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Don’t get caught up!

May 9, 2019 / / No Comments

I don’t mean by the markets, but by yourself. Regardless of your system, you will have losing trades. Some of the best traders have a win ratio of only about 50%, so their predictive system is not much better than a coin toss. However they have great risk management in place and they know when to back off. Everybody experiences a series of bad trades, but only the best know when it’s time for them to stop to minimize the damage that would have been incurred otherwise.

If I could count how many times I was stopped out and how many times I experienced one of those series… numerous. But what prevented me from going bust was exactly that, knowing when to stop.

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Workshop feedback [video]

April 23, 2019 / / No Comments

Here is the feedback with a few opinions about the workshop I held last week. The video is recorded in Slovene language, but it’s subtitled in English.

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Had retirees invested, they wouldn’t have financial issues

March 15, 2019 / / No Comments

No matter where you live, you probably face similar financial issues to people elsewhere in the world. As a society today, most people have to rely on others. For example, we rely on others to get our salaries on time, or that others will grow our retirement fund big enough to support our current living standards in retirement. But unfortunately the current demographic in the western world is not optimal and is particularly challenging for the pension system.

The current generation of retirees probably can’t do much to improve their situation. However, the active generation still has everything at their disposal to guarantee themselves a better and more stable future. To get there they must learn how to invest and use the power of the compounding interest. As Einstein said so many years ago, compounding interest is the 8th wonder of the world.

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Trading workshop

February 20, 2019 / / No Comments

I was relatively quiet in the past weeks, I didn’t post as frequently as I usually do. The main reason is that I was working on the content for a trading workshop. Many people close to me were asking me questions about trading and investing, like why would one do it, where to start and how to do it successfully. Instead of giving them brief answers to their questions I decided I’ll do it properly.

There was no other way than to post a bit less, there’s just no such thing as successful multitasking in my opinion. So in the past weeks I worked on putting all my knowledge and past experience together with a goal to educate future traders and investors. I prepared a massive slide pack full of theory accompanied by detailed examples and quotes where we dive deep into the following topics.

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Typical bottom

January 14, 2019 / / No Comments

People love picking tops and bottoms. I understand where this comes from, some just have the urge to prove they know more, they know better. While this might be a viable strategy, one needs to know where the market is currently and if a low has a chance of becoming the bottom. Are we in a 8-12% consolidation phase, a 20-30% cyclical correction or a 35+% secular bear market?

We’re seeing a good 10% bounce from the Xmas lows and it’s easy to feel stupid if you dumped your stocks then but now watching the market go up without you. It’s also as easy to feel victorious if you didn’t sell then, but what if we get a retest, or worse, what if it’s not over yet? Can you withstand that?

I prepared a chart pack of 16 bottoms that occurred since 1962. They might help you navigate through the cycles and picking the bottoms. One very common characteristic in bear markets is that we often see a multiple double digit counter trend rallies, the same goes for rallies near market bottoms.

I bet you’ve heard the old saying that tops are a process and bottoms an event. The following charts prove that bottoms are a process too, even though sometimes shorter in length! There are no V type bottoms really, a much more common bottom is the one that fakes people in believing it’s not over yet, like a double bottom or a low undercut bottom or a bear trap bottom. Let’s go through them one by one.

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Commit to a process and stick to it

January 3, 2019 / / No Comments

The start of a new year can mean a new beginning for some. Hope, resolutions, more hope. But a few are willing to do the right thing, this mostly means ditching hope and replacing it with work, solutions and processes.

The market doesn’t care what we hope for, a retirement plan, a new house, or a hot stock tip. The market is a redistribution machine. It transfers the money from many to a few. Trading and investing is not that much about stock picking than it is about risk management. 2018 was nothing like 2017. In 2017 most forgot about risk management, many didn’t use it, and they were handsomely rewarded for their complacency. But then 2018 came. It was the total opposite year. It was a tough year, especially for those who forgot what the term stop loss means.

I’m not mocking anyone. The same day I think I know more than others the market smacks me straight in the face. And I get humbled down. What I’m trying to achieve is to make you a bit more aware of the current situation. Have we seen the bottom yet? If not, are you ready for another leg lower? Can you take it? Will you handle it? Most complacent people who answered yes to the questions above will most likely sell the bottom.

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Keeping a perspective

December 3, 2018 / / No Comments

After G20 meeting when stock indices are gapping up it’s very easy to lose sight. It’s as easy to get excited as it had been easy getting depressed two weeks ago. In this kind of environment one needs to keep perspective. Often the best way is to take a deep breath, zoom out and take a more long term view. Usually the longer you go in the past, the more you will understand the present and the easier you’ll prepare yourself for any possible outcome in the future.

So I would like to share with a longer term chart of the S&P 500 index dating back from 1900 to the present day. 

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Affordable mistakes

September 6, 2018 / / No Comments

We all make mistakes in our day to day life. I make them all the time. I bet you do too. For the most part, we don’t pay any special attention to them. But sometimes, when they get a bit bigger, we become very aware of them. We repeat some over time, and for most we’ve learnt over the years what we can and cannot do to minimize the effects.

I bet you’ve heard countless times what you should and shouldn’t do to avoid mistakes and how important they can be in not resulting in ruin. For example, in trading, people advise you shouldn’t risk more than x% of your capital per trade. Quite often they over generalize. They give this advice to both young folks, just starting their careers, and older guys and girls, already counting down the hours to retirement.

Why is this? Why do we think a piece of advice is good for some circumstances? Are they really equally effective in all circumstances? Read More

Brazil’s plunge and what can we learn from it?

May 21, 2017 / / No Comments

This week I would like to write about Brazil and it’s stock market. Most of you are probably aware, that the market opened with a nasty gap down of around -17% on Thursday the 18th of May. I was long EWZ, Brazilian ETF and of course I was down on this position that day. I decided to close my position with no hesitation. Let me write about this position and what can one learn from it.  Read More

Money management is crucial in trading

March 29, 2017 / / 2 Comments

Ever felt like your trading is a bumpier experience than it should be? The purpose of this post is to show one of the most likely reasons for volatility in traders’ equity curves and the risk of ruin based on your edge and money management skills. Read More