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There are many ways you can come up with a measure of how far apart stocks are. Here we've come up with a measure of stock distance that has the following properties:
You want to trade like they do on Wall St? Well sorry, unless you're friends with someone high up, like Henry Paulson, the former CEO of Goldman Sachs and the United States Secretary of the Treasury for George Bush, then you won't be able to. So if you make risky bets and win, he'll pat you on the back, if you lose, he'll give you a big fat bailout package. Wall St made upwards of a trillion dollars on the whole housing bubble by peddling crappy loans that they knew were just toxic.
You Want To Be A Millionaire? If you've looked through this website, we hope that you've learned something about the nature of the stock market, and who not to trust. Don't throw your money down the toilet to line the pockets of some charlatans. Think about the fundamentals of how investing works, and how there are millions of people that are trying to do the same thing. Money doesn't grow on trees. You may be a millionaire one day, but statistically, the chances are you won't.
Start lowering your risk with a stock portfolio. The obvious way to lower your risk to is to hold more than one stock. Suppose one of these was a company on Earth that makes socks. The other stock you own is for a company on the planet Bok in the constellation Xeka. They make socks too but for hands, feet, and their 100 other appendages as well. So you've got sock stock and bok stock (sounds a bit like Dr. Suess). The sock stock price goes up and down depending on various factors, but suppose it's controlled by if sandals are in fashion. That's bad news for socks.
What is volatility? Volatility is a measure of the risk of an investment. A highly volatile stock will be up one minute, down the next. In more technical terms, volatility measures the standard deviation of the returns of a stock.
Over the course of the day a stock will go up and down, in a random way. So over a long period there is an average drift in stocks, mostly in the upward direction, so it's goes up more than it goes down.
You've heard about how in China they use animals to warn them of big earthquakes, the innate instinct of animals are, ostensibly, suppose to be clued into the movements of the Earth's crust.
Well how about picking stocks using animal instincts? There's someone that has a dog that can beat the street easily. But it's not just dogs. Canaries, and cats can do quite well also. Does this sound like a joke? Or are you reading the ramblings of a bunch of loons?
Why don't we all just go invest in index funds? That's a very good question. The best answer might be: for the greater good. It's hard to be too altruistic when it comes to making money, but this might be one of the few cases where it makes sense.
The reason the market is so efficient is because investors are constantly looking for inefficiencies in it, capitalizing on new information, to turn a profit.
Why do you think so many trading sites say trading requires discipline? Does a dog have discipline. Well some have, but certainly not for trading, and they're no worse statistically then all those systems requiring discipline out there.
As an example, some sites say that you can't be too greedy. Just set your goal for what you want to make for the day, and then quit. You've got to have discipline not to continue on.