I have been a trader for about 14 years and in that time period I have seen many strategies fail because traders only have to have a couple losing trades in a row before they throw out the whole system and go back to trading on impulse. Once a trader gets into this situation, they tend to head in a downward spiral and quick. Our emotions tend to get people in at dead highs and then our emotions tend to get us out at the dead lows as we continually buy tops and sell bottoms out of impulse, panic and fear. It is this cycle that tends to happen over and over again. Additionally, this cycle WILL NEVER STOP.
The stock market (and all financial markets for that matter) naturally take advantage of and prey upon our human nature, especially when it comes to greed, hope and fear. The key is to remember that the biggest movements in the markets occur not when traders “feel like buying.” They occur because groups of traders (and machines programmed by humans) are all getting smoked at the same time and are forced out of a position. In reality, traders are not trading the stocks, futures or options. They are trading other traders. The very fine line that separates the profitable traders from the herd is that those that learn to be aware of the psychology and emotions behind the person taking the trade on the other side. The herd (or the average market participant) only understands their own side of the trade. The stronger minded traders (code for profitable trader) understands what’s happening on both sides and understands how to take advantage of human weakness, and therefore they are able to grind most others into the ground. In short, winners take money from losers. I know this may sound harsh but in a business or up, down or sideways, sometimes it just that basic.
Good skiers rarely worry about a route down a mountain. They just go, confident that they’ll react to changes in the trail as they come upon them. It’s the same thing in trading: Traders have to have the confidence in their technique. That’s the beauty of mustering the right mindset before a trader starts the day. This enables you to feel like a good skier, nice and relaxed for the next unexpected turn.
Monday, January 23, 2012
Trading Anatomy
Done with trading today, for the understanding in layman's term about trading will show a simple trading setup.
I will term this post as Trading Anatomy.
For starters, trading needs time or possibly years to make it but I will just show a simple setup how trading is being done the way I understand based from my own education.
Remember trading is solely based from your own way and there are may ways (thousands of them) to make a trade.
The important is how to make a trade profitably, anyway you want it...anyway you do it as long as you make money, that's all you cares.
It's simple but it's not easy!
Will show an etf instrument, the DIA, it's the etf for the Dow Jones that comprises the 30 main companies of the US (these are the big companies that moves the US economy like the GE, 3M, HP, MSFT and all those well known companies).
For starters, etf's are sure way to trade as compared with the individual stocks because etf's are group of companies stocks relative to their company structure.
But before you can trade of course you have to open an account but before you have to open an account you need time to study the market.
It's like going to a school or a college to get a degree but will skip that portion.
What we are after for is the setup in trading, how to make a trade.
So in this chart I am showing, the market opens daily 9:30 am. Eastern Time (New York, I live in the East Coast that's why I have to wake up early, 6:30 am. PT.)
In the market you can make money whether the market is going up or going down so you cannot lose as long as you know what you are doing.
They call it the "short trade" if the market is going down, and the "long trade" if the market is going up.
In this chart we are going to short the market because it is going down (by just looking at it).
For a start, sell (short, top arrow) 10 shares at 127.25 (we'll cover the buy/sell stop from next post).
And exit the trade (buy back (cover), bottom arrow) at 126.50.
The difference of $0.75 cents per share, that's a profit of $7.50 for 10 shares (if you trade 100 shares that's $75.00 in just a few minutes/hours, how about 500 shares?) Enough to trade than to work per hour isn't it?
This is a short trade, we borrow from the broker to sell it to the unsuspecting trader (who doesn't know what he is doing, we tricked him), we call it sell high, sell lower, the difference is ours. See how these traders/investors make money from the public, that's why lots of people are mad with the Wall Streeters, their secret are now being exposed? That's not our business, ours is to make money anyway.
It's simple to trade but it's not easy, need years to learn or master it.
Easier said than done, but it's not impossible to do it. It's just a matter of persistence and having a goal.
I will term this post as Trading Anatomy.
For starters, trading needs time or possibly years to make it but I will just show a simple setup how trading is being done the way I understand based from my own education.
Remember trading is solely based from your own way and there are may ways (thousands of them) to make a trade.
The important is how to make a trade profitably, anyway you want it...anyway you do it as long as you make money, that's all you cares.
It's simple but it's not easy!
