Thursday, November 24, 2011


"Conventional capital market theory is based on a linear view of the world, one in which investors have rational expecations; they adjust immediately to information about the markets and behave as if they know precisely how the structure of the economy works.  Markets are highly efficient, but not perfectly so.  Inefficiencies are inherent in the economy or in the structure of markets themselves...We believe inefficiencies in markets can be exploited through a combination of trend detection and risk management."

John W. Henry

Friday, August 12, 2011

Perceptions and Beliefs

"Because you grasp labels and slogans,
You are hindered by those labels and slogans,
Both those used in ordinary life and those
Considered sacred.
Thus they obstruct your perception of objective truth,
And you cannot understand clearly."

Saturday, July 16, 2011


 "One cannot fight the desert and live. One lives with it, or one dies. One learns its ways and its life, and moves with care, and never ceases to be wary, for the desert has traps and tricks for the careless."


Tuesday, June 14, 2011

Musical Chairs

"In this game of musical market chairs, the largest traders control the pause button.  They wait for the other players to bunch together; then they grab a seat just as they stop the music.  Much of the intraday movement of the market is attributable to precisely this bunching and its exploitation by large traders. "

-Brett N. Steenbarger

Sunday, June 12, 2011


"A major purpose of markets is to transfer resources from the weak to the strong, so that the infrastructure can be augments and stabilized, and everything you read or hear about the market is designed by an invisible evil hand to put you on the wrong foot so that you will contribute and lose more than you have any civilized personage has any right to do."

-Victor Niederhoffer

Sunday, May 29, 2011

James J Hill

"Give snuff, whiskey and swedes, and I will build a railroad to hell."

-James J. Hill

Saturday, April 23, 2011

Learning to trade is a task that most people never complete.  I've been at it for about 15,000 hours and still have a long way to go.

I attribute the degree of complexity to the competition.  There are no minor leagues when it comes to trading, your opponents are professionals and most make the all star game.  So here you are stepping up to the plate with watching 98 mph pitches coming at you as a beginner.

If you trade equities, futures, or options check out my friends at  I have been trading with them for about a year now, and they have helped me accelerate and solidify core concepts of trading.

The group is warm, friendly, knowledgeable and trade extremely well.

Sunday, April 17, 2011

The Essence of Markets

"The markets are not something that we create or imagine; it is a natural process of our world that continues as long as life lasts, whether we concentrate on it or not.  So it is an object that is always present; we can turn to it at any time.  One does not have to have any qualifications to watch it, we do not even need to be particularly intelligent – all we have to do is to be content with, and aware of, one rise and one fall.  Great wisdom does not come from studying great theories and philosophies, but from observing the regular.

The Market lacks any exciting quality or anything fascinating about it, and so we can become very restless and averse to it.  Our desire is always to ‘get’ something, to find something that will interest and absorb us without any effort on our part. 

For example, if we hear some music, we don’t think, ‘I must concentrate on this fascinating and exciting rhythmic music’ we can’t stop ourselves, because the rhythm is so compelling that it pulls us in.  The rhythm of the market is not interesting or compelling, it is tranquillizing, and most beings aren’t used to tranquility.  Most people like the idea of peace, but find the actual experience of it disappointing or frustrating.  People and markets desire stimulation, something that will draw them into itself.  

With a lack of a point of view we stay with an object that is quite neutral, we don’t have any strong feelings of like or dislike for markets and just note the beginning of a move, its middle, and end"

-Written by Me

Wednesday, April 13, 2011

There is an explanation for every price movement?

"These days, there are many more deep intellectuals in the business, and that, coupled with the explosion of information on the Internet, creates the illusion that there is an explanation for everything and that the primary task is simply to find that explanation. As a result, technical analysis is at the bottom of the study list for many of the younger generation, particularly since the skill often requires them to close their eyes and trust the price action. The pain of gain is just too overwhelming for all of us to bear!"

 -Paul Tudor Jones

Friday, April 8, 2011

Trading Macro

"When trading macro, you never have a complete information set or information edge the way analysts can have when trading individual securities. It's a hell of a lot easier to get an information edge on one stock than it is on the S&P 500. When it comes to trading macro, you cannot rely solely on fundamentals; you have to be a tape reader, which is something of a lost art form."

-Paul Tudor Jones

Friday, April 1, 2011


"A speculator is a man who observes the future, and acts before it occurs"

-Bernard Baruch

Wednesday, March 30, 2011


"If a betting game among a certain number of participants is played long enough, eventually one player will have all the money. If there is any skill involved, it will accelerate the process of concentrating all the stakes in a few hands. Something like this happens in the market. There is a persistent overall tendency for equity to flow from the many to the few. In the long run, the majority loses. The implication for the trader is that to win you have to act like the minority. If you bring normal human habits and tendencies to trading, you'll gravitate toward the majority and inevitably lose." 

-William Eckhardt

Wednesday, March 23, 2011

Great Waves

A novice monk approaches his teacher and asks, “Is this a bull market or a bear market?”
The teacher replies, “If it is a warm day, and I say that it is winter, will you still wear your heaviest coat?”

Tuesday, March 22, 2011

Strictly Success

“I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. 26 times, I’ve been trusted to take the game-winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed.”
—Michael Jordan

Monday, March 14, 2011


"Speculation comes in and destroys trends. I am a speculator. It accelerates the trend. It gets you closer to the truth faster."

-James Simons

Sunday, March 13, 2011

Rigid in Rules, Flexible in Expectations

"We need to be rigid in our rules so that we gain a sense of self-trust that
can, and will always, protect us in an environment that has few, if any,
boundaries. We need to be flexible in our expectations so we can perceive,
with the greatest degree of clarity and objectivity, what the
market is communicating to us from its perspective.

