Archives of “February 1, 2019” day

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Analysis, Education, LINKS
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chain_links

This is what Crude Oil looks like.

Mexico is paying the price for not being open in its development of crude reserves.

What is the real consumer impact on our economy?

Not only should we not get rid of nuclear weapons, but giving one to an unstable country often makes it safer to deal with them.

Just another step along China’s path to economic and political liberalization, it’s happening right before our eyes people.

My father, who is a real estate attorney in NYC, told me this week that all of the sudden he is slammed with deals after nothing for the past year, interesting.

Good luck finding a job right now.

What happens when California reaches 15% unemployment and crude trades at 100$.

The is ZERO value in cable news, Thomas Barnett is one of my favorite writers by the way.

I will volunteer to colonize the moon, but I don’t ever want to pay taxes up there.

Who gets how much oil from Iran.

There is no such thing as a safe haven for terrorist organizations anymore.

If you have the time and desire, please read this report on China, it’s long, but well worth it.

For all the ruckus in 08′, investing in hedge funds will always be better than leaving it to the market.

Smart kids will always want to go into investment banking, dumb rich kids as well.

The Hidden Variable in Your Trading Success

  
  Education
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Most traders realize that trading involves a lot of psychology. And most traders readily admit that a significant portion of their trading losses, or lack of performance, is due to “psychology”. Although the term ‘psychology’ isn’t always mentioned as an explanation, you can see it easily enough in the following statements ……”I froze just as I was about to pull the trigger”….. ”I hesitated and missed that trade and was so pissed that I got myself into an impulse trade right after”….. “That large loss was not what I wanted, I held it thinking it would come back because last time I bailed out of this type of trade I got stopped out right before it reversed”….. “I was really nervous about losing money again so I got out of my winning trade way before my target”

Those are four common examples of trading psychology issues manifesting in one’s trading. Do you recognize yourself in the above statements?

All four of those statements have in common one thing, fear. Whether it’s the fear of not being perfect, the fear of being wrong, fear of losing money, fear of missing out, the fear of not being approved by others, or some other fear, the common theme is fear. Most trading mistakes are a maladaptive attempt to deal with fear or anxiety.

Emotions like fear and anxiety cannot be eliminated; it is part of the human experience. But how you respond (your behavior, the action you take in response) to anxiety and fear will determine how successful you are as a trader. Some traders recognize this and do something about it; they learn to work with the fear and anxiety to reduce the chance that they’ll continue to fall into the same old behavioral response pattern to fear and anxiety. (more…)

Trader’s Emotions

  
  Education
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The hardest thing about trading is not the math, the method, or the stock picking. It is dealing with the emotions that arise with trading itself. From the stress of actually entering a trade, to the fear of losing the paper profits that you are holding in a winning trade, how you deal with those emotions will determine your success more than any one thing.

To manage your emotions first of all you must trade a system and method you truly believe will be a winner in the long term.

You must understand that every trade is not a winner and not blame yourself for equity draw downs if you are trading with discipline.

Do not bet your entire account on any one trade, in fact risking only 1% of your total capital on any one trade is the best thing you can do for your stress levels and risk of ruin odds.

With that in place here are some examples of emotional equations to better understand why you feel certain emotions strongly in your trading:

Despair = Losing Money – Trading Better

Do not despair look at your losses as part of doing business and as paying tuition fees to the markets.

Disappointment = Expectations – Reality (more…)

Ten Cardinal Rules For Traders

  
  Education

The Ten Cardinal Rules

  1. Learn to function in a tense, unstructured, and unpredictable environment.
  2. Be an independent thinker versus a conventional thinker.
  3. Work out a way to handle your emotions and maintain objectivity.
  4. Don’t rely on hope and fear in the conventional sense.
  5. Work continuously to improve yourself, giving importance to self-examination and recognizing that your personality and way of responding to events are a critical part of the game. This requires continuous coaching.
  6. Modify your normal responses to certain events.
  7. Be willing to face problems, understand them, and recognize that they are in some way related to your behavior.
  8. Know when problems can be resolved and then apply methods to solve them. That may mean giving up some control in order to gain a different control. It may mean changes in your personality, learning self-reliance, or giving up independence and ego to become part of a trading team.
  9. Understand the larger framework in which trading occurs—how the complexity of the marketplace and your personality both must be taken into account in order to develop the mastery of trading.
  10. Develop the right mind-set for trading—a willingness to commit to the kinds of changes in personal habits and beliefs that will drastically alter your life. To do this requires a willingness to surrender to the forces of the game. In order to be able to play at a maximum level, you have to let go of your ego and your need to have things your way.

The Unofficial Pundit-to-English Translation Guide

  
  Education
When a pundit saysThey really mean
“We suggest reducing exposure”We were betting the Brits would vote remain
“I am not an expert in foreign policy, but…”Prepare for a thoroughly uninformed, useless opinion
“The macro forces at work”Allow me to construct a reassuring narrative
“The smart money is betting”I won’t assume any responsibility for this next bit of foolishness
“It has long been our position”That’s my story and I am sticking to it, even if it’s wrong
“We don’t see a recession”We didn’t see the last recession either
“We expect the second half of the year”We were wrong in the first half of the year
“The chart shows…”The fundamentals are terrible
“We still like the fundamentals…”The technicals are terrible
“We have a ‘Buy’ on the stock”Now if only we can figure out who is dumping all those shares!

Two Mistakes frequently made by Stock Traders

  
  Education
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The first big mistake is the flawed logic of extrapolation. Many traders and investors assume that a trend will remain in force until an “event” comes along to change it. But market trends are not like billiard balls on a pool table. This false assumption will put you on the wrong side of the market more times than not, especially at major turning points.

The second big mistake is to suppose that news events drive market trends. In fact, the opposite is true: economic, political and social events lag market trends.

Trading Sins

  
  Education
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  • over-trading
  • too much leverage
  • under capitalization
  • not adhering to stops
  • trading without a plan
  • paying short thrift to proper execution
  • assuming too much risk, not respecting it
  • trading products I don’t fully understand
  • competing where I have no edge
  • becoming too emotional
  • under-valuing the need for ample liquidity
  • misaligning time-frames (the time a trade typically needs to play out, versus my expectation/need for it conclude)

Successful traders fail all the time. In fact, many even fail a majority of the time. The difference is that their failures are not a failure to execute their plan. The failure rests in the fact that the expertly chosen trade turned out to be wrong (nobody can be right 100% of the time – except Congress). And when the trade was wrong, they took their loss which resulted in minimal damage to their portfolio and moved on to the next opportunity.

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