Con-tango

Deal or no deal!

Listening to NPR’s radio station, I picked up this interesting study. These guys studied the behavior of contestants to the “Deal or no Deal” game show; and  discovered two striking features in their behavior:

• In a game of high stakes, people lose perspective on the value of money, – “Well, it’s only $10,000” said a contestant gambling her money away; in a different setting, kicking tires to buy a car, $10K would have a much higher value for the same person.

• Unlucky players are willing to take much higher risks than in a normal or winning situation…

Let’s have this in mind, next time losses knock on our door, -sideline trading for a while –, to counter this erosive behavior.

Happy trading guys!

Timing the trade

First, we should not rush the trade; it’s far better to pay a little by coming in late, than to pull the trigger too soon, – there’s always another trade.

Once we’ve pulled the trigger, we should always remember Jesse Livermore’s advise, the underlying should soon begin to move in the expected direction; if it doesn’t, get out of Dodge real quick! I think what he meant to say is that if it doesn’t move or goes against us, then our plan is not working, something is amiss, then, act don’t think!

Once you’re in, consider that it’s always a risk, – the more time you stay in the market with an open position, the more risky it is; so, be sure to get paid for assuming that risk, if not, get out. Add a timing stop to your ordinary stop; something like: I have to be making so many ticks per minute, if not met, adios!

In the same venue, overtrading is a sign of poor methods of trade selection; staying in there too long is costly, are you getting the reward you deserve for spending all that time at risk?

Finally, if after entering your trades, they don’t move, or move against you, consider going back to the drawing board, it’s a sure sign you’re doing something wrong.

That’s all folks!

It’s about time!

On Friday, my ass was handed to me in a platter.

Why? I got caught in a shallow market with a market maker shark.

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Pivot points

Pivot points reflect floor traders quick calculation of the day’s support and resistance levels, – I can believe that, it’s a tradition from the pre computer era…

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Taylor’s method

George Taylor’s reading is quite confusing, I’ll try to simplify his
method as much as I can.

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An interesting method?

I was going over Van Tharp’s book, which is a must have, – to present it to you guys in a future post; when I ran into a very simple volatility breakout method in page 3, and I couldn’t resist posting it.

I think this would be a nice method to trade ESs and NQs.

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Testing… 1, 2, 3

Jesse Livermore

I recognized the importance of testing while reading Edwin Lefevre’s unforgettable book Reminiscences of a Stock Market Operator (for a Jesse Livermore photo album, check this site).

Up until that moment, I had been searching for a magic bullet, or a magic formula that would signal entries and exits to my trades.
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