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The Bible of Trend Following

Who Should You Believe if We are in Stock Market Bubble Professor Shiller?

If you have been following my blog, you should now know that I do not subscribe to Gurus. My goal in my trend following teaching is that you can become your own guru.

There are many who say we are in a Stock market bubble…and maybe we are…However I much prefer to use time tested tools to keep me on the right side of the market. As you can clearly see, without opinions…I am in cash on the sidelines….

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QQQ

Or you can listen to Bob Shiller the professor of economics from Yale University and listen to all of his reasons why stocks are in a bubble…More so…he states..

His CAPE indicator of equity market valuation is flashing red (highest since 1929, 2000, and 2007)

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Stock Market Breadth Not Overly Healthy

Our job as stock market investors is to know where we stand not just on our stocks…but the whole market. My model went to cash on the SP 500 Friday. It has been rather whippy…however another nail on this bull market might be the signs of weakness presented in the market breadth…

A picture speaks a thousand words…

breadth

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Metastock Live Webinar Increasing Trading Returns

Yesterday I had a live Thompson Reuters Metastock Webinar….you can view below…

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Increasing Trading Returns and Decreasing Draw Downs Through Trend Following

andy1

andy2

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15 Year Highs on the Nasdaq- Long to Wait to Recover

Can you imagine 15 years being upside down in your investment. All those great tech stocks blew up. If one to watch CNBC they might believe Dow 40,000. Now after 15 years either you have quit and never want to hear about the stock market or you want to learn how to stay on the right side of the market. Trend Following mentor can help you stay on the right side of the market..

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“Recession Ahead” Watch out so says the Economist

Actually it might even be prudent to be a contrarian….Wouldn’t it be interesting if the markets rallied????

watch out

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Trading Flaws that Prevent One From Reaching Their Potential

We all carry our personal baggage when we trade. That is why psychology is so important yet so many never invest the time to properly learn this attribute.

As I have taught many traders and mentor many I have seen common trading flaws…

1. Some never want to admit a trade does not work and do not take losses as they should
2. Some will only enter limit orders and refuse to buy at the market and at times miss profitable trades…
3. Clearly many even do not have a trading plan let alone follow it
4. Some traders keep on buying as stocks fall in price as they rationalize they are buying cheaper and getting a bargain…
5. Some traders have too high of expectations yet some have too low….

Trading is one of the hardest professions or even indulgences..The vast majority lose money…

If you want to get on the right path and start learning …I believe I can share with you my experiences…

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Can Zoes Breakout Happen $ZOES

Zoes is a chain of restaurants and had a great deal of volume….I am very skeptical of this market and it has been only a stock pickers market….I am long ever so slightly QLD. The SPY have gone to cash already…From the longside…Zoes could be interesting…and on the short side CMG could be a short if it can rebound back to the 50 DMA….

Even with that said my conviction levels are not high with Zoes as per IBD Stock check up…there are many red flags..

Composite Rating 79
GENERAL MARKET AND INDUSTRY GROUP (ZOES)
General Market
Market in confirmed uptrend
Industry Group
Industry Group Rank (1 to 197) 62
FUNDAMENTAL PERFORMANCE (ZOES)
Current Earnings
EPS Due Date 08/26/2015
EPS Rating 62
EPS % Chg (Last Qtr) 300%
Last 3 Qtrs Avg EPS Growth N/A N/A
# Qtrs of EPS Acceleration 2
EPS Est % Chg (Current Qtr) 25%
Estimate Revisions
Last Quarter % Earnings Surprise 500.0%
Annual Earnings
3 Yr EPS Growth Rate N/A N/A
Consecutive Yrs of Annual EPS Growth 1
EPS Est % Chg for Current Year 200%
Sales, Margin, ROE
SMR Rating D
Sales % Chg (Last Qtr) 36%
3 Yr Sales Growth Rate 48%
Annual Pre-Tax Margin 0.3%
Annual ROE 0.5%
Debt/Equity Ratio 19%
TECHNICAL PERFORMANCE (ZOES)
Price And Volume
Price $36.31
RS Rating 85
% Off 52 Week High -5%
Price vs. 50-Day Moving Average 11%
50-Day Average Volume 414,400
Supply And Demand
Market Capitalization $701.0 M
Accumulation/Distribution Rating B
Up/Down Volume 2.3
% Change In Funds Owning Stock -1%
Qtrs Of Increasing Fund Ownership 0

