Monday, June 16, 2014

The Zeroes

Product Details




If you want a glimpse of the hedonism associated with Wall Street BEFORE the 2008 crisis, this is the perfect book.

When money is easy, everybody swims naked...

When the tide goes out, hmm...


I like the motto of Traders Monthly...

SMS : See it, Make It , Spend It!

Also his OPM vs MOM money .... Other People's Money vs My Own Money!

Long term Secrets to Short Term Trading



















When I first picked up this book, I thought Short term trading refers to Intra-day trading using 5 mins or 1 hour charts. But this book is filled with daily charts. So I guess the author's short term is different from my short term.

Since our premise is different , the strategies recommended are for overnight trades vs my preferred intraday, strictly session-only trading. Readers must discern the strategies.... and adjust accordingly to their own preferred style. Eg he mentioned that one needs time to grow the profits, quoting Livermore's quotes of sitting tight during market runs. Good for overnight traders, nightmare for session traders!


However , some POINTS are worth noting :

(1) He goes with a loss in mind. This forces him to place a stop loss order immediately.

( p/s this is very similar to Dr Elder's Loser's Anonymous idea !)

(2) His breakout system makes sense ( after a certain% from the day's open )
( p/s but not all markets behave the same way)

(3) Order within Chaos
(p/s this can easily be identifies using the Zig Zag Indicator )

(4) "There are two primary ways we make money trading ; catching a big price move with a small position or having a large position and catching a small move " - Bill Mehan

(5) Greatest Swing Value ( GSV ) : this is where the Trend changes sentiment

(6) Chart Patterns
    i. SMASH DAY
    ii. HIDDEN SMASH DAY
    iii. SPECIALIST TRAP
    iv. OOPS!

Here are the pictures drawn by me to help explain visually ( hope you like it....;)   ). The charts drawn by the author were bar charts; I prefer candlesticks...

Now , these few pattern are worth looking at.  Maybe some explanation may be enlightening :
SMASH DAY are reversal patterns.
DOWNTREND REVERSAL : the close is lower than previous day's close. The next day, the market closes higher than High of the  New Close. Buy stop upon breakin of the high of the New Close.
UPTREND REVERSAL : the close is higher than than the previous day's high. The next day, the market closes below the Low of the new high day. Stop sell upon breaking of this low.

HIDDEN SMASH DAYS  are Continuation Patterns.
They just serve to attract the unsuspecting public into a "must do " pattern...like a hammer at the bottom of a downtrend. And then "hiddenly" smash through the low of the hammer!. Read the TA books... always look for confirmation in the next day after the hammer before entering long positions!

SPECIALISTS TRAPS are just failed breakouts.

OOPS! are Island reversals.

New traders.... make sure the strategies recommended fit your own style before adopting the ideas suggested by the author.

Thursday, June 12, 2014

Master Your Mind , Design Your Destiny


Standing on the Shoulders of Giant, you will discover that all the giants are follow the same template, but with a little variation along the way to suit individual foibles....

.... my humble observation.

 



If you had read T Harv Eker books, then you will be familiar with the terms and concepts presented in this book by Adam Khoo. Well being a Singaporean, they are very good at "re-packaging" things. After all , Singapore build its wealth on entreport - but raw goods from neighbouring countries , repackage , and then re-export at a higher price. Call it by another name, value-add, rebranding, whatever.

But this does not dilute in anyway the powerful concepts present ( though the same basic materials done in a different way).

What attracted me what the concept of  " acceptance level"...

This brings to mind Chapter 1 in Rich Dad series ( see.. they all share the same basic principles !)

If you accept an $3,000 paycheck and lifestyle, then you will get comfortable with  $3,000. In order to get $20,000 lifestyle, you cannot be doing the same thing at $3,000 level and expect to get paid $20,000.

It is all a matter of choice... if you choose to work at $3,000 level , then you will get $3,000 paycheck. If you want $20,000 then you would need to do the extra work required of $20,000.

His concept of choice has a tinge of Tibeten Buddhism in it... he recommends that  that isntead of saying " I am depressed", say " I choose to feel depressed". This concept of recognising and isolating the feelings of instead of allowing the feeling to overcome oneself has the roots in " mindfulness". This will enable a person to change ( provided he is willing to change in the first place... read Who Moved My Cheese...)... because the agent of change is now within him, instead of using the BLAME OTHERS  as an excuse to pinpoint the responsibility away from oneself!

So, the materials has multi-displinary roots all over ... just like what Robert Hagstrom used to say in the book The Warren Buffett portfolio... it is a latticework of skills that will make you a super investor ( math, psychology  on top of the basic number crunching skills ).

Here are some summary worth remembering :

(1) Patterns of Excellence  : we all have the same hardware ( same brains, and neuron)
                                          we just need the right software to replicate the success

( p/s In my humble opinion, different people have different set of abilities, andweakness. It is better if you can try by trail and error to find the suitable work that suits your aptitude. Eg many may want to be a doctor, but how can an academically smart person be a good doctor if he /she hates the sight and smell of blood? Or course , he can undergo NPL training to get over the fear of blood... but isn't it doing double work? 1st to get rid of the fear, 2nd to get the person to like the job? My teacher used to say, Never waste too much time to go after an attached person... it is double work, 1st to get the girl to like you, then 2nd , to get the girl to dislike the current partner! Phew !)

