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Simit Patel's  Instablog

Simit Patel
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I'm a precious metals and energy investor as well as a currency trader who combines analysis of geopolitics, monetary economics, energy technology, innovation cycles, Internet technology, and technical price patterns to develop trading and investing outlooks. I trade/invest in all timeframes --... More
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My blog:
Forex Trading Journal
My book:
Wealth Management in the New World
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  • S&P Gearing Up to Test 137.50
    The S&P 500 has rallied sharply off the 200 MA, and is now above the 50 MA as well. I think the high reached in April at approximately 137.50 may be the next key battle on the S&P front. 

    Tags: SPY
    Jul 04 9:03 PM | Link | Comment!
  • Steve Blank and Ben Horowitz Debate the Bubble in Startup Technology IPOs
     The popular magazine The Economist has been running an online debate about whether or not there is a bubble in the startup technology sector, given the recent IPOs of LinkedIn, Pandora, Groupon's filing, and others seemingly in the works (Twitter, Zynga, Facebook). See the link below:

    The debate features Steve Blank, serial technology entrepreneur and teacher, and Ben Horowitz, venture capitalist who has made investments in many of the companies pointed to as having bubbly valuations -- implying their valuation will enjoy a parabolic rise followed by an ensuing crash. 

    I thought this would be worth mentioning and including here at InformedTrades, for those interested in studying bubbles. From the perspective of Austrian economics, the macroeconomic environment favors the condition of a bubble, as Quantitative Easing efforts have resulted in an increase in the US money supply (as expressed by M1, M2, and MZM from the Federal Reserve). The book Early Speculative Bubbles & Increases in the Supply of Money (pdf) elaborates on the correlation between money supply increase and the emergence of financial bubbles. 

    Regardless, though, I thought both Horowitz and Blank shared insight that would be useful for many traders, with Horowitz offering his take on technology cycles and valuation trends, while Blank offered a psychological assessment of a bubble, mapping out the participants in the bubble and their motives. 

    Click here to go to the debate on The Economist.
    Tags: LNKD, GRPN, P
    Jun 22 1:19 PM | Link | Comment!
  • Trading With Multi-timeframe Analysis
    Thus far in this series explaining my method of trading, I’ve outlined the key steps I take:

    1. First, forecast the flow of capital across the world based on Global Macroeconomic Analysis. This should give us an idea of the main global capital movements, and what markets will give us the best opportunities to execute trend-following strategies. 

    2. Once we have identified our target market via Global Macroeconomic Analysis, we can use technical analysis to employ High Loss Rate Strategies to control risk and optimize profits in this trend. Getting in the High Loss Rate mindset is vital to the successful execution of this strategy. 

    3. Then, we can conduct Lifestyle Integration to determine how trading fits into our life. This helps us get into the flow of trading, develop discipline, maintain psychological poise so that we can succeed in trading, and identify what timeframes we will be trading. 

    The next step is to carefully define your risk. 

    By carefully understanding our risk, we know exactly how much capital is being risked due to trading. This keeps our psychology and our accumulated wealth in much better condition.

    I prefer to start this process by thinking about my Lifestyle Integration, and what timeframes I can trade. I then setup a separate trading account for each specific timeframe. Currently, there are three timeframes I trade:
    • Weekly
    • Daily
    • Intraday (primarily 15 minute)
    Then, I decide how much I will risk per trade on each account. One of the primary benefits I’ve found via this approach is that it allows me to overcome the fear of missing out, one of The Four Fears, that I’ve found myself especially susceptible to on lower timeframes. 

    Below is my risk tolerance per trade for each account:
    • 1. On the weekly, I risk 4% per trade.
    • 2. On the daily, I risk 2% per trade.
    • 3. Intraday, I will risk 1% on trades placed on the hourly chart, and 0.5% on trades placed on the 15 minute timeframe.
    All of these accounts are equal in balance (this is in regards to trading; the bulk of my stored wealth is in physical gold and silver that is traded based primarily on the gold/silver ratio. Perhaps my next series! ). 

    Each account is related to my overall strategy in that my participation in one account affects decisions in the other accounts. I will get into the mechanics of order entry and exiting later when we delve into the technical analysis portion of this series. 
    Jun 21 3:50 PM | Link | Comment!
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  • chart analysis of $txn (texas instruments) triangle pattern forming, mkt consolidating
    Aug 12, 2010
  • coca cola chart ($ko); potential oppty to short at 59.40? if candlesticks confirm IMHO.
    Aug 11, 2010
  • hutrade shares intermarket analysis; concludes major reversals imminent. nice tech analysis here: $es $spy $dx $tlt
    Aug 11, 2010
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