Monday, November 3, 2014

Money Show 2014 - Patrick Ceresna

What Patrick Ceresna wanted to cover in this presentation are
  • Trading vs. Investing
  • Paper Profits vs. Real Returns
  • Psychology in Trading
  • Technical Techniques for Taking Profits
First he discussed trading vs investing. He thinks people like to do both, but he feels that they should chose. Traders and investors have different objectives. Investors commonly seek to profit from growth and inflation over the long term. Traders seek to profit from cycles and prices. Trading is not necessarily short term and not all traders are day traders. People need to choose what they are and this talk is about trading.

Paper profits vs real return was the next topic. This is talking about unrealized and realized gains. Unrealized gains only demonstrate value of an investment if theoretically it was liquidated. Realized gains involve dividends, option premium income and capital gains taken. A traders needs to change paper profits into cash to make money.

The next topic was psychology in trading. Traders tend to be passionately overconfident in their predictions. They will over estimates probabilities. People tend to stay with a trade that they are emotionally invested in.

There are solutions to this. You should develop a methodology. Makes rules for taking actions and do not make it up as you go along. You should learn to trade around your position. You should utilize options to define the risks. In learning to trade around a risk, say you had Apple (NASDAQ-AAPL) and it hit a certain predetermined price, then sell 100 of your 300 shares and take some profits.

Technical analysis is no holy grail. It is a tool to be used in combination with sound risk management. You need to identify trends, to identify support and resistance levels and also identify when the price is no longer confirming the sentiment.

You should use technical analysts to see when the stock has made a symmetrical move. This is when a stock seems to take two steps forward and one back and then consolidations. The stock then two steps forward and one step back and then consolidate. Say a stock raises $20 then consolidates and then it is up $20 and consolidates. This could be a time to sell some stock. This is a time to pay attention. It may be a time to make a move to at least keep some of the gain of the last rally.

This is not an exact science. The stock may just be making a short term high. However, it may be an ideal place to take some profit.

If a stock moves in a bell type curve, on the way up buyers are in control. At the top buyers and sellers (or bears and bulls) are equal. On the way down, then sellers (or bears) are control. There are not enough buyers. You need to make money when the stock is trending high. If a stock is stuck in a band you will not make money.

If there is a change in the trend, that is there is a change to a downward trend, then it is time to get out. Using moving averages will not get you out at the top. Say you own 1,000 shares of a stock. When a top occurs sell 500. At the bottom buy 500 so you are back to 1000 shares. Never get all out, but manage the trends.

Dow Chemical (NYSE-DOW) has had an uptrend for one and one half years so you need to recognize that the trend has changed and the bull trend has stopped. Emerson Electric Co. (NYSE-EMR) has changed from a bull trend to a bear trend and so it is time to sell some.

Do not try to manage all in or all out. This is too emotional.

Learn to trade Global with the National Bank. See their website or email this link This course cost $200.00.

On my other blog I am today writing about WiLan Inc. (TSX-WIN, NASDAQ-WILN) ... continue ...

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.

No comments:

Post a Comment