Tag Archives: Investing

Misato Katsuragi

Kelly Criterion

Money, Trading, , ,

If money is your bread then nothing else matters.

The Kelly Criterion is something anyone who trades, invests or even gambles must know. I have a brief summary below and some additional resources at the end of the summary.

There is also a great book devoted to this topic, Fortune’s Formula by William Poundstone, a must have book for any serious investor.

The Kelly Criterion, also known as the Kelly strategy, Kelly formula, or Kelly bet, is a mathematical formula designed to help people determine the optimal size of a series of bets. It’s named after John L. Kelly, Jr., who introduced the concept in a 1956 paper titled “A New Interpretation of Information Rate.”

The Kelly Criterion is commonly used in gambling, investing, and other areas where decisions involve uncertainty and risk. The goal of the Kelly Criterion is to maximize the long-term growth of capital by finding the optimal fraction of capital to invest in each opportunity.

The basic formula for the Kelly Criterion is:

Kelly-Critierion
Kelly-Critierion

The formula tells you what percentage of your current capital should be invested in a particular opportunity, given your assessment of the probability of success and the odds being offered.

It’s important to note a couple of things about the Kelly Criterion:

1. Risk of Ruin: The Kelly Criterion can be aggressive. Betting too much of your capital, even with a positive expectation, can lead to significant losses. The criterion doesn’t consider the risk of ruin, which is the risk of losing your entire capital.

2. Estimates are Crucial: The accuracy of the criterion depends heavily on the accuracy of your probability estimates. If your estimates are inaccurate, the strategy might not perform well.

3. Logarithmic Utility: The formula assumes logarithmic utility, meaning that the investor’s goal is to maximize the expected logarithm of wealth. This utility function helps to balance between risk and reward.

To use the Kelly Criterion, you would apply the formula to each opportunity, and the resulting fraction represents the proportion of your current capital that you should invest.

Keep in mind that many variations and adaptations of the Kelly Criterion exist to address specific situations and concerns. It’s a tool that requires careful consideration and understanding of the underlying assumptions and risks.

 

To learn more, see these resources

https://www3.cs.stonybrook.edu/~skiena/691/2007/lectures/Kelly.pdf

http://r6.ca/blog/20070816T193609Z.html

https://www.economist.com/media/globalexecutive/fortunes_formula_e.pdf

https://towardsdatascience.com/python-risk-management-kelly-criterion-526e8fb6d6fd

Ancient Psychology

Money, My Thoughts, , , , , , , , , ,

True good is only possible when the self is aware of the suffering of the other and wants to minimize the suffering.

An interesting thought is to think about is when did humans or higher animals become self conscious and therefore developed a theory of mind that allows them to know what it feels like for others to experience the same thing that they might.

To make this more concrete, let’s use an example, two for that matter, one good behavior and one not so good. A bonobos monkey accidentally breaks a branch off of a tree and it falls on the head someone below, “… the film’s animal advisor, Patrick Bleuzen, who remarked that ‘Once I got hit on the head with a branch that had a bonobo on it. I sat down and the bonobo noticed I was in a difficult situation and came and took me by the hand and moved my hair back, like they do. So they live on compassion, and that’s really interesting to experience.” Excerpt From FREEDOM: The End Of The Human Condition Jeremy Griffith. The behavior  suggests that they can feel what it like to be in a position of compassion towards others.

Example two, an angry dominant male chimp snatches an infant from a female and dangles it precariously over a cliff edge. This is a clear example of control and an I don’t have to hit you but, I can get what I want from you by threat alone.

So what’s the threshold. What level does an animal have to be at to exhibit this behavior. How do we test for self awareness to begin with. One way that comes to mind is can they recognize themselves in the mirror. I decided to look it up, sure enough it has been done. As one would guess higher primates pass the test along with dolphins and others. See Mirror Test for more.

