Posts Tagged ‘Round Numbers’

Irrational Numbers: Price Clustering & Stop Losses

Irrational Numbers: Price Clustering & Stop Losses

Courtesy of Tim at The Psy-Fi Blog

Professor holding astronomical globe

Universal Number Theory

One of the odder things about the universe is that the small set of numbers that define its structure, the so-called universal constants, don’t seem to have any structure of their own. You’d have thought that whatever immortal deity breathed life into the whole shebang would have at least have bothered to make sure that reality was defined in simple integer values your average gameshow contestant could remember. Yet someone’s just calculated Pi to more decimal places than you can read in a lifetime. The universe is strangely irrational, it would seem.

More likely, however, is that the irrationality lies in our heads. If you look at the way we treat numbers for investment purposes it’s probably a good job the infinite cosmos is specified in irrational numbers, because if it were otherwise we’d probably have sold it to the lowest bidder eons ago. Humans, it seems, treat numbers as an approximation to reality, unlike reality, which treats humans as an approximation to nothing.

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That Friday 13th Feeling

Under standard economic theories one price should be much the same as another but all experienced practitioners know that this isn’t so – some numbers are much more likely to occur than others. Anyone with even a basic appreciation of behavioural psychology would expect no more or no less – people are as arbitrarily inconsistent about numbers as they are about everything else. In western culture, for instance, thirteen has acquired negative connotations to the point where many tower blocks omit the number from their floor numbering plans, presumably on the grounds that the universe can’t count. Beware, for fourteen is the new thirteen. Ha!

Despite the obvious irrationality of ascribing luck to a number many people are petrified of Fridays falling on the thirteenth of the month. Such is the human propensity to translate mental muddle into actual behavioural nonsense that it turns out that more accidents do occur on these days. So either there’s a malevolent demon tripping us up or our incipient fears are causing us to fall over our own feet. Mental confusion in our heads often turns into real problems in the real-world.

metallic zero

Round Number Attractions

It’s no surprise to find this numerological naughtiness feeding across into investment,…
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Eight Trading Superstitions

black cat

Every profession has its own idiosyncratic superstitions.  In honor of tomorrow being Friday the 13th, I thought this would be a good time to discuss this topic.

Actors performing MacBeth will refer to it only as “The Scottish Play” for fear of being crushed by a stagelight.  Sailors never set foot on a boat with their left foot first.  The baseball player is perhaps the most tormented by ritual, from tapping the bat on home plate to never stepping on a foul line to the prolonged use of a lucky bat or glove way past what its condition warrants.

Traders and investors have their own set of superstitions, and these can seem every bit as silly as those we see in other walks of life.  That said, trading superstitions are very tough to let go of, even for the most logical and circumspect of market players. 

Let’s look at a few of them:

Never Sell a Stock Crossing 90 – There is a widely held belief that you never sell a stock you own as it crosses $90 per share because they almost always go straight to $100.  This concept is demonstrably specious, but I know 20-year veterans who will never be convinced otherwise.   

The Maiden Sacrifice to the Volcano - In times of market turmoil or in the midst of a heavy sell-off, many portfolio managers and investors believe that they have to blow out one position to appease the market gods, tossing a maiden into the volcano so that the island will be spared the wrath.  This thinking is as primitive as you get, but sometimes it feels good to toss out some AK Steel on a down 200 point day only to see the market rally.  If this happens once or twice, logic aside, you will swear by it.

Options Expirations/ Triple Witchings - “Never buy or sell on the third Friday of the month which is when monthly stock options expire.  And no matter what you do, stay away from everything on the four Triple Witching days of the year, when stock option, stock index options and stock indexes futures all expire together.”  Obviously absurd, but deeply ingrained in many investors.

Don’t Go Back Into a Stock the Third Time – This is a variation on the old “sticking your hand


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Zero Hedge

How China Overtook The US As The World's Major Trading Partner

Courtesy of ZeroHedge View original post here.

How China Overtook The US As The World's Major Trading Partner

Authored by Iman Ghosh via VisualCapitalist.com,

In 2018, trade accounted for 59% of global GDP, up nearly 1.5 times since 1980.

Over this timeframe, international trade has transformed significantly - not just in terms of volume and composition, but also in terms of the countries that the rest of the world leans on for their mos...



