Data mining for traders is the process of researching large amounts of historical data to find repeatable price action patterns in financial markets. Data mining can be done on all different time frames and both technical and fundamental data can be used to analyze the movements of markets based on different catalysts. When you mine […]
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Stocks are an asset class of investments where you buy a share of ownership in a publicly traded company. Stocks are equity in a company. Shares trade on stock exchanges through market makers and executed for investors through a stock broker. How do you invest in stocks? Decide you want to own stocks. Understand the
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Warren Buffett’s 2014 Cadillac XTS. Warren Buffett is not only one of the richest people in the world but also very frugal to a point that it is very surprising to people. He lives in the same five bedroom house he purchased in 1958 for $31,500. He also has a modest car in comparison to
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Warren Buffett has established himself as being the best investor in history by both becoming the wealthiest person in the world many times over and building one of the biggest companies in the world Berkshire Hathaway out of a failing textile company. What specific investment strategy did Buffett use to create such success and wealth?
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In trading the two terms tactic and strategy are not used enough and when they are used many times they are mixed up. Trading tactics are the actual means that are used to achieve a single specific goal or target, but a trading strategy is the big picture plan that combines many different tactics together to achieve the overall objective of
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In 2001 during a Fortune Magazine interview Warren Buffett said that the stock market capitalization to GDP ratio as a long-term valuation indicator is probably the best single measure of where valuations stand at any given moment. The stock market capitalization to GDP ratio is used to measure if a market is undervalued or overvalued in
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This is a guest post by Jake @TrendSpider. In this weekend’s analysis, we analyze the moves made by SPY, QQQ, and IWM over the last week and beyond. SPY: Daily Chart QQQ: Weekly Chart XBI: Weekly Chart Related Blog Posts Alerts – Add alerts to your trendlines and indicators with sensitivity. Raindrops – Visualize
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The company that Warren Buffett built along with his business partner Charlie Munger is Berkshire Hathaway Inc. Berkshire is a multinational conglomerate holding company that has been run out of its headquarters located on one floor of the Kiewit Plaza building for over 50 years in Omaha, Nebraska in the U.S. Berkshire Hathaway Inc. is a publicly
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The term Antifragile was coined by author Nassim Nicholas Taleb who was also a professional option trader and former hedge fund manager. Taleb created the word ‘anti-fragility’ because the existing words used to describe the opposite of fragility, such as unbreakable and robustness, were not accurate in what he was trying to describe. Antifragile goes beyond these
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This is a guest post by Tino @TradersReality. There have many associations that martial arts have with probably every endeavor in life. The simple reason is that both require discipline. Now you have more than likely read the basics of marital arts is preserving your character, having the discipline not to react when not required,
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The Occam’s razor heuristic was created by William of Ockham who was a philosopher and theologian who preferred simplicity for explanations over unneeded complexity. Occam’s razor is one way to solve problems using the principle that the most obvious answer is the right one and adding complexity in reaching a solution should not be done
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Nassim Nicholas Taleb is a best selling author, philosopher, scholar, and statistician. He had a long career as a professional option trader and hedge fund manager. His expertise was as a risk analyst focusing his work on the problems of outliers and fat tail events of randomness. His books go into depth about the nature of probability
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If you are losing money in the markets or having a large drawdown in capital it could be a good idea to go back and return to first principles. First principles are the core concepts or accepted foundation of beliefs that a theory, process, system, or methodology is based. Profitable trading comes from using the
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Mental models are tools used to explain the process and theory a person uses to understand how something works in the real world. It represents a system of principles that tries to explain the interrelated cause and effect of actions and results. A mental model represents the relation between intuition and reality and beliefs about
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There are two different methods for reasoning, inductive and deductive. While deductive reasoning looks for certainties, inductive reasoning is used when a circumstance is seen as supplying evidence that a conclusion could be true. The belief in a conclusion based on inductive reasoning is highly probable and based on evidence that can be seen and
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The Dunning–Kruger effect is a cognitive bias identified in the world of psychology. This effect is identified when people believe their intelligence and knowledge is adequate and correct when in reality they are ignorant and inexperienced in the area they think they are competent in. In reality, they are not only ignorant and blind to
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Confirmation bias is a psychological filter that causes people to interpret information in a way that proves or at least confirms what they believe is true or what they believe will happen in the future. Confirmation bias is a kind of mental bias and is the wrong way to use reason to arrive at the
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Warren Buffett has said “I just sit in my office and read all day.” The Omaha World-Herald reported: “Eventually finding and reading productive material became second nature [to Buffett], a habit. As he began his investing career, he would read even more, hitting 600, 750, even 1,000 pages a day.” Warren Buffett says he reads a
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Peter Lynch was one of the greatest mutual fund managers of all time for returns over a long period of time. He was the manager of the Fidelity Magellan Fund from 1977 to 1990. During his time managing the fund he averaged a +29.2% return annually. He was able to consistently double the annual returns
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The Pareto Principle is named after Vilfredo Pareto an Italian economist who first noticed an 80/20 distribution in statistics and published his first work on this in 1896. Pareto is said to have first observed the mathematical formula when he observed about 80% of the total land in Italy was owned by 20% of the people. In his
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