Interesting Study on Traders and Trading

[tsptalk]

Can you be taught to trade or is it an innate ability? How emotional do you get with gains and losses? Interesting ...

http://web.mit.edu/alo/www/Papers/lorepsteen4.pdf (http://web.mit.edu/alo/www/Papers/lorepsteen4.pdf)

[teknobucks]

check this out :

How to Make Money in Wall Street by Louis Rukeyser.

These are the ten indicators, each of which is reported each week as being “positive,” “neutral” or “negative”:
(1)An advance-decline index. Practically every technician uses some variant of this, which tots up how many stocks went up versus how many stocks went down. The result is a measure of the market’s “breadth” –and bad breadth stinks. If the averages are rising but breadth is declining, technicians will assume that the market is already beginning to deteriorate. They were right in 1961, 1966, and 1969-70, but wrong in 1963-64. Nobody’s perfect.
(2)A Dow Jones momentum ratio. This compares today’s Dow Jones Industrial Average with its longer-range trend to see if the index is getting ahead of or behind where it ought to be –and thereby indicating a possible turning point. (These trends are plotted in the form of “moving averages,” such as the “200-day moving average” that is often shown for a stock. Standard and Poor’s “Trendline” compiles such figures weekly by averaging the 30 most recent Thursday closing prices for each stock on its list. By comparing a stock’s actual performance with its 200-day moving average, the statistics are supposed to help you decide where the stock is going next. Sometimes they even do.)
(3)A New York Stock Exchange high-low index. This measures the number of new highs and new lows reported each day on the New York Stock Exchange, on the theory that any extreme one sidedness will signal a turning point. For example, five or fewer new lows suggest an intermediate top. This is based on the general theory that when everybody is tickled pink, it’s time to sell, and when everybody is scared to death, it’s time to buy. How’s your courage index this week?
(4) A market breadth indicator. Here we have a reinforcement of, and double check on, the first indicator. In this case, a ten-day moving average of the net advances or declines is employed. The idea is to measure the underlying strength of market moves by indicating whether or not most stocks are actually heading in the same direction as the market averages. (When the averages are going up, but your stocks are not, it can be a moving experience indeed.)
(5) An institutional block ratio. This one keeps track of the urgency of buying or selling by the big boys, who are also prone to hysteria. If close to three quarters of their purchases of 10,000 shares or more came at higher prices than the last previous trade, batten down the hatches.
(6)A low-price activity ratio. This is an indicator of speculative sentiment, the growth of which is supposed to signal the concluding stages of a rally. The ratio compares weekly volume in the Barron’s Low-Price Stock Index to volume in the seasoned blue chips of the Dow Jones Industrial Average. A neutral indication would be about 9 percent; 10-15 percent suggests an intermediate top is arriving.
(7) An odd-lot short sales ratio. Odd lots are trades of fewer than 100 shares; short sales are sales made on borrowed stock that the seller hopes to replace by buying the stock at a lower price in the future. These odd-lot short sellers are regarded as uninformed small investors. When they get active –thinking the market is going lower –technicians often assume the opposite. If the ratio of odd-lot short sales to all odd-lot sales runs as high as 1.5 percent or more, it’s taken as a highly bullish indication.
(8)A New York Stock Exchange specialist short-sale ratio. Here we have the reverse situation. The specialists who make the market in each individual stock are regarded as the most informed players in the game. Also, they are assigned to go against the tide –which, the technicians assume, is probably headed the wrong way anyhow. So when the specialists’ short selling increases, others get worried. If more than 60 percent of all short sales are made by specialists, it’s taken as a sign that an intermediate top has been reached. On the other hand, when the percentage gets below 45 percent, it indicates an intermediate bottom –and good news ahead.
(9)A weekly tabulation of advisory-service sentiment. Here is another example of the theory of contrary opinion at work. This one calculates how many of the leading advisory services are bearish –that is, negative abut the market’s prospects. The more, the better. The notion is that when advisory-service sentiment gets overly one sided, it is probably wrong –since these services tend, on the whole, to follow trends rather than anticipate changes in them. They do a terrific job of telling you where you’ve been.
(10)A bond-market indicator. In the belief that an improving bond market usually precedes an improving stock market, and that a declining bond market is an unfavorable portent for stocks, this keeps track of the recent strength of long term government bonds. A good sign, indicating higher stock prices ahead, would be a one- to two- month improvement taking the bond prices up at least two points.
When the difference between the number of indicators showing positive readings and the number negative is 5 or more (for example, 7 up, 1 neutral, 2 down; or, 1 up, 3 neutral, 6 down ), the index is thought to be clearly indicating a coming change in the market’s direction. (Remember that we are talking always of changes only in the market’s three- to six-month “intermediate” term –not in the market’s long range course.) A highly positive reading on the index would suggest that the market was “oversold” and about to rally; a heavily negative balance would indicate that buying excesses had set in and that a downturn should be expected.

[teknobucks]

always thought Mr. Rukeyserwas a bit strangeboth in his approach to the market and appearance (lol) . buthis contraian elves were right on the money most of the time.

tekno

[repleh]

Meditation May Help: Surprising Secret to Better Returns

(Analysis) Investors need to relax if they want to succeed, according to Andrew Lo's recent five-week study of the performance of 69 day traders.


http://www.investing-news.com/artman/publish/article_475.shtml


Couldn't get to the Andrew Lo site at mit.

-rep