The Traders Journal

Table of Contents

Driverless Trading and the Five Investor Personalities

Pursuing a ‘driverless strategy’ – be it automobiles, hedge funds or individual investing – is counterfactual thinking, in my opinion.  The new BMW iVision car has knob-less gesture controls, 3D displays and an auto function that switches the car into driverless mode.  Perhaps this will work on highways of the future, but don’t bring that sort of thinking to the stock market. 

You’ll recall all those hedge funds that flamed out because they believed PhDs had uncovered new algorithms and derivatives that created virtual driverless portfolios.  For all my years in the markets, I have yet to meet an investor who has ever made money for a significant period of time by pursuing a similar driverless strategy using some third party’s black box.  Inevitably, investors doing that get sucker punched.  I refer to these efforts as the pursuit of dark money.  It’s always been with us, and it will continue to be with us.  But successful investing is 180 degrees from there.  

Continue reading "Driverless Trading and the Five Investor Personalities" »

Pulling the Trigger: Six Essential Rules

Make no mistake about it: these are internet days and news circles the globe at the speed of light.  Couple that with the fact that Wall Street is the world’s most sophisticated disinformation machine ever devised and you’ll appreciate why I believe technical analysis is an individual investor’s primary defense against the dark arts of disinformation.

Okay...I’ll lighten up. How about a few clichés?  The trend is your friend.  Snooze and you lose.  Both of these common sayings encourage you to be nimble and focus on reacting to changes promptly. It fosters the strategy of winning by not losing. Markets move fast, and you must be capable of pulling the trigger based on your technical signals despite a gaggle of possibly glowing fundamentals staring you in the face.

Continue reading "Pulling the Trigger: Six Essential Rules" »

Your Survival and Success As An Investor Depends On This

“The way to pick an investor’s pocket is through the ear.” – Jason Zweig

There is a direct correlation between an investor’s profitability and his or her communication skills.  I would be willing to wager you that I could ascertain the degree of your success as an investor within just a few minutes of speaking with you.  That sounds arrogant, but if you do not speak the language of the markets, they have a way of skewering you.  

Continue reading "Your Survival and Success As An Investor Depends On This" »

My Pal Warren on the 10 Stages of Investing

I’m a big fan of pithy quotes.  When I teach my college class “Tensile Trading”, I use quotes extensively to help illustrate each of the essential 10 stages of stock market mastery.  This week, I thought I’d have a guest blogger share his wisdom with respect to each of my ten elements for successful investing.  These are some of my favorite quotes from Warren Buffett.

Continue reading "My Pal Warren on the 10 Stages of Investing" »

This Investor's Personal Mantra

Having traded the markets for over 25 years, I am still focused on ruthlessly driving mind-bending emotions from my investing efforts.  With novice investors, the first and most significant speed bump seems to be simply acknowledging the fact that investors themselves are the speed bump.

We need to accept two realities in particular.  The reality is that we, as human beings, are hard-wired to an ancient set of gray cells that have us perpetually tethered to poor financial decision making skills coupled with the reality that the world’s most sophisticated disinformation machine (i.e. Wall Street) is set up to take advantage of this fact.   Once you understand that profits are the product of behavioral control, you can appreciate why I continue to have to make the effort to remain even-keeled emotionally when trading the markets.  

Continue reading "This Investor's Personal Mantra" »

WOW! The 10th Tensile Trading ChartPack Update!

This is the tenth update to the Tensile Trading ChartPack.  When I look back at the initial version, let me just say I am astonished at how far we’ve come and how many improvements we’ve made over the past ten quarters.  At this juncture, I think it’s apropos to acknowledge two parties who’ve contributed to the ChartPack’s ongoing success.  First and foremost, I’d like to tip my hat to our user community, now numbering into the thousands, which continues to make excellent suggestions for enhancements. 

Secondly, I’d like to recognize my son, Grayson Roze, who has come aboard with important contributions to the last few updates.  He is very much his own trader even though his investing style is foundationally based on the Tensile Trading methodology.  His personalized style is reflected in these recent updates, and I’m certain you’ll notice his broader orientation.  

