Before Trading Starts

Another good collection of rules, this batch from Garnett Znidaric, contributor to the Australian based magazine “Your Trading Edge,” Znidaric offers issues to be aware of before trading:

Know your goals and objectives: “After much soul searching you need to have come up with reasons for doing what you are doing. The reasons need to include family, financial aspirations, and your philosophy and purpose in life.”

Know yourself: You must learn your own strengths and weakness in order to take full advantage of the former and minimize the latter.

Set and use rules: Do you have rules you use everyday in the markets? If not, why not?

Test and measure everything: “If you are going to put money on the line, you need to know what the probability is of it doing what you expect.”

Build a library: Read.

Plan bigger than an entry system: “Too many people get overly concerned about buying low. It is more important to sell at a higher price than you bought.”

Losses are great teachers: Many have said that losses are the tuition fee to ultimate success. The idea is to win in the long run, not be right in the long run.

Technical analysis is not magic: If you know this “secret” than you are already one step ahead of the majority.

Eye and hand versus computer: Testing trading systems for your own confidence is critical, but you must do more than sit back and rely only on your PC or the latest software fad. The underlying premise of why a strategy works must resonate in you, not just your PC.

Plans are personal: Not everyone wants the same thing in life. Some people want 15% a year. Some want 50% a year. These are choices and there are tradeoffs.

System evaluation: You have to always measure and make adjustments. If volatility changes, for example, what is your plan? You must know before you ever start.

Keeping good records: “Trading sheets that detail trades and a day book that helps you understand what you were thinking when you entered are the minimum records you need to keep.”

I do not see anything to disagree with on this list . . .

Sources:
Garnett Znidaric* is ACT State President of Australian Technical Analysts Association.
Your Trading Edge
TurtleTrader – Putting It All Together: Issues of Concern Before Trading Starts

Category: Finance

It’s not whether the Medals matter or not

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Today’s New York Times has an OpEd titled “The Medals Don’t Matter.” It’s by Jake Tapper, who is a well regarded ABC News Correspondent (formerly of Salon). The article reaches the conclusion that voters do not care about the military service of their Presidential candidates.

To reach this feat of logical deduction, Jake focused primarily on the 1992, 1996 and 2000 Presidential elections (and the 2000 GOP primary), and the Military Service of each candidate.

There are many, many analytical errors in his approach, sample size being the most obvious. But let’s focus instead on a very common logic error which seems to catch most people unaware:

Controlling for a single variable instead of many when analyzing complex systems.

I would be oversimplifying the situation were I to call this error, well, a mere oversimplification. But that’s what lay at the heart of this fallacy: Taking an extremely complex and dynamic issue — who won the Presidency and why — and then boiling it down to a single, and in this small sample, mostly minor issue. The author might as well have based it upon how many letters were in the men’s first and last names.

Presidential victories are the result of a far more nuanced and multi-faceted set of factors. This issue deserves to be examined in far greater depth . . .

Read More

Category: Media, Politics, War/Defense

Why the president’s record matters

Category: Politics, War/Defense

“single greatest percentage decline in the labor force”

Category: Finance

Read it here first: Earnings vs the market

Category: Finance, Media

More on Job Creation

Category: Finance, Politics

Hangin’ out with Steve Forbes

Category: Media

Kriptik Shorty

Category: Finance

Forbes on Fox

Category: Media

Getting Productivity and Employment Backwards

Category: Finance