A book review for Brent Penfold’s book “The Universal Principles of Successful Trading: Essential Knowledge for All Traders in All Markets“
This book is excellent for traders that are ready for it. You need a foundation in trading to understand its importance and take the principles seriously. Once you are through the rainbow and butterfly phase of trading and realise that you will not be a millionaire in a year, this book will help you get focused and get serious about your trading and what really works.
Here are the six universal principles of successful traders:
1) Preparation
Author Brent Penfold is in the minority believing risk management is the #1 priority in trading. Brent believes that once you get your trading system and position size in place you must use the amount you will risk on each trade to determine your risk of ruin. The book shows exactly how to figure this out using Excel. His point is that if your risk of ruin is not zero then you will eventually blow out your account. Risking 1% to 2% of your capital in any one trade usually gives you a zero percent risk of ruin but it also depends on your systems win/loss ratio. But the point is to test any system with 30 trades first then determine your risk of ruin.
2) Enlightenment
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AK has been an analyst at long/short equity investment firms, global macro funds, and corporate economics departments. He co-founded Macro Ops and is the host of Fallible.
In this video we’re going to discuss how Ray Dalio created his investment strategy and how you can use the same principles to create your own!
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Markets saw the third-worst fall of 2019 on Friday as benchmark indices S&P BSE Sensex and Nifty50, both, fell to two-month low. The indices touched intra-day lows of 38,271 level at Sensex and 11,399 mark at Nifty. ‘Super-rich tax’ concerns on FPI, trade war tenions and weak corporate earnings contributed to the fall.
The Sensex tanked 560 points, or 1.44 per cent, to close at 38,337 levels with 26 of the 30 stocks listed at the index ending in the red. IndusInd Bank, Bajaj Finance, M&M, and YES Bank were the top laggards while only NTPC, TCS, PowerGrid and ONGC ended in the green. The Nifty50, too, lost 178 points, or 1.53 per cent, to settle at 11,419 mark. Of the 50 stocks listed at the index, only 7 stocks advanced while the remaining 43 declined.
In the broader market, S&P BSE MidCap closed 285 points, or 2 per cent, lower at 14,078 level while the S&P BSE SmallCap slipped 248 points, or 1.83 per cent, at 13,310 levels.
Sectorally, all the indices ended in the red. Nifty Auto index, too, tanked to two-month low to end 3.31 per cent lower. This was followed by losses in Nifty Private Bank index and Nifty Pharma index, down 2.45 per cent and 2.23 per cent respectively.
The Nifty Auto index hitting a three-year low on Friday. Thus far in the calendar year 2019, auto index slipped 21 per cent, against 5 per cent rise in the benchmark index. M&M, Motherson Sumi Systems, TVS Motor Company, Exide Industries, Escorts, MSIL, Eicher Motors, Hero MotoCorp, Bosch and Ashok Leyland have seen market value erosion of more than 22 per cent during the period.
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How to use the gann fan indicator, How to draw gann fan, these are the most common questions about this indicator. For good reason though!
This trading strategy is a complex support and resistance trading strategy that uses diagonal support and resistance levels. Unlike the traditional horizontal support and resistance levels, the Gann fan angles are mathematically calculated based on the price, time and the price range of the market. If you want to learn how to correctly trade horizontal support and resistance level we’ve got your back, just read Support and Resistance Zones – Road to Successful Trading.
Our team at Trading Strategy Guides has developed the best Gann fan trading strategy which can be applied to all markets because according to the Gann theory, financial markets move as a result of human behaviour which makes them cyclical in nature. In other words, history is a good predictor of future price action.
One of the main reasons why Gann fan angles are superior to the horizontal support and resistance levels is that financial markets are geometric in their movements. This means that if you can spot a pattern or or any other geometric shape in a chart, then there is a high probability you can spot them at the Gann fan angles.
Now…
Before we get started, let’s look at what indicator you need for the job for the Best Gann Fan Trading Strategy:
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StockCharts.com’s Chief Technical Analyst, John Murphy, has created another set of trading rules: “Ten Laws of Technical Trading:”
“Which way is the market moving? How far up or down will it go? And when will it go the other way? These are the basic concerns of the technical analyst. Behind the charts and graphs and mathematical formulas used to analyse market trends are some basic concepts that apply to most of the theories employed by today’s technical analysts.”
The following are John’s ten most important rules of technical trading:
- Map the Trends
- Spot the Trend and Go With It
- Find the Low and High of It
- Know How Far to Backtrack
- Draw the Line
- Follow That Average
- Learn the Turns
- Know the Warning Signs
- Trend or Not a Trend?
