<brag>It is official yours truly is the South Australian winner of the ASX share market game.</brag> It has been all quiet on my website for a while as I have been busy with programming and other non-trading related tasks. I’m sure everyone can relate to life getting in the way of all the best-laid […]

It is official yours truly is the South Australian winner of the ASX share market game. It has been all quiet on my website for a while as I have been busy with programming and other non-trading related tasks. I’m sure everyone can relate to life getting in the way of all the best-laid plans. In case you’re unaware with what the ASX share market game is, you might like to read my introduction to the ASX share market game.

How did I come first in South Australia in the ASX share market game?

I know you are all wondering how I came to be in first position so without any further ado I will tell you. It was simply a matter of buying shares holding them until they increased in value and then reducing my holdings via pending orders. Due to rules of the game, the pool of shares I could choose from was only 100 companies and could not short sell. As I do with any problem I face I try to break it down into its component form.

Components involved

After initial brainstorming, I came up with some very broad components that would need to be implemented in my strategy. These components are interrelated below is a simplified view of the various components that need to be considered:

Given this information, the ideal strategy I could use would be to select stocks that were highly correlated and stay out of any stocks that had exposure to the subprime. I did select one banking sector stock as it had a quality loan book and no US market assets. My portfolio was heavily weighted to the resource sector with exposure to Gold, Zinc, Copper, Aluminium, Bauxite, Uranium and AUD/USD spot prices. Below is a chart showing my performance throughout the trading period. You can also see where I scaled back my resource market holdings.

As you can see in the final two weeks if I didn’t modify my strategy, my portfolio would be worth $3000 less and I wouldn’t have been in first place.

Game Statistics

National Performance summary

Conclusion

Although it was very humbling that I came first in the say and 13th in the country, the strategy that I used was highly risky and in the real world, I would not undertake such risk. In addition, I am reminded of a Ron Chernow quote:

“As a bull market continues, almost anything you purchase goes up. It makes you feel that investing in stocks is a very easy and safe and that you’re a financial genius.”

At the end of the day winning the say division doesn’t mean a hell of a lot, my bank account is $1000 dollars better off, I don’t suddenly now consider myself to be an expert trader. I will continue myself education process and I believe entering these simulated trading games has helped my understanding of the markets.

For more visit Source:traineetrader.com

Share This

Share This

Amazon.com: The Complete TurtleTrader: The Legend, the Lessons, the Results: Books: Michael W. Covel ISBN: 0061241709ISBN-13: 9780061241703 The turtle trading experiment came about after a dispute between Richard Dennis and Bill Eckhardt on the issue of weather great traders were born or made. Dennis had the view that an individual could be taught to be great trader […]

The turtle trading experiment came about after a dispute between Richard Dennis and Bill Eckhardt on the issue of weather great traders were born or made. Dennis had the view that an individual could be taught to be great trader while Eckhardt thought great traders required genetics and aptitude. In order to settle the matter ads were taken out in the Wall Street Journal, New York Times and Barron’s. The ads were for the position of trading apprentices and after an initial training period the trainee would be given an account to trade. Out of a thousand applicants 13 were selected, these trainees were known as the Original Turtles.

In the Complete Turtle Trader Michael Covel investigates the story of the turtles. The book takes a pragmatic and extremely well researched look at not just the turtle experiment in isolation but explores the events that took place directly before and after the turtle experiment.

The Complete Turtle Trader Contents

• Preface
• Acknowledgments
• Chapter 1 - Nurture versus Nature
• Chapter 2 - Prince of the Pit
• Chapter 3 - The Turtles
• Chapter 4 - The Philosophy
• Chapter 5 - The Rules
• Chapter 6 - In the Womb
• Chapter 7 - Who Got What to Trade
• Chapter 8 - Game Over
• Chapter 9 - Out on Their Own
• Chapter 10 - Dennis Comes Back to the Game
• Chapter 11 - Seizing Opportunity
• Chapter 12 - Failure Is a Choice
• Chapter 13 - Second-Generation Turtles
• Chapter 14 - Model Greatness
• Appendix I: Where Are They Now?
• Appendix II: Related Websites
• Appendix III: Turtle Performance Data
• Appendix IV: Turtle Performance While Trading for Richard Dennis
• Endnotes
• Index
• About the Author

In the early chapters, the book investigates the origins of the turtle experiment and the mastermind or “Prince of the Pit” behind the turtle experiment. A look at Dennis’s early life gives a good perspective of his core beliefs and by the age of 24 Dennis had already made $100,000 1973 dollars and was getting attention from the Chicago papers.

