Slow Trader

Tag: Managed Funds

  • Investing or Trading?

    Investing first:

    Investing is buying into something that appreciates. In stocks and shares, any price increase after about a year is 100% because of the fundamentals: the strength of the books, the management, the continued saleability of the underlying product….to mention a few.

    Most of us have investments in pensions or managed funds.

    Over a bunch of years the market goes up about 9% on average. However, somewhere between 7 to 15 years the market crashes. Timing is everything.

    Moreover, most pension and managed funds don’t beat the market, actually an astonishing 95% of them; on top of that, they charge several percent annually to do so.

    If we need our invested funds, 15 years before would be best, move it into something that is not market based, at least not ‘fundamentally’ based.

    Now for trading:

    Trading is generally over a shorter time frame and is mostly technical based: that is, the reaction of price when price reaches a support or resistance. In its simplest form, it is one person’s opinion (or computers) against another.

    And, as a computer does not have an opinion – it is of course emotionless – that presents the biggest obvious challenge to most human traders.

    Some 75% of trades are institutional based (the big money). The remainder is made up from other entities such as high frequency trading (HFT) systems, large hedge funds and the like. Smaller (professional) organisations and home traders represent less than 5% of the market.

    To be clear, when the (small) professional trader or home trader trades she is up against the institutions – computers mainly – so she better know her unemotional stuff.

    That is probably why few home based traders, particularly lower timeframe traders like day traders, make it. Cheery, eh.

    The one factor more than any responsible for successful trading is – no it’s not luck – is trade management, boring as that sounds. Good trade management always provides a positive traders equation of: risk, reward and probability.

    Without a clear calculation of each of these (and probability is often the one that is missed) then we are not trading but doing something else…gambling, maybe.

  • Hedge Funds Update

    We remain down:

    Sorry, that is how it is. How much down I’m going to keep to myself for a while. I know we’ll be even by the next report, 23rd February. After that, based on patterns, I say that we’ll be up 40% by 23rd April. And after that, until the annual report of Slow Trader Hedge we’ll gain a further 10%. (Ferrari Hedge started later and will fare slightly better).

    We will therefore have a total gain in Slow Trader Hedge of only 50%. Somewhat short of my double prediction.

    What went wrong? Encouragement from you possibly did it, and I have to say good natured encouragement at that. The problem was me. My inexperience of dealing with other peoples money. I tried too hard.

    I could have tried to edge some back over the early New Year but decided against it. When you take a hit, at least in the trading sense, its sometimes best to take a ‘review’ time out.

    Slow Trader and Ferrari Hedge, and my own funds, have been completely out of the market for a few weeks.

    We have only just trickled back in. Building slowly over the next few weeks as buy patterns present themselves and as my indicators suggest.

    I often knock the managed funds, because they fail most of the time. I still have no support for managed funds but I do now appreciate what they have to do. Unlike me, they have additional pressure from share holders, bosses etc; they cannot simply take time out to regroup.

    I continually read that 94% of people that do what I do fail to make the grade. In the case of managed funds, fail to beat the index – in my case, fail to stay profitable, or worse.

    I need to learn from this experience and do my thing – not the thing that is encouraged of me. If that makes sense!

    As a Slow Trader or Ferrari Hedge investor you have no downside this first investment year. Original invested amounts can be returned whenever wanted, and with no detriment to remaining investors.

    But over the next few months…. I think its going to be positively exciting.