Archives of “January 2019” month

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Tomorrow is Too Late

  
  Education

Trading has many ups and downs and can easily cause us to feel defeated.

However, defeat can only be disastrous if we classify it as disastrous.

Losses, defeats, failures, etc. have been a part of history for every person who has reached high levels of success. The difference with the successful people is that they analyze the situation immediately. Those that tend to fade away are those that wait until tomorrow or maybe never to review and discover why the results were not what they expected.

To be successful we must accept every result as a part of our growth and to apply those findings today. Don’t wait until tomorrow, because tomorrow may be too late.

7 Ways Your Brain Is Making You Lose Money

  
  Education
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“Investors are ‘normal,’ not rational,” says Meir Statman, one of the leading thinkers in behavioral finance. Behavioral finance aims to better understand why people make the financial decisions they do. And it’s a booming field of study. Top behavioral finance gurus include Yale’s Robert Shiller and GMO’s James Montier. It’s also a crucial part of the Chartered Financial Analyst (CFA) curriculum, a course of study for financial advisors and Wall Street’s research analysts. We compiled a list of the seven most common behavioral biases. Read through them, and you’ll quickly realize why you make such terrible financial decisions.

Read. However, once you get the idea of behavioral finance, keep in mind that the names associated with this article don’t have a wise strategy. Trend following is wise. Predictions, forecasts and other la la statements about what might happen tomorrow are only useful if you are masochist.

 

Nicolas Darvas on stops: "no loss-free Nirvana"

  
  Education
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I was just rereading Nicolas Darvas’ How I Made $2,000,000 in the Stock Market and came across this interesting summary of his trading method and risk management approach in the author’s intro. I’d like to share it with you.
Quoth Darvas: 

“I built a fortune with serenity by avoiding premature selling yet making an exodus from most of my stocks with the use of a single tool: the trailing stop-loss. 
I have discovered no loss-free Nirvana. But I have been able to limit my losses to less than 10 percent wherever possible. My stop loss method had two effects. It got me out of the wrong stock and into the right one.”

Full passage in the image below:

Darvas

7 Points to Bulid Trading Confidence

  
  Education
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1. Frequently visualize a successful trading process. What goes into good trading for you? Make sure you see the preparation required, the focus you have during the trading day, and the continous learning from both winning and losing trades to keep getting more effective.

2. Increase your level of physical fitness, as this will enhance both your trading alertness and give a boost to your self-image simultaneously. Both of these elements make you a more confidence trader.

3. Make a list of your strengths. Review this list regularly to remind yourself of how successful you really are.

4. Eliminate negative thoughts and memories. When they occur, replace them with positive self-statements (for example, “I create my own luck” or “I have a good written plan of how I will execute my trades”).

5. Have a general strategy going into each trading day. When you prepare the day before, you position yourself to be proactive and gain confidence as you implement your plan. How aware are you of what you’re experiencing in your mind, body and soul at any moment?  You need to set up a monitoring system at the end of each trading day, to summarize what you executed according to your rules and what you did not.  Look for patterns in your behavior, that you can copy if they work for you, or minimize if they are costing you.

6. Create positive body language regardless of the gain or loss on that trading day. The way you act will often influence the way you feel for future trades. The more confident you feel, the more confidence you will show in your trading.

7. Improve on areas of weakness during preparation time and you’ll create more confidence and belief during the trading day. 

Focus on one of these seven tips at a time, until you can build that area as a habit in your routine.  This will service to greatly improve your trading confidence over time.

27 One Liners For Traders & Life

  
  Education

1.) Perspective might be everything, but knowledge is power.

2.) You are constantly faced with decisions and there is always incomplete information.  This paralyzes most people.  Not you.  Make fast decisions and move forward knowing that at best 50% of decisions are going to be right.  Move the ball forward every day.  Be quick to spot  mistakes and correct.  Put the lid on what smells bad.

3.) The cost of failure is not high.  The cost of failure is calculated.

4.) Don’t celebrate when you’ve raised money.  Know that you’ve signed up for more obligation.

5.) Tap expertise of others in the organization or elsewhere.

6.) Be thorough, just like what an analyst needs to be.

7.) Be clear about what is opinion and what is fact.  Understand different types of investors and views on a particular idea.  See the macro as well as the micro.  Use technical analysis to augment fundamental work.  Be obsessive about managing time.  Focus on a few critical factors when analyzing and communicating a stock idea.

8.) Filter out the noise.  Easy to say, difficult to do.

9.)  Include perspective of others garnered in interviews and surveys.  Cite sources, make concise summaries of findings.  Seek out opinions and alternative ideas from readers/others to help in research.

10.) Have insatiable curiosity and intense focus on work. (more…)

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