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I received a good question from a listener, Alex: I was talking to a friend of mine (who is a physicist). ” I presented him with some market statistics that seem to hold true in many markets, e.g. that the market has only a low probability to hit yesterday’s high and low on any given day (10-15%, depending on the market). My friend argued that in order for a statistic to be significant, I’d have to test it on randomly generated market data. Only if the random data does not show the same tendency, a statistic can be thought of as showing a bias. Do you think that my friend is right? Are statistics only significant if randomly generated data does not show the same tendency? What if both, real historical data and random data show the same tendency? I’d love to hear your thoughts on this. Best, Alex” This podcast ended up being a bit more involved than most, but I hope you find it useful and entertaining! Here is a link to the academic paper I mentioned in the podcast. If you enjoy the podcast, one of the very best things you can do for me is to leave me a review on iTunes here. Also, if you like the music for this podcast, then be sure to check out Brian Ashley Jones, my friend, and a fantastic singer-songwriter. Enjoy the show:  

Just a quick podcast here to share some thoughts and ideas about tips–what’s wrong with stock tips? Why is it a bad idea to take trading tips from social media? What can you better? How can you take ideas and give yourself the best chance of success? The answers to these questions move us closer to developing a professional trading process. If you enjoy the podcast, one of the very best things you can do for me is to leave me a review on iTunes here. Also, if you like the music for this podcast, then be sure to check out Brian Ashley Jones, my friend, and a fantastic singer-songwriter. Enjoy the show:  

I received a great question from Jason: Mr Grimes, I need to ask you something. I have been watching your videos and I’m a little confused about one thing. On one of your examples, you showed a diagram of a collection of people making I believe 250 trades with a wining process. The diagram showed that a certain amount of people still lost money and you made a comment that winning and losing was random, even with a successful process. This information really made me take a week off to think “Do I really want to do this with my life?”.  I know the market is unpredictable but even with a process, risk management, and slight odds in my favor — I could still lose all my money even after 5 years of trading small like you recommend? Are you saying that winning and making money is completely random?  Thank you for clarifying this. This is a great question that every trader will grapple with, more than once, at some point in his career. I hope my answers in the podcast are entertaining and useful! I also want to link to a few resources that will help you dig deeper. Michael Mauboussin’s book The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing should be on your reading list. I also wrote a two blogs, here and here, that will give you a slightly different perspective. In particular, the second post has some ideas for managing your reactions to luck and for accepting the impact of luck in a constructive way into your trading process. If you enjoy the podcast, one of the very best things you can do for me is to leave me a review on iTunes here. Also, if you like the music for this podcast, then be sure to check out Brian Ashley Jones, my friend, and a fantastic singer-songwriter. Enjoy the show:

In this podcast, I look at some ideas for using stock screens well and successfully. We start by considering all of the possibilities and screens that are available, narrowing them down to the types that might truly help your trading. Going through a few points, we use the screens to narrow down the tradable universe to the candidates you wish to execute, and then think about how to put these ideas in context of your own, personal trading program. These are important points for traders of both stock indexes and individual stocks to consider. If you enjoy the podcast, one of the very best things you can do for me is to leave me a review on iTunes here. Also, if you like the music for this podcast, then be sure to check out Brian Ashley Jones, my friend, and a fantastic singer-songwriter. Enjoy the show:

In this podcast, I answer a few reader questions: From Tom: I’m definitely not a beginner. I consider myself intermediate, but always suffered from “I know nothing. Other market participants know more or know better” inferior-type thinking. How does one gain the appropriate confidence and conviction in their knowledge to execute trades? in other words, how does one have confidence in what they DO know through lots of hard study? From Tim: I was wondering how to do statistical studies on markets. This is a very basic question, but do you use excel or do them by hand or use something else? What software and tools do I need to do this well? From Omar: I am fully discretionary and my edge lies in being able to read the context of the market. The technical lens I use is…. I have been taking some free Python courses as I see the need and have the desire to “keep up with the times” in applying algorithmic trading to my method. The challenge I am seeing is that I don’t see a way yet of how I can put coding rules to the way I look at context and the way I use  [my tools]. Can you code methods such as this? I am told no by others, but told yes by those selling the Python course. Ideas, suggestions, point me in the right direction please? The answers to these questions might surprise you, and may give you some ideas to improve your own trading and process. If you enjoy the podcast, one of the very best things you can do for me is to leave me a review on iTunes here. Also, if you like the music for this podcast, then be sure to check out Brian Ashley Jones, my friend, and a fantastic singer-songwriter. Enjoy the show:

In this podcast, I cover a step by step plan that I’ve found to be very effective in fixing the problems traders face. Too many times, people waste time on trading plans that do not work. Too many times, traders do not understand their edge, or even know if they have one. Too many times, traders may have a good plan, but struggle to apply it in actual trading. This plan will fix all of those problems, if you’re willing to do the work. Along the way, we explore some of the issues of trading psychology and loss of efficiency in trading system design. If you enjoy the podcast, one of the very best things you can do for me is to leave me a review on iTunes here. Also, if you like the music for this podcast, then be sure to check out Brian Ashley Jones, my friend, and a fantastic singer-songwriter. Enjoy the show:

