was responding to the A up question from the other poster, "a percentage of the 10-30 day average daily range" direct quote. He restates this when he did the Danny Riley webinar can't remember, but the point being (to use his words) is to create a level which makes sense to your risk tolerance. This goes to the whole discussion with the guy that was trading oil and figured out that high vol will give you wider stops and low vol gives you tighter stops. This was earlier in the thread. I have learned the hard way that when market get volatile say vix over 20%, you really need to reduce your size and widen your stops.
Yesterday, the 5th trading day of the month, was the highest monthly A downs for the year at 209. Today there are 184. Historically these high numbers are very rare at the first of the month. AAPL was at the top of the list.
Any of you guys boxing fans , the following video is small compilation of boxing video's with poem by Rudyard Kipling "if" . the video has some cool trading principles that can be applied generally to trading and life. enjoy https://www.youtube.com/watch?v=mS0POjriQMs
Thanks Robert. Solid info. For those of you home gamers out there, let me point out a process which led to perhaps info that could lead to a series of productive trades. 1) Collect Data 2) Analyze Data 3) Look for obscure patterns or changes in existing patterns 4) Concept of rarity 5) Use data to isolate specific areas of opportunity 6) Estimate your risk 7) Design optimal trade Or you could just fade stuff. Nice job Robert.
Mav regrading trading relative relationships is the following understanding or approach correct for example lets say one wanted to purchase AAPL , the individual is in fact buying the USD ( relationship can change sometimes ) and to hedge against the large purchase the individual buys the stocks in yen instead to protect against the stock declining for example so if the AAPL falls depending on the relationship of the yen and many other factors the yen should in fact rise therefore creating a spread which can be reflected with in the pair USD/JPY or better AAPL/JPY . let me know if my though process is correct , i think you talked about this somewhere in the thread
When you are buying AAPL you are shorting the USD. It's AAPL/USD. If I lived in Europe and I bought shares of AAPL, they would be purchasing dollars and selling Euros. Technically speaking you could say they were buying "Apple Dollars" against Euros. When you buy shares of AAPL you are essentially willing to give up the interest rate you are getting by holding dollars in exchange for the return of holding AAPL shares. This example might help. Let's say you have $1,000 in cash. You have two choices. You could invest that 1000 in a interest bearing account for one year that pays say 2%. Or you could forgo that 2% and take your chances with $1,000 worth of AAPL stock. The opportunity cost for owning AAPL is 2%. Essentially you are giving that away by selling the dollar in exchange for shares of AAPL. Hope that makes some sense.
Thanks Mav for the explanation also Mav when your talking about opportunity cost you referring to how efficient one is in allocating his resources. So if a trader takes a trade and it moves in the right direction but not at the impact as you initially thought relative to another instrument ,the trader has made money but in real terms with regards to the opportunity cost of trading the relative instrument that has moved up more significantly the trader in fact has lost money. So Mav would you say picking the right stocks, currencies or commodities instruments to watch is half the battle for traders and is the following reason's i have stated above the main reasons for the use of time stops i apologize if the question is crap Mav , just want to start strengthening my understanding