Will show an etf instrument, the DIA, it's the etf for the Dow Jones that comprises the 30 main companies of the US (these are the big companies that moves the US economy like the GE, 3M, HP, MSFT and all those well known companies).
For starters, etf's are sure way to trade as compared with the individual stocks because etf's are group of companies stocks relative to their company structure.
But before you can trade of course you have to open an account but before you have to open an account you need time to study the market.
It's like going to a school or a college to get a degree but will skip that portion.
What we are after for is the setup in trading, how to make a trade.
So in this chart I am showing, the market opens daily 9:30 am. Eastern Time (New York, I live in the East Coast that's why I have to wake up early, 6:30 am. PT.)
They call it the "short trade" if the market is going down, and the "long trade" if the market is going up.
In this chart we are going to short the market because it is going down (by just looking at it).
For a start, sell (short, top arrow) 10 shares at 127.25 (we'll cover the buy/sell stop from next post).
And exit the trade (buy back (cover), bottom arrow) at 126.50.
The difference of $0.75 cents per share, that's a profit of $7.50 for 10 shares (if you trade 100 shares that's $75.00 in just a few minutes/hours, how about 500 shares?) Enough to trade than to work per hour isn't it?
This is a short trade, we borrow from the broker to sell it to the unsuspecting trader (who doesn't know what he is doing, we tricked him), we call it sell high, sell lower, the difference is ours. See how these traders/investors make money from the public, that's why lots of people are mad with the Wall Streeters, their secret are now being exposed? That's not our business, ours is to make money anyway.
It's simple to trade but it's not easy, need years to learn or master it.
Easier said than done, but it's not impossible to do it. It's just a matter of persistence and having a goal.
Sunday, January 22, 2012
How to Succeed Against the Odds
Always look at the big picture in the economy and in your industry. What may be coming down the pike that will affect your industry? What indicators in economy could trickle down into what you’re doing? Take note of these possibilities and plan and prepare ahead.
Make sure not get bogged down. It’s important to create efficiencies, processes, and systems to get and keep yourself out of the rut. Don’t ever be afraid to take a step back to do this. Things may pile up in the short term but if you find solutions and work on the problem by building efficiencies into your business you will have the time to dedicate to other, more critical initiatives. Entrepreneurs who get bogged down in the daily requirements of their business often believe that there isn’t a solution. There are always solutions ; the real problem is that you don’t want to take the time to fix the problem. Stop. Fix it. Execute the solution. There may be a little bit of pain at first but will provide for long term success.
Don’t work on the day-to-day, month-to-month, or even year-to-year. If you want to be viable you can’t afford to think only of the short term. Have a long-term strategy and vision and build contingencies for the “what ifs”. Dedicate money in your budget toward initiatives that will work toward long term strategies. Pay attention to the big picture; don’t get blindsided.
After any setback, always review the circumstances and look for lessons. Ask yourself, and your team, a series of questions to gain perspective. Learn from failures, fail your way into success. Ask questions like, What did we do right? What did we do wrong? How could we have done it differently? After you identify the critical components put the exercise away, learn from the experience, get over the challenge and move forward.
Take calculated risks. Evaluate your decisions by looking at the cost vs. benefit. Make sure that your assumptions are grounded in reality and fact. Look at rewards and benefits; surround yourself with the right people to get the job done. Plan ahead and keep your risks in check mitigating them along the way. Don't get paralyzed in the analysis; be decisive. Do this and the probability of success goes up dramatically.
Trust yourself and apply a strong work ethic. More than you realize is within your control when you believe in yourself and work hard. Trust is a big factor in the decision- making process, as is your willingness to take risk. It’s also important to surround yourself with people who are smarter than you; people you can trust.
Create multiple revenue streams to build a strong revenue model. Look at larger, more successful companies in your industry. Evaluate how those organizations would succeed if and when anything changes in the economic environment. What fuels their growth? Study their revenue models and, if you find a stable one, improve upon it and build your own.
Perform due diligence in hiring employees. Interview your candidates thoroughly, check references, spend time getting to know them on a personal level. Also ask your team for input. Before considering anyone for partnership, make sure they prove themselves and always have an out.
Be cautious about partnerships. People often bring in partners because they don’t trust themselves to do it on their own. Once you bring in a partner you’ve created a marriage in a sense. Be careful because this is hard to undo. Protect yourself legally and never give away too much when your bring people on board. Also, be very careful about creating partnerships with family and close friends - these often do not work very well. Only introduce a partner into the picture if you have to and never conduct business on a handshake; avoid ambiguity in these business relationships; ambiguity will cause conflict down the road.