So once one is self aware, it is one easy step to start projecting that out to others and develop a theory of mind. And, this might be the root of good and evil. ( I started thinking about this was when I read partway through FREEDOM: The End Of The Human Condition by Jeremy Griffith )

For how can one know good and evil other than having a theory of mind for the other. True evil  is only possible when the self is aware of the suffering of the other and wants to maximize this suffering. True good is only possible when the self is aware of the suffering of the other and wants to minimize the suffering. The good news is that there is more good available because good can go beyond just minimizing suffering but, beyond it to generate positive benefit above this point, towards freedom from the potential of suffering and on to the path of the pursuit of happiness. Good can also generate the resources to create a reserve to push out and prevent suffering.

Cooperation

Think of it this way, people in small groups or a community can cooperate to store up a harvest and other reserves to carry the individual and a community through the hardest of times. The more that is stored up, the more that can be shared and the worse conditions might have to be before there is suffering.

Kye

In modern times this form of cooperation can be extended to one of the best resources that can be held in reserve collectively and used to do good for people involved cooperatively. The resource is money and the tool is known as a kye in Korean and, pronounced as geh in English. A form of this concept exists in many other countries around the world. It is basically a loan circle among a group of close friends and/or relatives and can expand to be as large as a community (good for the community such as providing a water well can be funded this way). Money goes into a kitty on a periodic basis, usually monthly and then someone from the group gets a payout to start a business, cover an emergency, obtain a down-payment on a house and so on. Think of it as a communal savings plan of sorts. Money is effectively harvested and concentrated to do good for all the participants on a rotating basis which can be determined by a leader of the group, a vote, consensus, random draw or rotation around the group in turn. To read more about this and the versions from other parts of the world read The Radical Economics of Lending Your Friends Money and/or Rotating Savings and Credit Association (ROSCA) . The descriptive category that is one level higher than this is Collaborative Finance.

The Circle of Self

In a way personal money can work like this too, with yourself, you can give the gift of it to your future self from your present self, your own mini loan circle, with now-you giving and future-you on the other side of it receiving.

Money is not quite about happiness after all

Money really does not buy happiness and having it beyond a certain point creates less of what economists call utility.

  • The first million is exciting, the second not quite as much.
  • Twenty dollars to someone living on the street with nothing is worth far more in utility than a person that is making 100K per year, it has a lot more utility for the former than the latter.

A thought experiment is to pretend that you have 10x your financial resources, 10x in income and in the bank, just divide everything that you see the price of by 10 and think of that for a minute for a perspective of how it would feel. Then do the opposite. It’s like having a utilty-scope and gives you a sense of what it feels like to slide into different financial brackets.

But, money has it’s limits to buying happiness as we can see with falling utility as we have more of it. But, it ( having enough buffer ) does buy a way out of misery, which is just a word for a continuous never ending path of suffering. Savings is just money set aside to share with your future self.

It’s expensive to be poor

  • In central Nairobi water comes out of a tap. In a shanty town outside of Nairobi it gets delivered in plastic containers at 10 times the cost of the tap water and with much more inconvenience to use.
  • If you are too poor to have enough money in your banking account to cover a check that was written to you, you can go to the originating bank and cash it. In the past this was free and why not, the money is right there, isn’t it? Totally verifiable and available on the spot. Nowadays you can expect a service fee of $5 for the convenience of getting the check cashed.

These and worse examples of predatory lending like payday loans, subprime lending make access to money as a resource more difficult for the poor.

How much to save?

It depends, some say 6 months of your income. I’d take that further by looking at what the FIRE (Financial Independence Retire Early  ) movement does. Save 6 months worth of expenses as a start, but don’t stop there, get rid of debt, learn how to raise your savings rate and learn how to invest what you have saved. The more you have, the further you push out the gap between comfort and potential suffering for you and others around you. Aim for true financial independence. Something major breaks, a big expense, no problem. If in the end it’s become a large pile of fat stacks of cash that you don’t need all of, well you can pay it forward to do good for someone else, a reverse kye maybe. Plus, having money saved up gives you more options in a positive way, life changes, plans change, unforeseen opportunities arise and being there at the right place and the right time means nothing unless you have the resources, usually money,  to make the opportunity manifest into reality.

