Archives of “January 13, 2019” day

rss

Chief Investment Officer’s fundamental principles

  
  Education
#  #  #
  • We are for long-termism. We do not give a &*%$ about quarterly returns.
    • We are for asset owners using their purchasing power to get the best deals possible.
    • We are for CIOs empowered as decision-makers by boards that trust and check them. We like intelligent, engaged board members. We don’t like politics in the mix.
    • We are for innovation, collaboration, and talent development.

Inside the Mind

  
  Education
#  #  #  #  #  #

When I impulsively take the first type of countertrend trades (i.e. missed a good trend), here’s what is going through my mind:

  1. Woah, the move has already gone quite a distance.
  2. Sigh, I should’ve taken that entry earlier. I shouldn’t have followed my trading plan so strictly.
  3. Should I get in now? No, I cannot get in any more, I cannot chase the market, it’s too risky, I have no logical stop nearby, you don’t know when it might reverse down quickly.
  4. I have already missed the move. I need to wait to enter in the opposite direction when the trend ends.
  5. The trend has gone too far, it must turn soon
  6. Look! There’s a bit of resistance, the trend is about to turn, go short! (for an uptrend)

And the countertrend trade is made! Below are what I think are the psychological process at work:

  1. Observation
  2. Regret
    • Trading is always full of regrets. You always think you can do better.
  3. Indecision, uncertainty, anxiety
    • Fear of losing out starts to take hold.
    • When you don’t have a well-defined trading plan that caters for all scenarios, or if you don’t believe in your trading plan, you will face indecision and anxiety.
  4. Resignation
    • I  accepting that I can no longer enter in the direction of the trend.

(more…)

When Things Go Wrong

  
  Education
#  #  #  #  #  #  #

The trade falls apart. The stop loss gets hit, but your dealer doesn’t get you out of the trade. Or the spreads widen. Or you forget you have an order in the system and it triggers, and you’re on vacation, and you’re just having a great time until you are on the White Knuckler roller coaster ride and you think to yourself:

Trading is much like holding a fire in your hand.

At the same time, it’s beautiful and mesmerizing (for some of you at least). It hurts, too. When you have a bad trade, you are holding fire in your hands, so to speak. What are you going to do with it? Take a picture of it? Hide from it? Close your hand on it? Blow on it? Pour gasoline on top of it?

We don’t always react in the best of ways to the unexpected trade. Especially if the trade is a loser, or a mistake, we are likely to try to hide from it first. We flee from the scene of the crime.

If things don’t go your way in trading, tackle the situation. Get on top of it. Figure something out, and do it with friends, and do it sooner rather than later. You’ll be happy you put out the fire in your hand.

Go to top