Archives of “January 13, 2019” day

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Excellence Is A Drive From "Inside"

  
Education, Life
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excellence793681A gentleman was once visiting a temple under construction. In the temple premises, he saw a sculptor making an idol of God. Suddenly he saw, just a few meters away, another identical idol was lying.

Surprised he asked the sculptor, “Do you need two statutes of the same idol”. “No” said the sculptor. “We need only one, but the first one got damaged at the last stage”. The gentleman examined the sculptor. No apparent damage was visible.

“Where is the damage” asked the gentleman.

“There is a scratch on the nose of the idol. Where are you going to keep the idol”.

“The sculptor replied that it will be installed on a pillar 20 feet high. When the idol will be 20 feet away from the eyes of the beholder, who is going to know that there is scratch on the nose?” The gentleman asked.

“The sculptor looked at the gentleman, smiled and said “God knows it and I know it “.

The desire to excel should be exclusive of the fact whether someone appreciates it or not. Excellence is a drive from “Inside” not “Outside“.

False Beliefs About Trading the Markets

  
  Education
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1) What goes up must come down and vice versa.

That’s Newton’s law, not the law of trading. And even if the market does eventully self-correct, you have no idea when it will happen. In short, there’s no point blowing up your account fighthing the tape.

2) You have to be smart to make money.

No, what you have to be is disciplined. If you want to be smart, write a book or teach at a university. If you want to make money, listen to what the market is telling you and trade to make money — not to be “right.”

3) Making money is hard.

Nope. Sorry. Making money is actually easy. Statistically, you’re going to do it about half the time. Keeping it, now that’s the hard part. (more…)

Risk and Loss

  
  Education
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Risk– when it comes to life risk can be a bad thing.  It means not looking both ways before crossing the street.  Risk is like breathing when it comes to trading.  It is the only way to stay alive.  It can be toxic air or clean air know the difference before taking a deep breathe.

Loss– losses are a part of trading they need to be handle the same way as wins, the psychology should be determined by the way it was realized more than what was realized.  The exception is big losses/risking more. You will have more control of amplitude than frequency so take advantage of it

16 Points for Day Traders

  
  Education
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Accepting risk may cause losses, but accepting unfunded liabilities and negative skew can bankrupt us.

Use models not to predict, but to create a range of possible outcomes for which we can plan.

Markets follow cycles based on the perceptions and actions of its players, and one can gain alpha by using these cycles to manage risk and reward.

Markets SEEK efficiency, but offer tremendous opportunities while traveling from inefficiency to efficiency.

Both people and machines have flaws, so use the best attributes of each for peak performance.

Forecasting is necessary but should be timid in nature, while action is not always necessary but should be BOLD on the occasions when conditions dictate it.

Risk management is made more complete by searching for information that differs from your analysis rather than by that which confirms it.

Successful practitioners turn mistakes into assets by generating learning experiences and continuous improvement.

Remember to distinguish between clues that are necessary, vs. a complete picture revealing a group of necessary AND sufficient measures.

Markets can be generally explained 95% of the time, but extreme events happen much more than a bell curve would indicate…using options guarantees that we’ll survive fat tails and grab positive skew.

We are certain we DON’T know what will happen, so the best approach is to figure out what WON’T happen and blueprint accordingly.

Diversification reduces risk most of the time, but we assume all assets are linked and eventually correlate.

It is critical to have both a brain and a gut; the ability to find an edge, and the fortitude to trade it aggressively.

Profitable opportunities are best entered in the earliest stage of latent power being converted to energy. Too soon is a waste of capital, too late involves too much risk.

Virtually all long-term strategies are positioned to simply ride the tailwinds of rising prices. It is imperative to have methods to protect us from both headwinds and crosswinds to avert disaster.

Treat volatility as a psychological risk to be managed into an ally, not as a financial measure of risk to obsess over.

Accepting Loss

  
  Education
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One of the fundamental principals of trading stocks, or anything for that matter, is; you never play with money you cannot afford to lose. You should not be trading money needed for car payments, rent, food, diapers etc. The reason for this is, no matter how sound a system or piece of advice may sound, trades often go against you. Trading money you can afford to lose means that you have money to live, some money saved for a rainy day, and some for trading.

Now, by trading money you can afford to, or are willing to lose means just that. Even a successful trader’s account may experience dips or losses at many points. In fact, being willing to lose, or admit loss is essential to trading. (more…)

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