From Inc.com
Make sure not get bogged down. It’s important to create efficiencies, processes, and systems to get and keep yourself out of the rut. Don’t ever be afraid to take a step back to do this. Things may pile up in the short term but if you find solutions and work on the problem by building efficiencies into your business you will have the time to dedicate to other, more critical initiatives. Entrepreneurs who get bogged down in the daily requirements of their business often believe that there isn’t a solution. There are always solutions ; the real problem is that you don’t want to take the time to fix the problem. Stop. Fix it. Execute the solution. There may be a little bit of pain at first but will provide for long term success.
Don’t work on the day-to-day, month-to-month, or even year-to-year. If you want to be viable you can’t afford to think only of the short term. Have a long-term strategy and vision and build contingencies for the “what ifs”. Dedicate money in your budget toward initiatives that will work toward long term strategies. Pay attention to the big picture; don’t get blindsided.
After any setback, always review the circumstances and look for lessons. Ask yourself, and your team, a series of questions to gain perspective. Learn from failures, fail your way into success. Ask questions like, What did we do right? What did we do wrong? How could we have done it differently? After you identify the critical components put the exercise away, learn from the experience, get over the challenge and move forward.
Take calculated risks. Evaluate your decisions by looking at the cost vs. benefit. Make sure that your assumptions are grounded in reality and fact. Look at rewards and benefits; surround yourself with the right people to get the job done. Plan ahead and keep your risks in check mitigating them along the way. Don't get paralyzed in the analysis; be decisive. Do this and the probability of success goes up dramatically.
Trust yourself and apply a strong work ethic. More than you realize is within your control when you believe in yourself and work hard. Trust is a big factor in the decision- making process, as is your willingness to take risk. It’s also important to surround yourself with people who are smarter than you; people you can trust.
Create multiple revenue streams to build a strong revenue model. Look at larger, more successful companies in your industry. Evaluate how those organizations would succeed if and when anything changes in the economic environment. What fuels their growth? Study their revenue models and, if you find a stable one, improve upon it and build your own.
Perform due diligence in hiring employees. Interview your candidates thoroughly, check references, spend time getting to know them on a personal level. Also ask your team for input. Before considering anyone for partnership, make sure they prove themselves and always have an out.
Be cautious about partnerships. People often bring in partners because they don’t trust themselves to do it on their own. Once you bring in a partner you’ve created a marriage in a sense. Be careful because this is hard to undo. Protect yourself legally and never give away too much when your bring people on board. Also, be very careful about creating partnerships with family and close friends - these often do not work very well. Only introduce a partner into the picture if you have to and never conduct business on a handshake; avoid ambiguity in these business relationships; ambiguity will cause conflict down the road.
From Inc.com
Friday, January 20, 2012
TRADING OUTLET QUOTE:
"Without passion, don't waste your time or your money because you will lose both.You must love to walk, talk, think, and study the market theory if you will develop as a successful trader. What you feed your mind, and how often, will mold your attitude of the market. But it all starts with passion, not greed."
"Without passion, don't waste your time or your money because you will lose both.You must love to walk, talk, think, and study the market theory if you will develop as a successful trader. What you feed your mind, and how often, will mold your attitude of the market. But it all starts with passion, not greed."
The market (YM Dow) made a nice move upwards today as compared with the other market core index.
Nasdaq and the S&P were quite choppy, maybe because most traders trade these two instrument regularly.
Unlike the Dow (YM) which is not often traded by many.
That's why I prefer to trade the (YM) than the other two.
Nasdaq and the S&P were quite choppy, maybe because most traders trade these two instrument regularly.
Unlike the Dow (YM) which is not often traded by many.
That's why I prefer to trade the (YM) than the other two.
Understanding The Ticker Tape
You've seen them on business programs or financial news networks: a flashing
series of baffling letters, arrows and numbers scrolling along the bottom of
your TV screen. While many people simply block out the ticker tape, others use
it to stay on top of market sentiment and track the activity of certain stocks.
What exactly is that cryptic script reeling by? It obviously tells us something
about stocks and the markets, but how does one understand the ticker tape and
use it to his or her advantage?