The turtle’s selection and training process is discussed at length giving you an almost fly on the wall insight. Dennis’s hiring process seemed to be somewhat unorthodox however given the nature of the interview and questions asked it was clear certain characteristics were required of potential turtles. It is clear from the outset that this was not a serious scientific experiment as the sample size was too small and there was clear sampling bias:

Self-selection bias, which is possible whenever the group of people being studied has any form of control over whether to participate. Participants’ decision to participate might be correlated with traits that affect the study, making the participants a non-representative sample. For example, people who have strong views or substantial knowledge might be more willing to spend time answering a survey than those who don’t.

Source http://wikipedia.org/

The core or middle chapters of the book delve into the philosophy, the rules, the trading experience and the end of the experiment. Covel outlines the original trading rules in the most easy easy to comprehend presentation of the turtle rules I’ve seen to date. These rules are complemented with the eleven “Trade your own account tip[s]”.

The final chapters look at the turtle’s performance when the experiment finished and the second-generation turtles. It is very interesting to see the turtles that continued to trade successfully and those that did not. The addition of the profile of a second-generation turtle adds weight to the turtle story. The fact that someone who was never involved in the original experiment can apply the rules so successfully is a testament to the system.

The Bottom Line

Having read Curtis Faiths book I thought I knew the turtle story, however I couldn’t have been more wrong. If you want to gain an objective well researched and thoroughly enjoyable insight into the turtle trading experiment Michael Covel’s The Complete Turtle Trader is the only book on the market to provide this. Throughout the book, Covel gives the reader a brief historical context of events that occurred in the period that is being discussed. Younger readers like me will find this to be helpful. Although the book is very detailed and well referenced at no time does the pace slow down, even when details of the system are discussed in chapter five. This is a must read trading book and is written so well that it can be read by someone with little trading experience yet it won’t bore the seasoned professional. I should note a great source of resources is the authors blog Turtle Trader.

For more visit Source:traineetrader.com

Share This

Share This

I came across a documentary on youtube that investigates the banking system. I must say from the outset this is a very biased look at the banking system and in places it is factually incorrect. That being said it is still worth a look as it does provide some basic information about the banking system. The documentary is described as:

A highly informative and easy to understand film covers just about everything that isn’t taught in school regarding the corrupt banking system. It explains how these institutions get away with robbing the unsuspecting public by creating monetary policies designed to enslave society, while keeping the system in a perpetual state of rising debt.

I will only post the first three videos as I think the final two videos are so biased as to be of little use.

Corrupt Banking System - Cartels Robbing the Public

This video delves into a brief stylised history of the banking system, loans and Fiat currency.

Corrupt Banking System - How Money is Created

This video looks into the modern monetary system, the loan establishment process and a very simplified version of the multiplier effect.

Corrupt Banking System - Money is Debt

This video explores money as debt theory and highlights how interest payments exceed principal. The end of the video starts to look at monetary system reforms.

The final two videos in my opinion are far to biased to be of any real use. I have to say these videos provide a basic introduction to the monetary system and provide it in an easy to understand manner.

Have your say

Note: There is a poll embedded within this post, please visit the site to participate in this post’s poll.

Share This

Today I am going to share with you two magazines that offer a wealth of articles and are delivered to you via email free every month. I have been a subscriber to these magazines since late 2005 and they have proved to be interesting reading.

The first of the magazines is Currency Trader. The Currency Trader magazine is delivered monthly after you subscribe (By providing your email address). The areas currency trader covers include:

• Analysis and news
• Trading strategies
• Systems and more

Articles in November 2007 currency trader include:

• Japan: Politics, carry trades and the yen
• Japanese Inflation and the yen
• Trading FX pattern breakouts
• Triennial BIS Forex survey

One of the extremely helpful features of the Currency Trader magazine is the global economic calendar and the trading events and conference section usually located at the rear of the magazine.�

The second magazine also produced by the same company is Futures & Options Trader. The subscription and delivery method for both magazines is the same. Futures & Options Trader covers analysis, news, trading strategies and systems however the articles relate directly to futures and options trading.

