This section is called Trading and contains the sub categories Market psychology and Rules. Below you will see the total of all articles in both categories. To filter for either one of them, click the appropriate category in the menu on the left hand side.
If you use any search engine and type in the phrase "How to become a successful short term trader" or anything similar, you will find roughly 70 million(!) websites that will help you in achieving that goal, or so it seems. While in reality, there's only one right and honest answer which is more like this: "There is an extremely low probability you will ever be successful in short term trading, and you will most likely lose all funds in your account".
If you're a software developer like me, then the phenomenon of a so-called bug is a well know thing. The other day, I ran some tests and discovered one in my neural network which has significantly degraded the performance in the last 6 months.
The first part of 'Market gurus and their predictions' has really caught some attention. Let's now move on to the next part about this subject.
Again, as mentioned in part 1, these pages are mostly meant as an eye opener that almost all of the 'mainstream' analysts have no added value in trading or investing. In fact, flipping a coin has a higher probability of making a correct call about expected market direction than those analysts.
First, autotrading is a great development for the trading community, both for investors as well as traders. It gets rid of all the fluff and ambiguous analysis that float around the internet, that whole crazy circus feeding the modern gold-rush.
Actual and verified trading results of the Greed and Fear model portfolio are now available provided by trusted third parties. They are keeping track of the actual trading activity and record each and every trade made, based on the Greed and Fear indicator.
Early visitors of this blog have seen my daily posts for years now with the so called Greed and Fear indicator and to which direction it was pointing. This was my initial attempt to expose the indicator to the public. Along the way, the performance was measured of course, to see if it was any good and useful in trading. The most honest way to measure this performance was by counting index points 'it called right' subtracted by 'index points it called wrong', as I've explained here in more detail.
But during all those year, I never explained in some more detail what the Greed and Fear indicator really was, while this is probably one of the most fascinating subjects today: a neural network! The more widely known terminology would be machine learning, artificial intelligence etc. There are subtle differences, but it all comes down to 'intelligent software'.
As a trader or investor, you certainly have noticed the tons of analysts and self-proclaimed gurus out there who all give their opinion about what will likely happen next in the markets. But are they any good?
"Mind the gap" may be a useful warning on airports and train stations, but is it any good in short term trading? As traders we have all heard this general trading wisdom that says 'gaps get closed'. But are they? And also, let's be more specific about when they get closed. Is it the next day, next week or next year a gap gets closed?
"Never complain, never explain" - it's a well known quote. Famous people have used it, management gurus have used it, too many to accurately determine who initially came up with it. Let's apply this to trading, because trading is probably the ultimate activity where this quote fits extremely well.
Sometimes, the most simple and basic ideas can lead to better performance in trading. As we know, trading is a lot about having rules and obeying them. Maybe, when those rules are complex or can be bent, it's more likely that they will be broken. A simple rule has, therefore a good chance of being applied in a very rigid and disciplined way. In this article, I will share a very basic and easy rule that I use and have used for quite some time now. I call it the One-Trade-Per-Day rule. As you can guess from the name, that doesn't sound like a very ingenious idea. And it isn't, but it works.
Every now and then when I'm reading an article from the world of behavioral economics discussing a particular phenomenon, it makes you realize once again how much trading and investing is about human behavior.
This section will explain how autotrading works and what the benefits are for investors in the Greed and Fear portfolio. Autotrading also offers the possibility to have the trading results verified by a trusted third party, the autotrading platform. Potential investors can easily see each and every transaction and how those results build up to the current state of the portfolio.
As a trader you need rules. One could also say that a trader needs a plan. The trading rules/plan will protect a trader from making decisions that he would otherwise not have made. Sometimes the stressful moments of the markets may disrupt the thought process. It is at those times that rules will tell a trader what to do.
The articles in this section are mostly about market psychology. As a trader, you have to be aware of market psychology, what it does to you, but also what it does to other market participants. Every trader at some point realizes that everything is not what it always seemed to be. There is a somewhat hidden reality behind the obvious one. Getting to know this hidden reality, this different view on the markets and human behavior, will likely make you a better a trader in the end.
The field of machine learning is a very fascinating one. And because the Greed and Fear indicator is a neural network, there's a lot to discuss about ways to apply neural networks and machine learning in trading.