Would you get on a plane with a pilot who only managed to land 40% of the time? It may seem counterintuitive but that's exactly how some of the best share traders make money. Jason is the founder of Motion Trader, an algorithmic subscription-based trading tool which provides technical analysis to identify trends in the market. Jason uses technical analysis to help to identify trends - specifically moving averages.
Prior to founding Motion Traders Jason worked at Bankers Trust Australia in the Charting Department. This was where his appreciation of technical analysis was born.
Technical analysis can be as simple as a line on a chart showing the average closing price over a period of time. Or it can be a mind-blogging mess of patterns, clouds, pennants, triangles, pitchforks or flags. The degree of complexity is not important. It is about finding a process that offers repeatable success. There's some chart examples below in no particular order for information only.
Emotions in the market
Individual stocks don’t owe you anything. Getting emotional about a stock distorts objective critical evaluation. Holding onto a stock that is down in the hope you will eventually breakeven is often not the best strategy. Selling the loser may put your capital into a more productive investment, at the end of the day you always need to consider the opportunity cost of holding an investment.
What it really takes to come out ahead
When you go to a doctor you want them to be right one hundred percent of the time. That’s not how it works in the stock market. It’s not so much about how often you are right and how often you are wrong, it’s about how much money you make when you are right and minimising the amount you lose when you are wrong. A strategy which allows you to stay on and ride trends up while cutting losses when investments turn down can provide a degree of asymmetric risk. In this scenario your winners can outweigh your losers and it's possible to come out ahead.
Motion Trader is an algorithmic process which takes the investment thesis which Jason has developed and turned it into computer code. This allows Motion Trader to analyse the market quickly and efficiently each day looking for opportunities. These opportunities are emailed to subscribers each afternoon. Jason has set up a landing page for you to find out some more information.
Two Moving Averages
The company and/or guest has contributed to the costs associated with producing this episode of Shares for Beginners.
Shares for Beginners is for information and educational purposes only. It isn’t financial advice, and you shouldn’t buy or sell any investments based on what you’ve heard here. Any opinion or commentary is the view of the speaker only not Shares for Beginners. This podcast doesn’t replace professional advice regarding your personal financial needs, circumstances or current situation.
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