Articles in the November 2007 Futures & Options Trader include:

• Trading Bid-Ask volume data
• System test: Reverse trade equity management
• System Test: Ratio butterfly
• Trading diagonal spreads
• Collar Trades
• Interview: Money Manager Klaus Schatz����

�

�

When a new issue of these magazines is ready to be downloaded you will be sent a link to download the current issue and the previous months issue. The download format for both of these magazines is PDF which makes it easy to download, store and archive. I have found that many of the articles presented in these magazines to be useful and I often refer back to them.

Share This

In trading as in any other profession it is important to have the right tool for the right job. In our daily life as a trader we work with a large range of data that requires analysis. If you have done any kind of statistical or financial analysis I am sure you will be familiar with Microsoft Excel, however if you are just starting out Microsoft Excel may be less familiar to you.

Microsoft Excel is a powerful spreadsheet based application. The main window is comprised of rows and columns laid out in a grid format. This allows for easy entry and analysis of data. The version I use and would recommend is Microsoft Excel 2007. There are many new features in Excel 2007 these include: larger workbook capacity, completely overhauled user interface, simpler pivot table creation, easier third party data access and a stream lined workflow. The image below shows a screen shot of Excel 2007 in action.

As you can see Microsoft Excel 2007 has a remarkably different user interface to earlier versions of Excel and if you are used to working with previous versions of Excel it will take you a little while to adapt to the new way of doing things.

Microsoft Excel allows you to create your own formulas and apply them to data. Excel also has many built in functions that allow for manipulation of data and the ability to record macros to streamline processes. Before I go through the interface of Excel 2007 there are two key things that you need to do.

1. Install Add ins.
2. Enable the developer toolbar.

Install Add-Ins

It is easiest to install add ins at the time you install Microsoft Excel, this can be done quite simply by selecting a custom install and then selecting the desired add-ins as shown below:

After the add-ins are installed they will then need to be enabled. This can be achieved by clicking on the Office button -> Excel Options -> Add-Ins -> Manage Add-Ins then click the Go button. This will open a window were you can select an Add-In to enable.

Enabling the Developer Toolbar

In order to record/run macros and write Visual Basic for spreadsheets you need to ensure the developer toolbar is enabled, which is not the case by default. To enable the developer toolbar simply click on the Office button -> Excel Options -> click checkbox “Show developer tab in the ribbon”.����

The ribbon and Office Button

In Excel 2007 the ribbon and the Office button are the most notable graphic changes in Excel 2007.� The office button is the circle in the top left hand corner of the screen and stores all non document tasks in the one spot, these include Open, Close, Print, Prepare Send and Exit Excel.

The Ribbon is a replacement for the menu bar it extends across the whole top area of the window. New users will quickly learn how to carry out tasks using the ribbon however users migrating from previous versions of Excel may find themselves frustrated looking around for commands. The ribbon is Broken up into a number of tabs these tabs are highlighted below:

Home Tab

Under this tab most of the editing and formatting is carried out.

Insert Tab

Under this tab inserting different elements into your spreadsheets is carried out.

Page Layout Tab

Under this tab page layout elements can be modified to establish the look and feel of the spreadsheets.

Formulas Tab

Under the formulas tab you can apply built-in or user defined formulas to your spreadsheet as well as controlling the naming of cells and data integrity.

Data Tab

The data tab allows for the importing/exporting of data from multiple data sources as well as sorting and filtering and data validation.

Review Tab

The review tab allows for reviewing the spreadsheets spelling, translation and workbook sharing.

View Tab

The view tab allows you to customize the way the document is viewed on screen.

Developer Tab

The developer Tab allows for Macro recording and code editing.

This has been a quick introduction to Excel 2007, in further posts I will be going through how to best use this application for trading purposes and covering some more advanced topics.�

Share This

In yesterdays post I highlighted the free on-line courses that could be undertaken for individuals wanting to gain understanding of the futures and options market. The focus today will be on the equity market, in particular the Australia equity market. I know that the majority of my readers are from the US however I think that it is important to expand your horizons as there are many investment opportunities outside the US.

