Archives of “January 5, 2019” day

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Soft Hands When Trading

  
  Education

You may have heard of the term “soft hands” in reference to horse riding. I found these explanations of the terms on a forum:

“Having soft hands is all about what the horse feels
in his mouth. Being able to feel even the smallest amount of pressure
you are exerting and being able to adjust it every moment of every ride
to ensure the horse’s comfort and
responsiveness. Not being so quick with your hands that you bump him in
the mouth and having the proper timing to release the moment that they
give to pressure is also a big part of having soft hands.”
“Generally when referring to soft hands… its not about how tight you
hold the reins. But more how tight you hold the horses head with the
reins if that makes since. Being soft handed also means having quiet
hands so not bumping the horses mouth when working. Basically…. soft
handed people use very little pressure of the reins to direct the
horse.”

We should strive for soft hands in trading as well, and in all sports. To snatch and grab and hold on too tight for any outcome can spell nerves, caution and anxiety. This should never be the case when trading.

Why Traders Fail

  
  Education
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Why Intelligent People Traders Fail

1. Lack of motivation. A talent is irrelevant if a person is not motivated to use it. Motivation may be external (for example, social approval) or internal (satisfaction from a job well-done, for instance). External sources tend to be transient, while internal sources tend to produce more consistent performance.

2. Lack of impulse control. Habitual impulsiveness gets in the way of optimal performance. Some people do not bring their full intellectual resources to bear on a problem but go with the first solution that pops into their heads.

3. Lack of perseverance and perseveration. Some people give up too easily, while others are unable to stop even when the quest will clearly be fruitless.

4. Using the wrong abilities. People may not be using the right abilities for the tasks in which they are engaged.

5. Inability to translate thought into action. Some people seem buried in thought. They have good ideas but rarely seem able to do anything about them. (more…)

Five Qualities For Successful Trader

  
  Education
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  1. Capacity for Prudent Risk-taking.The young successful trader is not afraid to go after markets aggressively when the opportunity presents itself.
  2. Capacity for Rule Governance. The young successful trader has the self-control to follow rules in the heat of battle, such as rules of position sizing and risk management.
  3. Capacity for Sustained Effort.The trader uses productive time to do research, preparation, work on himself, outside of market hours.
  4. Capacity for Emotional Resilience. All young traders will lose money early in their development and experience multiple frustrations. The successful ones will not lose self-confidence and motivation in the face of loss and frustrations.
  5. Capacity for Sound reasoning. The successful young trader exhibits an ability to synthesize data and generate market and trading scenarios.

Gems of Jesse Livermore

  
  Education
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Jesse Livermore

What beat me was not having brains enough to stick to my own game — that is, to play the market only when I was satisfied that precedents favored my play. There is a time for all things, but I didn’t know it. And that is precisely what beats so many men in Wall Street who are very far from being in the main sucker class. There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. No man can always have adequate reasons for buying or selling stocks daily — or sufficient knowledge to make his play an intelligent play.

The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals, who feel that they must take home some money every day, as though they were working for regular wages.

It takes a man a long time to learn all the lessons of all his mistakes. They say there are two sides to everything. But there is only one side to the stock market; and it is not the bull side or the bear side, but the right side. It took me longer to get that general principle fixed firmly in my mind than it did most of the more technical phases of the game of stock speculation.

Nobody offered to point out the essential differences or set me right. If somebody had told me my method would not work I nevertheless would have tried it out to make sure for myself, for when I am wrong only one thing convinces me of it, and that is, to lose money. And I am only right when I make money. That is speculating.

15 One Liners For Traders

  
  Education

  1. One good trend pays for them all.
  2. Accept just enough risk so you can sleep well at night.
  3. When prices break through your stops, pull the trigger and sell.
  4. News:  we stash that flash in the trash.  Ignore the “newsamentals”.
  5. Betting the right size matters bigtime.
  6. Most investors get stressed and need to stop the pain, so they use medicinal strategies instead of doing the right thing.
  7. You have to notice trends early.  If you wait and only participate in them when they’ve gone exponentially vertical, it’s too late.  Look for a fresh trend.
  8. Plow money back into your trading portfolio.  Don’t make a big profit and then run out to buy a new Porsche.
  9. When trend traders begin to lose interest, momentum starts to turn negative.
  10. There are no Holy Grails.  You just have to do the work, follow your disciplines and trends, and then cut your losses.  It’s that basic.
  11. Know where you’ll get out before you get in.
  12. I have no demons.  I’m a blessed man.
  13. Luck is just a fat tail or outlier on a normal distribution.  Luck happens.  If it happens to you, manage it with humility and use stops.
  14. The folks I mentor who wash out are those who just cannot control their feelings like I ask them to do.  They can’t accept their own emotional landscape.
  15. The trading adrenaline does diminish over time and with experience.  The objective is to rid yourself of it – totally.

Quotes on Manipulation

  
  Education
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“Observation # 1: The greatest number of losing traders is found in the short-term and intraday ranks.  This has less to do with the time frame and more to do with the fact that many of these traders lack proper preparation and a well thought-out game plan.  By trading in the time frame most unforgiving of even minute error and most vulnerable to floor manipulation and general costs of trading, losses due to lack of knowledge and lack of preparedness are exponential.  These traders are often undercapitalized as well.  Winning traders often trade in mid-term to long-term time frames.  Often they carry greater initial levels of equity as well.” Walter Downs

“The ability of banks to issue claims far in excess of their reserve position is essentially regulated counterfeiting when those claims have little or no chance of being satisfied, and it is an inherently cyclical and destabilizing process. The Fed, as US banks’ chief regulator, has not only condoned this imprudent, unsustainable (and Constitutionally-dubious) activity, it has encouraged and abetted it.”  Paul Brodsky and Lee Quaintance

“He did not publish or spread any information that was false.  Instead he praised the companies he had invested in to the skies, including the spreading of rumors.  Does his action fall into information-based manipulation because of this?  The answer is: partly.  From the total gain of USD 800,000 he had to repay USD 285,000, so just over a third of the total gain.”  Mark Schindler   

“Runs occur when a group of traders create activity or rumors in order to drive the price of a security up.”  Unknown (more…)

The Difficulty In Trading Lies Not In The Concepts But In Their Application

  
  Education
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Human emotion is both the source of opportunity in trading and the greatest challenge. Master it and you will succeed. Ignore it t your peril. – in Way Of The Turtle
If you want to learn a thing or two about trading or how to be a trader this is a book for you. I will be exploring and discussing it here over the next few days. The difficulty in trading lies not in the concepts but in their application. It is not too difficult to learn what to do when trading. The hard part is to really apply those lessons in actual trading while dollars are coming in and out of your trading account. 

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