Articles for: Australia

It always amazes me when people tell me that techniques are too simple to work. I’m not pointing the finger here, I have done exactly the same thing myself. For example, take Gann’s rule of markets moving in equal sections.

While the direst predictions over the world economy have failed to pass, it is nevertheless a fact that many of us did it tough, and in fact are still doing it tough today. But outside of losing a job any pain was most likely, to a large extent at least, self inflicted. That’s a little harsh, but the truth isn’t always nice.

Perhaps chaos is slightly too strong a word for what we have experienced in global markets in the last few days. However it has caused some consternation, otherwise we would not have seen this kind of action:

In some recent editorial I have referred to methodology and making sure whatever system you use is well founded and has been successfully tested. I would like to elaborate a little more on this.

Given the apparent devastation that resulted from the Global Financial Crisis, a casual observer would be forgiven for thinking that stock market investors are still licking their wounds. After all, the Australian market more than halved in value between Late 2007 and early 2009 and still remains a good 25% below its all time high. Fortunes have been lost and, according to the popular media, the hopes and dreams of the soon to be retired baby boomers have gone up in smoke.

Welcome to Part 11 of my series of articles on the Butterfly. In this week's article, we will continue looking at the Risk Graph page. We will work with the same Butterfly we have been working with throughout the series, the Apple Computers (AAPL) Oct 09 155|175|195 Call Butterfly. At the time we constructed the trade, AAPL's price was about $173.

In the early 1980’s a trader and a psychiatrist were having an ongoing dispute as to whether great traders were born or created. In order to resolve their positions the pair suggested that they recruit and train several individuals, provide them with accounts and see how they faired. The two having the argument were Richard Dennis and Bill Eckhardt and the subsequent experiment became the very famous ‘Turtle Traders’.

Firstly I’d like to wish all of our Trading Tutors Newsletter Readers a very Happy New Year, with an abundance of good times, good memories and good trades for 2010!

Experience has repeatedly taught me to be wary of ‘hot tips’, especially when they concern unproven speculative enterprises. In an efficient market one must be careful not to forget that by the time you have received the tip, so have a thousand others and the expectation will most often already be reflected in the market price. This is especially relevant for those concerned only with short term gains.

Late last year I talked about ‘sticking to your guns’ when you believe in your strategy – despite there maybe being some headwinds. This of course assumes that your strategy was well founded in the first place and has been successfully and repeatedly tested. This is all part of having a proven methodology which you use over and over again.