Trade war
Trade war
Archives of “January 2, 2019” day
rssThe Market is Not Flexible, But You Are
In trading, and in anything in life, we need to be focus and committed to achieving excellence in what ever we do. However, you need to remember that there will always be more than one way to reach a destination. Yes, let me repeat, there will always be more than one way to achieving a goal.
Stay committed to your decisions but stay flexible in your approach.
If you believe what I say, and you should at least try to, then you’ll realise that the methodology that you’ve learnt about trading is the only thing you know at the moment. And, unfortunately for many, you don’t know what you don’t know.
To overcome that, you need to be hungry and curious about learning new markets and new trading systems all the time – continuous development. Nonetheless, you’ll also need to be discipline and structured about how you learn them. The last thing you want to do is to be jumping around trading everything that moves in the market place. Do you get my point?
Once you become a flexible trader, you can trade anything you want and make as much money (from the market) as you like. Right?
Now, the key question. If the market has no influence on you (as to how you make money), how can it have any influence on you now?
Thought For A Day
Risk & Chance
Here are some interesting quotes from ‘Risk & Chance’ (Dowie and Lefrere) that have a relevance to trading and speculation more generally:
Henslin (1967) notes …dice players behave as if they are controlling the outcome of the toss. One of the ways they exert this is to toss the dice softly if they want a low number, or hard for a high number. Another is to concentrate and exert effort when tossing. These behaviours are quite rational if one believes that the game is a game of skill.
As a trader I wish I could figure out what portion of my trading results can be attributed to luck, and what portion to skill. The problem is that trading seems to be a game of both skill and luck, so we spend half our time figuring out just how hard we should be throwing the dice. Splitting skill from luck is a problem for all speculators, but high frequency traders can find out much sooner than low frequency macro traders, who only take a few positions each year. In the latter case, it may be close to impossible to look back to a macro trader’s career and make this determination with any reasonable level of certainty.
De Charms(1968) stated that “Man’s primary propensity is to be effective in producing changes in his environment. Man strives to be a causal agent, to be the primary locus of causation for, or the origin of, his behaviour; he strives for personal causation.
The polar opposite of mastery is helplessness. (more…)
Good one on risk management from Peter Bernstein
7 Points For Charged Life
Can A Trader be a do-gooder?
It occurs to me that the only way in which a trader can become more than a completely selfish, self-enriching, narcissistic person is to trade well enough so that you can manage other people’s money and thus saving these investors from crooks and charlatans (provided you are convinced you are not a crook and charlatan yourself).
Other traders have advanced other arguments in favor of trading. But I am not convinced by them.
They say that we provide liquidity to other long-term investors who may need to liquidate their investments. But then, this applies only to mean-reversal strategies. Momentum strategies take away liquidity from the market, and in some cases exacerbating price bubbles. Certainly not something your grandma would approve.
Others argue that momentum strategies help disseminate information about companies through quick price movements. But can’t we just watch Blue Channels? Do we really need some devious insiders to convey that information to the rest of us through price movements?
No, I think that independent trading should serve only one purpose (besides short-term self-sustenance): as training and preparation to become a fund manager. Once you graduated from independent trading, you then enter into the grand contest among all fund managers to see who can best serve and protect investors’ assets, (and be rewarded according to your standing in this contest.)
I know, this is the idealistic way to look at things. Serving and protecting seem to be what policemen should be doing, not traders. But as in quantitative trading, I think it helps one becomes more successful in one’s activities by having a simple guiding principle or model. And it doesn’t hurt that in this case, the principle would also be conscience-nourishing!
Have A Plan
Remember, big losses can begin with small losses.
While it is always possible that the stock will rebound, causing you to sell a good investment, you can help mitigate losses during a bear market with carefully placed stop orders. You are managing your risk. And you will live to invest another day.
No matter which way you think the market is heading, if you own stocks you must know what has to happen to cause you to sell. Sometimes it is a change in the fundamentals, and other times the market reacts in advance to tell you something is wrong. That will be the time to consider managing risk rather than seeking that last nickel of profit.
Phases of Knowledge
You’ve probably heard the saying, “a little knowledge is a dangerous thing.”
The path to mastery passes through a window where the intermediate practitioner, getting their first taste of knowledge and experience, knows more than the beginner — but less than they think.
This creates a widening gap between “how much I think I know” and “how much I actually know.”
I’ve never seen this concept better expressed than via the below graphic, created by Simon Wardley: (more…)
10 Common Trading Errors
1. Making trades with insufficient study and practice.
2. Making trades out of harmony with the general trend.
3. Taking a position too late after a move is well under way or is completed.
4. Taking a position too soon due to impatience.
5. Improperly estimating the distance a stock should move.
6. Letting eagerness to make profits warp judgment.
7. Failing to keep a position sheet and selecting stocks on hunches rather than calculations.
8. Buying on bulges instead of waiting on reactions.
9. Failing to place and move stops.
10. Listening to advice from brokers, Blue Channels,, friends, or Website Analysts