Aloysius Chan's Blog

Key Fibonacci ratios: 1.618, 2.618, 4.236, 0.618, 0.382, 0.236 and 0.146. FIbonacci may be more effective to be used with cycle, Gann, moving average, Stochastic and RSI. Alternate retracement Ratio of cube to sphere: 91.1% & 52.3%. Congestive zone (difficult to break): 44.7% / 41.4%

Optimal trade What is it the state of the market? What is the volatility of the market? What is the equity being traded? What is the system or the trading orientation? What is the risk aversion of the trader or client? Types of error Type I error, also known as an error of the fi rst kind or a false negative, is the error of rejecting something that should have been accepted. Type II error, also known as an error of the second kind or a false positive, is the error of accepting something that should have been rejected. Expectations = Winning Percent x Average Winner - Losing Percent x Average Loser Top 10 hedge fund earners (2005) James Simons, Renaissance Technologies Corp.: $1.5 billion T. Boone Pickens, Jr., BP Capital Management: $1.4 billion George Soros, Soros Fund Management: $840 million Steven Cohen, SAC Capital Advisors: $550 million Paul Tudor Jones II, Tudor Investment Corp.: $500 million Edward Lampert, ESL Investments: $425 million Bruce Kovner, Caxton Associates: $400 mi...

Behaviours to avoid Lack of discipline Impatience No objectivity Greed Refuse to accept the truth Impulsive behaviour Inability to stay in the moment now Stay open-minded Avoid false-parallel

Chart days Wide-ranging day: volatility with events. Outside day: may expected reversal. Inside day: high and low fall within previou day. Continuation: triangles, flags, pennants, wedges. Rounded top/bottom: changed in market force, usually will have longer end. Episodic patterns In bull market: shock > stabilisation > congestion In bear market: shock > sell off > bounce > settle Some charting teehniques Dunnigan and the Thrust method One way formula Square root theory Nofri's congestion-phase system Fibonacci Tubbs' law of proportion DeMark's Sequential Donchian's 4-week rule: long when current price exceeds the previous 4-week high or short when it falls below the previous 4-week low. Using regression Least squares / Sinusoidal Linear correlation Multivariate approximations Autoregressive integrated moving average (ARIMA) Kalman filters Trend calculation Geometric moving average Kaufman's adaptive moving average Drop off effect Exponential smoothin...

Money is never lost in the market, it simply move from one trader to another. "Show me a guy with a system, and I'll show you a guy who is welcome in my casino." Bollinger Band with Kelter Channel: when BB came back to KC, time to trade. Typical setup EMA 8, 21, 200 Slow Stochastic 14, 3, 3 MACD 12, 26, 9 40 trading tips Trading is simple but not easy. No hope, focus on setup and stick to stops. Exit early if the direction is obviously going against yours. Trading is boring. Amateur become pro when they stop hunting for the holy grail technical indicator. You are against the other traders. Watch your emotions. Don't be too overly excited. Don't overtrade. Never have the idea of making big money from a trade. Focus on executing the trade and not the money. Focus on protecting your risk and not the money. Best risk management is not to trade, especially during uncertainty. You will be sharper trading less than more. Do not damage your capital, stick to stop and trad...

Vision Value hypothesis: a product or service really delivers value to customers once they are using it. Growth hypothesis: how new customers will discover a product or service. Customer Do consumers recognize that they have the problem you are trying to solve? If there was a solution, would they buy it? Would they buy it from us? Can we build a solutionfor that problem? Build-measure-learn feedback loop: ideas > build > produce > measure > data > learn. Genchi gembutsu by Toyota: go and see for yourself. 3 A's of metrics: actionable, assessible, auditable. Pivots catalog Zoom-in pivot: from single product to become whole product. Zoom-out pviot: from whole product to single product of a large product. Customer segment pivot: product solves problem for non-intented, non-original customer. Platform pivot: from application to platform and vice versa. Business architecture pivot: switch between high margin low volume or high volume and low margin. Value capture pivot: f...

Baker/baker paradox: people tend to remember the profession more than the person's name as it is more relevant. People only remember 7 digits plus, minus 2. To remember better, chuck or group them. The Major System by Johann Just Winkelmann: to convert strings to numbers for easier memory. Person-Action-Object (PAO) system: applying arbitrary images. You can't learn without memorising, you can't memorise without learning.