by any trader, even when the rate does not seem attractive at first.

Regards,
Luiz.

]]> By: trading platform http://tuckerreport.com/articles/how-a-trader-might-improve-the-odds-of-success/comment-page-1/#comment-11145 trading platform Mon, 01 Mar 2010 04:02:39 +0000 http://tuckerreport.com/?page_id=1327#comment-11145 <strong>trading platform...</strong> (Blogger now has backlinks - very similar to the trackback feature in Movable Type. This is similar to comment spam but avoids some... trading platform…

(Blogger now has backlinks – very similar to the trackback feature in Movable Type. This is similar to comment spam but avoids some…

]]> By: makkie p http://tuckerreport.com/articles/how-a-trader-might-improve-the-odds-of-success/comment-page-1/#comment-10260 makkie p Mon, 25 Jan 2010 08:42:37 +0000 http://tuckerreport.com/?page_id=1327#comment-10260 TY Doug for sharing your thoughts and wisdom. I am enjoying all your writings very much. A great help to my learning process. makkie p TY Doug for sharing your thoughts and wisdom. I am enjoying all your writings very much. A great help to my learning process.

makkie p

]]> By: Mark Fenton http://tuckerreport.com/articles/how-a-trader-might-improve-the-odds-of-success/comment-page-1/#comment-10220 Mark Fenton Sat, 23 Jan 2010 13:32:13 +0000 http://tuckerreport.com/?page_id=1327#comment-10220 Very Informative and realistic analysis Very Informative and realistic analysis

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