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March 6 - July 28, 2019
What is important is to assess what the market is focusing on at the given moment.
Since I usually tend not to put on a straight long or short position, I have to give a lot of thought as to what particular option combination will provide the most attractive return/risk profile, given my market expectations.
list of stocks broken down by market sector, ranking the stocks in each sector by how close they are to their all-time highs.
major trends are now frequently preceded by a sharp price change in the opposite direction.
McKay doesn’t try to gauge whether the fundamentals are bullish or bearish, nor does he place any direct weight on whether the fundamental news is bullish or bearish. Rather, he focuses on the market’s response to fundamental news.
I would buy when weak hands were selling and sell when they were buying.
However, if your distribution assumptions are even a little bit off, the error is enough to derail the delicate statistical estimators, and cruder, robust estimators will yield more accurate results.
Any meaningful approach must be invariant to the choice of units.
Your comments basically seem to imply that chart reading is just laden with pitfalls and unfounded assumptions. Yes, it is.
You should try to express your enthusiasm and ingenuity by doing research at night, not by overriding your system during the day.
Ironically, even though money management is more important than the price model, mathematically, it’s the more tractable problem.
If you bring normal human habits and tendencies to trading, you’ll gravitate toward the majority and inevitably lose.
When all the criteria are in balance, do the thing you least want to do.
“Don’t think about what the market’s going to do; you have absolutely no control over that. Think about what you’re going to do if it gets there.”
In particular, you should spend no time at all thinking about those roseate scenarios in which the market goes your way, since in those situations, there’s nothing more for you to do. Focus instead on those things you want least to happen and on what your response should be.
The majority of people trade worse than a purely random trader would.
The general idea is that what works most of the time is nearly the opposite of what works in the long run.
system designers should believe their results only after they have done everything possible to disprove them.
Don’t worry about what the markets are going to do, worry about what you are going to do in response to the markets.
You ask a lot of questions. You stand in the pit and talk to the people around you.
Right above the high and below the low of the previous day.
Therefore, the best place to get in is before that number is reached and play what I call the “magnet effect.”
Normally, the Sharpe ratio is measured using monthly data. Thus, only equity variability that occurs on a month-to-month basis would be considered.
We do good research, so we have an edge. (B) We have a rational, practical approach to money management. (C) We pay very low commissions. (D) Our executions are among the best in the business. (E) Most of the people who work here keep a large portion of their net worth in the fund we manage. Personally, I have over 95 percent of my net worth in the fund.
one of my risk management rules is that if we lose more than 1.5 percent of our total equity on a given trade we get out.
At the beginning of each month, I determine the maximum position size that I’m willing to take in each market, and I don’t exceed that limit, regardless of how bullish or bearish I get. This rule keeps me in check.
Learn a lot of statistics. Learn how to use a computer. Find some systems that work. Develop some simple risk management rules.
The Complete Guide to the Futures Markets [Jack D. Schwager, John Wiley & Sons, 1984], The Handbook of Futures Markets, by Perry Kaufman [John Wiley & Sons, 1984], and The Commodity Futures Game: Who Wins? Who Loses? Why? by Richard J. Tewles and Frank J. Jones [McGraw-Hill, 1987].
I firmly believe that for every good thing in life, there’s a price you have to pay.
To make a 30 percent return each year, with no peak-to-valley drawdown greater than 10 percent.
I knew that his trades were based largely on signals generated by computerized technical trading systems.
a combination of having an edge and using rigid money management controls.
Thereafter, I focused my analysis on seeking to identify the factors that were strongly correlated to a stock’s price movement as opposed to looking at all the fundamentals.
you could be right on a market and still end up losing if you use excessive leverage.
The dividend yield was down to 2.6 percent and the price/book value ratio was at an all-time high.
I use liquidity considerations and technical analysis for timing.
when you earn the right to be aggressive, you should be aggressive.
The chart suggested that there was tremendous support near 2,200 based on a trading range that had been built up during most of 1986.
holding a core group of stocks long and a core group of stocks short and then using leverage to trade S&P futures, bonds, and currencies.
an attractive yield should be the last reason for buying bonds.
The way to build long-term returns is through preservation of capital and home runs.
Soros has taught me that when you have tremendous conviction on a trade, you have to go for the jugular. It takes courage to be a pig. It takes courage to ride a profit with huge leverage. As far as Soros is concerned, when you’re right on something, you can’t own enough.
If a trade doesn’t work, he’s confident enough about his ability to win on other trades that he can easily walk away from the position.
if you make a mistake, respond immediately!
The key tools Druckenmiller applies to timing the broad market are liquidity analysis and technical analysis.
the initial step in any analysis is determining the factors that make a particular stock go up or down.
Ultimately, you have to balance your underlying faith in the company with the price action.
I have to see some stability in the price action before I buy the stock.
However, often the trigger for buying a stock is fundamental news.
If there’s a large move on significant news, either favorable or unfavorable, the stock will usually continue to move in that direction.