 

Precious Metal Accumulation and Distribution

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Precious Metal Exchanges

A few examples to get started with…

https://www.coinexchangeny.com
https://libertycoin.com/
https://www.jmbullion.com/

Resources

Silver Dragons

The Silver Dragons channel is about silver stacking, buying silver, silver investing, precious metals, gold investing and anything to do with silver or gold …
https://www.youtube.com/channel/UCucqfNRyBkieAop_LDUqHEg

Yankee Stacking

One New Englander trying to stack silver and gold the “Yankee Way”!Stack silver and gold to hedge against our debt-fueled, fiat currency-based economy that …
https://www.youtube.com/c/YankeeStacking

Tickers on Yahoo Finance, this is where the iPhone gets prices

SI=F Silver Futures next delivery period, close enough to the spot price.
GC=F Gold Futures next delivery period, close enough to the spot price.
DXY (DX-Y.NYB) Dollar Index, strength of the USD against a basket of other currencies, The six currencies included in the USDX are the Euro, Swiss franc, Japanese yen, Canadian dollar, British pound, and Swedish krona. When the dollar goes up, metals go down and vice versa.

Investing Basics

All of the basics of investing apply to not only gold and silver but in general, only this first idea is specific to gold and silver.

Do you buy gold, silver, both?

A general rule for investing that gives a short answer for Gold -v- Silver.

When the ratio of the Gold price divided by the Silver price is…
> 80 Buy Silver
60-80 Buy Both
< 60 Buy Gold
Some people will even pairs-trade (swap) between the two to accumulate more metal over time. As in when > 80 buy silver by selling gold. When < 60 buy gold by selling silver. 60-80 is a neutral zone do nothing.

DCA

The following applies to metals or any other long term investment.

You can’t always predict the right moment to move a large sum into or out of an investment.

For investing it is best to dollar cost average (DCA) in and out of a position. Buying and selling on a periodic basis helps accumulate and distribute at average reasonable prices over the long haul of time. This can be done weekly, monthly, quarterly. And it could be done by considering good prices to buy or sell at, with a buy lower and sell higher plan.

Buy Lower/Sell Higher

The following applies to metals or any other long term investment.

You can’t always pick the bottom or top of a market.

A simple rule is to buy when the price is lower than it has been in a while, buying a local low and the converse on highs. The concept can be used to improve upon the ‘blind’ DCA, buy on a regular periodic basis.
Looking back at the high or low from the past year, or market cycle works fine for picking a reasonable high and low point. Keep buying in small amounts when below a local low and selling small amounts when above ( preferably longer timeframe ) local high. It is not always worth trying to ‘time’ the tops and bottoms of the market as this is very tricky even for sophisticated traders.

Judging Value Simply

The following applies to metals or any other long term investment.

Is it a bargain or overpriced?

When starting out it in investing is hard to judge value, so a quick and easy to spot way is the best way to start to get thinking about value.

A reasonable rule is to use the midpoint between the last big high or low price and keep accumulating up to that midpoint. In this manner you can easily tell that you are buying ‘value’ and not buying the asset when it is overpriced. Then hold the asset until the appropriate market cycle which reaches beyond local highs, preferably higher than a previous high in the future and do the converse, slowly sell above the midpoint which should always be checked out to make sure it is in profitable range. It is easier to sell into a rising market as when the price hits a peak sometimes it can drop violently. Prices tend to fall faster than they rise.

Price Charts

How to view the price and a handy tool, the moving average of price.

Kitco among others has decent charts for metals that have moving averages on them as well. The moving averages are a tool that can help with trading and investing. They act as guides to see to position of the price relative to a slower,smoother version of the price, the average price. These charts can be used to help DCA in and out using the buy lower/sell higher, judging value simply or using the moving averages as described below to use a trading type strategy or to accumulate and distribute for long term investing.

Using charts as a  trading tool example

Moving averages can be used to follow a trend. When the price is above a moving average or even better, a short time average (like 14,30,60 days) is above a long average (200 days) there is an uptrend. It is possible to follow a trend by buying in when the short average crosses the long average and sell when the short average goes below the long average. This is an example of a ‘trade’, specifically a long trade or going long. Technically this is called a Dual Moving Average Crossover. This is just one simple example of many trading styles.