This episode kicks off a mini-series in which I work with a beginning trader to learn the very fundamentals of the business. We will cover method, psychology, risk, learning techniques, money management, and much more, and hopefully we will get to see Austin have some success along the way! Look for future udpates in this mini-series over the next few months. Here are the show notes: Where did the idea for this podcast come from? * A question from someone who doesn’t trade: How do you know for sure what a market is going to do? What will this podcast do? * Follow real beginner from very first steps * Reflect on the beginner’s questions and mistakes and misunderstandings * Present the course of study I give that beginner * Expect irregular updates Who is this podcast for? * Learners, at various stages * Experienced traders. There is great value in revisiting basics Teaching beginners * Chopin’s philosophy on beginners (and why he’s wrong!) * Best performers/athletes/etc not always best teachers/coaches * Beginner is a blank slate * Beginner has a lot of enthusiasm and energy. That’s a valuable resource * Also no bad habits. (That’s an even better resource) * Understand why beginners fail * False expectations Lesson One * Why is this hard to learn? * It’s not really about knowledge * It’s a skill. Skill must be transmitted or developed * Buying and selling for profit * Shorting * Everything we do is about probabilities * Math matters * Importance of managing anxiety, etc The trader’s questions: * What markets should I trade? * What is the best timeframe? * How much money can I make? * How should I get started? Assignments * Read from The New Market Wizards * Selected interviews with specific goals in mind * The Market Wizardom section. We will discuss * Read from The New Trading for a Living * Just explore the book * Find and track several markets * Write down daily prices * Investigate free interne

The podcast is back after a long break! Today, we dig into some of the conventional wisdom and common “soundbites” that are used. You’ve heard these, probably over and over: Only price pays. The trend is your friend. Ride your winners Never add to a losing trade Never let a winning trade turn into a loser No one ever went broke taking a profit You’re only as good as your last trade Each of these sayings (well, most of them) have a place and are exactly right for certain kinds of trading, but they are also wrong and maybe even dangerous. In this episode, I use these sayings and encourage us to think deeper about trading styles, markets, and what actually matters. If you enjoy the podcast, one of the very best things you can do for me is to leave me a review on iTunes here. Also, if you like the music for this podcast, then be sure to check out Brian Ashley Jones, my friend, and a fantastic singer-songwriter. Enjoy the show:

So much emphasis is placed on where to get into a trade, entry signals, entry patterns… but the decisions we make after we are in the trade are at least as important (and maybe far more important) for overall profitability. In this episode, I dig into some of the ideas, decisions, and tradeoffs that are involved in these decisions, and leave you with a few interesting ideas that might challenge you to look at the problem in some new ways. This podcast is a departure from recent episodes because it digs more deeply into details of trading topics, and is aimed at the developing trader who is well on his or her way to having a working trading plan. Here are the show notes: Trade management * What we do after we get into the trade * Maybe more important than entry to profitability * Entry * Exit * Position sizing * What to consider? * Initial stop * Initial target * Active management * Moving stop * Trailing stop * Moving target * Partial exits * At profit * At loss * Adding * As trade moves in your favor * As trade moves against you * Pyramiding (right and wrong) * Most important point is that every decision has a consequence. * Two interesting ideas: * Can you make money with random entries? * Work with a partner—divide and conquer If you enjoy the podcast, one of the very best things you can do for me is to leave me a review on iTunes here. Also, if you like the music for this podcast, then be sure to check out Brian Ashley Jones, my friend, and a fantastic singer-songwriter. Enjoy the show:

In this episode, I look at basic technical tools that anyone, regardless of background or previous experience, can use to enhance his or her trading program. Important concepts and tools are covered, along with some ideas for how to expand your learning and learn to do this yourself. Technicals vs Fundamentals * Frequency of data * Difference in intent (true value / behavior) * Both only address probabilities Biggest points * Consider learning to short * How do you size positions? * Technical factors force you to deal with the market as it is right now. * Be careful of indicators. Many of them measure the same thing. Trend * Many ways to measure trend/define trend * Three trends * Trend depends on timeframe * Your timeframe depends on who you are and how you invest * What does trend mean? * How to use trend? * Don’t fade a trend Overbought / Oversold * Rubber band concept * Statistically verifiable tendency * Stronger on some asset classes (stocks) * However, trends get more and more overbought/oversold * Some indicators measure this Price behaving badly * Price behavior shows emotion * Wide range bars * Gaps * Why are there gaps? * Extended thrusts Price rejection: where mistakes were made * Price “doesn’t want” to be there—quick snap back * What does this look like? * Tails on candles * Up/Down or Down/Up bar pairs with wide range How to get started? * Decide what tools to use and change them slowly * Write down prices * Chart by hand * Do research The link to the free trading course I mentioned is here . If you enjoy the podcast, one of the very best things you can do for me is to leave me a review on iTunes here. Also, if you like the music for this podcast, then be sure to check out Brian Ashley Jones, my friend, and a fantastic singer-songwriter. Enjoy the show: