Archives of “January 2019” month

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25 Points -Before the Trade

  
  Education
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1. Do you know the name and numbers of all your counterparts, especially if your equipment breaks down?

2. When does your market close, especially on holidays?

3. Do you have all the equipment you’ll need to make the trade, including pens, computers, notebooks, order slips, in the normal course and in the event of a breakdown?

4. Did you write down your trade and check it to see for example that you didn’t enter 400 contracts instead of the four that you meant to trade?

5. Why did you get into the trade?

6. Did you do a workout?

7. Was it statistically significant taking into account multiple comparisons and lookbacks?

8. Is there a prospective relation between statistical significance and predictivity?

9. Did you consider everchanging cycles?

10. And if you deigned to do a workout the way all turf handicappers do, did you take into account the within-day variability of prices, especially how this might affect your margin and being stopped out by your broker? (more…)

Michael Palin and a Zen monk teach trading and much else besides

  
Analysis, Education
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In Michael Palin’s travel series ‘Full Circle’, Palin talks to Sokum, a Zen Buddhist monk. I jotted down the brief conversation that takes place between them:

Monk – With unity of body and mind we can attain our true nature.

Monk – Each moment is the practice.

Palin – As I am only here for one night, what will I be able to learn in that time?

Monk – You? But that is your problem. You must not ask me.

When I read this I think about oneness, of our perception of tasks in relation to time, of an even allocation of one’s energy, of learning from others but not without reaching deep into oneself. Much food for thought.

Four Basic Traits of Successful Investors

  
  Education
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1. They look at objective indicators. Removing the emotions from the investing process, they focus on data instead of reacting to events;Four Stages
2. They are Disciplined:  The data drives decision making with pre-established rules. External factors do not influence them;
3. They have Flexibility:  The best investors are open-minded to new ideas, or revisiting previous thoughts;
4. They are Risk adverse: Not always obvious to investors, it is a crucial part of successful investing.

A Fixed Mindset or A Growth Mindset

  
Analysis, Education

Trader A underperforms for a month and meets with the AnirudhSethiReport Team.  The ASR Team  asks why Trader A thinks he is not doing as well as he can.  Trader A claims his underperformance relates to where he is sitting, his filters program being buggy, and the girl he is dating. ASR Team Member  offers some adjustments which Trader A finds upsetting since he does not believe he should need help.   Trader A finishes with: “I guess I am just not that good of a trader.”

Trader B underperforms for the month and meets with the AnirudhSethiReport Team.  The ASR Team Member asks why Trader B thinks he is not doing as well as he can.  Trader B explains he is underperforming because he is in the wrong stocks.  Trader B explains his plan to be in better stocks.   The ASR Team Member Trader offers some adjustments which excite Trader B since he is always interested in getting better. Trader B finishes with: “This will help me find better stocks and do much better next month.”

Are you Trader A or Trader B?  Do you have a fixed mindset or a growth mindset?

Do you have a fixed mindset or a growth mindsetsurvey software

 

 

Bob Bowman, The Golden Rules -Book Review

  
  Education
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How many times does one have to read good advice before acting on it? I don’t know. I for one continue to struggle. This time the advice comes from Bob Bowman, Michael Phelps’s coach, in The Golden Rules: 10 Steps to World-Class Excellence in Your Life and Work (St. Martin’s Press, 2016), written with Charles Butler.
The rules are straightforward:
1. A champion sets a “dream big” vision
2. Adopt an “all-in!” attitude, not a “get out!” one
3. Take risks—and then enjoy the rewards
4. Short-term goals lead to long-term success
5. Live the vision every day
6. A team approach can inspire individual success
7. Stay motivated over the long haul
8. Adversity will make you stronger
9. When the time comes, perform with confidence
10. Celebrate your achievement, then decide what’s next
Following them is something else.

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2 Questions & Answers For Traders

  
  Education
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It is impossible to make money trading without an edge.

There are many ways to create an edge in the markets, but one this is true—it is very, very hard to do so. Most things that people say work in the market do not actually work. Treat claims of success and performance with healthy skepticism. I can tell you, based on my experience of nearly twenty years as a trader, most people who say they are making substantial profits are not. This is a very hard business.

Every edge we have is driven by an imbalance of buying and selling pressure.

The world divides into two large groups of traders and investors: fundamental traders who base decisions off of financial analysis, understanding of the industry and a company’s competitive position, growth rates, assessment of management, etc. Technical traders base decisions off of patterns in prices, volume or related data. From a technical perspective, every edge we have is generated by a disagreement between buyers and sellers. When they are in balance (equilibrium), market movements are random.

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