Read More At Investor’s Business Daily: http://research.investors.com/stock-checkup/nyse-zoes-kitchen-inc-zoes.aspx#ixzz3cLrwZ7Z8
Follow us: @IBDinvestors on Twitter | InvestorsBusinessDaily on Facebook

zoes

The above are my personal opinions…I am not recommending anything or suggesting one should take any trading action…It is very easy to lose money trading. Your trading decisions are your sole decision…

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What promotions can FreshForex company offer?

Do you want to find a reliable broker to achieve some success on Forex market? Then you need to take a closer look at FreshForex company – this broker has been providing one of the best trading conditions for last 10 years.

Сhoosing a broker most traders pay attention not only to its reputation, but to its promotions. FreshForex company often launches new bonuses and useful trading services. Let me bring to your notice the most interesting offers of this broker.

Are you looking for the most profitable bonus, which helps you to earn money? Use “35% on deposit”! If you activate this promotion, you will get an opportunity to open new orders and lock them, even if you are out of your own money. But that’s not all:

•you can receive this bonus on every deposit;

•the bonus is credited automatically in 1 hour after deposit;

•you can use maximum leverage up to 1:1000;

•every participant can receive up to 5 000 USD!

MAXIMUM PROFIT FROM EACH TRADE!

From 25th of May to 28th of June become a client of FreshForex, join “Cashback” promotion and receive a guaranteed reward in the amount of $10 per each lot of closed trade. Trade with a reliable broker and squeeze entire profit out of the market to the last cent!

EARN INTEREST ON FOREX DEPOSIT!

From April 8 to December 31, 2015 take part in the “36% per annum” promotion and receive the most profitable interest rate on free funds! Trade as usual, earn with various instruments, whereas FreshForex will work to increase your deposit month by month.

CHANGE YOUR BROKER AND RECEIVE UP TO 5000 USD!

From February 24 to June 25, join FreshForex and get a bonus up to 50% of your deposit! We offer you up to 5 000 USD for changing your broker – avail from it and earn more!

FreshForex gives you everything traders dream about:

1) We withdraw profit in 10 minutes during working hours – the best time among brokers!

2) Oil, metals, indexes and stocks – you get a full range of contracts to earn money with us.

3) Narrow floating spread from 0 p.

But promotions alone cannot ensure a successful trading! To absolutely every client, the company offers to start trading with a super-fast ECN-account without any minimum deposit. Also you can activate Swap free option for long term trading. It gives a perfect opportunity to trade without swap. It is difficult to describe all advantages of this broker company with one article, that’s why we recommend you to visit freshforex.com

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Interview with Top Traders- Stock Market Gurus

Interview with Top Traders – What is the #1 Thing That is Absolutely Critical to a Trader’s Success?

Posted on May 21, 2015 by Rayner — No Comments ↓

expert

Trading is tough.

There is much to learn with a lot of noise out there.

But what if you could skip the fluff and focus on what really matters?

In this post, I’ve interviewed 5 top traders and asked them What is the #1 thing that is absolutely critical to a trader ‘s success?

Jon Boorman

Jonboorman.com – @JBoorman

I think more than anything it has to be discipline. Because as important as finding a suitable methodology, developing a strategy, sound risk management, and position sizing is, it will be for nothing if you don’t have the discipline to consistently execute it and follow your rules.

Discipline is an integral part of all trading, whether systematic or discretionary, day trading or buy-and-hold, across all asset classes. I don’t believe you can be consistently successful without it.

