Saturday, September 24, 2011

Adding value to your analysis

Watch the Hang Seng: Big Picture suggests tracking the Hang Seng Index which it says represents the risk appetite of investors. The full article and chart can be found here. This is an interesting thought. Can the Hang Seng be a leading index?

Fear is the key. Excellent insight for investors comes from A Dash of Insight. You can read it here. Jeff Miller says "To emphasize, if the market was always right, you could never gain an advantage. Making strong returns involves stepping up when the market is wrong. The greater the irrational fear, the more difficult it is."
There is more.  "Here is the challenge for investors: If you are going to buy when others are fearful and sell when they are greedy, how do you know when to act?" The answer is to use data -  "to focus on the numbers -- earnings, the current GDP growth rate, the huge risk premium indicating that stocks are cheap by historical measures."
Finally, "Investors need not and should not go "all in" but neither should they go "all out."

Shape of Trading. The author of a new book "A History of Greed" discusses his book in the blog naked capitalism. He says "We should be asking whether Wall Street – that is, the financial community – is justified at all in its present size"  ...   "Speculation has to be seriously limited to small institutions through the use of higher capital requirements.  " ....  "

My Notes: The purpose of finance is to lubricate the wheels of the economy. In the Market Economy, finance has becomes the reason for existence. This is likely to change in the next few years, as finance will again take a back seat, with the truly productive sectors of the economy coming on the forefront. This is good news for traders, since manipulation / chaos will reduce in the markets.

5 comments:

rocky said...

sir please can you explain how to identify choppy trend and when to use ORB TRADES ? and sir any plans for chandigarh i want to meet you

rohit said...

That will have to happen, people are losing faith in everything, they do not trust anyone, and it has been proved once again that dum people who are good for nothing become govt officials or politicians and that is not only in India but all over the world. The markets are volatile because there is so much noise and uncertainty in the world around us, civil unrest is increasing rapidly and mkts are a reflection of that and that is the reason gold is moving up and is in a bull market at least for now. Once the world stabilizes the markets will also stabilize.

rocky said...

sir in 2 period RSI what should be upper limit and lower limit we should adjust??and sir also please tell about the limit setting in ADX Too

pranav.kulkarni said...

Dear Sir,

Many times on this blog, you have explained 15 min rule, i have a ques related with this, what should be SL for this rule??

Regards,
Pranav Kulkarni

rocky said...

respected sir, i have few query

•How to develop a view on markets each day before we actually start trading

how to identify choppy trend and when to use ORB TRADES ?

In 2 period RSI what should be upper limit and lower limit we should adjust??and the limit setting in ADX ??

in case possible please upload the presentation in newsletter too as we got the newsletter after market closing not before the market opening so it will be beneficialif you discuss the strategy regarding view on markets each day before we actually start trading