Using charts as a tool to accumulate and distribute example

Moving averages can be also used to accumulate and distribute by looking for lows that are worth DCA-ing in and out on. For example good buys would be in the zone where the following line up, ..

  • short moving average lower (try 30 or days- blue line on Kitco chart) than long moving average. 200 day, green line on Kitco chart), with price lower than both ( buy when 30 or 60 day average below 200, with price below both, blue line below green, with red price below both

This is like buying little nips at a time, buying mini-bottoms. The opposite can be done for distributing….

  •   ( sell when 30 or 60 day average above 200, with price above both, blue line above green, with red price above both ), unless you have a buy and hold forever plan.

https://www.kitco.com/charts/techcharts_gold.html

https://www.kitco.com/charts/techcharts_silver.html

JPEG image Metcalfe's Law BTC

Bitcoin Charting Resources for Long Term Investing

Info Links, Money, Trading, ,

“Good investing is not necessarily about making good decisions. It’s about consistently not screwing up.” – Morgan Housel author of The Psychology of Money

Accumulation/Distribution Aids

2 year moving average investor tool

https://www.lookintobitcoin.com/charts/bitcoin-investor-tool/

Puell Multiple, an oscillator, accumulate at bottoms, distribute at tops

https://www.lookintobitcoin.com/charts/puell-multiple/

MVRV Z-Score, an oscillator, accumulate at bottoms, distribute at tops

https://www.lookintobitcoin.com/charts/mvrv-zscore/

Pi cycle top indicator, finds tops…it actually worked again in 2021

https://www.lookintobitcoin.com/charts/pi-cycle-top-indicator/

Market Sentiment, fear and greed index…

Fear mode = Might be a buying opportunity, people are scared and dumping BTC probably at a loss to them in full panic mode, macro indicators are crashing, full panic, bank run on exchanges, major crisis crypto or otherwise…

Greed Mode = Look out, euphoria is happening, price may drop soon as BTC is in the news and suckers buying in late in the game pushing the price parabolic, like the old saying, ” Bulls run up the stairs only to jump out the window.”…

https://www.lookintobitcoin.com/charts/bitcoin-fear-and-greed-index/

HODL wave 1 year. BTC sitting on chain for more than a year, shows if people are accumulating or distributing

https://www.lookintobitcoin.com/charts/1-year-hodl-wave/

Realized Price, might be a good indicator of fair value for BTC.  A gauge of relative under/overvalue….

https://www.lookintobitcoin.com/charts/realized-price/

Wallet Sizes, who is holding large amounts of BTC, good to track the ‘smart money’, are they accumulating or distributing?

Wallet > 1 BTC

https://www.lookintobitcoin.com/charts/wallets-greater-than-1-btc/

Wallet > 10 BTC

https://www.lookintobitcoin.com/charts/wallets-greater-than-10-btc/

Wallet > 100 BTC

https://www.lookintobitcoin.com/charts/wallets-greater-than-100-btc/

Wallet > 1000 BTC

https://www.lookintobitcoin.com/charts/wallets-greater-than-1000-btc/

Look into Bitcoin, has many more charts…

https://www.lookintobitcoin.com/charts/

Mayer Multiple

Basically accumulate until it hits 2.4, then hold, sell at the top optionally, then when it drops below 1.5 start accumulating again.

https://bitcoinition.com/charts/mayer-multiple/

Metcalfe’s Law Model

This is a static chart, (don’t remember where it is from) would love to see this as a dynamic one. Seems to show a fair value for BTC. Paper on Metcalfe’s law and Bitcoin

Crypto Basics Notes

Trading, , ,

Having an ‘edge’ and surviving are two different things: the first requires the second. You need to avoid ruin. At all costs.” – Nassim Taleb

Class Slides

The following are the handmade slides from the class. Well all but the last one on valuation.

