Short term - knowledge library 4.0 start of colation, page-14

Trading thought .

Poster sharks 37

link 35009465

"I swear if I never started with stocks and put all those man hours into a paying job or apprenticeship, I’d be either a fully qualified tradesman or have half a million bucks by now. It’ll all pay off eventually I’m sure."

@sci9249 good post, and I think the quote above makes a point missed by many who try their hand at trading about expectations.

Because the barrier to entry into trading is so low (anyone with a few $$$'s can open a broker account, depost some money and trade), and with many tools provided by brokers and others to "help" traders (charting software, financial information, etc), most people (including myself when I started) enter the markets thinking this is not hard and can earn lots of money after minimal effort.

The reality is to make money from trading is like making money from any other profession (when I say make money, I don't mean just some pocket money, or a few lucky wins here and there in between all the losses, I mean money that is consistent enough to live on and/or build wealth), but in what other profession can you get started with such minimal entry requirements and make money and/or build wealth???

Most professions, trades, etc, require at least 4 years (as a minimum) of university, apprenticeship, etc, before becoming an entry level professional in our chosen field (i.e. at the lowest pay/rank, and need to work many years in the profession to start getting pay rises and earn really good money). Even entry to unskilled jobs requires some training.

And yet here we are many of us get into trading thinking we can start making good money in quick time. This would be akin to starting say a 4 year accounting degree and expecting after the 1st semester in 1st year that we can go out and start earning money as a professional accountant. That is just not realistic.

So the reality is if we would treat trading like any other profession, or business, what is needed is training and preparation for several years before attempting to start earning $$$'s, which would be minimal $$$'s, and trading for several more years to gain the industry experience to gradually start earning bug $$$'s.

Unfortunately many people don't have the patience for that (yet for some reason in any other professional field we accept this training/development requirement to be true - why is there such a disconnect!!!), and so this is probably one of the reasons that 95% of traders fail and end up falling away, and only 5% stay and go the distance and do well over time.

Personally I started trading part-time (while working) in 2000 just before the dot.com bust, lost money and got out. I started again just before the GFC in 2008 (yep, I've got great timing skills), lost money but hung in there and managed to maintain enough capital to keep trading until I decided to go full time 2 years ago. Now I have done 2 years fulltime in addition to 8 years part-time and I consider myself to be on the verge of proving to myself I will be in that 5%, so after a failed start and a 10 year apprenticeship I now consider myself to be an entry level full time trader. Earning money but not yet big $$$'s. Maybe I am just a slow learner, but maybe I am the tortoise that has just kept plodding along slowly while all the hares run past and leave me behind and now I have done enough to be truly classified as a professional in this field.

Cheers, Sharks

Infidel175

link 35011514


1. Reworking your strategy and systems. So what are people doing to fix or tune up their trading systems.

2. Examples of trading problems you have and how you intend to fix them or how you fixed them

I've recently discovered that FP markets have a performance dashboard in built. Covers # of trades, Avg. win $, Avg, Loss $, Percentage win /loss over various timeframes. Allowing you to monitor the impact of changes in your trading strategy before and after.

It was very illuminating for me. As a newer trader I have spent the past few years learning how to pick winning trades as compared to losing trades. I was operating with a 60-70% success rate which was impressive I thought , nevertheless I was slowly losing money because my avg loss was greater than my avg win.

Therefore over the last couple of months have been focusing on improving that side of my trading and the world seems like a different place.

Looking at your numbers manually or electronically was key for me to identify where my short comings are and were.

Have a good weekend.

Poster Lambre

link 35017430

Discussion Topic: How to spend you time productively during a poor/slow market.

I think a lot of us look to for ways outside of share trading to bring the funds in. And I have been doing that for a season.

1. Reworking your strategy and systems. So what are people doing to fix or tune up their trading systems.

I have been going back over tips to find out where I went wrong - which has been most of the time lately. My tipping score is getting way worse, but I still feel like I am learning and getting closer. I am studying to find out where my formula, is not accurately lining up with the mathematical formulas within the charts. For a formula to work , it should work on any and every chart. The main way that I do it is by backtesting charts , looking for patterns and consistent rules. And that means pouring over hundreds of charts. There is a consistency within the charts that is astoundingly perfect. Perfect like mathematics is perfect. And that encourages me. There are things that happen on every chart before it goes up. And therefore it is possible to predict. But unfortunately my formula needs to be perfect too. It can't be sort of right - or close to right. Sort of right means wrong , in the maths arena. And that means loosing money, and reputation- ouch!

