Archive for December, 2010

Book Review: Entries and Exits (by Dr. Alexander Elder)

Posted in book review, education on 2010-12-31 by Strategesis

A critique of 16 traders by Dr. Alexander Elder (who is not only a great trader, but a psychologist):

Entries and Exits has to be one of the best all around guides to trading that I have come across. There are many other books that do a good job of explaining what you need to do in order to be successful at trading commodities or stocks, but none that hit it from this angle. By the end of the book, you will have learned some good techniques from 16 successful traders who trade for a living. Better yet, you will have a strong understanding of Dr. Elder’s trading methods, which are well worth the price of the book.

This book also instills confidence and opens your eyes on how trading is done by real traders. These are not cheesy testimonials that you seen on infomercials or an ad in a trading magazine – they are real people. Moreover, you are reading the works of an author who is a successful trader in his own regard and has written some excellent information to help you be a successful trader. It is very apparent that the author has a passion for trading and if you don’t, this book may not have as much meaning.

Continued

The Puretick Trading Room: Live, real-time trading calls and trading education

Posted in advisory service, education, great traders on 2010-12-31 by Strategesis

Puretick: trading room with the best track record in the business.

Is Market Sentiment Really Forecasting a Correction?

Posted in technical analysis on 2010-12-31 by Strategesis

Frank Hogelucht:

Most recently the current investor sentiment got a lot of press around the blogosphere, regularly picking out the rapid increases in bullish sentiment and it’s most probably negative (contrary) implications for the market’s short- and intermediate term performance.

For example: For the week ending 12/23/2010, the American Association of Individual Investors (AAII) sentiment survey was reported at 63.3% bulls and 16.4% bears (bulls significantly above the long-term average of 39%, and bears significantly below the long-term average of 30%, and the highest reading for the bulls since August 19, 2005), (courtesy of) Investor Intelligence US Advisors Sentiment bulls (data at 58.8% and bears at 20.6%, and finally the Market Vane Bullish Consensus (tracking the buy and sell recommendations of leading market advisers and commodity trading advisers) at 60%, the highest reading since November 9, 2007.

So, what does this mean?

Position Sizing (a.k.a. Money Management)

Posted in position sizing on 2010-12-31 by Strategesis

From Trader Mike:

Position sizing could very well be the most important aspect of a trading system, yet, like expectancy, it’s rarely covered in trading books. A position sizing model simply tells you ‘how much’ or ‘how big’ of a position to take. Position sizing can be the key factor in whether or not you stay in the game or whether your gains are huge or minimal.

Continued

Great Traders: Larry Williams

Posted in great traders on 2010-12-31 by Strategesis

Synopsis of Larry Williams’ accomplishments in the trading domain. I rank his discovery of money management (dynamic position sizing) as the most important.

11 Rules For Better Trading

Posted in trading rules on 2010-12-30 by Strategesis

Guy Lerner’s 11 Rules For Better Trading

Expectancy

Posted in expectancy on 2010-12-29 by Strategesis

From Trader Mike:

“Expectancy along with position sizing are probably the two most important factors in trading/investing success. Sadly most people have never even heard of the concept. Out of the 30 or so trading books I’ve read only a few even touch on any aspect of money management. Only one of those handful of books discussed expectancy. In simple terms, expectancy is the average amount you can expect to win (or lose) per dollar at risk. Here’s the formula for expectancy:

Expectancy = (Probability of Win * Average Win) – (Probability of Loss * Average Loss)”