Only passions, great passions, can elevate the soul to great things.
by Denis Diderot (1713 - 1784)

“The volatility edge in options trading”, by Jeff Augen (2008)

Today I just went quicky through a book by Augen about technical trading with options. This seems to be a quite interesting book, which contains not only interesting options trading strategies (not to be used blindly, but to be studied further and incorporated into a general investing strategy), but also information about the markets . . . → Read More: “The volatility edge in options trading”, by Jeff Augen (2008)

Playing the adult stem cell revolution

Just a quick note:

Mesenchymal Stem Cells (MSC), which can be taken from adult donors and are universally compatible (no controversy, unlike embryonic stem cells) have been tested in labs for maybe 10 years now, and studies have shown that MSC can help fight a multitude of health problems (diabetes, cardiac, Crohn’s, cerebral, cancer, . . . → Read More: Playing the adult stem cell revolution

Get poor quick vs. get rich slow: 2-asset portfolio theory

Many people jumped in to the stock market hoping to get rich quickly, but instead of getting rich, they burned most or all of their money. Even the legendary speculator Jesse Livermore, who made millions of dollar on the stock market a century ago (he would have been a billionaire in today’s dollars), committed suicide in the end after he lost it all. The number 1 reason for bankruptcy on the stock market is not bad market analysis, but bad risk management. You can be right most of the times, and still go under if you don’t manage your risks well. On the other hand, as unbelievable as it may sound, with a proper risk management you can actually make money on the stock market  in the long term, even if you know nothing about the direction of the market !

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All Warfare is based on deception

or so Sun Tzu said, and the stock market is a war ! If you keep that in mind, then maybe you will be able to understand many asburd things on Wall Street, and avoid being “killed” by the “sharks”.

Nowadays, only about 2% of all trading on the stock markets are real investing  (long term, fundamentals-oriented, “cooperative”, “win-win”), the other 98% is a zero-sum game, where for some person to win, another person must lose. When you enter the stock market, you enter a war, where a multitude of adversaires are there trying to kill you (that is to take all the money they can take from you). And how do they do that ? By deception, of course !

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Why the “efficient market theory” is bullshit ?

The efficient market theory, which states that the stock market moves randomly (because all the available information about the stocks are already factored in the price, and future movements depend solely on random future events that are not known yet), has a very strong following among “ivory tower economists”, even though it has been . . . → Read More: Why the “efficient market theory” is bullshit ?

Technical analysis: rocket pattern

I mentioned the “rocket pattern” in the previous post about Huron (HURN). So what is a “rocket” (in TA) anyway ?

A “rocket” consists of a “rocket launch” (a day with a huge jump up in the stock price, due to a very significant news that changes the prospects of the company completely and that takes a long period of time to fully play out), followed by a robust up-trend during the following months.

In order to have a “rocket”, the news must be really outstanding and its impact long-lasting.

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Mind the gap !

If you are a day trader,then you want to find stocks with a big intraday momentum.

One of the ways to do it is to check for opening gaps, i.e. stocks whose opening price jumps significantly from the previous closing price, due to a news item which changes the perceived value of the stock completely.

The gap can usually be seen in premarket already, but in general avoid trading the premarket. Instead, wait to see the opening price, and the intraday momentum after the opening. If, for example, 5-10 minutes after the opening, the price is moving up and higher than the opening price, then the momentum is up and it may be OK to go long. On the other hand, if the price falls below the opening prie, then the momentum is down, and it’s better to go short. (Don’t look at the direction of the gap, but at the direction of the price in the first 5-10 minutes after the opening !)

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Stocks & Options

Starting today, I’ll write about investing in stocks and options in the world markets (mainly the NY stock market)

I have been interested in the stock market for about 12 years now (though I have never had any big amount of money to really invest, just enough to trade a bit), and have made . . . → Read More: Stocks & Options