The Lunatic Fringe - Market and Trade Chat

Lancers32

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They got brand name gas down to $3.10 here in Central NC now $3.30 now the fun begins the reserve at this point must be depleted. 5 bucks on the way.
 

pmbug

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The 3-month to 10-year spread flattened from +227 basis point to 0 and is now 112 basis points inverted, steepening in a negative (inverted) direction.

Anticipating where the 3-month yield will be in May is much easier than figuring out where the 10-year yield will be.

The Fed has penciled in quarter-point hikes in February and March with decent odds of yet another hike in May. The market agrees with that assessment.

Numerous Fed officials have repeated they will hike more than the market expects and stay there longer.

I don't doubt that unless something breaks in a major way. If the Fed gets in hikes in February and March, then the 3-month Treasury note will start inching towards 5 percent possibly as soon as April.
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dpong

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From Market Wizards interview with Ed Seykota.

Q: Without divulging trade secrets, how have you been able to so spectacularly outperform standard trend-following systems?

A: The key to long-term survival and prosperity has a lot to do with the money management techniques incorporated into the technical system. There are old traders and there are bold traders, but there are very few old, bold traders.

[By "technical system" I believe he is referring to his computerized trading system on which he did ground breaking work.]
 

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"Restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy," Powell said during a panel discussion hosted by the Swedish central bank Tuesday. "The absence of direct political control over our decisions allows us to take these necessary measures without considering short-term political factors."
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Powell going to bring the pain.
 

dpong

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From Market Wizards interview with Ed Seykota.

Q: What are the elements of good trading?

A: The elements of good trading are (1) cutting losses, (2) cutting losses, (3) cutting losses. If you can follow these three rules, you may have a chance.
 

dpong

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From Market Wizards interview with Ed Seykota.

A: The profitability of trading systems seems to move in cycles. Periods during which trend-following systems are highly successful will lead to their increased popularity. As the number of system users increases, and the markets shift from trending to directionless price action, these systems become unprofitable, and undercapitalized and inexperienced traders will get shaken out. Longevity is the key to success.
 
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Zed

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has a lot to do with the money management techniques

I think he means, size of position, size of loss (controlled), rules around profit taking etc. AKA risk control. I know that can turn a system that only picks 50% winners into a good thing. You control losses or they control you.... everyone good I have listened to has some variation on that message and if not they eventually all seem to hit the wall like a crypto kid on acid.

My 2c

Again.

LOL.
 

dpong

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I think he means, size of position, size of loss (controlled), rules around profit taking etc. AKA risk control. I know that can turn a system that only picks 50% winners into a good thing. You control losses or they control you.... everyone good I have listened to has some variation on that message and if not they eventually all seem to hit the wall like a crypto kid on acid.

My 2c

Again.

LOL.
I agree. You sometimes refer to this as back office activities, I think. I'm a believer in the power of that.
 

jelly

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As a reminder, here's a 20-20 hindsight view of the 2016 move up off the 2015 lows in GDX. Had alot of blips and sell signals on the way higher, but it kept on moving higher regardless.

2016-GDXrun.png
 
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Lancers32

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FWIW some Armstrong.


 

Zed

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I agree. You sometimes refer to this as back office activities, I think. I'm a believer in the power of that.

#BoringRepetition follows!

I know you know this... I'm just putting it out there one more time as we are in a new home with new folk. :)

Many moons ago one of our papers often ran a stock picking competition and invited a bunch of guru's to have their picks published. The result was tallied weekly. It seemed that more often than not the "Dart Board" was winning. They literally threw a dart at a stock universe for the picks as a sort of performance control bench mark.

I think that was around the time that I realized that the selection method was much less important than how you planned and managed the trade from end to end. Intuitively it also made sense to me simply because all anyone ever wanted to talk about was picking winners, my view of the world is that the crowd always has basically the wrong idea while superficially seeming like they have the right idea. (yeah I am a curmudgeon!). Also the detractors always claimed you were "gambling"... which is true in a sense if you have no risk control. Proper risk control removes the binary total win / total loss element. It becomes controllable loss v uncontrollable wins, control what you can and let the market take care of the rest. Be consistent, keep it up, and you will win over time even if your stock picking skill is pretty average. Tilt the system in your favour to get a 60 to 70% win rate and you should do well. That should be attainable with decent T/A or systems like WTT.

The problem?

Emotional attachment to your money tends to make you screw all of this up which is why most can't trade.

FYI --> Just a curmudgeonly old opinion! Take with salt. :)
 

Zed

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What do you suppose this means...?


View attachment 5796

I can't see how that is the case? They are simply off market transfers, there still has to be supply and demand for a deal to happen. I kinda look at them like cross trades. Say you stick and order in for 1m$ worth of APPL @ market, if your broker can match it up to a sell order without placing it in the public market they will. You get what you want, as does the seller and the order never actually hits the exchange. I think the only difference with a dark pool is that they can probably choose to keep the offer or bid in the dark pool and off the market. However the demand or supply still has to hit that pool to fill the order and that will alter what hits the market. In the end the supply and demand is still the same. I guess the rest of the market can't see the big orders and out bid them... but that effect should be short lived if the order is a one off. If there are a stream of big sells or buys the market is still going to move.

Keep in mind that big block sells or buys don't tend to get placed. They setup a computer to drip feed the stock into the market and follow the price @ an appropriate volume. Sometimes you can see it when there is a trading halt and they don't shut the order down. You get these exact same size orders coming through, bidding up or down by the same increment at about the same time spacing... they pile up for about 5 or 10 minutes until boy wonder trader works out a halt is on then they all go poof in an instant and disappear. I've seen that happen a few times.

I've always assumed that big buys and sells are programmed trades.
 
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