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Monday, 26 June 2017

How to Spot a Lie

If you are laughing, no problem, it is out of frustration, I get it.

In today's modern era the cliche is "I don't know what to believe." I know that my friend sorry to say it but that is the facts!

That makes it tough, not knowing what to believe when it comes to making money with your money. The pain of not knowing what to trust will impact everything from the initial consideration to the profit/loss outcomes.

Plus most of us are sick of all the platitudes engulfing our trading life. Like," cut losses short and let profits run" and  "past performance is no guarantee of future results."

Booyah!

Traders rely on statistics, which suffer from an image problem. Ok got it, everyone knows there are three types of lies -- lies, damn lies, and statistics. Even after the joke ends, today people just don't believe in statistics.

You only have to go back to the 2016 Presidential elections to see the failure of the polls preceding the election. Their inability to predict the outcome of the race accurately makes it easier to understand the public distrust in statistics.

There is a large plurality of people with no faith in statistics, leaving a clear division; and just not politically.

On the one side, there are people who see statistics as crucial. On the other side are individuals that see statistics as rigged. On the one hand, statistics are needed to move beyond emotional anecdotes, used as an objective measure of progress. While many other people only see fabricated numbers. This group feels the numbers do not reflect what's happening in their everyday lives.

On the one hand, statistics are needed to move beyond emotional anecdotes and used as an objective measure of progress. While many other people only see fabricated numbers. This group feels the numbers do not reflect what's happening in their everyday lives.

What makes the widespread distrust even more confusing for the informed trader is the knowledge we have that this time, this uninterrupted period of no market volatility, will not be different. That change will come back into the market, and it is not a dull idea when Warren Buffett says "the true investor (trader) welcomes volatility."

Does it go without saying that with change comes opportunity comes to those who are ready, right?

If we as traders have to rely on statistics, what are the ways to spot the lies and find the reliable numbers While some vendors hide their product under the veil of superficial high prices, in real life good advice is free, it is work that costs money.

So for the intermediate/advanced trader, who knows the current, no brainer market will end at some point, here is an opportunity to access three exclusive trading videos pull from our member's library. Give us your name and email for easy access to the following TMT short videos.

Fill out the three line form below with your full name and email for easy access to three short videos from our members only Advanced Trader Mentorship Series.

1. What is a robust strategy and how can you test for robustness?

2. What is an overlooked statistic in performance reports that of critical importance to the trader's success?

3. What is the decisive question traders need to answer today?

Sign up for three short videos intermediate/advanced traders


If you would like more than just a review of the above videos, make an appointment here for a real-time demonstration of our tactics or a free one day pass into our member's only blog.


Great and Many Thanks,

Jack F. Cahn, CMT
Thinking Mans Trader 1775 E Palm Canyon Drive, Suite 110- box 176 Palm Springs, CA 92264.NV USA. www.ThinkingMansTrader.com, 800-618-3820

-- Thinking Mans Trader does not assume the risk of its clients trading futures and offers no warranties expressed or implied. The opinions expressed here are my own and grounded in sources I believe to be reliable but not guaranteed.

Tuesday, 4 April 2017

Greatest Game Ever Created: The Capital Markets


Signing of Button Wood Agreement


















The Buttonwood Agreement formed the New York stock exchange and kicked-off the capitalist game called the stock market. To understand the stock market has to do with fiancĂ©. For a business to raise funds – finance – they offer shares in its company. To do this, there has to be a secondary market – the aftermarket – one that buys and sells the shares to provide liquidity to the original investors, called initial public offering (IPO). No one would buy an IPO if they did not have a way to sell it, full stop.
However, the bastion of the stock market remains one of the great unknowables for the majority even if they own common shares. Worse yet, many people who own shares have bought into shares not understanding risk, i.e., market risk.
What they need to understand is “the world is but a stage, ” and it is the story, the presentation, the PR that makes the market, not economics.
Today investors face information overload and misinformation.  The problem is compounded by the most sources of information being credible but the information being provided has nothing to do with the market, ascertain cause and effect of the stock market.
For example, Deal Book, a blog of the New York Times, written by Andrew Ross Sorkin could not be more trustworthy. However, their content, while informative from an academic view, has nothing to do with why the market is zigging and zagging.
A financial blog maintained founded in 2005 by Bill McBride Calculated Risk is followed for its economic commentary. The problem, again, is traders will use the stories to formulate opinions about macroeconomic events—such as employment statistics or political event—and how they will affect major indices.
Therein lays the rub, there is no hard and fast cause and effect between the news and market action. Unless of course, the news is about the market’s action in and of itself.
Shock blogs like Zero Hedge reflect how people follow the hype in their pursuit of profits. This blog is the stock markets equivalent to Breitbart when it comes to alt-facts. Zero Hedge is a leading source of gossip and other news that could have large impacts on a person’s judgment. The blog uses a pseudonym from Fight Club – Tyler Durden – to give it a macho image and to maintain its comments anonymously.
So many of the financial blogs are information providers and some with a point of view. Others provide information based on a trading idea, a strategy to enable the investor to act. One of the actionable types of blogs is COT Timers.
This financial blog interprets weekly Commitments of Traders (COT) reports, which provides the large dollar positions in most actively traded markets, including the equity indices. The idea presumes to watch what big money is doing is to know what smart money is doing. What they failed to understands is that big money persons are just people who can make mistakes like anyone else.
After years of publication, they have stop publishing on Monday, 22 September 2014.
To get a better handle of how the markets operate ask yourself what would you do, if you were mega rich, don’t laugh. How would you buy a major position in a stock without spooking the market, that is driving the price up making your investment more expensive? Put another way, how would you unload a major position in the security without causing the market to collapses?
Here is an investor’s fact of life: Big money needs liquidity to move into and out of a market. That liquidly is provided at major turning points when the broad-based public is active, providing that liquidity.  They are buying when big money is distributing shares and panic selling providing big money the opportunity to buy.
A contrary opinion blog created by Birinyi Associates provides aggregate data from other financial blogs. “Ticker Sense”  tracks the bullish or bearish opinion of major advisory blogs. It created the “Blogger Sentiment Polls” to provide insight into the financial blogosphere’s aggregate opinion on the overall market. The strategic idea is to look for an extreme reading of optimism after a major market advance to earmark a peak and an extreme pessimistic reading at major market lows.
Technical analysis blogs reduce everything to price to have an idea of when change is about to occur. The focus of Fallond Picks commentary is short-term trading. He provides a technical summary daily, but he still falls back on discussions of fundamental causes, and I am not sure from his writing how in-depth his understanding is of Technical Analysis.
You now have more understanding than the majority of stock owners. Remember when you are listening to the nightly market wrap it is a rationalization of a price based market events that preceded their comments.

Did your Mother call you a contrary child? 

Join the club and now you understand how to put that personality trait to good use. 

I welcome all comments and will respond promptly.