- Know the Confirming Signs
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Domestic indices ended Friday’s choppy session in the negative territory. The markets remained range-bound, in the positive territory, for most part of the day but were dragged lower by index heavyweights like HDFC Bank, Axis Bank, Larsen & Toubro, and Bajaj Finance.
The benchmark S&P BSE Sensex closed at 38,736 levels, down 87 points or 0.22 per cent. Among the gainers, YES Bank, Tata Steel, Sun Pharma and Vedanta topped the charts while ONGC, Bajaj Finance, ONGC and L&T were at the lower end of the spectrum.
The broader Nifty50 too settled with cuts. The 50-share index settled at 11,552 levels, down 30 points, or 0.26 per cent.
In the broader market, the BSE MidCap index ended 59 points, or 0.41 per cent, higher at 14,554 levels while the BSE SmallCap index closed 22 points, or 0.16 per cent, higher at 13,776 levels.
Sectorally, banking, financial services and FMCG counters were under pressure. The Nifty Bank index closed 0.37 per cent lower followed by Nifty Financial Services index, down 0.29 per cent. Among gainers, Nifty metals, pharma and realty counters were up between 0.4-0.7 per cent.
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There are lots of people who trade stocks based on news and financial results. And they get severely confused and even disappointed when stock price roars despite a bad result/bad news or worse, it falls despite a wonderful result/good news. Today’s article depicts how trading based on news and results is a hopeless, dangerous and a loser’s game.
In India, companies are required to report their quarterly earnings to its shareholders. So, in every three months’ time, we are faced with a plethora of companies coming out with their quarterly results. So, most traders buy if results are good and if results are disappointing, they sell. On the face of it, it appears completely logical but let me tell you, it is far from being logical.
Let me show you a recent real life scenario which defied the logic of buying on good results:
Mahanagar Gas Limited (MGL), announced it’s Q1 2017-18 results on 9th August 2017. The result was terrific yet the stock fell like there’s no tomorrow.
Here are the key highlights of the result:
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10 Reasons moving averages work as trading tools.
- Moving averages filter trends in different timeframes.
- Moving averages can create entry signals at the beginning of a trend.
- They can be used as exit signals when price dips below them.
- Moving averages can be used as trailing stops so you can exit with profits when a trend starts to bend.
- Moving averages can be used in crossover combinations for slower signals.
- Moving averages can help filter volatility.
- You can do historical back tests of price action to develop price action trading systems using moving averages.
- Moving averages are reactive technical trading tools not predictive.
- When price falls below and then breaks back over a moving average it is a great signal for a potential reversal.
- Moving averages are better gurus than talking heads on financial television.
Moving averages have a place in any trader’s or investor’s strategy. They are my favourite filter for price action.
The original post is written by Steve Burns, appears on newtraderu.com and is available here.
Domestic indices plummeted on Friday as Modi government’s Union Budget for 2019-20 failed to cheer investors. Even though the markets opened higher with the benchmark S&P BSE Sensex zooming past the 40,000 mark to hit 40,032, the index fell over 500 points from the highs.
The S&P BSE Sensex closed 395 points, or 0.99 per cent, lower at 39,513 levels with the YES Bank, NTPC and Mahindra & Mahindra being the top laggards. The broader Nifty50 index tanked 136 points, or 1.14 levels, to end at 11,811 levels.
In the broader market, S&P BSE Mid-Cap ended 208 points, or 1.39 per cent, lower at 14,726 levels while the S&P BSE Small-Cap dipped 195 points, or 1.36 levels, to settle at 14,142 levels.
Sectorally, all the indices ended in the red except Nifty PSU bank and Nifty Bank index that gained after the finance minister announced that the government will pump in Rs 70,000 crore into public sector banks (PSBs) to strengthen them and enhance their lending capacity.
Metals, realty and auto counters were the biggest losers after the Budget proposed import duty hike for auto-parts, metals and other equipment used for manufacturing capital goods. Each index slipped over 3 per cent. PSU Bank index closed 0.18 per cent higher after gaining nearly 4 per cent intra-day on government’s proposal to recapitalize banks.
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George Soros gained international notoriety when, in September of 1992, he risked $10 billion on a single currency speculation when he shorted the British pound. He turned out to be right, and in a single day the trade generated a profit of $1 billion – ultimately, it was reported that his profit on the transaction almost reached $2 billion. As a result, he is famously known as the “the man who broke the Bank of England.”
Soros went off on his own in 1973, founding the hedge fund company of Soros Fund Management, which eventually evolved into the well-known and respected Quantum Fund. For almost two decades, he ran this aggressive and successful hedge fund, reportedly racking up returns in excess of 30% per year and, on two occasions, posting annual returns of more than 100%.
“I’m only rich because I know when I’m wrong…I basically have survived by recognising my mistakes.”
Understanding that he was not always right enabled him to cut losses short and position size right.
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