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Isn't there a difference between the volatility of the actual market and
VIX, which I thought measured the implied volatility in options? VIX can
climb or fall while the market stays steady, and vice versa.
Regards
DanG
"M. Simms" wrote:
>
> regarding below:
> "q.. Markets form their tops in violence; markets form their lows in quiet
> conditions."
>
> HUH ? Totally contrary to the VIX concept.....and does not follow past
> history...at all.
> Many bottoms coincide with large increases in volatility....which can
> correlate with violence.
> Maybe he has this one reversed.
>
> > -----Original Message-----
> > From: John Cappello [mailto:jvc689@xxxxxxx]
> > Sent: Sunday, October 20, 2002 12:33 AM
> > To: Realtraders@xxxxxxxxxxxxxxx
> > Cc: MedianLine@xxxxxxxxxxxxxxx
> > Subject: [RT] Trend Trader's Strategy -- Strategy Lab - MSN Money
> >
> >
> > Please scroll all the way down for what he is doing. He is up almost
> > 60% using a Technofundamental Investment Strategy which he esplains.
> >
> > John
> >
> >
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> > Trend Trader Richard Rhodes
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> > Richard develops a macroeconomic view of market trends
> > and trades the stocks he believes will fundamentally benefit from
> > major rallies and declines.
> > Post a message for Richard
> >
> >
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> > Trend Trader Lab Performance
> > Round 7 $158,461.86
> >
> > Lab Summary Page
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> > Web Site
> >
> > --------------------------------------------------------------------
> > The Rhodes Report
> >
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> >
> >
> >
> >
> >
> >
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> >
> >
> >
> >
> > Portfolio
> >
> > --------------------------------------------------------------------
> > Track Richard's investments on Trend Trader's portfolio
> > page.
> >
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> >
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> >
> > Journal Entries
> >
> > --------------------------------------------------------------------
> > Follow every buy and sell Trend Trader's Transactions
> > page.
> > Strategy
> > If there is anything I have learned in 18 years of
> > trading, it is that simple works best. Those who need to rely upon
> > complex stochastics, linear-weighted moving averages, smoothing
> > techniques, Fibonacci numbers, etc., usually find that they have so
> > many things rolling around in their heads that they cannot make a
> > rational decision. One technique says buy; another says sell. Another
> > says sit tight, while another says add to the trade. It sounds like a
> > cliché, but simple methods work best.
> > Discuss the latest trades
> > on the Strategy Lab
> > message board
> >
> >
> >
> > Therefore, my trading strategy is to analyze fundamental
> > and technical factors to determine whether a long, short or a
> > sideline position is warranted in the market. Fundamentally, I
> > develop a macroeconomic view of the world using Federal Reserve
> > interest-rate policy, world economic trends and currency movements.
> > This allows me to use my fundamental beliefs as a backdrop against
> > which to apply technical analysis. If I perceive that fundamentals
> > are bullish, then I am poised to go long the markets if my simple
> > technical indicators tell me to do so. Conversely, if the
> > fundamentals are bearish, I trade from the short side when my
> > indicators tell me to do so.
> >
> > Those simple technical resources are simply log charts,
> > common trend lines and other well-known chart patterns. To supplement
> > this, I use various term moving averages dependent upon the equity
> > under analysis, for I believe that all equities beat to their own
> > drum, thus a one-moving-average-fits-all does not necessary apply.
> > Also, my favorite oscillator is the 20-day stochastic, for it is
> > longer term in nature and captures the intermediate trends rather
> > well.
> >
> > In addition, and more importantly, I use trading rules to
> > effectively manage my positions and to protect myself from making
> > judgment errors. I must admit, I am not smart enough to have devised
> > these simple trading rules. A great trader gave them to me some 15
> > years ago. However, I will tell you they work. If you follow these
> > rules, breaking them as infrequently as possible, you will make money
> > year in and year out, some years better than others, some years
> > worse -- but you will make money. The rules are simple, but adhering
> > to them is difficult.
> >
> >
> > a.. The first and most important rule is that in bull
> > markets, a trader should be long. This may sound obvious, but how
> > many of us have sold the first rally in every bull market, saying
> > that the market has moved too far, too fast? I have, and I suspect
> > I'll do it again at some point. Thus, we've not enjoyed the profits
> > that should have accrued for our initial bullish outlook, but have
> > actually lost money while being short. In a bull market, one can only
> > be long or on the sidelines. Remember, not having a position is a
> > position.
