Thought For A Day
Archives of “January 6, 2019” day
rssConsistent And Discipline
In order to realize the full potential of your trading systems it is critical that you take every trading entry, adjust every stop, and close out every trade as and when your system says you should do. This takes extreme confidence in your trading systems, good robust reliable technology, and the mental discipline to stick to your trading plan whatever happens.
An underlying assumption about being consistent and disciplined is that you have a pre-defined plan for every situation you may face in your trading, so that you know how you are defining what being consistent is. Your plan needs to include at least the following items:
All your trading rules for entering, adding to, and exiting positions
What you will do if your trading computer, internet connection, broker, power, telephone
etc. fails
What you will do if you are unable to trade (more…)
Greatest Challenge in Trading
“One of the greatest challenges in trading is dealing with ambiguous information. The market is always sending mixed information to various degrees. We can also see this ambiguity in the commentary from the market pundits in the media. Each pundit chooses (consciously and/or subconsciously) to focus or emphasize one thing over another thing. I came across the following quote recently by Robert Gates addressing a group at the CIA in 1991: ‘the most difficult task that falls to us in intelligence is to see the world as it is, not as we – or others – would wish it to be.’ I talk about this all the time, using different words: ‘we don’t see the market as it is; we see it as we are.’ What do I mean by that? Our thoughts, feelings, hopes, expectations, and beliefs (both conscious and subconscious) create a personal filter that we see the market through. And that filter forms the basis for our entry and exit decisions. That’s just the way it is. It’s part of being human. And this filter not only impacts how you see the market, even your choice of instrument, time frame, trading style, etc, are influenced. Traders who are self-aware, who understand their own biases, their fears and hopes and what triggers them are in a better position to profit from the market. Going one step further, traders who are self-aware and who are honest with themselves are in an even better position. And taking another step, traders who are self-aware, honest, and have the courage and willingness to do the work to incorporate their own personal trading psychology into their plan are in the best position. What kind of trader are you?”
New Glossary of Finance Terms
Bonus: A form of extortion whereby employees of a company extract either shareholder or taxpayer money for their own pleasure regardless of the success or failure of said company.
Derivatives: Trading vehicles created by over-educated finance professionals for whom speculating in stocks and bonds was not quite risky or volatile enough.
Bulge Bracket Firm: A Wall Street investment bank that is literally “bulging” with off-balance sheet leverage and bloated pay packages for the architects of said leverage. They used to be referred to as “Too Big to Fail”, circa 2007-2008; they are now extinct.
Credit Ratings: These are fictitious opinions of health and financial strength that are sold to the highest bidder. The business of assigning credit ratings to bonds is similar to the business of receiving payola at a radio station for playing a particular record more often than others.
Department of the Treasury: This is a government agency in charge of rescuing companies and executives who make bad decisions or investments. Oh yeah, another minor function they serve is printing the nations currency.
Federal Reserve: An institution that ensures the inflation and subsequent bursting of asset bubbles roughly every 7 years.
Hedge Fund: A betting pool, similar to a group of employees or friends who all contribute their money to a pot and buy lottery tickets. Only in this case, a few of the participants charge everyone else involved a fee for picking which lotto numbers they will play. (more…)
54 +1 Things About America You May Not Know
Is America the greatest nation on the planet? Before you answer that question, you might want to check out the statistics that I have shared in this article first. The reality is that the United States is in a deep state of decline, and it is getting harder to deny that fact with each passing day. Mentally, emotionally, physically, spiritually and financially we are a train wreck. Many that are “patriotic” attempt to put a happy face on our growing problems, but the truly patriotic thing to do is to admit just how bad things have gotten so that we can start finding solutions.
If you truly love this country, then you should know that this nation needs a huge wake up call. We have abandoned the values and the principles that early Americans held so dear, and as a result our society is a giant mess. The following are 55 things about America that you may not know…
#1 We are supposed to have a government “of the people, by the people, for the people”, but only 25 percent of all Americans know how long U.S. Senators are elected for (6 years), and only 20 percent of all Americans know how many U.S. senators there are.
#2 Americans spend more on health care per capita than anyone else in the world by far, and yet we only rank 35th in life expectancy.
#3 Only one state in the entire country has an obesity rate of under 20 percent. 11 states have an obesity rate of over 30 percent.
#4 Of all the major industrialized nations, America is the most obese. Mexico is #2. (more…)
6 Trading Behaviours For Traders
1) Fresh Ideas – I’ve yet to see a very successful trader utilize the common chart patterns and indicator functions on software (oscillators, trendline tools, etc.) as primary sources for trade ideas. Rather, they look at markets in fresh ways, interpreting shifts in supply and demand from the order book or from transacted volume; finding unique relationships among sectors and markets; uncovering historical trading patterns; etc. Looking at markets in creative ways helps provide them with a competitive edge.
2) Solid Execution – If they’re buying, they’re generally waiting for a pullback and taking advantage of weakness; if they’re selling, they patiently wait for a bounce to get a good price. On average, they don’t chase markets up or down, and they pick their price levels for entries and exits. They won’t lift a market offer if they feel there’s a reasonable opportunity to get filled on a bid.
3) Thoughtful Position Sizing – The successful traders aren’t trying to hit home runs, and they don’t double up after a losing period to try to make their money back. They trade smaller when they’re not seeing things well, and they become more aggressive when they see odds in their favor. They take reasonable levels of risk in each position to guard against scenarios in which one large loss can wipe out days worth of profits.
4) Maximizing Profits – The good traders don’t just come up with promising trade ideas; they have the conviction and fortitude to stick with those ideas. Many times, it’s leaving good trades early–not accumulating bad trades–that leads to mediocre trading results. Because successful traders understand their market edge and have demonstrated it through real trading, they have the confidence to let trades ride to their objectives.
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This is A Major Problem In India
Damn Algorithms
What more is left to say at this point other than the fact that the hedge fund computers and their damnable algorithms have destroyed the integrity of the US futures markets. The sheer size, extent, ferocity and volatility of the moves that these pestilential computers are creating have rendered these markets basically useless for what they originally came into being for, namely, risk management for commercial entities.
—I am predicting here and now that unless something is done to corral these hedge funds, the futures market is going to become useless as a risk management tool for non-speculative entities.
—Maybe we all should just go the hell to sleep and wake up in a year and see if the chart has actually gone anywhere besides up and down like a stinking yo-yo.
Painfully true