�

The ASX much like the CME has an excellent investor education section. The first place to start would be the Getting Started in Shares(PDF) publication, this will give you a very brief introduction to share trading and the ASX. There are also a series of audio visual presentations that can be viewed while you are online. These audio visual presentations include:

• What is the share market?
• What is a stock broker?
• An introduction to trading language.
• An introduction to Listed Managed Investments (LMI’s).
• An introduction to interest rate securities.

In addition to these audio visual presentations there are several free online courses that can be undertaken. In order to sign up for these courses you need to register with MyASX which is also free. The courses are well structured and easy to follow. The layout of the course screen is shown below:

The courses contain interactive content and tests and quizzes to reinforce knowledge. The courses are rated beginner. intermediate or advanced. The courses that relate to share trading are:

• Getting started in shares - Beginner
• Starting in the sharemarket - Beginner
• Tracking your sharemarket investment - Beginner
• Analysing and selecting shares - Intermediate
• Developing an investment portfolio - Intermediate

As well as the sharemarket courses also cover options, warrants, interest rate securities and contracts for difference(CFD’s).

• Getting started in options - Beginner
• Option trading strategies - Intermediate
• Getting started in warrants and instalment warrants - Beginner
• Getting started in interest rate securities - Beginner
• ASX CFD Introduction - Intermediate

These courses form an excellent foundation for understanding the Australian sharemarket. With such a strong growing resource sector I think that the Australian share market is worth investigating for the astute investor.����

Share This

There are hundreds of websites of varying credibility offering to provide you training courses and material. These course can cost thousands of dollars and in most cases provide little more information then can be obtained from well written book. For the futures or options trader in training the first stop in the quest for knowledge should be the education section of the Chicago Mercantile Exchange. You can download a free 132 page Introduction to Futures and Options Manual. The following are free online courses you can undertake:CME Futures  a Introductory GuideTopics 

• The mechanics of futures trading
• Who trades futures and why : hedgers and speculators
• Forecasting prices
• Electronic trading and the trading environment

For the Foreign currency or Forex trader there are two courses offered by the CME. The first being the:Dynamics of Foreign ExchangeTopics 

• History and concepts of FX
• Trading CME FX futures and options
• Currency pricing - spot, futures and cross-rates
• How to use CME E-quivalents®
• Hedging with FX
• Concepts of fundamental and technical analysis in FX markets
• Basic FX trading strategies

After Completing this course you can then move on to:Advanced Strategies for Foreign Exchange TradersTopics  

• FX market concepts
• Trading strategies using futures and options
• Spreading strategies
• Futures trading strategies with cross-rates
• Advanced hedging strategies
• 20 futures strategies examined

All of the CME courses are very well structured and offer interactive exercises, email contact with instructors, online quizees and ability to earn a certificate of achievement. It should be noted that each one of these courses has a time limit of 90 days to complete.

Share This

There are blogs on nearly every single topic you can imagine and trading is no exception. Today I will share with you blogs I enjoy reading and blogs that will make you a better trader. If you have been living under a rock for the past 5 years a blog is:

“A website where entries are written in chronological order and commonly displayed in reverse chronological order. “Blog” can also be used as a verb, meaning to maintain or add content to a blog.” Source wikipedia�

Blogs are growing at a phenomenal rate as they allow individuals to have a powerful voice. The growth of blogs is highlighted in the chart below:

�

Blogs are also a source of income for a growing number of individuals. One notable blogger is John Chow whose income for October 2007 from his blog alone was $23,448.59.

Number One

Steve Pavlina runs a personal development blog that is full of insight and will help you become more productive and grow as a person. The blog is not regularly updated, however there are enough resources to keep you busy for a long time.

Key Posts

• Podcasts
• Ten Reasons to never get a job
• Self discipline series
• Reaction vs Responses

Number Two

Zen habbits covers a wide range of topics including eliminating debt, achieving goals, being organized, productivity, eliminating debt and saving.

Key Posts

• How to make the most out of luck
• Escape your location�
• Create an Emergency Fund�
• Simplified living

Number Three

Michael Covel is the author of Trend Following: How Great Traders Make Millions in Up or Down Markets and The Complete TurtleTrader: The Legend, the Lessons, the Results. His blog contains diverse range of quality trading information.�

Key Posts

• CNBC Is Dangerous for Your Health!
• Pied Piper Feedback
• Plunge Protection Team
• Ben Stein on Oil

Number Four

The money blogs is an aggregation of a large number of different blogs. The topics posted on vary widely from real estate, stock investing, personal finance and trading.