Andrew Abraham

Trendfollowingmentor.com – @TrendFollower9

The #1 thing that is absolutely critical is risk control. Risk control based on risk per trade, risk control based on sector, risk control based on total portfolio.

You must know how much you can lose on a given trade, and the maximum loss to your entire portfolio at any one time. Only then can you take the necessary measures to manage these risks.

Almost equally important is correct trading psychology. Being able to accept trades that do not work. Staying focused and strong in the complete uncertainty of trading.

Because even the best trading system will have losing periods and this is when you need to remain discipline and continue executing your trades.

JB Marwood

Jbmarwood.com – @MarwoodJoe

A trader must have many different ingredients to be successful in trading, but what is absolutely critical is that you must love the type of trading you do.

Many people think they have a passion for trading but the reality of trading; watching charts, managing risk all day, is not as exciting as many believe. If you are a day trader then you must actively enjoy this process.

If not, you must find another form of trading (or profession) that suits your style. That might be swing trading, automated trading, systems trading, whatever. But what you must have is passion!

Mike Bellafiore

Smbtraining.com – @MikeBellafiore

A growth mindset is the number one thing critical for a trader’s success.

I highly recommend the book, Mindset, by Carol Dweck, as an important read for traders/investors.

Trading edges come and go. The sustaining trader learns everyday so they can adapt when edges change. The elite trader maximizes their edge by trading it bigger and more often.

There is no destination for the trader. There is just the perpetual quest to become your best trader and that requires embracing a growth mindset.

Trader Steve

Thetrendfollower.com – @UKtrendfollower

Controlling your own mindset is the most important. Why is this?

Because it is your mindset that controls everything else you do, in terms of trade selection, position size, risk management, when to enter and exit etc.

You may have a written trading plan that sets these things out, and that plan may well have been written objectively with a clear mind. You may even have back-tested or paper traded the method, with good results.

However, once you start trading with real money on the line, this is when controlling your mind comes into play. The mind can make you make irrational or emotive decisions, such as:

Override your stops;

Getting impatient and taking impulsive trades that do not meet your criteria;

Taking on revenge trades to make back money lost;

Override your risk control parameters, either on an individual trade or portfolio basis (the concept of portfolio heat)

In those instances, the carefully constructive trading plan is thrown out of the window.

Traders who have been successful over a long period of time know this, and resolves to eliminate these issues as far as possible.

Trend following brings it own issues – the basic premise is to cut losses and let profits run. And, as we have seen in trends such as crude oil, or EUR/USD over the last few months, no-one knows how big those trends can become.

There are no profit targets used, as these could limit your gains on a trade. So let’s split that down:

Cutting losses – a trader can have a solid trading plan, which includes his stop methodology. Yet a lot of traders think they can out-smart the market. An experienced trend follower will know that he will lose on the majority of his trades, so it is imperative that those losses are kept as small as possible.

Letting profits run – as your winning trades will come along less frequent that your losing trades, you need to capitalize when they do materialize. Therefore, your winning trades have to be bigger compared to your losing trades (in terms of R). You HAVE to let winning trades run, in order to achieve the positive expectancy that a solid trend following approach can give you.

Particularly after having a run of losing trades, a trader may get into a profitable position, and will close the trade for a small gain, for fear of the trade reversing and turning into another losing position. This is fatal for a trend follower.

Say you have gone short on crude oil a few months back, after having a run of say 10 losing trades. You went short at $90, and then closed the trade out when price was at $85. You would have felt good at that point, but I dare say you wouldn’t have felt so good when price then fell to $50, and your method would have kept you in the trade the whole way down..

That single trade would have covered a whole bunch of losses and made your year, and the fact that you didn’t profit from that trend was purely as a result of a lack of mind control.

So, once you have a basic method that demonstrates a positive expectancy (be it trend following or any other approach) with good risk control, then from that point it comes down 100% to controlling your mindset.

Conclusion

In essence, the #1 thing that is absolutely critical to a trader’s success are your risk management, psychology and passion.

So, what do you think is absolutely critical to a trader’s success?

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