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Archives of “January 3, 2019” day
rssA great quote
I’m sure every trader has run into some kind of negativity from know-it-all chodes who just don’t get what this subject is about – it goes something along the lines of “What good does it actually do? You are just stealing other peoples money?” blah blah *yawn* blah….
Here’s a great quote from a book I’m reading “Hedge Fund Edge” that demolishes their complaints:
“Principle 7: Develop a Love and Respect for Trading, Free Markets, and Individual Liberty and Initiative.
Profits are just the gravy. When they test a group of traders, one of the traits that almost all successful traders and investors share is a deep understanding of how trading and investing is part of the process that allows humankind to progress. Even day-traders provide critical liquidity that allows others to hedge, companies to raise capital, and investors to invest with limited risk. Stock selection allows investors to become second-level venture capital firms, with their demand helping provide access to financing in areas where the people need capital most. The more you understand the remarkable way in which freedom and free association work to produce economic gain and real progress for humankind from new innovations and technologies, the more likely you are to feel a strong sense of purpose at being a part of such an incredible system. And the stronger your sense that your efforts are creating something good that is bigger than yourself, the more committed, enriched, excited, and innovative you will become.”
… so put that in your pipe and smoke it.
Bertrand Russell -Ten Commandments
5 Trading quotes for Weekend
-If you are hesitating to take a position, that indicates a lack of confidence that is not necessary. Just get into the position and PLACE A STOP. Day Traders lose money in positions everyday. Keep them small. The confidence you need is not in whether or not you are right, the confidence you need is in knowing you will stick to your stop no matter what. Therefore you can actually alleviate this hesitancy to pull the trigger by continually sticking to your stops and reinforcing this behavior.
-You want to own the stock before it breaks out, then sell it to the momentum players after it breaks out. If you buy breakouts, realize that professional day traders are handing off their positions to you in order to test the strength of the trend. They will typically buy it back below the breakout point which is typically where you will set your stop when you buy a breakout. (In case you ever wondered why you get stopped out on a lot of failed breakouts).
-Embracing your opinion leads to financial ruin. When you find yourself rationalizing or justifying a decline by saying things like, “They are just shaking out weak hands here,” or “The market makers are just dropping the bid here,” then you are embracing your opinion. Don’t hang onto a loser. You can always get back in.
-Professional day traders focus on limiting risk and protecting capital. Amateur traders focus on how much money they can make on each trade. Professionals day traders always take money away from amateurs traders.
-In the stock market, heroes get crushed. Averaging down on a losing position is a “heroic move” that is akin to Superman taking a spoonful of Kryptonite. The stock market is not about blind courage. It is about finesse. Don’t be a hero.
LEARNING FROM OUR STUPID MISTAKES
We were born to screw up, make stupid decisions, rationalize the irrational, form biased opinions even though standard economics assumes otherwise. However, there is good news for us flawed humans and our castles in the sand decision making processes. The good news comes from the science of behavioral economics and more specifically from Dan Ariely in his book Predictably Irrational.
Standard Economics vs Behavioral Economics
Standard economics assumes that we are rational—that we know all the pertinent information about out decisions, that we can calculate the value of the different options we face, that we are cognitively unhindered in weighing the ramifications of each potential choice. We are presumed to be making logical and sensible decisions. If we make a mistake, the supposition is that we will learn from those mistakes and behave differently in the future.
However, we are far less rational in our decision making than standard economic theory assumes. Our irrational behaviors are neither random nor senseless—they are systematic and predictable. We make the same types of mistakes repeatedly because of how our brains are wired. Behavioral economists believe that people are susceptible to irrelevant influences from their immediate environment, irrelevant emotions, shortsightedness, and other forms of irrationality.
What good news can accompany this realization? The good news is that these mistakes also provide opportunities for improvement. If we all make systematic mistakes in our decisions, then why not develop new strategies, tools, and methods to help us make better decisions and improve our overall well-being? [Behavioral economists believe] that there are tools, methods, and policies that can help all of us make better decisions and as a consequence achieve what we desire.
When it comes to the markets and our quest to understand them, we would all benefit from first learning about ourselves. Then, and only then, may we have a fighting chance to “trade another day”.
Just a thought.
Confidence
When you feel confident, presuming you do sometimes feel confident, where do you feel it? Can you feel it in your brain or is it in your thorax (i.e. middle part of your body)? Better yet, why do I ask?
Well if you think about it, part of our mission here at Trader Psyches is to teach traders of all stripes how to use the message in Gladwell’s blink to assist in the d/m (that is decision making) process. The zillion copies it has sold prove the interest in it but the practical parts about what I read – sort of the “just do it” related to using your instantaneous impressions seem frankly impossible.
And I honestly still feel that most traders are for good reason, stuck in their heads. So, I ask this simple question – when you feel confident where does it hurt?
Think and act
-Euphoria gone at 5400 level.
-Anxiety at 5000 level.
-Denial :Done by every 2nd person in India (Blue Channel Jokers )that its a correction only and nobody saying or indicating big crack.
Just wait and watch,From 5398 to 4786 in 34 sessions and 101% this is a Trailor only.Watch price levels by 15th June.
About 15th June and 4501 level ,I will update more very soon.
Updated at 8:18/26th May/Baroda
Pursue your dreams
Ignorance
Ignorance is not knowing something; stupidity is not admitting your ignorance.
How to Treat Delusional Disorder
This market is delusional! I’ve heard it several times, but I am still unsure exactly what this means. Given what I’ve seen and heard on this trading desk over the past several weeks I can begin to hypothesize about the true nature of this ubiquitous exclamation. First, strength and weakness in the market has not necessarily translate to strength and weakness in individual names. Dean’s portfolio has been the best barometer of this divergence. His long cash book has felt the slings and arrows of a declining market while under performing on up days; the perfect shitstorm. Strong balance sheets and superior management have failed to translate into upward price action. On the other side of the coin, Moskowitz’s technical strategy has also struggled in the face of this “delusional” market. Daily levels of support and resistance, moving averages, and pivot points have been broken, traversed, and forsaken. Familiar setups have failed to produce familiar results. Finally, after reviewing the charts of Schwartz’s portfolio, we came to the conclusion that the tenets of relative strength and relative weakness have been all but abandoned. Names have shown massive intraday reversals that suck away P&L without warning.
Given the “delusional” nature of the market, there is only one strategy that guarantees success; get small. The fact that strategies have lacked their usual effectiveness does not imply they are obsolete; however, given the unusual action we have witnessed lately, it is advisable to limit one’s exposure to the bizarre action. Eventually the market will begin to look like its old self and when that time comes, the heavens will open and the money gods will reappear. In the meantime, remember the old axiom: “The market can remain delusional longer than you can remain solvent.”