( Aung Suki said it so well... Singaporeans must learn that money isn't everything... they need to learn how to be happy with what life gives. Of course, that must not stop people from making choices to be rich. Just remember that being rich isn't the only choice available. Being happy is also another viable choice. )


(2) Ultimate Success Formula : Beliefs, Values ---> Goal -----> Strategy ---> Action ---> Feed back
      ( p/s Isn't this similar to T Harv Ekers' : Program( Blueprint ) ---> Think ---> Feel ---> Act---> Results ? )


    Failure : (1) Excuses, Blame, GiveUp
                    (2) Try same thing ( hope for different results?)---> that's Insanity ( byAlbert Einstein!)
                    (3) Feedback and change

  Flexibility : constantly change strategy until you succeed ( Edison's 9,999 ways of how NOT to do it)

(3) Levels of Acceptance : you MUST put yourself in the LINE, and raise yur level of acceptance if you want to achieve something more

(p/s  This is where the concept of choice comes in. You must want something more before you can take action to achieve it . But if you choose something lower and  happy to do so , than so be it. Remember .. your choice , but you cannot run away from the consequence ( read : Steve Covey's 7 Effective Habits) . Do not blame the lack of money on other factors if you are not willing to work hard for it ! )

(4) Responsibility  :  take responsibility for all the choices we make. Don't play victim by blaming others. Playing vitim gives the power to others. Taking responsibility makes the power to change reside within us. Grow up!

(5) Beliefs : beliefs are double edged sword . They can make ( believe you can succeed ) or break you ( believe you cannot succeed ) . The human mind cannot tell the difference between a real experience with an imagined one  . Beliefs are first created from an idea that is reinforced on evidence. To change beliefs, you need to remove the evidences supporting the beliefs and add new evidence.

(6) Emotion Drives Action : We create our own emotions through :
 1. Physiology ( how we stand, our eyes, facial expressions, body pose)
 2.  IR ( Internal Representations ( Beliefs , Values, Action )

Here is my Visual Summary... hope you'd like it....




Wednesday, June 11, 2014

50 Best of Yoga

And I thought Yoga was only for the hermits, and for those who want to meditate...

This book gives the logic behind yoga poses and the principles of healing .

As we rush through life, we often neglect that our bodies need time to recharge it. We sit and walk too much, putting a strain to our skeletal framework.  

Backward poses "restring" our posture; breathing exercise out internal organs; body twists give muscle tautness and a good massage to the internal organs; inversions drain out the lymphic fluids back to the nodes as the passage the fluids go through do not have valves.

The above  are the physiological benefits.

By being mindful of our breathing , the mental well being is being nurtured as well.

Yoga  has both the external and internal benefits ...all good for the body, mind and soul.

Try it today!


The Way of the Turtle






 
"This is one of the five best trading books ever written."  - foreword by Dr Van Tharp


If Dr Van Tharp says it is good , then it must be good!

I think the "goodness" of a trading book comes from the COMPLETENESS of the content in that it deals with both the software and the hardware of trading. Many books concentrate too much into the trading process ( the METHOD, as defined by Dr Elder ) .... and forget the emphasis on the other 2 legs... MIND, and MONEY MANAGEMENT....

This book has it all...

The EDGE ( Method)
The RISK ( Money Mangement)
The CONSISTENCY ( Mind)
The SIMPLICITY ( The Philosophy )

You will not regret buying this book. Dr Van Tharp was right... it is one of the best trading books written.... the COMPLETE book!

The otherComplete books I recommend :
(1) Trading for  A Living ( Dr Alexander Elder )
(2) Trading in the Zone ( Mark Douglas )
(3) SuperTrader ( Dr Van Tharp )
(4) Better Trading ( Daryl Guppy)


Some lessons gleaned from the book :

(1) TAMING THE MIND : controlling Fear, Hope, Greed, Despair. ( FHDIG..& Ignorance )
        Handling Biases : (1) Loss Aversion
                                      (2) Sunk Cost Effect
                                      (3) Dispositon Effect
                                      (4) Outcome Effect
                                      (5) Recency Bias
                                      (6) Anchoring
                                      (7)  Bandwagon Effect
                                      (8)  Law of Small Numbers

It is the existence of Human Bias and Uncontrolled Emotions that give rise to trading opportunities... to traders alert enough to spot the signs, and to exploit it ( as a business opportunity with the appropriate Risk and Rewards ).

"Human emotion is both the source of opportunity in trading and the greatest challenge. Master it and you will succeed. Ignore it at your peril" . Well said, by the author.


(2) THINK LIKE A TURTLE

 Forget The Past, Live in the Present, Avoid the Future Tense
    Think of Possibilities, Probabilities, and Not Predictions.


( 3)  TRADING WITH AN EDGE
   
 EDGE : exploitable statistical advantage based on market behaviour that is likely to recur in the future  ( breakout , trend filter )
       RISK : risk of ruin; controlled risk ( so that you can be around to see the benefits of  a positive expection system), expectation
       CONSISTENCY : consistent execution of the plan is necessary to achieve the positive expectation)
     SIMPLE : simple and easy to understand ( catch every filtered trend) , but not easy to execute

A simple ( 3R ) Chinese way to do this : (1) know the rules
                                                        (2) know the risk
                                                        (3) know when to run

(4) FALLING OFF THE EDGE
     1. Drawdown
     2. Low returns
     3. Price shocks
     4. System Death

(5) WHY TRADERS FAIL
     1. No plan
     2. Too much risk
     3. Unrealistic expectations

(6) A GOOD SYSTEM : complete and robust 

Lessons from a Turtle :
1. See your way around cognitive biases and make adjustments for them in your thinking
2.Risk is your friend. Don't be afraid of it. Understand it. Control it. Dance with it. Nothing ventured, nothing gained.
3. Failure is a neccesary prerequisite to success and learning.