Your Questions About Successful Trading System

Richard asks…

Regarding Day Trading and Forex?

Background: Fundamentals, with an investing strategy out of the Graham playbook (by distressed, unloved or otherwise underpriced securities). Risk is minimized by having a margin of safety, higher upside than down, and by buying into companies that can be understood and predicted down the line.

However, finding a good opportunity tends to leave at least some cash floating around. Aside from dumping it into a placeholder stock like BRK.B, moneymarket, etc. I am interested in utilizing, to some small degree, daytrading.

Basically:
(1) How is risk managed in security day trading? Forex trading?

(2) Do the few successful traders operate by intuition or determinism?

(3) How wide of a scope to most traders take? Ten stocks? One hundred? All of them? Similarly, how wide of a scope do forex’ers employ?

(4) Is there a way to get a hold of raw market data, outside of the wacky software like eSignal, etc?

Please do not try and pitch a trading system. Thanks.

John answers:

Once you are able to learn the basics of online trading, you won’t need to ask for specific details like the ones you ask. You would know how to figure out the answers for yourself. And of course, be able to trade profitably on your own.

A Free Basic Hands-on Training is available at http://finance.groups.yahoo.com/group/currencytrader/.

Donna asks…

How successful had Bismarck been in bringing about the full unification of Germany by 1878?

Considering problems he faced and how he overcame them.
e.g- political unity, transport system, trade between states etc.

I’m stuck, so any help would be appreciated big time.

John answers:

He was not. Austria, Liechtenstein, Luxemburg (all part of the Deutsches Bund of 1814), and the German speaking cantons of Switzerland, remained outside his “Second Reich.” A German nationalist would also add (Friesian speaking) Heligoland, which the UK had seized from the Danish province of Slesvig in 1808, but which Germany claimed as part of that province which Prussia had annexed in 1863, and was incorporated in 1890 by the exchange for Zanzibar. Free trade between the German states had been achieved long before, by the Prussian-sponsored Zollverein of the 1830s.
Transport unity was important for military reasons. I am not sure whether the pre-1918 Reichsbahn included Bavaria, but if it did not, Bavarian independence was purely decorative, like its supposedly separate post office, which really meant no more than having its own post stamps.
The Reich was a federal state, and was more of a political unity than Germany had ever experienced before, but complete political unity (at the level of France or of the 1801-1922 United Kingdom) was only achieved under the Third Reich of 1933-1945.

Mary asks…

Why can’t carbon cap and trade be similarly successful to sulfur cap and trade?

The Clean Air Act Amendments of 1990 used a cap and trade system to reduce anthropogenic sulfur dioxide emissions. At the time, power companies predicted that reducing sulfur dioxide pollution would cost $1000-$1500 per ton, $51 billion to $91 billion a year, and electricity prices would increase up to 10% in many states. In fact, the actual pollution reduction cost has been between $100 and $200 per ton for most of the program, the legislation will cost only $31 billion next year, and electricity prices fell in most states.
http://energycommerce.house.gov/Press_111/20090616/dc_industryjobs.pdf

Moreover, EPA’s analysis of the costs and benefits of the Clean Air Act projects that in 2020 the benefits of the 1990 Clean Air Act Amendments will exceed the costs of compliance by a factor of 30 to 1. Studies by the Office of Management and Budget and private researchers support these conclusions as well.
http://blogs.edf.org/climate411/2010/12/02/there-they-go-again/

The same thing is happening with carbon – oil companies (and oil-funded right-wing think tanks) are claiming that carbon cap and trade will cripple the economy, while economists claim the economic impact will be minimal. Benefits of sulfur cap and trade exceeded costs by 30-to-1, so why can’t carbon cap and trade have similar success?

John answers:

I’m sure it would. The problem is that the Congressional Budget Office analysis “does not include the effects of other aspects of the bill, such as federal efforts to speed the development of new technologies and to increase energy efficiency … [or] the economic benefits and other benefits of the reduction in GHG emissions and the associated slowing of climate change.”

It’s interesting that they had such a high economic impact back then for sulfur trade and now it’s lower for carbon and 6 other gases. Now, the CBO estimates and annual cost of $22 billion to the economy until the year 2020. That would be about $175 to each household with those in the lower income receiving a net gain of $40 per year and the wealthiest a net cost of $245.