Brief History
Firstly, a tick is any movement, up or down, however small, in the price of a security. Hence, a ticker tape automatically records each transaction that occurs on the exchange floor, including trading volume, onto a narrow strip of paper or tape.
The first ticker tape was developed in 1867, following the advent of the telegraph machine, which allowed for information to be printed in easy-to-read scripts. During the late 19th century, most brokers who traded at the New York Stock Exchange (NYSE) kept an office near it to ensure they were getting a steady supply of the tape and thus the most recent transaction figures of stocks. These latest quotes were delivered by messengers, or "pad shovers," who ran a circuit between the trading floor and brokers' offices. The shorter the distance between the trading floor and the brokerage, the more up-to-date the quotes were.
Ticker-tape machines introduced in 1930 and 1964 were twice as fast as their predecessors, but they still had about a 15 to 20 minute delay between the time of a transaction and the time it was recorded. It wasn't until 1996 that a real-time electronic ticker was launched. It is these up-to-the-minute transaction figures - namely price and volume - that we see today on TV news shows, financial wires and websites; while the actual tape has been done away with, it has retained the name.
Due to the nature of the markets, investors from all corners of the globe are trading a variety of stocks in different lots and blocks at any given time. Therefore what you see one minute on a ticker could change the next, particularly for those stocks with high trading volume, and it could be some time before you see your ticker symbol appear again with the latest trading activity.
Reading the Ticker Tape
Here's an example of a quote shown on a typical ticker tape:
Throughout the trading day, these quotes will continually scroll across the screen of financial channels or wires, showing current, or slightly delayed, data . In most cases the ticker will quote only stocks of one exchange, but it is common to see the numbers of two exchanges scrolling across the screen.
You can tell where a stock trades by looking at the number of letters in the stock symbol. If the symbol has three letters, the stock likely trades on the NYSE or American Stock Exchange (AMEX). A four-letter symbol indicates the stock likely trades on the Nasdaq. Some Nasdaq stocks have five letters, which usually means the stock is foreign. This is designated by an 'F' or 'Y' at the end of the stock symbol.
On many tickers, colors are also used to indicate how the stock is trading. Here is the color scheme most TV networks use:
Before 2001, stocks were quoted as a fraction, but with the emergence of decimalization all stocks on the NYSE and Nasdaq trade as decimals. The advantage to investors and traders is that decimalization allows investors to enter orders to the penny (as opposed to fractions like 1/16).
Which Quotes Get Priority?
There are literally millions of trades executed on more than 10,000 different stocks each and every day. As you can imagine, it's impossible to report every single trade on the ticker tape. Quotes are selected according to several factors, including the stocks' volume, price change, how widely they are held and if there is significant news surrounding the companies.
For example, a stock that trades 10 million shares a day will appear more times on the ticker tape than a small stock that trades 50,000 shares a day. Or if a smaller company not usually featured on the ticker has some ground-breaking news, it will likely be added to the ticker. The only times the quotes are shown in predetermined order are before the trading day starts and after it has finished. At those times, the ticker simply displays the last quote for all stocks in alphabetical order.
The Bottom Line
Constantly watching a ticker tape is not the best way to stay informed about the markets, but many believe it can provide some insight. Tick indicators are used to easily identify those stocks whose last trade was either an uptick or a downtick. This is used as an indicator of market sentiment for determining the market's trend.
So next time you're watching TV or surfing a website with a ticker, you'll understand what all those numbers and symbols scrolling across your screen really mean. Just remember that it can be near impossible to see the exact price and volume at the precise moment it is being traded. Think of a ticker tape as providing you with a general picture of a stock's "current" activity.
Brief History
Firstly, a tick is any movement, up or down, however small, in the price of a security. Hence, a ticker tape automatically records each transaction that occurs on the exchange floor, including trading volume, onto a narrow strip of paper or tape.
The first ticker tape was developed in 1867, following the advent of the telegraph machine, which allowed for information to be printed in easy-to-read scripts. During the late 19th century, most brokers who traded at the New York Stock Exchange (NYSE) kept an office near it to ensure they were getting a steady supply of the tape and thus the most recent transaction figures of stocks. These latest quotes were delivered by messengers, or "pad shovers," who ran a circuit between the trading floor and brokers' offices. The shorter the distance between the trading floor and the brokerage, the more up-to-date the quotes were.
