Trader's Thread 04 (Feb 12 - Jan 20)

[winston]

Successful Active Stock Investing is Hard: Here are Seven Traits that I Believe are Required for Active Investors to Win in the Long Term

by Jim O'Shaughnessy

Investors with passive portfolios—assuming they are adequately and broadly diversified—face only one real point of failure: reacting emotionally to a market selloff and selling their holdings, often near a market bottom.

But investors who use actively managed strategies face two points of failure:
1. Reacting emotionally to a market selloff and liquidating their holdings, usually at the very worst time; and
2. Selling out of an active strategy that is doing worse than its benchmark, often over periods as little as three years.

Seven traits that are necessary to be a successful long-term active investor.
1. Successful Active Investors Have A Long-Term Perspective on Their Investments.
2. Successful Active Investors Value Process over Outcome.
3. Successful Active Investors Generally Ignore Forecasts and Predictions.
4. Successful Active Investors are Patient and Persistent.
5. Successful Active Investors Have a Strong Mental Attitude.
6. Successful Active Investors Think in Terms of Probabilities
7. Successful Active Investors are Highly Disciplined

http://jimoshaughnessy.tumblr.com/post/ ... -hard-here

[winston]

Master Your Emotions to Beat the Market

By Kevin Matras

'A good strategy works best when you use it'.

Over-Confidence and Under-Confidence

In trading, being over-confident can be just as destructive as being under-confident. Both can lead to poor decision making.

Over-confidence: Did you know the average investor thinks they're smarter than the average investor? They tend to attribute their stock gains to smart decisions, while attributing their losses to bad luck.

Unfortunately, the opposite is probably true. The majority of their gains could most likely be attributed to luck, while their losses are more often the result of poor decision making.

It's also easy to confuse skill with a bull market. A lot of bad decisions can get rewarded when the market is going straight up. But, when the cake-walk stops, those bad decisions can ruin your portfolio.

Under-confidence: Constantly second-guessing yourself is no better. Too many investors, after finding a good stock, will try to overcome their feelings of self-doubt by over-researching a stock to find additional reasons to buy.

Invariably, they will come across something that causes them to feel even more uncertain, and they'll talk themselves out of the trade altogether, only to eventually find that the stock had run up as expected, and you've missed the whole thing.

Vowing to not let that happen on your next pick, you decide to plunge right in after you've found your newest stock. (You don't want to talk yourself out of it like the last time.) This time, however, the stock drops after you get in, and you immediately regret your decision.

So the next time, you tell yourself you'll be more diligent, and turn over every stone before your next trade. But, of course, you find yourself back in the same position as the first time, with information overload, and self-doubt, which eventually leads to the same poor result as before.

Source: Zack's

[winston]

How to Find Truly Uncommon Gains – Fast

Interview with Chris Johnson

So when you identify the sectors and stocks investors should be in (based on fundamental and technical performance) but aren't, you can stay a step ahead of the "big money migrations" and "price eruptions" and put yourself in front of often outrageous upside.

But when the stock gets too crowded – too many "Buy" calls, too much good press, lots of investors love the stock – it's time to move on.

The market trades in a range about 80% of the time and in a trend about 20% of the time. So, if you think about it, the buy-and-hold investor will watch their investment move sideways eight years of every 10.

But here's the thing: Investors who choose to be just a little nimbler, and trade the movements that are made the other 80% of the time, are the ones that can truly "find a bull market" anytime.

In the end, they will always outperform the "buy and hold" crowd and end up with the kind of money that can make a retirement or fulfill a dream.

Source: Money Morning

https://moneymorning.com/2017/04/07/how ... ers-money/

[winston]

How to Be a Master of Market Timing

By JAMES "REV SHARK" DEPORRE

I have found that it is beneficial for me to sell everything I own every once in a while, especially when the market is acting poorly. That frees me of my emotional attachments and allows me to view the stocks I like with fresh eyes and greater objectively.

I always can buy back stocks that I still favor, so the cost of selling tends to be very minor or even beneficial in a down-trending market.

The first rule of holes is that when you are in one, stop digging. The same applies to stock. When they are in a downtrend, dump them.

Badly timed sales can be costly, but simply holding on to stocks in the wrong market can be a disaster.

Watch the price action, and when it turns down then get out of the way. Simply doing that will make you a master of market timing.

Source: The Street

http://realmoney.thestreet.com/articles ... yptr=yahoo

[winston]

Cramer unveils his secret method to picking a stock

by Elizabeth Gurdus

One of the easiest ways for the " Mad Money " host to identify the stocks that should be on his radar is to look at the new-high list.

These are stocks that hit a new high in trading for the day, especially on days when the market is in bad shape. If a stock hits a new high on a down day, then it obviously has something good going for it.

Cramer likes to wait for a pullback before pulling the trigger to buy a stock. The key is to buy on weakness and sell into strength.

He recommends waiting until a high-quality stock falls at least 5 percent, as that will give you a solid entry point.

Source: CNBC

http://finance.yahoo.com/m/5992b648-9ee ... ecret.html

[winston]

Trading With Different Types of Stop Loss

If you're making a trade with a tight stop loss (maybe 10% or less), you may want to take a full position size right off the bat. After all, a 10% loss isn't too bad, even with a relatively large position size.

If you're making a trade with a moderate stop loss, you may want to take a half position. This way, you'll risk just half the amount you would on a full position. Then, you can add the other half position once you're sitting on gains and can comfortably tighten your stop loss.

If you're making a trade with a wide stop loss, you may want to take a one-third position size. Just like with your half positions, you can add to one-third positions after the trade moves in your favor.

Source: Daily Wealth

[winston]

Averaging Down

Source: Daily Crux

http://thecrux.com/this-common-mistake- ... portfolio/

[winston]

7 trading tips to improve your consistency

By Mike Bellafiore

Source: Yahoo Finance

http://finance.yahoo.com/news/traders-m ... 54668.html

[winston]

When Volatility Erupts: 3 Simple Ways to Profit From Market Gyrations

By Jonathan Rodriguez

Source: Wall Street Daily

http://www.thetradingreport.com/2017/05 ... gyrations/

[winston]

Three Sure-Fire Ways to Avoid Losing Your Money in the Markets Today

by TOM GENTILE

1. Trading Without Rhyme or Reason
2. Buying and Selling Stocks… As Your Short-Term Profit Strategy
3. “Betting the Farm”

Source: Power Profit Trades

https://powerprofittrades.com/2017/05/t ... /#deeplink