2. Examples of trading problems you have and how you intend to fix them or how you fixed them.

I think it takes time to learn . The simple fact is that it can't be learnt in a hurry. Maths can't be learnt in a hurry. It is complex and layered. I have tonnes of trading problems , and it takes time to address them one by one - and hopefully not loose all my money in the process. Making mistakes is how we learn. I love the challenge!

Poster roberter1

link 35018597

This trading system thing has the hound and I little bit perplexed, as though some common truth is in discussion where the team is at a disadvantage as we have no idea what the truth is.

to spend time trying to engineer a static structure (system) to generate optimal outcomes in an environment (market) whose only one common property is change the team views with suspicion.

In a world absent of concrete metrics (specs) todays 'truth' is tomorrow's 'lie', tomorrows 'truth' today's 'fib'.

Fark me, hound even went further suggesting people look for support in structue they have control over as an act of compensation over something they don't understand.

Big call from the little bloke but after his defense of territory against the bull terrier he is not taking any shite from anyone and starting to come across a tad opinionated, apologies on behalf of the garage.

Changes in 'trading systems' over last 6 mths in garage have been quite simple if not executed to perfection.

1. Recognition of Li boom of late 2017 being exactly that 'a boom' therefore profile of demand 'sector emotional' not metrics based.
2. Knowledge that my watchlist is the single most important 'space' in my trading universe and it must reflect what is going 'on' not what 'went' on or what I would 'like' to go on.
3. Watchlist since late 2017 has undergone a dramatic shift from 'sector momentum' to individual 'model validation".
4. Watchlist MC's increased and 'derisked'.
5. Ignore stock specific threads, the concept of 'group validation' is not a component of the truth at spec end whatever that truth may be, pretty much an exercise in 'mind f#ck' actually for those of weaker thoughts one would suggest. (STT is not 'stock specific')

The above besides coming across as a bit of a hindsight wank (I've made plenty of mistakes last 6 months) is driven by the topic suggested for lounge some weeks ago, that being 'trading expectations' went over like a lead balloon at time and resulted in garage apologising to forum for suggestion.

Bottom line I think we tend to 'overthink' it and seek solutions when there is only one, that being what has been expressed by that sharky37 bloke above. (read his post if you're a newbie then take a cold shower)

all 'blowback' going straight through to the hound, he'll 'go' ya in current mood.

Podcasts

Poster Anton Chigurh
link 36108971

Pretty much have my headphones on all the time these days. If you can even manage an hour/day, that's an extra 15 days per year or an extra 4% of the year learning, just from podcasts

Macrovoices probably my favourite podcast on deep dive markets/macro analysis.

Jeff Snider's (Alahmbra Capital) regular blogs and commentary and anywhere he turns up on an audiostream.

For a good local podcast with good local investors: https://www.raskfinance.com/australian-investors-podcast/

Livewire's "Rules of Investing" series: https://itunes.apple.com/au/podcast/the-rules-of-investing/id1305615859?mt=2

Northern Miner podcast

a16z.com podcast

The Mike Alkin Show: talking stocks over a beer

The Felder Report podcast

https://www.theinvestorspodcast.com/podcast/

The Frontier at www.stitcher.com/podcast/the-frontier

Palisade Radio (too promotional generally but a few decent guests from time to time)

Sector Rotation

Poster Fullmoonfever
link 36118803

Rad

First paragraph of your post reminded me of one I put up in March last year when we discussed sector rotation. Some may find of interest.

https://hotcopper.com.au/posts/23664387/single

http://stockcharts.com/school/doku.php?id=chart_school:market_analysis:sector_rotation_analysis

Sector Rotation Analysis attempts to link current strengths and weaknesses in the stock market with the general business cycle based on the relative performance of the nine S&P Sector SPDR ETFs. Once you have identified the strong and weak sectors, you can the compare the results to a theoretical business cycle chart and - hopefully - determine which part of the business cycles things are currently. That information, in turn, may help you predict which sectors will strengthen in the coming weeks and months.
The Business Cycle

The graph below shows the idealized business cycle and the intermarket relationships during a normal inflationary environment. This cycle map is based on one shown in the Intermarket Review by Martin J. Pring (www.pring.com). The business cycle is shown as a sine wave. The first three stages are part of an economic contraction (weakening, bottoming, strengthening). Stage 3 shows the economy in a contraction phase, but strengthening after a bottom. As the sine wave crosses the centerline, the economy moves from contraction to the three phases of economic expansion (strengthening, topping and weakening). Stage 6 shows the economy in an expansion phase, but weakening after a top.

