Archives of “January 2019” month
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Paul Tudor Jones documentary-Must Watch
The nature of the self
The Blind Traders and the Market
There is an old parable known as “the blind men and the elephant.” In this story, there are four blind men who are asked to determine what an elephant looks like. The first blind man feels the leg of the elephant and says, “The elephant is like a tree because it is large and round like a pillar.” The second man feels the tail and says, “The elephant is like a rope because it is small and coarse.” The third man feels the ear and says, “The elephant is like a fan because it is flat and thin.” The fourth man feels the trunk and says, “The elephant is like a snake because it is long and curves.”
A king comes to the four blind men and says, “all of you are correct.” The king goes on to explain that each one had drastically different descriptions of the elephant because they are all feeling different parts. So, they are all correct. The elephant has all the features described by the four blind men.
This parable is a good analogy describing different types of profitable traders. Many of the arguments that erupt between traders on social media are due to not understanding the others time frames or not understanding the other trader’s position sizing, stop loss level, or expected winning percentage. Also too many cult members of Elliot Wave, Trend Following, Market Profile, Day Traders, and option traders etc. think their way of trading price action is the only way when their way is only one of many paths to profitability. There are as many ways to trade price action to be profitable as there are profitable traders.
The elephant in the room is that profitable traders do a few things in common: (more…)
List of Common Characteristics of Great Traders -10 Points
1. They all have a tested, positive expectancy system that’s proved to make money for the market type for which it was designed.
2. They all have systems that fit them and their beliefs. They understand that they make money with their systems because their systems fit them.
3. They totally understand the concepts they are trading and how those concepts generate low-risk ideas
. 4. They all understand that when they get into a trade, they must have some idea of when they are wrong and will bail out
. 5. They all evaluate the ratio of reward to risk in each trade they take. For mechanical traders, this is part of their system. For discretionary traders, this is part of their evaluation before they take the trade.
6. They all have a business plan to guide their trading. You must treat your trading like any other business
7. They all use position sizing. They have clear objectives written out, something that most traders/investors do not have. They also understand that position sizing is the key to meeting those objectives and have worked out a position sizing algorithm to meet those objectives.
8. They all understand that performance is a function of personal psychology and spend a lot of time working on themselves. You must become an efficient rather than inefficient decision maker.
9. They take total responsibility for the results they get. They don’t blame someone else or something else. They don’t justify their results. They don’t feel guilty or ashamed about their results. They simply assume that they created them and that they can create better results by eliminating mistakes.
10. They understand that not following their system and business plan rules is a mistake. If you make even one mistake per month, you can turn a profitable system into a disaster. Thus, the key to becoming efficient is to eliminate such mistakes.
What elements from the above list do you need to work on more than any other? Yes, take a moment to think about this today. As you set your top priorities for this new second quarter, I recommend focusing on just one of these elements by outlining specific steps you need to take this quarter to improve. For some, this will require further study. For others, it only requires just some minor behavior modification, refocus and attitude adjustment. Many times the difference between being great and mediocre
Entrepreneur Emotional Cycle
Tells
Tells: Look for them, and you will find them. Poker players and stock markets have tells — giveaway moves that are very revealing. Learn to recognize them. History is your textbook. (For example, improving corporate financials usually presage a rally; conversely, deteriorating financials usually augur poor market performance)
Trading Wisdom-Video
Why it is so easy to blame others for your losses.
When things don’t go your way in the markets, you can do one of two things:
1) assign blame to a plethora of different parties, entities, conspirators and evil factors or
2) try to figure out what you could have done better or where you might have strayed
#1 is the easy and natural thing to do: it’s hard to admit we screwed up, but it’s easy to blame:
– short sellers
– market maker manipulation
– FIIs
– The RBI
– Centre Govt
– fake government statistics
– Algo Trading
– bad data from some internet finance site