Ticker-tape machines introduced in 1930 and 1964 were twice as fast as their predecessors, but they still had about a 15 to 20 minute delay between the time of a transaction and the time it was recorded. It wasn't until 1996 that a real-time electronic ticker was launched. It is these up-to-the-minute transaction figures - namely price and volume - that we see today on TV news shows, financial wires and websites; while the actual tape has been done away with, it has retained the name.
Due to the nature of the markets, investors from all corners of the globe are trading a variety of stocks in different lots and blocks at any given time. Therefore what you see one minute on a ticker could change the next, particularly for those stocks with high trading volume, and it could be some time before you see your ticker symbol appear again with the latest trading activity.
Reading the Ticker Tape
Here's an example of a quote shown on a typical ticker tape:
 |
Ticker Symbol
|
The Unique Characters used to identify the company. |
Shares Traded
|
The volume for the trade being quoted. Abbreviations are K = 1,000, M = 1 million and B = 1 billion |
Price Traded
|
The price per share for the articular trade (the last bid price). |
Change Direction
|
Shows whether the stock is trading higher or lower than the previous day's closing price. |
Change Amount
|
The difference in prie from the previous day's close. |
Throughout the trading day, these quotes will continually scroll across the screen of financial channels or wires, showing current, or slightly delayed, data . In most cases the ticker will quote only stocks of one exchange, but it is common to see the numbers of two exchanges scrolling across the screen.
You can tell where a stock trades by looking at the number of letters in the stock symbol. If the symbol has three letters, the stock likely trades on the NYSE or American Stock Exchange (AMEX). A four-letter symbol indicates the stock likely trades on the Nasdaq. Some Nasdaq stocks have five letters, which usually means the stock is foreign. This is designated by an 'F' or 'Y' at the end of the stock symbol.
On many tickers, colors are also used to indicate how the stock is trading. Here is the color scheme most TV networks use:
| Green indicates the stock is trading higher than the previous day's close. | <><><><><>Red<><><><><> indicates the stock is trading lower than the previous day's close.
Before 2001, stocks were quoted as a fraction, but with the emergence of decimalization all stocks on the NYSE and Nasdaq trade as decimals. The advantage to investors and traders is that decimalization allows investors to enter orders to the penny (as opposed to fractions like 1/16).
Which Quotes Get Priority?
There are literally millions of trades executed on more than 10,000 different stocks each and every day. As you can imagine, it's impossible to report every single trade on the ticker tape. Quotes are selected according to several factors, including the stocks' volume, price change, how widely they are held and if there is significant news surrounding the companies.
For example, a stock that trades 10 million shares a day will appear more times on the ticker tape than a small stock that trades 50,000 shares a day. Or if a smaller company not usually featured on the ticker has some ground-breaking news, it will likely be added to the ticker. The only times the quotes are shown in predetermined order are before the trading day starts and after it has finished. At those times, the ticker simply displays the last quote for all stocks in alphabetical order.
The Bottom Line
Constantly watching a ticker tape is not the best way to stay informed about the markets, but many believe it can provide some insight. Tick indicators are used to easily identify those stocks whose last trade was either an uptick or a downtick. This is used as an indicator of market sentiment for determining the market's trend.
So next time you're watching TV or surfing a website with a ticker, you'll understand what all those numbers and symbols scrolling across your screen really mean. Just remember that it can be near impossible to see the exact price and volume at the precise moment it is being traded. Think of a ticker tape as providing you with a general picture of a stock's "current" activity.
Thursday, January 19, 2012
The market is on a roll since 2012 open its first trading day.
A good sign for the market and seems the participants sentiments turns now to positive.
The last two years was a struggle for the investors (long term) and traders (short term) were the ones loving the market.
In the market, you can be both, it's just about how you understand and implement what you know about the markets.
The chart below shows the daily trend, and the way I can implies seems the market will continue its trend the whole year?
That's a daily question unless the perception of the participants changes with regards to market environment.
But for traders, the focus is on a daily basis.
A good sign for the market and seems the participants sentiments turns now to positive.
The last two years was a struggle for the investors (long term) and traders (short term) were the ones loving the market.
In the market, you can be both, it's just about how you understand and implement what you know about the markets.
The chart below shows the daily trend, and the way I can implies seems the market will continue its trend the whole year?
