Archives of “January 29, 2019” day

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Intuition

  
  Education
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A hunch can be trusted if it can be explained.

Though intuition is not infallible, it can be a useful speculative tool, if handled with care and skepticism.
If you are hit by strong hunch – put it to the test. Trust it only if you can explained it. That is only if you can identify within your mind a stored body of information out of which that hunch must reasonably be supposed to have arisen.
Be wary of any intuition that seems to promise some outcome you want badly.

Never confuse a hunch with a hope.

Metaphors and Similes

  
  Education
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Similes and metaphors play an important role in both the internal thought-process of a day trader as well as in communication between two traders.  To describe the emotional reactions coupled to the movement of a stock in likeness to a rollercoaster, or to compare averaging down in hopes of breaking even to digging one’s self out of a hole is to use simile to quickly illustrate a particular situation as clearly and succinctly as possible.  Every trader uses these analogies, each having his own favorites, and they are used to add structure to an environment that often lacks useful tools for explaining particular occurrences. 

Sports metaphors also play an important role in quickly passing information to another trader with a small chance for confusion.  Traders use base-hit as a metaphor to describe a solid but ultimately small-scale win in the market, and home run for when a trade is “out of the park”.  

Ultimately, metaphors and similes can be used by a trader to keep his mind in the right place, and maintain emotional control.  By metaphorically comparing trading to baseball or basketball, the Michael Jordan truism about never missing a shot he didn’t take or Babe Ruth’s statistical record for strikeouts helps the trader keep in the back of his mind the inalienable reality that he won’t get a hit every time he swings the bat.  (more…)

Three Wishes

  
  Education
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Indian_Post_BoxQ:  Genie has granted you three wishes to help you improve your trading/investing skills. What would you ask the Genie?

A:  I would ask for three things: 1) better statistical analysis skills, 2) more time to devote to mechanical strategy development and research, and 3) straightforward guidance on what I need to do to improve the performance consistency of a few of my stock screens. The good thing with all three of these is that I don’t really need a “genie” to give it to me as each are within reach as long as I devote the time and effort.

Ignore Your Guts

  
  Education
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In my studies I have often found something that is rather interesting and maybe different than most would suspect. The most successful traders I have studied don’t rely on gut calls or feels, but rather adhere to a disciplined set of rules or guidelines and are humbled enough to admit that their emotional decisions aren’t consistent enough to hold up during the heat of the moment.

Ironically, most would think just the opposite that the more successful a trader is, the more ‘feel’ he or she has or the more ‘instinct.’ Sure, it looks macho to make calls or predictions and when proven correct a person is often praised and viewed as having some superior knowledge, but in reality these people are one step below those that have already moved through this stage and left it behind.

As an individual trader it is simply impossible to remain emotionless, making the proper trading decisions at all times, when the action is heated. Even when there is a lull, our emotions kick in and we feel a change is needed or something should be done, when in reality our rules may say to stay put or do nothing.

Trading Mindset Upgrade Profit Opportunity -Anirudh Sethi

  
Analysis, Education

Image result for Trading MindsetAnybody that has traded for an expanded timeframe comprehends the significance of having the correct attitude with regards to trading beneficially. Truth be told, without the correct attitude, it’s practically difficult to deliver reliable outcomes. In addition, the greatest test I’ve seen for some traders understands what the right mentality involves, and after that making it perpetual so it turns out to be second nature while connecting with the business sectors. Most traders concentrate on creating techniques with a specific end goal to profit. Henceforth, there is no other path around. In any case, your mentality is regularly “the missing connection” with a specific end goal to perform better. To get consistent returns you need to concentrate on the mental part the same amount of as the trading numbers. For the individuals who have not traded much, this may sound somewhat abnormal. What does brain science need to do with hard and cool trading numbers? In the wake of trading for a few years, you’ll find that trading is absolutely not as simple as it appears to be, an incredible inverse. On the off chance that you can’t take after the principles of the procedure, you essentially have no technique.

Target is Most Valuable Consequence of Trading Mindset

Your mindset and convictions will be a noteworthy deciding component in your trading come about. Consider this illustration, where the same fruitful trading approach is utilized by a hundred traders and ordinarily no two of them will trade it the very same way. Why? Since every trader has a one of a kind conviction framework, and their convictions will decide their trading style and their trading comes about. That is the reason even with a gainful and demonstrated trading approach; numerous traders will come up short. They don’t have the best possible conviction framework to empower them to trade well. At the end of the day, they do not have ‘The Trader’s Mindset’. When you experience mental issues it is best to perceive the issues, simply know about them and don’t deny they exist. Keeping in mind the end goal to settle mental issues, we should first wind up plainly mindful of the issues that are making the issues altogether mind. This is a lot of what truly matters to analysis. The therapist or psychotherapist tries to get the patient initially to perceive issues that are causing their issues. The patient must trust that these issues are making the issue altogether for the patient recuperates. The reason this procedure can take so long, maybe even years, is on the grounds that the patient needs to perceive their issues as well as must acknowledge that there genuinely is an issue. They should assume liability for their issues to recuperate. (more…)

Russell Napier’s Anatomy of the Bear -Book Review

  
  Education
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Described as “a cult classic in the investment community,” Russell Napier’s Anatomy of the Bear: Lessons from Wall Street’s Four Great Bottoms, first published in 2005, is now in its fourth edition, with a new foreword and preface (Harriman House, 2016).

Napier remains a bear. He believes that the run-up in the markets we have seen since 2009 is merely a bear market rally. The “inexorable pressure” from rising consumption in China and increasing retirement in the U.S. “augurs deflation and thus can unleash the force that will push equities to valuation levels associated with the bear market bottoms of 1921, 1932, 1949 and 1982.” (p. 13)

August 1921, July 1932, June 1949, and August 1982: four summer bottoms. What do they have in common? And what can we learn from them to steer ourselves through the next “big one,” whenever it may occur?

To study the nature of bear market bottoms, and how investors reacted to them, Napier analyzed “some 70,000 articles from the Wall Street Journal written in the two months either side of the four great bear market bottoms.” From his research he unearths “approaches that have worked in assessing when the bear is about to become the bull. What also emerges is an understanding of how similar the great four bear-market bottoms were, in turn leading us to a set of signals to guide investment strategy.” (p. 27)

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