Resources

Here on this site

See the trading category on this site for more information on trading and investing on this site…

http://erick.heart-centered-living.org/trading/

On the Internet

Also, the following are resources that were mentioned in the class. Good places to start on the path to learning more about investing and crypto as well…

Subject: Game of Trades at 14:08:10, Mon Nov 15, 2021 from 192.168.1.66

https://www.youtube.com/c/GameofTrades

Subject: The Crypto Sniper at 14:05:40, Mon Nov 15, 2021 from 192.168.1.66

https://www.youtube.com/c/TheCryptoSniper

Subject: Brave New Coin at 14:04:54, Mon Nov 15, 2021 from 192.168.1.66

https://www.youtube.com/c/bravenewcoin

Subject: Josh Olszewicz at 14:03:59, Mon Nov 15, 2021 from 192.168.1.66

https://www.youtube.com/c/carpenoctom

Subject: ARK Invest at 14:02:21, Mon Nov 15, 2021 from 192.168.1.66

https://www.youtube.com/channel/UCK-zlnUfoDHzUwXcbddtnkg

Subject: Breaking Bad Fat Stacks at 13:45:44, Mon Nov 15, 2021 from 192.168.1.66

https://www.youtube.com/watch?v=48OJbbI0DfE

Subject: Electrum Wallet at 17:49:48, Sun Nov 14, 2021 from 192.168.1.66

https://electrum.org/#home

Subject: 1964 Prices at 11:14:49, Sun Nov 14, 2021 from 192.168.1.29

https://www.reference.com/history/much-did-everyday-items-cost-1964-cfba9fcd6734ea4f https://misterboomer.com/2014/04/boomers-and-the-cost-of-living-in-1964/ http://www.348-409.com/1964flash.html

Subject: Silver Coin Value Guide at 11:11:02, Sun Nov 14, 2021 from 192.168.1.29

https://www.coinflation.com/silver_coin_values.html

Sorelle Amore Finance

As far as finance, I agree with most of what she has to say…

Some Crazy Price Moves

A class on crypto would not be complete without showing some crazy price moves that are only possible in the crypto world.

AU-USD Prices to 3/2021

Opinions of Trading

My Thoughts, Trading, ,
There is too much hype an charlatanism out there waiting to mislead and take advantage of newbies, pushing a lot of nonsense. This is a quick post, stream of conciousness with some of my personal opinions.
Myself, I use several trading strategies, from mean reversion and gap buying algos running on a 5m tick tuned using genetic differential evolution, mid range day to week algos, trend and mean reverting, to manual trades that take weeks and to long term holds in a custom index fund that get added to over time. Personally for manual trading/investing if I had to choose one technique out of them all, Ichimoku would be the one. Daily/Weekly for most assets, gold and silver, Weekly/Monthly.

Trading and Investing in General

 It’s not for everyone and it’s not something to jump into blindly. Start very small, like 1% of your net worth, learn and then build up your position sizes slowly as a reward for success. Other than your ‘play’ money, while learning just buy and hold with the bulk of you invest able $. There is a lot more to it than charts and excitement when TSLA and DOGE climb. It’s more about psychology (See Elder Alexander and Morgan Housel)and risk management than anything. Forget about get rich quick and fast money, let it ride out for the long term. Day trading is not the place to start either. It is much to0 confusing for a beginner as to read signal (trend) in the noise of random price movements at low timeframes. Myself, I leave the low time frame stuff to algos, and mostly mean reversion works better than trend following with high noise at low time frames. To do algos, you need to know/learn code, well I might add, not just wing it. It’s not for everyone, depends on your skills and motivation to learn, math, physics, CS, engineering helps here. Briefly, just look at the edge cases, buy and hold and super quick trades. Super quick trades, noise, fees and slippage will eat your $ up. Plus, do you really want to sit in front of the computer watching 1,5,15m candles with a finger hovering on the mouse all day. That’s for machines to excel at, really. Buy and hold works and is super low maintenance, but in my opinion it can be easily improved on with a few small considerations. Use some basic moving averages, long ones, 1yr, 2, what ever makes sense on the major high and low cycles, then pick a multiple of this value not the time of the average, curve fit it to past data that is reasonable, DCA (Dollar Cost Average) in below the long base average, DCA out above the multiplier, like 5X the 730 day avg for BTC, for example. This helps get some more bang out of a plain buy and hold. The timing depends on how fast the asset moves. BTC, shorter cycles from peaks at about 3-5 years apart, think 2013,2018,2021 a 2 year MA works well and for the multiplier, look at the lows and highs and fit to them. Stocks, using an index like SPY, think of the last low, the real low, on March 9,2009, moves slower than BTC. But averages can be fit to the lows for a good DCA in. Gold, slower too. Look at an asset, see how long it took to 10x on a buy and hold hypothetically, that gives you a sense of the speed of assent. BTC does it in less than a year at times. Silver, just because, I know it off the top of my head was around $3 around 2003 and in 2011 it 10x’s that, a 1964 quarter was almost $0.25 in silver weight then, now it’s worth $4+ in Silver, so that’s it’s rate of change. Went on a bit of a tangent, hope this is helpful for someone.

