Investment Philosophy
Over the long-term, markets are driven primarily by fundamental forces. Corporate earnings, economic shifts and even demographics determine the ultimate direction of stock, bond and commodity prices. In time frames of less than one year, however, those same forces have much less impact. More technical factors, such as supply and demand, have a greater influence over whether prices will temporarily rise or fall within the context of the larger fundamentally-driven trends.
As prices make a prolonged move in one direction, there is a strong tendency for participants to expect that move to continue. In the case of the broader stock and bond markets, that tendency rarely persists as prices revert to a moving mean. The TTT Trading attempts to capitalize on those times when it becomes apparent that a mean-reversion is most likely to begin.
The tools we use for those determinations are primarily breadth and sentiment based. We use a collection of rigorously tested measures that have a history of successfully identifying periods of behavioral extremes, at which time we look to go the other way. This is a contrarian mindset, but that can get investors into trouble easily. Because of that, we take the overriding trend into consideration before trying to swim against the tide.
Historically, the very best buying opportunities arise when we observe conditions of excessive pessimism in an environment where the longer-term forces are driving prices up. The odds in this process are higher than average and when all factors are considered I believe that moves from 1 minute to 1 year can be forecasted.
Risk is our friend and that inequalities can be taken advantage of ...the small investor finally has a shot at beating the market with low commissions and technology!!!
Simple Rules we have
#1 Never go to bed with too large a position from a trading account to your IRA
#2 Emotions are a traders worst enemy , please be humble in victory and respectful in defeat...sometimes it does not go our way but we will work harder next trade.
#3 Cut your losses and let your winners run. Stops on stocks should be set 8% below purchase price and moved up if market conditions change or the stock rises...after a 10% gain...the trailing stop is put at 4% and then 2% as the run produces huge profits.
#4 Options are dangerous !!! The most dangerous items out there ..but also can make and create wealth beyond your wildest dreams...we use them as a last resort after we are convinced of a trend or move and want to buy options ONLY IN THE MONEY AND 3-24 MONTHS OUT ...for speculation and earnings plays we will buy early month and deep in the money.
#5 Futures are used for both profit and for protection ...make sure you establish a good relationship with your futures department at your brokerage or investment bank...they are your friends.
