How Is A Great Trader Made? Nature vs. Nurture
I have often talked to our TradersBlog visitors about one of my favorite authors, Linda Raschke. However, I just finished watching a seminar by a gentleman that was in an experimental trading group. I was so
interested in the idea of this experiment that I had to watch the whole thing.
In the early 80s, two men were in a debate about how great traders are made. Is it nature or nurture? Are great traders born with a natural intuition for economics, human psychology and self-discipline, or are great traders a product of intense education and practice? Out of this question emerged an experimental trading group called the “Turtles”. These people, with little to no trading experience were put through a vigorous training in trend following and then were provided funded accounts.
Out of this experimental group, Russell Sands was one of the first trainees. In this INO TV presentation, “I Am A Turtle,” Sands shares the lessons and methodologies that his professional trainers taught him. Sands was just one of the trainees that within a four year period aggregated a sum of over $100 million dollars.
It’s a great seminar and I hope you check it out. Send me any feedback you may have and stay tuned to INO TV for our next set of complimentary videos.
Lindsay Thompson
Director of New Business Development
INO.com
Traders Toolbox: Fibonacci - It’s all about the numbers
Fibonacci Number Series: The work in mathematics by a thirteenth century Italian has had a profound impact on modern man and has yielded a useful technical analysis tool. Born Leonardo of Piza, he is better known in the trading community as Fibonacci. Fibonacci’s best known work is Liber Abaci which is generally credited as having introduced the Arabic number system which we use today.
Fibonacci introduced a number sequence in Liber Abaci which is said to be a reflection of human nature. The series is as follows:1,1,2,3,5,8,13,21,34,55,89,144 and on to infinity. The series is arrived at by adding each number to the previous. For example, 1 plus 1 equals 2; 2 plus 1 equals 3; 3 plus 2 equals 5; 5 plus 3 equals 8; 8 plus 5 equals 13; and so on.
I use the Fibonacci series in a number of ways, in terms of both time and price movement. I will briefly discuss some basic time movements.
Watch a free video on Fibonacci.
The 13-week pattern in hogs is the simplest application of finding market turns based on a Fibonacci number. Markets will often turn on a time span which is a Fibonacci count from a previous important event. For example, look at the monthly cattle chart to see several turns on or about 21 months from a previous high or low.
Time counts can be done on virtually any type of chart. The turns can be counted in terms of days, weeks, months or even years. I have found weekly counts to be the most practical and very effective.
Another powerful method is to look for areas where Fibonacci time counts from various previous lows and highs converge.
In analyzing price action, the simplest way to use Fibonacci numbers (1,1,2,3,5,8,13,21,34,55,89,144…) is on support and resistance levels or pivot levels. For example: 5.00 and 8.00 soy- beans, 5.50 (55) soybeans, 3.00 corn, 500 gold, 5.00 silver, 1.44 oats, 34.00 hogs, 55.00 cattle, and so on.
Lengths of moves in terms of price commonly are a Fibonacci number. The down move on the weekly crude oil chart was $22, which was followed by a $13 rally. Livestock commonly move in increments of $5, $8 or $13. Grains like to move in 8<;, 13<t! and 21d; swings. Treasury bonds and Treasury bills often move in Fibonac- ci increments in terms of both time and price.
The most common application of Fibonacci numbers is the use of ratios within the number series. Many people do not realize that the common retracement levels are derivatives of Fibonacci relationships. Fifty percent is 1 - 2, 66% is 2 - 3 and thereafter, any number in the series divided by the next results in 62 %. Also, starting with 3, any number divided by the second number following it will result in 38% (3 - 8, 5 - 13, etc.).