• Stage 1 shows the economy contracting and bonds turning up as interest rates decline. Economic weakness favors loose monetary policy and the lowering of interest rates, which is bullish for bonds.
• Stage 2 marks a bottom in the economy and the stock market. Even though economic conditions have stopped deteriorating, the economy is still not at an expansion stage or actually growing. However, stocks anticipate an expansion phase by bottoming before the contraction period ends.
• Stage 3 shows a vast improvement in economic conditions as the business cycle prepares to move into an expansion phase. Stocks have been rising and commodities now anticipate an expansion phase by turning up.
• Stage 4 marks a period of full expansion. Both stocks and commodities are rising, but bonds turn lower because the expansion increases inflationary pressures. Interest rates start moving higher to combat inflationary pressures.
• Stage 5 marks a peak in economic growth and the stock market. Even though the expansion continues, the economy grows at a slower pace because rising interest rates and rising commodity prices take their toll. Stocks anticipate a contraction phase by peaking before the expansion actually ends. Commodities remain strong and peak after stocks.
• Stage 6 marks a deterioration in the economy as the business cycle prepares to move from an expansion phase to a contraction phase. Stocks have already been moving lower and commodities now turn lower in anticipation of decreased demand from the deteriorating economy.

Keep in mind that this is the ideal business cycle in an inflationary environment. Stocks and bonds advance together in stages 2 and 3. Similarly, both decline in stages 5 and 6. This would not be the case in a deflationary environment, when bonds and stocks would move in opposite directions.
Sector Rotation

Unsurprisingly, the business cycle influences the rotation of stock market sectors and industry groups. Certain sectors perform better than others during specific phases of the business cycle. Knowing the stage of the business cycle can help investors position themselves in the right sectors and avoid the wrong sectors.



The graph above shows the economic cycle in green, the stock market cycle in red and the best performing sectors at the top. The green economic cycle corresponds to the business cycle shown above. The centerline marks the contraction/expansion threshold for the economy. Notice how the red market cycle leads the business cycle. The market turns up and crosses the centerline before the economic cycle turns. Similarly, the market turns down and crosses below the centerline ahead of the economic cycle.

Cyclicals, which is the same as the consumer discretionary sector, are the first to turn up in anticipation of a bottom in the economy. Technology stocks are not far behind. These two groups are the big leaders at the beginning of a bull run in the stock market.

The top of the market cycle is marked by relative strength in materials and energy. These sectors benefit from a rise in commodity prices and a rise in demand from an expanding economy. The tipping point for the market comes when leadership shifts from energy to consumer staples. This is a sign that commodity prices are starting to hurt the economy.

The market peak and downturn are followed by a contraction in the economy. At this stage, the Fed starts to lower interest rates and the yield curve steepens. Falling interest rates benefit debt-laden utilities and business at banks. The steepening yield curve also improves profitability at banks and encourages lending. Low interest rates and easy money eventually lead to a market bottom and the cycle repeats itself.

Trading diary stuff ?

Poster fullmoonfever
link 36537382

Hey Rad

Can have a look at this one and see if fits your needs.

https://tradebench.com/trading-journal-features

Poster manslo
link 36538096

https://www.someka.net/excel-template/trade-journal/
https://edgewonk.com
here ya go both very good depending on time frame top one good for DT bottom for more ST-MT
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Wow ! End of the diary series and it just happens have a post on diaries as last entry . Some thing are strange in the world how they happen . So for all who have contributed over time and for the many readers and followers of the stt .

A big thank you for the resources we have available by your contributions to the stt over the years . This is the last of the series i guess unless at some future time perhaps the topics and q and a weekends come back . Will take bit of time tidy up and we can hand over for Colonial Cousin to add to the openings each week for everyone new and old to peruse and use at their leisure .

Done it @Lambre !

2018 done and dusted .

One job out of the way this year and Melbourne Cup sweep next on the agenda which always brings some surprise as their is nothing like the stt Melbourne cup sweep anywhere in the world as crazy as the stt one is