Good Investing Lessons

I was watching the interview with Georege Soros by Google CEO and this sentence from George Soros and I was captured by this sentence. I think what he wanted to say was people don't make decision using information alone. When they make decisions, a lot of other things come in to interfere with the decision making. These things include emotions like fear, greed etc. Apart from that, people's anchoring causes them to be bias towards certain choices. In trading, it is very important to make sure we make decisions based on facts instead of emotions or intuitions. It is important that we do not let our emotions blind us the facts in front of us.

Risk Measurement (N) The trade size is determined by measuring the volatility using the Average True Range (N). Where N is the largest absolute value among the following: The distance from today’s high to today’s low The distance from yesterday’s close to today’s high The distance from yesterday’s close to today’s low Using Simple Moving Average of 15 sessions (SMA15) to determine the value. Setting Stops There are 2 ways in which we can set stops. One is to use 2N as guide to set stops. That means, for a stock where price is $8 and if N = $0.50, then, the stop will be $1.00 below the entry point. This is quite a large percentage of the entry price which will potentially resulting in large draw down. That may cause some sleeps. The second method is to use arbitrary support level and place 2 bits below the support. This method may result in too small stop and frequent stop out or the support may be too low that it may cause too much risk. I have come up with another method where you use