Achieving trading competence
Following on from the theme we have been discussing in the past 2 blogs on the differences between well recognised societal paradigms and how they differ from a market paradigm, let’s move on to discuss the development of trading competence. This topic will feature over the next 4 weeks as we examine the 4 stages […]
The 3 Paradoxes That Separate Profitable Traders from the Rest
“If you think you have discovered a great truth and it is not a paradox, I suspect you may be deceiving yourself.” – M. Scott Peck, The Road Less Travelled Most people enter the world of trading armed with the wrong mental framework. What we learn from society, through parents, school, and culture, teaches us […]
Discretionary or Mechanical?
Part 2 – Mechanical: The dictionary definition of mechanical reads: “like a machine, as if acting or doing without conscious thought.” Unlike the discretionary trader, a mechanical trader uses a set of unambiguous rules to guide his or her actions in the market. These rules determine: o when to buy and sell o what to […]
Discretionary or Mechanical?
Part 1 – Discretionary: Discretion is defined as: “freedom or authority to act according to one’s judgment”. Statistically most investors use discretionary decision making processes in the market rather than mechanical processes. Unfortunately, very few discretionary traders have longevity in the market and hence you could conclude that they don’t have an edge. A discretionary […]
Financial Stop Losses – Part 3
In this, my final posting on this topic, I respond to Victor’s comment posted in response to my 28 May Blog. At first glance this blog may appear complex but the area of risk management and money management is an extremely important area of active investing so persevere to understand it well. Hopefully Blog readers […]
Financial Stop Losses – Part 2
Response to Comment by Thomas Rac: “as you are using a technical exit signal only to exit a stock what is your interpretation of that valid signal? bear in mind that any particular stock might go temporary for a breather even 10 or more percent but you still would not know the outcome and sustained […]
Defining an ‘edge’
A trading edge is a set of entry and exit criteria that, when executed, will deliver profit trades that are sufficiently large enough to cover your trading costs and loss trades, and deliver you a positive return on your capital and time. The biggest strength of deploying an edge in the market is not the […]
General Market Overview
It’s now been two weeks since SPA3 generated a Low Market Risk signal on the Australian market . For users of the SPA3 system this indicates they can increase their position sizing for new buy signals on individual stocks. However, there are absolutely no guarantees that the market will remain low risk, and may indeed […]
Mechanical Trading Podcast
This week, for something a little different, I have provided a link to a Podcast I did with Louise Bedford. In this Podcast Louise and I discuss the benefits of using a mechanical system for trading the markets. In it, we discuss how a mechanical trading system can give you a clear edge to become […]