If they were to look into the other economic benefits, the outcome would likely be similar to that of the sulfur cap and trade. There are more than economic benefits that would come from the US using more renewable energy and using energy efficiency. The right-wing side certainly has the better media campaign. Just searching house.gov the first results that came up for “Cap and Trade Economic” were all from the right wing. I had to add CBO just to get something credible.

Charles asks…

What actions would you support to reduce carbon emissions?

Whether or not you’re an AGW ‘skeptic’, you have to admit that there are risks involved with emitting massive amounts of greenhouse gases into the atmosphere. And the reality is that at some point we’re going to take serious action to reduce carbon emissions. Plus oil is a limited resource concentrated heavily in politically unstable areas, and we should be trying to reduce our dependence on it. So I’m wondering precisely what measures people would be willing to accept.

So far political conservatives in the USA have rejected any market-based approach to reduce carbon emissions, and as a result we’re stuck with government (EPA) regulation. Republicans will no doubt attempt to eliminate the EPA’s ability to regulate greenhouse gases, but it’s not likely that they’ll be successful. Their best chance at success would be to pass a climate bill and replace EPA regulation with some sort of market-based system. So which of the following would you be willing to support, and why? Feel free to select multiple options, but state the one you most prefer.

1) Government regulation (i.e. EPA).
2) Market-based carbon cap and trade system
3) Carbon tax offset by reductions in other taxes
4) Heavy government investment in R&D and implementation of alternative fuel and energy technologies
5) Other

If you support #4, please specify where they money should come from. For example, should we implement a carbon tax but use the funds to invest in alternative technologies instead of reducing other taxes?
If you’re going to claim there is no risk then don’t bother to “answer” the question. I’m not interested in ignorant statements, I’m interested in the opinions of people who are capable of intelligent thought.

John answers:

4 is a shot in the dark and not likely to be useful. “Spend a bunch of money and hope.” How long has it taken for new energy technologies to come online in sufficient amounts in the past? How long do we have?

Globally, cap and trade seems to be the only sure-fire option for reduction, because it is verifiable to some degree. But it’s likely completely unrealistic to get that agreement anytime soon.

In the end, and it will make people howl, we need to make fossil fuel use more expensive. It’s the only way to reduce use. That doesn’t have to mean our energy bill is significantly more expensive though; it means we need to be prudent and efficient and make better use of renewable sources.

(I’ve cut my electricity use in half in the past year, much of it through simple actions that did not reduce my quality of life one bit. Electricity could have gone up by 2x, I’d have the same bill, and the environment would be that much cleaner.)

James Hansen had an interesting idea:

http://westcoastclimateequity.org/2010/12/22/climate-scientist-james-hansen-and-bill-mckibben-talk-together-about-dangerous-climate-change/

“The government must face the fact that fossil fuel use will not decline rapidly unless a rising fee is added to fossil fuels, a fee that should be collected from fossil fuel companies at the source before the first sale. Such a carbon fee will be passed on to consumers in the form of higher prices for fossil fuels. Therefore it is important that 100 percent of the collected funds be distributed to the public, preferably as a monthly “green check,” although the funds could be used in part to reduce taxes. This “fee and green check” approach would leave about 60 percent of the public receiving more from the green check than they would pay in increased energy prices. The objective is to reward people who reduce their carbon footprint and to stimulate the development of clean energies.”

It’s an interesting idea, but I’m no economist, and I have no idea if this is plausible or not.

Sandy asks…

Do you think a society that relies on bartering would be successful?

Imagine what modern society would be like if money was no longer in existence and we were forced to rely on trade to get what we want and need.

Would we feel morally obligated to help our neighbor obtain his needs, or would it be a dog-eat-dog world?

Would the bartering system bring us closer together or push us farther apart?

What do you think of money as it is used now? Is it the root of all evil?

Feel free to answer any or all of these questions. Thank you.

John answers:

The love of money is the root of all evil.

And bartering has its own problems. How often can you find a person that wants your services, – and has what you want at that particular time?

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