Key Posts

• Risk, ruin and chaos
• Do you trade for action or profit?�
• Above all have a trading plan
• Chance favors the prepared mind

Number Five

I can’t say too much about this blog other then it has some very interesting articles. It can be a bit hard to navigate but definitely worth a read.

Key Posts

• Avoiding outcome bias
• When index calculations lag
• But it is visually stunning (funny and so true)
• I am not as smart as I thought I was

Number Six

Trader’s narrative is concentrated mainly on timing, sentiment and new ways of analysing markets. It is jam packed full of analysis and also sells tshirts with the tagline “Traders do it for money”.

Key Posts

• Experts are hazardous to your health
• Sentiment measures
• Alan Grenspan
• The myth of Gold as safehaven� �

Number Seven

An inspiring blog by Jon who suffers from the degenerative Spinal Muscular Atrophy. This has not stopped Jon from living life to the fullest his sit is called onmoneymaking and provides tips on how to make more money.

Key Posts

• How much money have you made your company today?
• How to build a crystal ball to predict the future�
• Freedom in 2007
• Money making formula�

Number eight

Ugly chart is a blog that contains general trade information the author trade for a living. He trades with a Prop Firm.

Key Posts

• A glimpse into professional day trading��
• Futures trading is hard
• WOW Gold arbitrage opportunities

Number Nine

Foot Noted is a site that takes a closer look at things companies attempt to bury in their routine SEC filings.

Key Posts

• Sub primeitis or a sub prime ate my homework
• Sub prime and Citi�

Number Ten

Vitaliy’s Contrian Edge is a blog maintained by a CFA and author of Active value investing and contains interesting thoughts views and analysis.

Key Posts

• Why Are Bank P/Es So Low?
• Good Company vs. Good Stock
• Fly, Don’t Buy Airlines or Why Big Banks Make Dumb Loans

Share This

It is official yours truly is the South Australian winner of the ASX share market game. It has been all quiet on my website for a while as I have been busy with programming and other non-trading related tasks. I am sure everyone can relate to life getting in the way of all the best-laid plans. In case you are unaware with what the ASX share market game is, you might like to read my introduction to the ASX share market game.

How did I come first in South Australia in the ASX share market game?

I know you are all wondering how I came to be in first position so without any further ado I will tell you. It was simply a matter of buying shares holding them until they increased in value and then reducing my holdings via pending orders. Due to rules of the game, the pool of shares I could choose from was only 100 companies and could not short sell. As I do with any problem I face I try to break it down into its component form.

Components involved

After initial brainstorming, I came up with some very broad components that would need to be implemented in my strategy. These components are interrelated below is a simplified view of the various components that need to be considered:

Given this information, the best strategy I could use would be to select stocks that were highly correlated and stay out of any stocks that had exposure to the subprime. I did choose one banking sector stock as it had a quality loan book and no US market assets. My portfolio was heavily weighted to the resource sector with exposure to Gold, Zinc, Copper, Aluminium, Bauxite, Uranium and AUD/USD spot prices. Below is a chart showing my performance throughout the trading period. You can also see where I scaled back my resource market holdings.

As you can see in the final two weeks if I did not alter my strategy, my portfolio would be worth $3000 less and I would not have been in first place.

Game Statistics

National Performance summary

Conclusion

Although it was very humbling that I came first in the state and 13th in the country, the strategy that I used was highly risky and in the real world, I would not undertake such risk. In addition, I am reminded of a Ron Chernow quote:

“As a bull market continues, almost anything you buy goes up. It makes you feel that investing in stocks is a very easy and safe and that you’re a financial genius.”

At the end of the day winning the state division doesn’t mean a hell of a lot, my bank account is $1000 dollars better off, I don’t suddenly now consider myself to be an expert trader. I will continue myself education process and I believe entering these simulated trading games has helped my understanding of the markets.

Share This

For those of you wanting a bit more information on Turtle trading I have posted a three-part speech. Delivered by Michael Covel in Tokyo in June 2007 discussing Richard Dennis and the Turtle trading experiment. I hope to purchase his new book shortly and will post a review here about it. He makes a very interesting point in response to a question about the culture of investment banks.

Part One Turtle Trader Tokyo Speech