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Avoiding Cognitive Biases In Trading

The following is part 2 of our 3-part psychology series. To read part 1, click here. On top of rampant emotions and a dire need to “fit in”, our biological evolution also had another side-effect. It made us lazy. Back in the day we were faced with an endless cycle of feast and famine. We’d have short periods of feeding followed by long periods of minimal sustenance living. So naturally we evolved to conserve our energy as much as possible. If given two options we’re conditioned to choose the one that involves the least amount of effort. This applies not […]

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Lessons From a Trading Great: Ray Dalio

Ray Dalio is the founder of Bridgewater. Two years ago, Bridgewater surpassed Soros’ Quantum fund for the title of most profitable hedge fund of all time; returning over $ 46 billion since inception. In your author’s humble opinion, Ray Dalio is one of the more original thinkers alive today. In the investing world he stands alone in his depth of understanding of how the “economic machine” works. His “principles” for life and management are like beautiful computer code designed to produce desired outcomes while stripping away the non-essential. The man is a philosophizing engineer taking apart and designing machines for […]

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Lessons from a Trading Great: Paul Tudor Jones (PTJ)

From Jack Schwager’s Market Wizards: October 1987 was a devastating month for most investors as the world stock markets witnessed a collapse that rivaled 1929. That same month, the Tudor Futures Fund, managed by Paul Tudor Jones, registered an incredible 62 percent return. Jones has always been a maverick trader. His trading style is unique and his performance is uncorrelated with other money managers. Perhaps most important, he has done what many thought impossible: combine five consecutive, triple-digit return years with very low equity retracements. (I am fudging slightly; in 1986, Paul’s fund realized only a 99.2 percent gain!) Jones […]

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Intuition In Trading And Investing: Can You Trust It?

Do you ever get that feeling that a certain trade will be huge? That you should size up on it and go for the jugular? You can’t exactly describe why this trade is the “one”, but you can definitely feel it. This feeling is what we call intuition. Now the question is… should you trust your intuition? Or is it just another feeling the market will abuse? Let’s find out. The Barking Up The Wrong Tree blog has a great article on intuition in which they introduce researcher Gary Klein. Klein has studied the use of intuition for over 30 […]

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Lessons From A Trading Great: Stanley Druckenmiller

The “greatest money making machine in history”, a man with “Jim Roger’s analytical ability, George Soros’ trading ability, and the stomach of a riverboat gambler” is how fund manager Scott Bessent describes Stanley Druckenmiller. That’s high praise, but if you look at Druckenmiller’s track record, you’ll find it’s well deserved. Druck averaged over 30% returns the last three decades — impressive. But what’s even more astonishing is the lack of volatility… the guy almost never loses. He never had a single down year and only had five losing quarters out of 120 altogether! That’s absolutely unheard of. And he did […]

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Lessons From A Trading Great: George Soros

Remember the scene from the 90’s classic, The Sandlot, where “Smalls” loses his father’s Babe Ruth autographed baseball to “The Beast” and the other kids question him in disbelief, saying: Smalls: I was gonna put the ball back. Squints: But it was signed by Babe Ruth! Smalls: Yeah, you keep telling me that! Who is she? Ham Porter: WHAT? WHAT? Kenny: The sultan of swat! Bertram: The king of crash! Timmy: The colossus of clout! Tommy: The colossus of clout! All: BABE RUTH! Ham Porter: THE GREAT BAMBINO! Smalls: Oh my god! You mean that’s the same guy? All: YES! […]

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Lessons from a Trading Great: Jesse Livermore

“Boy Wonder”, “Boy Plunger” and the “Great Bear of Wall St.” are a few of the monikers Jesse Livermore was known by. Livermore was immortalized in the trading classic Reminiscences of a Stock Operator by Edwin Lefevre — a book your author has read countless times over the years and still pulls new wisdom from with each revisit. Reminiscences has stood the test of time because it, more than any other book, explains the fundamental truths that lie at the heart of successful speculation. It’s no doubt a reflection of Livermore’s deep and intimate understanding of this great game. One […]

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Lessons From a Trading Great: Michael Marcus

Michael Marcus turned $ 30,000 into $ 80 million over a 20 year period — not too shabby. He was profiled in Schwager’s original classic Market Wizards, giving one of the more impressive interviews in a book filled with many. What many don’t know is that Marcus was also part of what has to be the most famous mentor/trader lineage in trading history. The names read like a trader hall of fame inductee list. The lineage began with Amos Hostetter, Founder of Commodity Corp and mentor to Ed Seykota (whom was also profiled in Market Wizards). Seykota then trained Marcus […]

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The 5 Best Books On Economic History For Global Macro Trading & Investing

If your goal is to become a master global macro trader or investor, then you need to become a devout student of economic history. The books below cover various episodes of credit driven speculation throughout history. Studying these instances will show you that humans tend to repeat similar periods of economic delusion time and time again. This knowledge will help you stand apart from the crowd and form profitable “smart contrarian” opinions that will put you ahead of the game. 1.  Ray Dalio’s “How The Economic Machine Works” Ray Dalio is the founder of Bridgewater Associates — the #1 most […]

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Desperately Poor Teens In America’s Impoverished Inner Cities Are Trading Sex For Food

When people get hungry enough, they will do just about anything for some food.  According to brand new research that was just released this week from Feeding America and the Urban Institute, there are millions of teenagers in America that live in “food insecure” households, and researchers were stunned to learn what some of these teens are willing to do to feed themselves.  Some resort to shoplifting, others deal drugs, and there were a surprising number of participants in the study that actually admitted to trading sex for food.  It wouldn’t be a shock to hear that these kinds of […]

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