Author: lindsay

Your poll said no...

The Wall Street Journal claims that Shanghai's market runs off superstition – most notably Chinese investors that buy stocks on the favorability of numbers that contain 8s. This superstitious Shanghai market was the alleged trigger (among other things) of the February 2007's “Dow Dive” of 416 points.

AOL's Money & Finance “Blogging Stocks” sites a Chinese investor, Yan Caign, who bought 30,000 shares of a cement company, Jilin Yatai Co., because of a “lucky” ticker number than contained double 8s [60088]. Shortly after, his shares tripled and he walked away with $50,000 under the sheer belief that the double 8s brought him luck.

Instead of using tools like SmartScan, should we use a Jinga board to pick potential markets? Why is Shanhai's market so based around luck?

Blogging Stock's, Peter Cohan says we must look at who's doing the trading to truly understand why. In the US, the majority of trading is done by large financial institutions that use sophisticated fundamental and technical analysis. However, 60-80% of Chinese investors are individuals who gamble on numerical superstitions, with little understanding of concepts from the financial arena.

So in the US markets, we are not known to use superstition in our trading, but I am sure that we all make small behavior modifications when sitting down in front of the computer screen. Jeff White of The Stock Bandit claims that although he is not superstitious, he will never have a sports car as his PC wallpaper. He said that his cold streaks were either to blame on the computer wallpaper, or his over-eagerness to earn the money for that dream ride on the screen.

We asked Traders Blog visitors if, as traders, they were superstitious.

We heard you scream no.

But, if holding my breath, while wearing a necklace of garlic and humming the National Anthem makes me $50,000 within a matter of minutes... you can bet I'd do it.

Seminar Topic: Gary's presentation details his favorite momentum patterns from past actual trades, V-bottom upside reversals, late day upside price surges, extreme momentum days, Friday-To-Monday momentum and momentum break patterns, 1% true selling days and (his favorite), divergence patterns in the Dow, S&P, Nasdaq 100 and the Russell 2000.

He also shows you how he uses various sentiment indicators to determine how aggressively to trade these patterns. He discusses the mental and financial realities of trading for a living. Lastly, he details some of the tape reading techniques he uses for intraday trading and how he believes that the real money in trading comes from the trends that extend beyond intraday. Although this session is older, the techniques can still be applied to current practices.

    Covers:

• Technical Indicators
• Pure Price Action
• Momentum Patterns
• Trading Weapons
• Mutual Fund Trading Strategies
• Trading Stock Index Futures
• Realizing a Realistic Return                     

Gary Smith is a trading maverick who, in his thirty-three year trading career, has learned to shun much of conventional trading analysis, including chart analysis, oscillators, moving averages, waves, cycles, and even computers, as pure fiction. He trades in reaction to market changes as they occur, not after the fact when they can be measured by traditional analytical tools.

        Enjoy,

More Insight on
Stops & Money Management

On Friday I posted a seminar by Joe Ross on Stops. I am very curious about stops like so many other members of Marketclub and the guests that visit our blog. I was looking at the selection of trading books that we have at our office as well as searching the internet for more insights on stops and money management... here's what I found.

The Stock Bandit had a review on a book called "Pit Bull" by Marty Schwartz. Jeff White, President of Stock Bandit, listed quotes from the book... particularly noted the portion of "Pit Bull" entitled "Honor Thy Stop."

I found this quote very powerful, "... a stop is an investment in self-preservation because if you're wrong, it saves you those extra dollars that you'd lose by hanging onto a losing position. It keeps you from digging the hole deeper and makes it easier for you to climb back out."

I also ran into another piece by Mr. Joe Ross. Trading Educators had this book reviewed as a "must see." They say that Ross "emphasizes the how, why, and when of stop loss and profit protecting stop placement." In the book he also explains hedging positions, identifies his methods for identifying trends and sites ways to breakout from congestion. See all of Trading Educators book reviews.

It is also a rare known fact that MarketClub (parent company INO.com) has a plethora of trading books by various gurus. We don't make a point of advertising our collection, however we do sometimes sell these books to make room for future inventory. These prices are the lowest price you are likely to find over the net... be please keep in mind we have a limited quantity.

"Starting Out In Futures Trading (5th Edition) " By - Mark J. Powers

"The Day Trader - From The Pit to The PC" By - Lewis J. Boresellino

"The New Market Wizards: Conversations with America's Top Traders" By- Jack D. Swchwager

"The New Options Secret: Volatility" By - David L. Caplan

"Trading 101 -
How To Trade Like A Pro" By- Sunny J. Harris

Joe Ross, an active professional trader, author, and educator, is president of Ross Trading International . He holds a degree in business administration from U.C.L.A. He is best known as the inventor of the Ross hook. He has written Trading by the Book, Trading by the Minutes, and Trading is a Business.

In the workbook below, Joe raises the question, "Where Do You Place The Stop?" You will learn which specific items are important to consider for stop placement. You will learn several techniques for placing protective, objective, entry and exit stops. You will learn to place stops based upon natural support and resistance and volatility. You will be taught about small profit objective stops and full profit objective stops. You will learn how to properly trail stops and how to increase the size or your protective stops using OPM. Joe shows you how to "curve fit" market volatility, and how and when to use Fibonacci expansions for objective stops.

Learn about:

• Mechanical Stops: As dictated by mechanized trading systems.
• Protective Stops: To protect against loss, or to protect profits.
• Entry Stops: To initiate a trade.
• Exit Stops: To terminate a trade.

Also Learn About Stops Considerations based around:

• The size of the margin account
• Margin requirements
• Individual psychological and emotional tolerance
• You economic tolerance for loss
• The number of existing open positions already held
• Market volatility
• The rate of trade
• The tick size

Read about this and more in Joe Ross's work book, "Stops- Where Do You Place The Stops?"

Listen to Joe Ross on "Stops"
Follow Along In Workbook

"The point I'm trying to make here is that a lot of traders end up stopping themselves out of a market when there is no need." -Joe Ross

Enjoy,