That's a daily question unless the perception of the participants changes with regards to market environment.
But for traders, the focus is on a daily basis.
Wednesday, January 18, 2012
The market (YM Futures) is on the sideways (or in a zigzag) move from the overnight session as shown from this chart in the Globex.
I guess a choppy trading might be the trend for today's session.
Let's see and watch the market how will conduct its behavior.
Trade or no trade, let's focus and study how the market reacts.
In that way we can have an idea where we can find opportunities in the future.
That's how is trading is all about, watching the market and sitting tight is the way to make money in the market - as how one famous great trader espouse.
And especially love (and learning how the market works) for the market is important whether making money or not - love what you do as they say.
Anyway, let's see how the market reacts in the regular open.
I guess a choppy trading might be the trend for today's session.
Let's see and watch the market how will conduct its behavior.
Trade or no trade, let's focus and study how the market reacts.
In that way we can have an idea where we can find opportunities in the future.
That's how is trading is all about, watching the market and sitting tight is the way to make money in the market - as how one famous great trader espouse.
And especially love (and learning how the market works) for the market is important whether making money or not - love what you do as they say.
Anyway, let's see how the market reacts in the regular open.
Tuesday, January 17, 2012
The market surge in the open and run out of gas and drops almost where it came from.
The real breakout happened in the overnight session.
The good thing is that the overall daily trend is still on the upside.
A short trade is the most probable today after the high of the day.
As I mentioned earlier in my post, a surge in the overnight session will have a hard time (if not impossible) looking for a long trade in the regular open.
The real breakout happened in the overnight session.
The good thing is that the overall daily trend is still on the upside.
A short trade is the most probable today after the high of the day.
As I mentioned earlier in my post, a surge in the overnight session will have a hard time (if not impossible) looking for a long trade in the regular open.
The market (YM Futures) is advancing smoothly from this (chart) overnight session from the Globex.
It now advances by 100 points plus.
As always, the market make its big move in the overnight session.
Lucky for those from the overseas participants.
I guess it might not make a big move (anymore?) in the regular open, if it does, timing is important to place an entry.
It now advances by 100 points plus.
As always, the market make its big move in the overnight session.
Lucky for those from the overseas participants.
I guess it might not make a big move (anymore?) in the regular open, if it does, timing is important to place an entry.
Monday, January 16, 2012
UNDERSTANDING IRRATIONAL EXPECTATIONS
11 January 2012 by Cullen Roche
Markets are based largely on forward looking irrational expectations. They’re irrational because the summation of the decisions of the market’s participants are irrational. Human beings just aren’t built for life in the markets. We are built to survive. That’s why controlling your emotions is the #1 hurdle in the markets. Contrarians try to overcome this hurdle by taking the other side of the mainstream perspective, but being a contrarian is easier said than done. I always like to say that once you can eliminate your own brain from an investment strategy that you’ve won the investing war.
Fight or flight? Harvard physiologist Walter Cannon discovered the fight or flight response in 1915. This is an innate and very primitive reaction that occurs in humans when under stress. Interestingly, what happens in such a scenario is a near transformation of our thinking. Our thinking changes from a broad focus to a narrow focus. Fear takes over our mind. Everything is a potential threat to our survival. We are quick to respond and often inefficient to respond. And more often than not, it is easier to flight than fight. We don’t stay and fight the bear when it attacks (even though studies show that fighting or rather standing up to the bear is the more likely survival technique). We run. It’s innate. It’s a survive first mentality. And it’s often self destructive. In the markets, we are often slow to react. We will actually stay and fight the bear and then run when it’s too late (if you’ve been around long enough you’ve sold at the bottom – I know I have).
The key point to understand in a highly volatile environment such as the current one is that irrational expectations are constantly shaping our expectations of the future. They are based on an unknowable and unpredictable future, but we place the bets nevertheless. So we run from the bear for 10 minutes. Then we stop and look around, are comforted by the fact that we can’t see him (he can smell you though!) and we get complacent for 30 minutes. Then the bear reappears, we panic, run, rinse, wash, repeat. It’s an endless cycle in the markets that will never end (except some people get caught by the bear!). The key to understanding market movements is understanding this dynamic of irrational expectations.
