Friday, October 07, 2016

What traders could learn from Formula 1

There is an old maxim in racing that you need to be on the right tyres for the weather and the track conditions at that moment in time.

When Lewis Hamilton is on track, and sees a load of dark clouds suddenly appear overhead, he doesn't go sprinting into the pits to get his car fitted with rain tyres.

Sunday, September 25, 2016

Some thoughts on exploiting your edge

Traders who are successful over the long-term have clearly defined their 'edge' in the market or markets they trade. To me, an edge is basically a method that statistically generates a positive expectancy over a large sample of trades.

In order to capitalise on that edge, the trader needs to develop the ability to use that edge. This basically means that a trading plan which is constructed to exploit that edge is followed as closely as possible.

Saturday, September 17, 2016

Trading and the butterfly effect

Have you ever considered how you could come across two or more setups that are seemingly identical, and yet one moves in one particular direction, and another moves in a totally haphazard manner, and possibly start to move in completely the opposite direction?

Mark Douglas gave the best answer to this question in Trading in the Zone. Basically his explanation was as follows:

Saturday, September 10, 2016

Two stocks, two earnings reports, two different actions

Here is the story of two stocks which, this week, announced earnings. I had long positions in both these stocks coming up to the announcements however my treatment of the two trades differed. But first, I will explain my general approach to trading stocks and earnings.