Your Guide to Prudent Investing and Market Advice
You will find a compendium of our market wisdom on this page – collected over more than three decades.
This compilation of market advice and trading insights should help you to make better and savvy investment decisions.
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Market and Trading Advice by Sniper Market Timing
Determine why you want to trade and which trading style/approach fits your personality and time commitments. Design a similar trading system that suits you and your beliefs about the financial markets to feel 100% confident and comfortable.
Your psychological makeup will have the most significant impact on your trading. Therefore, system development is a mental process. Evaluate your psychological makeup and limitations precisely. Set up a reliable system of self-control. (“One who knows his enemy is strong – one who knows himself is unbeatable” – Sun Tzu).
Be always skeptical about your ideas, creations, and results.
Be disciplined and remove your emotions during system design and the trading process. The most challenging task in speculation is not prediction but self-control, especially when a trade moves against you.
You cannot change what markets will do; therefore, you have to change yourself. The markets are expensive places to learn about yourself, but they are patient and consistent teachers.
Trading is a business, and trade losses are expenses.
Sometimes you lose even when you have applied your system correctly. If you have followed your strategy 100%, agonizing over a loss will reduce your discipline for that system. Your discipline will also be compromised if you get too excited about a profit when you did not follow your trading method. Therefore, celebrate whenever you follow your proven system – win or lose!
Do not get impulsive and either take trades that were not signaled by your system/methodology or not take trades that were indicated by your system/methodology.
Assess your current mental and physical condition before you begin each trading session because one key to successful trading is knowing yourself and your stress point. Be aware of your areas of emotional weakness.
Try visualization techniques and use your imagination like other peak performers.
At the end of each trading day, do a mental debriefing.
Your worst enemy is fear and greed. But also know your competition because trading is a zero-sum game, not taking trading costs into account.
Beware of large positions that can control your emotions. Don’t be overly aggressive with the market. Treat it gently by allowing your equity to grow steadily rather than in bursts.
Keep your trading expenses, such as commissions and slippage low. Your trading expenses are a function of order size, order type, trading frequency, time of day, the traded market, broker, and liquidity.
Use a trading plan. It will keep you focused on your goals and objectives. It should also include a measure of your discipline and consistency in applying your trading approach.
Understand why the system works and grasp the components of your system to develop the required confidence.
Always review your system and see if you can poke holes in your strategy.
Describe the system edge logically and straightforward.
Use only parameters and “predictors” with a positive expectation / statistical edge.
Use trend following systems to take advantage of the “fat tails” of the price distribution. You do not know where the market is going – so you follow it.
Use simple trading ideas to yield robust, consistent, and stable results.
“It does not matter whether the cat is white or black. As long as it can catch mice, it is a good cat.” – Dang Sui Ping – “Try the simple things first; simple things tend to do better than the complicated ones. That’s not surprising in a world that is extremely noisy and complex.” – J. Doyne Farmer
Always use sensitivity analysis on system parameters.
Be careful about “hidden” random entry and exits methods. Create random trading sequences and compare them to the out of sample-performance of your trading systems. Seek for trading results that are unlikely to occur just by random coin-flipping.
Performance and risk measures should be evenly distributed through time and to one another.
Do not use higher-order polynomials because they are notoriously bad for extrapolation.
Use non-correlated indicators and “predictors.”
Use only 2-3 parameters: one parameter for trend identification, one or two variables for entries and exits to reduce the risk of model overtraining and increase generalization. These systems will not perform exceptionally in backtesting, but they are much more likely to continue to profit in the future.
Use proper “out of sample”-testing: Consistency and proportionality between out-of-sample and in-sample results are valid indicators that “generalization” is working well.
Test your system over large data samples and various market types to get an “all-weather trading system”.
Graph your trade distribution and measure the skewness and the tail-behavior of the trade distribution.
Use clean data because system performance is mostly a function of noise in time series.
Only use parameters that are settled in the center of the flattest parameter space. Seek robust trading system parameter values where a broad range of the surrounding values have similar profitability to withstand market statistics shifts and handle unforeseen situations. It is easy to design a trading system on any historical dataset that makes money. Still, the future has the nasty habit of not perfectly mirroring the past. Therefore the best-performing parameter in the past will not necessarily be the most profitable in the future. So, it is almost impossible to know what the optimal parameter value for the future will be.
Utilize a portfolio of non-correlated sub-systems. Look at their signals and compute their correlation.
Look for consistent trade results and avoid equity spikes.
Do not link your success with trading success, especially with the outcome of specific trades.
Simplify and un-clutter your trading. “Less is more.”
Apply the “Occam razor” principle and tend towards simpler theories on financial markets with the fewest new assumptions. Assumptions always introduce possibilities for error.
Automate your trading.
Also, the “little stuff,” such as trading fees, can “kill” you. Limit and minimize your trading expenses.
Apply the same rules and guidelines no matter whether it is a bull market or a bear market because the psychology is the same, just the reverse. Hope is what drives the market on the upside, and fear drives it on the downside.
Fundamentals do not change rapidly – whereas perceptions do.
A lot of new businesses fail due to under-capitalization – many new traders fail for the same reason.
If your trading business plan calls for consistent annual returns on capital exceeding 20% – 30%, which puts you in the top hedge fund peer, it is probably overly aggressive and perhaps also unrealistic.
Sniper Market Timing is providing this website and its information for guidance and information purposes only. The information contained herein has been compiled from sources deemed reliable. It is accurate to the best of our knowledge and belief; however, Sniper Market Timing cannot assure its accuracy, completeness, and validity and be held liable for any errors or omissions. All information contained herein should be independently verified and confirmed. Sniper Market Timing does not accept any liability for any loss or damage howsoever caused in reliance upon such information. Reader agrees to indemnify and hold harmless Sniper Market Timing from and against any damages, costs, and expenses, including any fees, potentially resulting from the application of any of the information provided by Sniper Market Timing. The Sniper timing system has not been applied over a significant period in real trading. Recommendations made in the future may or may not equal or better the Sniper timing system’s performance as simulated by historical backtesting.
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