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March 6 - July 28, 2019
They’re open-minded and flexible. They’re also risk takers, because they believe in what they’re doing.
When I first analyzed the hourly data, I found there was a 90 to 95 percent probability of realizing a gain by simply buying this fund at ten, eleven, and twelve o’clock, for different clients and then selling at the close.
There are five basic steps to becoming a successful trader. First, focus on trading vehicles, strategies, and time horizons that suit your personality. Second, identify nonrandom price behavior, while recognizing that markets are random most of the time. Third, absolutely convince yourself that what you have found is statistically valid. Fourth, set up trading rules. Fifth, follow the rules. In a nutshell, it all comes down to: Do your own thing (independence); and do the right thing (discipline).
if you played only the hands in which the odds were in your favor and folded when they were not, you would end up winning more times than you lost.
I analyze risk by measuring the extent and duration of price swings.
I’ve always had a point where I knew that I was getting out.
Whenever there’s a tax proposal, or some other major legislative uncertainty, I now get flat immediately. The market will always run to the sidelines until it knows what will happen.
Yes, when you’re trading at your biggest, you should be making money instantaneously.
For a trader, rationalization is a guaranteed road to ultimate failure
When I’m doing things correctly, I tend to expand my rate of involvement in the market. Conversely, when I start losing, I cut back my position size.
To relate that concept to trading, when you’re in a slump, try to be patient and wait for a trade that you feel very confident about and keep the bet size small.
the Dow Jones Industrial index made a new high, but the advance/decline ratio did not—a bearish divergence.
Start by finding a niche and specializing. Pick one market or pattern and learn it inside out before expanding your focus. My favorite exercise for novice traders is pick one market only. Without looking at an intraday chart, jot down the price every five minutes from the opening to the close. Do this for an entire week. Be in tune to the patterns. Where are the support and resistance levels? How does price act when it hits these levels? What happens during the last half-hour? How long does each intraday price move last?
If it looks too good to be true, the rest of the market may know something that you don’t.
The ability to implement your ideas despite adverse conditions.
I decide what I’m going to do when X, Y, or Z happens. If X, Y, or Z is a surprise, then you’re part of the crowd.
Just because all the information is in the market doesn’t mean that one trader can’t use it better than the next guy.
do you simply fit your distribution to your empirical observations, and price options accordingly? That path has some serious problems.
We were making judgments only about whether an option was overpriced or underpriced relative to other options, not about whether it was mispriced relative to the underlying market.
Share the responsibility and share the profits.
I thought that approach was too subjective; it couldn’t be quantified or systematized.
In blackjack, even if you have the edge, there are going to be periods of significant losses. When that happens, you have to cut back your bet size in order to avoid the possibility of ruin. If you lose half your stake, you have to cut your bet size in half.
All you need is a mathematical advantage and the money management controls to assure that you stay in the game.
he’s offering at a quarter and you can just read that he needs to get out. So even if you want to buy at a quarter, you’ll wait, because you know he’s eventually going to reduce his offer to an eighth.
I would adjust the model-implied prices so that the at-the-money implied price was in line with the market price.
In all classes of options, if you believed the model, you would sell more of these options.
When nobody wants to touch the market, that’s the time you have to step up.
There was a specific event tied to the timing of that trade:
It all goes back to the blackjack philosophy that, if you have the edge, in the long run, you’ll make more money by doing a lot of transactions.
I try to have a zero delta portfolio [a portfolio that is neutralized relative to directional moves in the market].
Speculators tend to be long the slightly in-the-money calls and they usually sell their option positions prior to expiration because they don’t want to exercise them.
market makers have agreed to be on the other side. When markets turn extremely volatile, the market makers cannot update these quotes fast enough.
You can’t listen to the news. You have to go with the facts.
You need to go for the small theoretical edges instead of home runs.
Probably the most basic requirement for successful trading is that you must have some well-defined method, or, in other words, a specific approach that gives you an edge.
Trade infrequently and only when you have a strong idea. Trade the opposite side of the predominant news stories. Time your trade to coincide with an event that has the potential to lead to a panic climax.
anything that seems very obvious should be double-checked.
There is never any money to be made in the obvious conclusions.
Another point emphasized by Yass is that our initial impressions are often wrong. In other words, beware of acting on the obvious.
In contrast, supertraders understand the concept of regression to the mean and use it to their advantage instead of being misled by it.
Incidentally, teaching kids to make self-to-self comparisons is one of the greatest gifts parents can give them.