Intro to Cryprocurrency

My Thoughts, , , , , ,

This post is a bit of a quick rant on the basics of cryptocurrencies (crypto) and is just my opinions and not any advice on investing. It started as a response to someone that was interested in learning a bit of the basics of cryptocurrency. Then I got on a roll and covered a bit of ground. It does not contain many references to sources as I was working from memory of information that I have seen or heard.

Pros and Cons

One of the cons with cryptocurrencies is wading through the charlatans and hype out there. Scammers too, malware that tries to copy your crypto addresses as you cut and paste them, always visually confirm and never leak your private addresses in an unsecured environment, they are your money. hype and nonsense out there also applies to trading, investing and mining it. Lots of pros to it. But, it all really depends what you want to do with it. The options typically center around trading,investing,mining it and using it as a payment method. I’ll work through the list a bit and build my case for crypto as I move along. Mining a coin such as ETH ,is not profitable for most people at the moment, Currently electricity and equipment costs factor into this heavily. However this may change in the future as ETH will be moved from a proof of work to a proof of stake model (a bit much to explain in this intro, but if you go to the site name for the creator of Bitcoin, Nakamoto.com, there is a whole intro to cryptocurrency series of posts there), with ETH 2.0, along with other changes. Using it as a payment method is getting simpler every day, there are numerous apps for it, Cash App and Coinbase for example.  PayPal and Venmo will be integrating crypto purchases into there systems.

Fundamentals

What is going on that may cause prices to rise

People in Europe that work on the underpinnings of the banking system that allows money to move around under the hood, kind of like our ACH system here in the US are working with the folks who developed the crypto called LINK. This has leaked out, I saw the presentation where the guy giving it slipped and said the name that LINK uses in it’s code instead of the secret project name that they were using to cover up LINK’s involvement. These projects are typically secret with NDA’s and all but, human error and a slip of the tongue can happen. The US Gov’t, Treasury Dept. has hired the person that developed the stable coin called USDC for Coinbase. He worked for a bank prior to Coinbase, the name I can’t remember, but there is a picture of him with 2 other co workers that now work in the Treasury Dept. so he was most likely hired because he was the lead in developing the USDC stable coin for Coinbase. A stable coin is a coin that attempts to stay in lockstep with a fiat currency. USDC is always $1, some others ary a little bit around $1, like a range a few pennies up and down at most. Examples are Tether and DAI. On top the Gov’t reserach into an electronic coin, there was initial language in the draft for the stimulus package that was removed that reference disbursing payments using electronic coins developed by the US Gov’t. I saw copies of this, it was interesting to see a reference to an electronic coin in a gov’t doc. Also, large banks are starting to work to become custodians for crypto currencies as well, they are entering into agreements with exchanges to be the custodians of large amount of crypto. BTC futures are traded on the Chicago exchange (Chicago Mercantile Exchange), something the big boys in the investment banks are interested in. There is something called BAKKT that the investment banks are working on, I forgot the details but, it relates to cryptocurrencies Why does this matter? This is all a big pro. Because governments adopting blockchain technology, Investment banks are starting to use crypto as an investment vehicle and considering being custodians of it and integrating blockchain tech into transactions. All of this validates it’s existence, which means only more growth in the future as people (investors really and end users eventually) realize it is not some kind of fad and a toy for tech hobbyists. Remember the curve of other tech. The first home computers were also “toys” and now we can’t live without (several of them, think phones too) them, the same will happen with crypto currencies in time. As far as investing in it. A big pro is that it is a new asset class in the world. Every time a new asset class comes into being it makes for a great investment opportunity as new asset classes don’t some along often.

