Late last year, I asked a reasonably established trader friend if he would take 60% return per annum on equity with low risk strategies (aka close to no equity loss for the year). He was reluctant as he spiraled towards 5 to 10% return on any single trade, perhaps even 20% on a good day. His risk factor would be […]
Yesterday I was trying to explain to my young son what I actually do everyday. …… “So you must guess the price direction?” “Yeah, in a way, I try to guess intelligently of course.” “You must be really smart.” “Yeah, but smart has nothing to do with making money (in the markets).” “So you must be really lucky.” “That I […]
Nervy Third Quarter The last quarter (June – Sep 2015) was a tragic tale with many acts. Some US$11 trillion was wiped out as stock markets were brutalized across Asia, Europe and US. Commodities accentuated their downward spirals, and funds continued their flight from emerging promised lands, (nearly US$1 trillion drained away over 13 months till July, much of it […]
“Have you increased your trade size?” – A friend asked me point blank. We have not met for several months, and he stuffed this in my face. What happened to “you look great?” What a ___? (I know you are reading this.) I fumbled “yeah, of course I have, well … ” and whatever soundbites I could piece together as […]
Simply, an edge gives you an advantage in a trading opportunity on a generally consistent basis. It does not guarantee an outcome. It does not give you control of an outcome. In trading, our emotions gift wrap our perceptions and thinking. Even when we can see through coloured lenses, logic may still lose the contest of will, and we execute […]
Except for quick action scalpers, most short term players still have to identify risk on / risk off scenarios. What is risk on / risk off? Simply – risk on is when traders and investors become optimistic and are willing to bear more risks, running up equities and other high yielding trades. Risk off pertains to heightened levels of conservatism, “flight” to safer […]
Money management. Most people have heard but care little to implement this wisdom correctly. A stop loss is not money management. Position sizing is not money management. These two are merely arms and legs of money management. Ralph Vince conducted an experiment with 40 Phd students using a computer trading game that gave 60% winning odds to the player (which […]
I consider day traders to be the most elite class of Traders. Absent of frontal cortex pride and highly risk efficient, these traders bang the markets with unusual fortitude and calm. Arresting tantalising emotions and soothing traumas with well practiced routines that cater to all expectancies (including a “I don’t know what’s gonna happen next” category), we are deftly proficient […]