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The Technical Traders

The Wuhan Wipeout - Could It Happen?

Courtesy of Technical Traders

News is traveling fast about the Corona Virus that originated in Wuhan, China. Two new confirmed cases in the US, one in Europe and hundreds in China. As we learn more about thispotential pandemic outbreak, we are learning that China did very little to contain this problem from the start. Now, quarantining two cities and trying to control the potential
outbreak, may become a futile effort.

In most of Asia, the Chinese New Year is already in full swing.  Hong Kong, China, Singapore, Malaysia, India and a host of other countries are already starting to celebrate the 7 to 10 day long New Year.  Millions of people have already traveled hundreds of thousands of miles to visit family...



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Phil's Favorites

Elites View The World Through "Market-Colored" Glasses

Courtesy of Lance Roberts via RealInvestmentAdvice.com

It is easy to suggest the economy is booming when your net worth is in the hundreds of millions, if not billions, of dollars, or when your business, and your net worth, directly benefit from surging asset prices. This was the consensus from the annual gaggle of the ultra-rich, politicians, and media stars in Davos, Switzerland this past week.

As J.P. Morgan Chase CEO Jamie Dimon told CNBC on Wednesday the stock market is in a “Goldilocks place.” 

Of course, it is when your bank receives an annual dividend from the Federal Reserve’s balance sheet expansion. This is...



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Kimble Charting Solutions

Bad News For Crude Oil Should Come From This Pattern, Says Joe Friday

Courtesy of Chris Kimble

It’s a good idea for investors to be aware of key indicators and inter-market relationships.

Perhaps it’s watching the US Dollar as an indicator for precious metals or emerging markets. Or watching interest rates for the economy. Experience, history, and relationships matter. And it’s good to simply add these to our tool-kit.

Today, we look at another relationship that has signaled numerous stock market tops and bottoms over the years, and especially the past several months, Crude Oil.

When crude oil tops or bottoms, it seems that ...



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Insider Scoop

5 Software-Application Stocks Moving In Thursday's After-Market Session

Courtesy of Benzinga

Gainers

Atlassian Corporation, Inc. (NASDAQ:TEAM) stock surged 9.7% to $145.50 during Thursday's after-market session. According to the most recent rating by Morgan Stanley, on January 13, the current rating is at Overweight.

Diebold Nixdorf, Inc. (NYSE:DBD) shares increased by 8.1% to $11.48. The most recent rating by DA Davidson, on December 13, is at Buy, with a price target of $17.00.

Telaria, Inc. (NYSE:TLRA) stock rose 4...



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Biotech

Snakes could be the original source of the new coronavirus outbreak in China

Reminder: We are available to chat with Members, comments are found below each post.

 

Snakes could be the original source of the new coronavirus outbreak in China

Chinese cobra (Naja atra) with hood spread. Briston/Wikimedia, CC BY-SA

Haitao Guo, University of Pittsburgh; Guangxiang “George” Luo, Univers...



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Chart School

RTT browsing latest..

Courtesy of Read the Ticker

Please review a collection of WWW browsing results. The information here is delayed by a few months, members get the most recent content.



Date Found: Monday, 16 September 2019, 05:22:48 PM

Click for popup. Clear your browser cache if image is not showing.


Comment: This chart says SP500 should go back to 2016 levels (overshoot will occur of course)



Date Found: Tuesday, 17 September 2019, 01:53:30 AM

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Comment: This would be HUGE...got gold!


...

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Members' Corner

The War on All Fact People

 

David Brin shares an excerpt from his new book on the relentless war against democracy and how we can fight back. You can also read the first, second and final chapters of Polemical Judo at David's blog Contrary Brin.

The War on All Fact People 

Excerpted from David Brin's new book, the beginning of chapter 5, Polemical Judo: Memes...



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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Digital Currencies

Cryptos Have Surged Since Soleimani Death, Bitcoin Tops $8,000

Courtesy of ZeroHedge View original post here.

Bitcoin is up over 15% since the assassination of Iran General Soleimani...

Source: Bloomberg

...topping $8,000 for the first time since before Thanksgiving...

Source: Bloomberg

Testing its key 100-day moving-average for the first time since October...

...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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