Cryptocurrencies as Technology

Trading and Investing

Cryptocurrencies behave a lot like a new technology in that there is an exponential growth curve which is reflected in the price. ETH could be bought for around $10 in 2016-17 and today it is worth over $300 with recent highs above $400. Weekly time-frame Ichimoku chart has a target at $750 within the next year most likely. Trading and investing are similar but, two different animals. A con with trading in general that does not occur as easy with investing is that it is easy to lose money trading for a lot of reasons, as a beginner. Most of them have less to do with proficiency and the mechanics of trading and more to do with emotional factors, especially how we view money itself. The market it a brutal but honest teacher at times and it will teach you how to look at your belief system. And, it is always your fault when you lose, the market never lies, only we can lie to ourselves. In the beginning I wish I would have spent a bit more time learning this versus spending most of my allotted learning time on technical analysis. I have found quite a few good time tested resources on the trading topic if you are interested. Always start with a few hundred $ and work up slowly until the charts stop looking like just a bunch of lines and start to intuitively make sense and your heart no longer drops every time the prices go red. It’s as if you have to develop a Zen or Taoist attitude to the market. Start with something really simple for a trading rule and stick to it. The more simple and boring the better until you get experience. And, on a longer time frame, daily and weekly charts, not less than hourly charts to start. In the limit as time –> 0 the charts become just noise which can cause confusion at best. Crypto has much more volatility than many other asset classes, so more noise there too. Especially the small cap coins, up 100% one day, down the next and as usual it takes double the gain to make up for a loss of half, so losses mount fast in downward price shocks. BTC and ETH, being large cap are less volatile than the rest, about 3000 of them, some of which are a joke (literally DOGE and Siraj coin are memes) and really have no future at all, Big pro. Investing for the long haul is one of the easiest easy options to start that can even be combined with trading/active investing. One of the best methods to invest in an asset with exponential growth is to accumulate the asset when the price is below the 1 year to 2 year average price and then distribute out at a price that is a multiple (2,3,5) of the 1-2 year moving average. Golden Ratio Multiplier Chart. This is an almost foolproof way to actively invest and could be used to dollar cost average in at the best times. Feel free to reach out to me for any more and research. I would highly recommend listening the Lex Fridman podcast where he interviews Vitalik Buterin the co-creator of ETH to get a flavor of the mind of who is behind it.

Bull market 2009 to 2020

Trading Resources Books

Info Links, Trading, , , , , , , , , , , , , , ,

Speculation in stocks will never disappear. It isn’t desirable that it should. It cannot be checked by warnings as to its dangers. You cannot prevent people from guessing wrong no matter how able or how experienced they may be. Carefully laid plans will miscarry because the unexpected and even the unexpectable will happen. Disaster may come from a convulsion of nature or from the weather, from your own greed or from some man’s vanity; from fear or from uncontrolled hope. – Reminiscences of a Stock Operator


This post is a trading resource dump on books for trading 

I have some good books in the list. The ones that cover the psychological aspects of trading are worth the time to read if you have gotten past the basics of trading. It helps if you have traded a little at least to have some hands on experience with it. Best to start out with a few hundred dollars and build up the account as you get the hang of trading. Adding to the account slowly. I wish I had read these books  in the beginning, just when I was trying the first half dozen trades, at the same time that I was learning about the technical aspects of trading.

