Archives of “January 2019” month

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Why Traders Lose Their Discipline

  
  Education
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  • Environmental distractions and boredom cause a lack of focus – All of us have limits to our attention span and these are easily taxed during quiet times in the market;
  • Fatigue and mental overload create a loss of concentration – The demands of watching the screen hour after hour make it difficult to be sharp, creating fatigue effects that are well-known to pilots, car drivers, and soldiers;
  • Overconfidence follows a string of successes – It is common for traders to attribute success to skill and failure to situational, external factors.  As a result, a string of even random wins can lead traders to become overconfident and veer from trading plans–especially by trading too frequently and/or trading excessive size;
  • Unwillingness to accept losses – This leads traders to alter their trade plans after trades have gone into the red, turning what were meant to be short-term trades into longer-term holds and transforming trades with small size into large trades by adding to losers; (more…)

Ten Trading Lessons

  
  Education
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teacher-point1. Markets tend to return to the mean over time.
2. Excesses in one direction will lead to an opposite excess in the other direction.
3. There are no new eras – excesses are never permanent.
4. Exponential rising and falling markets usually go further than you think.
5. The public buys the most at the top and the least at the bottom.
6. Fear and greed are stronger than long-term resolve.
7. Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chips.
8. Bear markets have three stages.
9. When all the experts and forecasts agree – something else is going to happen.
10. Bull markets are more fun than bear markets.

Life's Unanswered Questions

  
  Education
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Help me out here…

Why do you check your stocks twice a day but your cholesterol twice a decade? The former is killing your emotions and the latter is killing you.

Why do companies still provide paper receipts? My grandma discovered email 15 years ago.

Why do companies limit the number of sick days employees can take? If you can’t trust me when I say I have bronchitis, you shouldn’t trust me to be your employee.

Why is 2008’s 35% market crash so memorable, but 2013’s 33% rally so forgettable?Answer this and you’ll be a better investor.

Why is it so much easier to fool yourself than other people? It is amazing to watch smart investors convince themselves of something that clearly isn’t true. (more…)

Fear of failure

  
  Education
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Don’t worry about perfect.

The easiest way to fail the first time is trying to be perfect. In the beginning, understanding how different the experience is from how you imagined it is important.  Start with reasonable expectations and over time shift to unreasonable expectations.

Seeing others do it.

At the beginning you believe you will be successful. After your expectations for success are not met, your belief fades. Surround yourself with as many people who are successful.  Seeing is believing. You will begin to notice some of the little things that they doing.  The difference between good and great, I have found, is in those little things. (more…)

The Battle is With Yourself

  
  Education
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Years of experience eventually teach you that your main battle, always, is with yourself — your propensity for errors, for rationalizing marginal hands into good hands, lack of concentration, misreading other players, emotional eruptions, impatience, and so on. Your opponents are merely dim outlines that come and go. Few of them ever reach the exalted heights of damage that you can inflict on yourself.”

– Larry Phillips, Zen and the Art of Poker

Many great traders have expressed some version of the opinion, “Your greatest opponent is yourself.” Do you agree?

If so, what are the implications?

On the positive side, if “we have met the enemy and he is us,” as Pogo once said, what does that say about growth opportunity?

If you had perfect discipline, perfect motivation, and perfect emotional control, how good (or great) a trader could you be? 

FOUR STEPS TO TRADING PROGRESS

  
  Education
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The steps below are based on the developmental maturity of any trader. Each of us are at different levels in this process. This process can be applied to our overall progress as traders or in the learning of a new strategy. It is important for us to be realistic about where we are personally to become the best trader possible.

HEAR

To HEAR you have to listen and listen intentionally. You will not HEAR properly if you are focused on other things. This situation is especially true on a webinar or during the trading day when the markets are open. It is essential to set distractions aside and HEAR what is being stated.

RECEIVE

To RECEIVE something you have to HEAR it and come into agreement with it.  To RECEIVE is to take it unto yourself and personally grab hold of what you have heard and make it your own. (more…)

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