If you are already a ChartPack user, I believe you’ll find this update to be profitable.  If you’re not presently a ChartPack user, I suggest you sit down with a good cup of coffee and browse the previous user manuals and quarterly updates. 

http://store.stockcharts.com/collections/stockcharts-com-chartpacks/products/tensile-trading-chartpack-by-gatis-roze

I think you’ll discover many useful investment tools and organizational tips.  Frankly. I think existing users can profit as well from this little exercise.  Don’t overlook the free 60-minute video of my presentation to ChartCon 2104 where I take you on a guided tour of the ChartPack. 

Continue reading "WOW! The 10th Tensile Trading ChartPack Update!" »

What I Learned from 30,874 Trades

Thomas Edison said “Vision without execution is hallucination.” Real estate experts love to claim that success is based on “location, location, location.”  For his recent book, The Art of Execution (Harriman House 2015), Lee Freeman-Shor analyzed over 30,000 trades by 45 professional investors and concluded that success in the stock market comes down to “execution, execution, execution.”  

Freeman-Shor groups investors into five tribes – Rabbits and Raiders whose behaviors put them on the losing side, and Assassins, Hunters and Connoisseurs who are winning tribes due to superior behaviors and strategies.

It all comes back to the challenge that emotions drive the investment decisions of both professionals and individual investors.  I wholeheartedly agree with one of his conclusions that states “before you invest in an idea, you have to have a predefined plan of action that will govern your actions after the initial investment, and you have to have the discipline to stick to it.

Continue reading "What I Learned from 30,874 Trades" »

How I Deal with Trading Losses

“I’m the only person I know that’s lost a quarter of a billion dollars in one year... It’s very character building.”   -- Steve Jobs

I have to say this up front:  I hate to lose.  I work very hard not to lose.  As Paul Newman said, “Show me a good loser and I will show you a loser.”  The closest I’ve come is that I have learned to cope with my losses in a manner that results in the least amount of lingering collateral damage.  In other words, I’ve learned to quickly move on.

As I see it, there are two types of losses.  The first type of loss is simply a result of the laws of probability and is to be expected even if you follow your methodology.  I tell my classes that I lose about 4 out of every 10 trades.  The novices in the class react by asking themselves why they are taking an investment class from such a loser. The experienced investors nod their heads in approval.  The point is that when I lose, I cut my losses quickly to minimize the costs and I move on. When I have a winner, I let it run.  It works out to be a net positive as the winners more than compensate for the losers.  For you sports fans, another way to look at it might be to ask:  how much would a baseball team pay me if I hit only 6 out of 10 times at bat?  Probably whatever I asked for.

Continue reading "How I Deal with Trading Losses" »

Powerful and Profitable Pairings: 1 + 1 = 3

For myself, one of the most momentous insights into life and investing happened over 25 years ago when Sir John Templeton, who was exceptional as both an investor and a human being, talked about the profound importance of pairings in determining the quality of one’s life.  There are infinite examples all around us from which to choose – perhaps the most obvious being the pairing decision you make in choosing your significant other.  But imagine these famous pairs, for example.  Where would Lennon be without McCartney?  Sherlock Holmes without Watson?  Paul Simon without Garfunkel?  You understand the depiction.

Templeton’s belief was that the best pairings act as catalysts to enhance and empower each individual element – literally resulting in an equation where one plus one equals three.  Therefore, choose carefully.  

Continue reading "Powerful and Profitable Pairings: 1 + 1 = 3" »

A Trader's Discipline: How I Stay the Course

                                                                   

“A disciplined mind leads to happiness and an undisciplined mind leads to suffering.”
--Dalai Lama XIV,
The Act of Happiness

 

Investors don’t always have the discipline to act like a Nike ‘Just do it’ advertisement.  I recently had a trading buddy of mine lament about his struggles to stay motivated.  He held me up as his model of a well-disciplined trader.  I was both flattered and intimidated by his statement, but it’s hardly a secret that one of the keys to successful investing is to stay engaged and enthused.

Continue reading "A Trader's Discipline: How I Stay the Course" »

Table of Contents