 

Subject: Road less traveled M. Scott Peck

https://www.apnamba.com/Ebooks-pdf/The%20Road%20Less%20Traveled.pdf

The first section on discipline is a good read for the psychology of trading. Think discipline in terms of trading.

Subject: Technical Analysis (TA) of financial markets John Murphy

Classic TA book. This along with Perry J. Kaufman’s book New Trading Systems and Methods will be good references for the nuts and bolts of trading.

http://194.145.209.129/bk/wp-content/uploads/2020/02/download.php?file=Technical-Analysis-of-the-Financial-Markets-8freebooks.net_.pdf

Subject: Another TA Book, Open Source

This book is a good reference book. It compiles a lot of information that is in the public domain, mostly via Wikipedia in one place. At the end of each chapter there are good notes, references and further reading. It is good to have this on hand when you want to look something up quick or for beginners to get an overview of technical analysis.

http://www.mrao.cam.ac.uk/~mph/Technical_Analysis.pdf

In the Markets: Confessions of a Samurai Trader Edward Alan Toppel

Worth a read, especially for anyone that has been exposed to Asian culture. It still makes sense if you’re not familiar with the culture but, if you are it’s going to be a deeper read.

Confessions of a Samurai Trader Ebook https://www.forexfactory.com/attachment.php/2566801?attachmentid=2566801&d=1510983772

Trading for a living by Elder Alexander

Very good, Elder Alexander is a Psychologist turned trader. He is also the inventor of the Triple Screen Trading System, which is outlined in the book.

This is in download PDF http://www.saham-indonesia.com/Ebooks/Technical%20Analysis/Elder%20Alexander%20-%20Trading%20For%20A%20Living.pdf

 Reminiscences of a Stock Operator Book by Edwin Lefèvre Zen

There is nothing like losing all you have in the world for teaching you what not to do. And when you know what not to do in order not to lose money, you begin to learn what to do in order to win. Did you get that? You begin to learn!

Very good, a must read! This book is supposedly handed out to new employees at Goldman Sachs to read as a first assignment. I can see why, it really is an eyeopener. It is a book I wished that I had read right in the beginning of starting to consider trading myself.

https://ia803009.us.archive.org/4/items/JesseLivermoreReminiscencesOfAStockOperator/Jesse%20Livermore%20Reminiscences%20Of%20A%20Stock%20Operator.pdf

General Economics and Investing

While not necessarily for trading, it’s helpful to have a broad selection of different types of knowledge in your latticework of the mind as Charlie Munger calls it. In case you didn’t know, Charlie Munger is Warren Buffet’s right hand man at Berkshire Hathaway.

Investing , the last liberal art by Robert G. Hagstrom

This table of contents is what got my attention with this book. I was a bit caught of guard at first with the topics and the connection they might make to investing. But, a short skim confirmed the author was right on target with all of the topics covered.

Table of Contents: Investing: The last Liberal Art
Table of Contents: Investing: The last Liberal Art

I didnInvesting, the last liberal art’t know what to think of this book when I first saw it. But, it’s different from most investing books in a good way. It’s more about building a mindset, a latticework in your mind to pull from to better think about investing. Clearly, knowing other subjects beyond economics and finance are helpful to have a background of general knowledge to be able to pull ideas from. For me, I agree as this has been my own experience. This book went from one that I was skeptical about to a favorite after a few chapters.Initially the chapter titles caught my attention, as they were unlike any ones that I have seen in other investing books.

 

Principles of Economics by Alfred Marshall

Originally from 1890, it’s a classic. It’s still used in some college curriculums today. This book can provide a background on economics. With trading, you need to be able to understand the view from above as well. Understanding how economics works provides a high altitude view from far above the landscape of fundamentals and technical analysis. It’s important to a least have some understanding of the bigger picture, a macro view of economics from the beginning when you trade.

This is the 8th edition of what is regarded to be the first “modern” economics textbook, leading in various editions from the 19th into the 20th century. The final 8th edition was Marshall’s most-used and most-cited.

http://files.libertyfund.org/files/1676/Marshall_0197_EBk_v6.0.pdf