At this point, it probably goes without saying that the typical trader does just the
opposite: He is flexible in his rules and rigid in his expectations.
Interestingly enough, the more rigid the expectation, the more he has
to either bend, violate, or break his rules in order to accommodate his
unwillingness to give up what he wants in favor of what the market is

- Mark Douglas

Monday, February 28, 2011


"I always believe that prices move first and fundamentals come second. When I
trade, I don’t just use a price stop, I also use a time stop. If I think a market should
break, and it doesn’t, I will often get out even if I am not losing any money."

 -Paul Tudor Jones 

Crude Oil

Saturday, February 26, 2011

The Oracle of Omaha

"Unquestionably, some people have become very rich through the use of borrowed money. However, that’s also been a way to get very poor. When leverage works, it magnifies your gains. Your spouse thinks you’re clever, and your neighbors get envious. But leverage is addictive. Once having profited from its wonders, very few people retreat to more conservative practices. And as we all learned in third grade – and some relearned in 2008 – any series of positive numbers, however impressive the numbers may be, evaporates when multiplied by a single zero. History tells us that leverage all too often produces zeroes, even when it is employed by very smart people."

-Warren Buffet

Wednesday, February 16, 2011

Range Expansion

"We have a very good trading system.  The basic premise of the system is that markets move sharply when they move.  If there is a sudden range expansion in a market that has been trading narrowly, human nature is to try to fade that price move.  When you get a range expansion, the market is sending you a very loud, clear signal that the market is getting ready to move in the direction of that expansion"

- Paul Tudor Jones

Monday, February 14, 2011


"I don't mean to be understood as advising persistent pyramiding.
A man can pyramid and make big money that he couldn't
make if he didn't pyramid; of course. But what I meant to say
was this: Suppose a man's line is five hundred shares of stock.
I say that he ought not to buy it all at once; not if he is
speculating. If he is merely gambling the only advice I have to
give him is, don't!

Suppose he buys his first hundred, and that promptly shows
him a loss. Why should he go to work and get more stock? He
ought to see at once that he is in wrong; at least temporarily."


I went out to dinner not too long ago with a group of friends.  There was a large table of us, probably about 14 in total.  A couple seats away from me I could not help to overhear someone say in an awkward voice, 'trying to get in the market...just waiting for a pullback.'  That was 15% ago, and still no pullback.

All he had to do was buy a little, and if it worked then buy some more.

Friday, February 11, 2011


"The object of reading the tape is to ascertain, first, how and,
next, when to trade -- that is, whether it is wiser to buy than
to sell. It works exactly the same for stocks as for cotton or
wheat or corn or oats.

You watch the market -- that is, the course of prices as
recorded by the tape with one object: to determine the direction
-- that is, the price tendency. Prices, we know, will move
either up or down according to the resistance they encounter.
For purposes of easy explanation we will say that prices, like
everything else, move along the line of least resistance. They
will do whatever comes easiest, therefore they will go up if
there is less resistance to an advance than to a decline; and
vice versa.

Nobody should be puzzled as to whether a market is a bull
or a bear market after it fairly starts. The trend is evident to
a man who has an open mind and reasonably clear sight, for it is
never wise for a speculator to fit his facts to his theories.
Such a man will, or ought to, know whether it is a bull or a
bear market, and if he knows that he knows whether to buy or to
sell. It is therefore at the very inception of the movement that
a man needs to know whether to buy or to sell.

As a matter of fact, millions upon
millions of dollars have been lost by men who bought stocks
because they looked cheap or sold them because they looked dear.
The speculator is not an investor. His object is not to secure a
steady return on his money at a good rate of interest, but to
profit by either a rise or a fall in the price of whatever he
may be speculating in. Therefore the thing to determine is the
speculative line of least resistance at the moment of trading;
and what he should wait for is the moment when that line defines
itself, because that is his signal to get busy.
selling had been stronger than the buying and a reaction in the
price logically followed. Up to the point where the selling
prevailed over the buying, superficial students of the tape may
conclude that the price is not going to stop short of 1 So, and
they buy. But after the reaction begins they hold on, or sell
out at a small loss, or they go short and talk bearish. But at
120 there is stronger resistance to the decline. The buying
prevails over the selling, there is a rally and the shorts

The public is so often whipsawed that one marvels at their
persistence in not learning their lesson.
Eventually something happens that increases the power of
either the upward or the downward force and the point of
greatest resistance moves up or clown -- that is, the buying at
130 will for the first time be stronger than the selling, or the
selling at 12o be stronger than the buying. The price will break
through the old barrier or movement-limit and so on. As a rule,
there is always a crowd of traders who are short at 12o because
it looked so weak, or long at 13o because it looked so strong,
and, when the market goes against them they are forced, after a
while, either to change their minds and turn or to close out. In
either event they help to define even more clearly the price
line of least resistance. Thus the intelligent trader who has
patiently waited to determine this line will enlist the aid of
fundamental trade conditions and also of the force of the
trading of that part of the community that happened to guess
wrong and must now rectify mistakes. Such corrections tend to
push prices along the line of least resistance.
And right here I will say that, though I do not give it as
a mathematical certainty or as an axiom of speculation, my
experience has been that accidents -- that is, the unexpected or
unforeseen have always helped me in my market position whenever
the latter has been based upon my determination of the line of
least resistance. Do you remember that Union Pacific episode at
Saratoga that I told you about?"