At a recent traders roundtable discussion, we started to review the procedures and practices that each of us followed for coming up with new ideas to trade the market. While each trader have their own specific routines and follow, there were some aspects of their practice that were in common with each other. Here are […]
Tag: risk management
Profitable ETF trading strategies: cooperating with the voice of the future
Trading is by its very nature a crapshoot, filled with uncertainty. People find trading so difficult because it rewards the ability to maintain an open mind with respect to performance and uncertainty, whereas our pattern matching brain desires to create order out of chaos no matter what the cost. We like to believe that there […]
Profitable ETF trading strategies: a thought experiment with relative strength
Typically, traders will apply various technical analysis indicators to the behavior of price of an instrument in order to find moments of advantage. Many times these are combined in systems of ever-increasing complexity and apparent sophistication. All of these concepts however are based off of direct behavior of price. That’s not the only way that […]
Profitable ETF trading strategies: the power of focus
I have a good friend who has been struggling for years to become a professional trader in the stock market. He is well-capitalized, smart, a quick learner, humble, energetic, self disciplined and passionate about his desire to be a full-time trader. And yet, after years and years of trial and error he has not made […]
Profitable ETF trading strategies: reflection theory and its implications on back testing
A simple explanation of reflection theory comes from the mathematical field of set theory and statistics. The theory can be made as complex as you want it to be, based on your interest in statistics and math, but the essence of it is intuitive and has some interesting insights for back testing your systems in […]
Profitable ETF trading strategies: the importance of the initial capital preservation stop
Chat rooms and discussion boards are filled with the talk of what to do about stops for active traders? This discussion can seems take on an almost religious fervor and I have never actually seen a single discussion thread where anyone’s mind was ever changed or consensus was ever reached. That probably relieves me of […]
Design versus planning: what to do when you don’t know what to do
The scientific method has been responsible for the most extraordinary improvement in mankind’s standard of living. Since the Enlightenment and the Renaissance, it has been responsible for every major advance in human understanding and technology. The scientific method relies on a positivists worldview, which can be said to value certainty, control, objective reality, and planning. […]
Traders roundtable: how does position sizing compare to diversification as a risk management tool?
In a recent traders roundtable discussion, our talk came around to a discussion of two different risk management tools: position sizing and portfolio diversification. The question became: which one of these strategies is more effective? The discussion led us to quickly reframe that question into one which said “how do both of these strategies, and […]
What makes Buffett great: the ability to take disciplined action at moments of great stress
Trim Tabs reports an extraordinary panic selloff by the masses in September, driven by fear. Banks are collapsing left and right. The public is outraged by their ostrich-like elected leaders in the House and Senate and pressure the Congress into aborting a terribly framed corporate welfare/bailout bill. Market volatility, as measured by Average True range […]