Right now, the bear is nowhere in sight. But who knows where the next bear will come from? He could reappear in the form of the Euro crisis, earnings disappointments, or some other unforeseen event. But the key is understanding why the bulls are seeing what they’re seeing because in fact, it’s not what they’re seeing that has them buying, but what they’re NOT seeing….
Sunday, January 15, 2012
Think Less & Keep It Simple
Thursday, January 12, 2012 at 03:34 PM
“One of the most difficult things to get investors and traders to understand is that no matter how much they investigate an investment, they will probably do better if they did less. This is certainly counter-intuitive, but the way that our brains function almost guarantees that this will happen. This kind of failure also happens to those investors frequently regarded as the smartest. In essence, the more information that investors have, the more opportunity that they have to choose the misinformation that suits their emotional purposes.I could not have said that any better than Jeff. Well done!
Speculation is observation, pure and experiential. Thinking isn’t necessary and often just gets in the way. Yet everywhere we turn, we read and hear opinion after opinion and explanation on top of explanation which claim to connect the dots between economic cause and market effect. Most of the marketplace is long on rationale and explanation and short on methods.
A series of experiments to examine the mental processes of doctors who were diagnosing illnesses found little relationship between the thoroughness of data collection and accuracy of the resulting diagnosis. Another study was done with psychologists and patient information and diagnosis. Again, increasing knowledge yielded no better results but did significantly increase confidence, something which the smartest among us are most prone to have in abundance. Unfortunately, in the markets, only the humble survive.
The inference is clear and important. Experienced analysts have an imperfect understanding of what information they actually use in making judgments. They are unaware of the extent to which their judgments are determined by just a few dominant factors, rather than by the systematic integration of all of their available information. Analysts use much less available information than they think they do.
This underscores the value of using a simple method. I didn’t say easy – I said simple!” – Jeff Cooper
* This report was originally posted at the members’ only site on July 20, 2011.
Saturday, January 14, 2012
The market will be closed come Monday due to official holiday.
Showing the daily chart for the YM Dow where the trend overall is moving upwards.
I can say that the perception for the market is now positive for the days to come?
I guess that's what the chart shows, the big drop the last two months already waned out.
Showing the daily chart for the YM Dow where the trend overall is moving upwards.
I can say that the perception for the market is now positive for the days to come?
I guess that's what the chart shows, the big drop the last two months already waned out.
Friday, January 13, 2012
What Does Happiness Have To Do With Trading?
Are you as happy as you’d like to be? Do you have moments of happiness every day?
The answers you give to those questions are very important, and please be honest with yourself, because it has been scientifically proven that if you are not happy today you will not be happy tomorrow, unless you take steps to change today. Happiness in not something that just comes to us today because of some external event. Happiness is something we create. Waiting for something to change in order for you to be happy is nothing more than waiting around to live your life.
What does happiness have to do with trading? – A lot more than you might think. Have you ever witnessed people buying an enormous amount of lottery tickets, or visiting a casino and have you witnessed the enormous number of people playing games in a very serious manner? Or buying large amounts of stock because a friend said it was going to the moon; it is going to make them rich?
What you are really witnessing are people chasing a dream, chasing a dream that really does not exist, except in really rare and often under unusual conditions. Many people think that if they only had lots of money they would be happy, that is why they spend so much money at casino’s or the racetrack, or very recklessly in the markets. They are chasing that elusive dream of money that will make them happy.
In fact as Jim Rohn states: “Money does not change anyone, money simply makes one more of what they already are!” If you are unhappy you will, with money, become an unhappy person with money. If you are miserable, you will become a miserable person with money. That is all! Oh, for sure, if you were to win the lottery, you will have new friends, and you will think the lottery indeed made you happy with your new friends. However, it will not be very long before you find out the truth, that these new friends are after only one thing, and it’s not your friendship. Once the money is gone they will be too. It’s all too sad, but it’s all to true. If money is to make you happy, you must be happy first.
Making sure you are happy and enjoying life may seem self-centered, but the simple fact is that happy people have better relationships, reach more of their goals, are better parents and leaders, and are usually healthier. Creating happiness is a great gift you can give your family and everyone around you. When you are in good spirits, life becomes a rewarding adventure and not just something to get through.
Being happy will give you a different perspective on life and on trading. You will be working towards your goals without the pressure of thinking that attaining your goals will finally make you happy. You will have a much better chance of attaining those goals if you are happy already. Be happy with what you have while you are working towards whatever it is that you want!
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