> > b.. Buy that which is showing strength; sell that which
> > is showing weakness. The public continues to buy when prices have
> > fallen. The professional buys because prices have rallied. This
> > difference may not sound logical, but buying strength works. The rule
> > of survival is not to "buy low, sell high", but to "buy higher and
> > sell higher". Furthermore, when comparing various stocks within a
> > group, buy only the strongest and sell the weakest.
> > c.. When putting on a trade, enter it as if it had the
> > potential to be the biggest trade of the year. Don't enter a trade
> > until it has been well thought-out, a campaign devised for adding to
> > the trade, and contingency plans set for exiting the trade.
> > d.. On minor corrections against the major trend, add
> > to trades. In bull markets, add to the trade on minor corrections
> > back into support levels. In bear markets, add on corrections into
> > resistance. Use the 33% to 50% corrections level of the previous
> > movement or the proper moving average as a first point in which to
> > add.
> > e.. Be patient. If you miss a trade, wait for a
> > correction to occur before putting the trade on.
> > f.. Be patient. Once a trade is put on, allow it time
> > to develop and give it time to create the profits you expected.
> > g.. Be patient. The adage that "you never go broke
> > taking a profit" is maybe the most worthless piece of advice ever
> > given. Taking small profits is the surest way to ultimate loss I can
> > think of, for small profits are never allowed to develop into
> > enormous profits. The real money in trading is made from the one, two
> > or three large trades that develop each year. You must develop the
> > ability to patiently stay with winning trades to allow them to
> > develop into that sort of trade.
> > h.. Be patient. Once a trade is put on, give it time to
> > work; give it time to insulate itself from random noise; give it time
> > for others to see the merit of what you saw earlier than they.
> > i.. Be impatient. As always, small losses and quick
> > losses are the best losses. It is not the loss of money that is
> > important. Rather, it is the mental capital that is used up when you
> > sit with a losing trade that is important.
> > j.. Never, ever add to a losing trade, or "average"
> > into a position. If you are buying, then each new buy price must be
> > higher than the previous buy price. If you are shorting, then each
> > new selling price must be lower. This rule is to be adhered to
> > without question.
> > k.. Do more of what is working for you, and less of
> > what's not. Each day, look at the various positions you are holding
> > and try to add to the trade that has the most profit while
> > subtracting from that trade that is either unprofitable or is showing
> > the smallest profit. This is the basis of the adage, "let your
> > profits run."
> > l.. Don't trade until the technicals and the
> > fundamentals agree. This rule makes pure technicians cringe. I don't
> > care! I will not trade until I am sure that the simple technical
> > rules I follow, and my fundamental analyses, are running in tandem.
> > Then I can act with authority, and with certainty, and patiently sit
> > tight.
> > m.. When sharp losses in equity are experienced, take
> > time off. Close all trades and stop trading for several days. The
> > mind can play games with itself following sharp, quick losses. The
> > urge "to get the money back" is extreme, and should not be given
> > into.
> > n.. When trading well, trade somewhat larger. We all
> > experience those incredible periods of time when all of our trades
> > are profitable. When that happens, trade aggressively and trade
> > larger. We must make our proverbial hay when the sun shines.
> > o.. When adding to a trade, add only one-fourth to one-
> > half as much as currently held. That is, if you are holding 400
> > shares of a stock, at the next point at which to add, add no more
> > than 100 or 200 shares. That moves the average price of your holdings
> > less than half of the distance moved, thus allowing you to sit
> > through 50% corrections without touching your average price.
> > p.. Think like a guerrilla warrior. We wish to fight on
> > the side of the market that is winning, not wasting our time and
> > capital on futile efforts to gain fame by buying the lows or selling
> > the highs of some market movement. Our duty is to earn profits by
> > fighting alongside the winning forces. If neither side is winning,
> > then we don't need to fight at all.
> > q.. Markets form their tops in violence; markets form
> > their lows in quiet conditions.
> > r.. The final 10% of the time of a bull run will
> > usually encompass 50% or more of the price movement. Thus, the first
> > 50% of the price movement will take 90% of the time and will require
> > the most backing and filling and will be far more difficult to trade
> > than the last 50%.
> >
> > There is no genius in these rules. They are common sense
> > and nothing else. But as Voltaire said, "Common sense is uncommon."
> > Trading is a common-sense business. When we trade contrary to common
> > sense, we will lose. Perhaps not always, but enormously and
> > eventually. Trade simply. Avoid complex methodologies concerning
> > obscure technical systems and trade according to the major trends
> > only.
> >
> >
> >
> >
> >
> > StratLab Summary Report | GARP | Technical Tactician |
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