Warren Buffett – Daytrader

Warren Buffett Does Not Trade Trend by Boris Schlossberg. The other day I came across an article about Warren Buffett’s office. The writer catalogued in full detail all of the knick knacks that Buffett has in what was described as “the domain of a mid-level executive in a generic corporation.”.

Technical Analysis of the Currency Market:

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You have to wait till chapter 10 before you see something unique to the book. The other chapters are spent talking about what you can read up on most forex websites. Not exactly keen on Bollinger bands, so my interest was nil. If you are a complete beginner to forex, this book may be useful.. Many of the recent books on FX have been of such poor quality that I wonder where our priorities are.

Publishers, authors and readers seem to have lowered the bar both in terms of the quality of the presentation and in terms of rigor. Are we so impatient that we cannot wait until the text is proofed for errors or until the research is adequately validated and sourced?

Are we just lazy? This is the question on my mind as I finish Schlossberg's book. While it may be an achievement for him personally, it is unfinished and I suspect even he must agree. While I do acknowledge the paucity of books on the FX spot markets -- especially thorough and well written books -- there is no excuse for this one. The two concepts that stood out in this book, and the concepts the author seemed most eager to sell, were the scaling in approach and the Bollinger Band "bands.

You can learn all you need to know about Schlossberg's approach to both by reading his articles on Investopedia and MoneyTec. He published his article on "bands" more than two years go. The rest of his book is just filler You can, literally, find free and very well documented information on the internet that covers all 10 chapters! He also doesn't give credit where credit is due, presenting some concepts without ackowledging the debt owed to his intellectual benefactors and giving the impression I'm sure without realizing it that he is the originator.

This has also become popular in the industry -- taking credit when none is deserved. I won't name names. Specifically, the idea of Bollinger Band "bands" is not original. His only contribution is putting quotes around the "bands". I have personally been using them since , and I was taught by someone else who had been using them since You can find a more diverse discussion of them on any of the major FX forums, but you might have to dig a little.

But these are only my pet peeves. And I am peeved at the author a bit. He is, as he says, a currency strategist for FXCM. He has also referred to himself as a profesional trader in the past. But titles can mean anything these days and I am left wondering whether he really trades for a living.

All the speaking and seminar tours -- and he does a lot -- leave little time to actually trade consistently. On any time frame but the weekly and monthly. If you are not trading consistently, then you are simply not trading. And if you are writing about trading, then you had better be trading consistently yourself. Or retired from trading successfully. My doubts go further. The model he presents is statistically very dangerous and requires very precise entry and exit techniques in order to enable the risk model to work.

Beginning traders should simply not try this model and instead look for something that has a better reward to risk profile and that has more forgiving entry and exit tactics. He claims the countertrend trades on the Bollinger Band "bands" model he presents have a high probability of success.

This might be true, but traders must remember that he has provided little in the way of precise entry and exit rules and even less on the money and risk management side of the equation. And all of a few sentences on how to determine whether this style of trading is suitable for you. And since it is impossible that he is trading consistently, I wonder if he can really say with an acceptable measure of statistical certainty that his model has been or will be profitable over time.

He would probably be better off not disclosing this information for legal reasons, but acknowledging its importance and explaining its use would go a long way toward making the book credible.

If a new trader jumped in and started trading this model based on the information presented in the book, he or she would merely be "eyeballing it. He has not presented essential statistics to indicate that he employs the model profitably -- yet he gives the impression he is a profitable trader. In undertaking the exploration of any trading model, I have to know a few things first: Granted, Schlossberg's approach is discretionary and his focus is technical and so is mine , but the lack of any informaton on the measures above -- or their importance to formulating trading models -- has me worried.

Which brings me to a question similar to the first. Are we so impatient about the process of trading -- market research and model selection, self-assessment, and risk management -- that we can't wait to jump into the trade? If we are, I suspect we will all lose. And that is my rating for this book. Booker's claim that this is the only book one needs for technical analysis is pure rubbish.

They often speak together at FX expos and Booker himself is selling FX education courses and, in general, Rob's response to everything is "brilliant!

In addition to the above, the charts are poorly presented and some of the patterns, particularly the head and shoulders patterns, are not necessarily valid in the "classical" sense.

And the whole thing just feels like a series of previously published articles loosely strung together -- which is in fact what some of the chapters are. This book will not give you the skill you need to carve out a small but profitable niche in the global currency market.

At first glance there seems to nothing common between Warren Buffett and the chaotic frenzy of the day-trading world that I inhabit. But on closer inspection I realized that there are some striking similarities between the way Mr. Buffett approaches investing and the way I look at trading every day. Both of us try to stay away from risk as much as possible. In his latest letter to the shareholders, Buffett talks about the insurance business.

He states that it is not enough to just understand the risks involved in the transaction and to price that risk correctly. This I think is the core secret for all trading and investing success.

When you look at the way Mr. Because trading trend puts you at a disadvantage from the moment go. You are chasing price, you are following the crowd and that strategy only works if the wave continues to swell. But hurricanes are rare and most of the time the wave crests and you just crash into the rocky bottom of unforgiving ocean wondering what you did wrong.

Currency markets -- and for that matter all capital markets -- are just like the ocean. On a day to day basis prices crest and fall and rise again. Trading counter trend by no means guarantees success. In fact, if you do what most retail traders do, which is -- add to the position and trade without a stop -- you will most certainly go bankrupt.