Archives of “February 4, 2019” day

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U.S., U.K. 'most stretched' by debt, Moody's says

  
Analysis, Economy, Education
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Uncle Sam isn’t in danger of losing his top credit rating, but he’s not in the greatest shape, either.

So says Moody’s Investors Service in its quarterly assessment of triple-A-rated countries.

Paying the interest on their debt remains manageable for these countries, Moody’s says, so their governments aren’t in any immediate danger of a downgrade.

But among the AAA countries, the U.S. and the U.K. are “most stretched” by their debt obligations, Moody’s says.

The debt ratings are important because a downgrade raises a country’s borrowing costs. And virtually every big country faces a difficult challenge in removing bailout and stimulus money quickly enough to avoid inflation and slowly enough to keep the weak recovery going.

“This exposes governments to substantial execution risk in the implementation of their exit strategies, which could yet make their credit more vulnerable,” says Arnaud Mares, senior vice president in Moody’s sovereign risk group and the main author of the report.

LESSONS FROM TRADING IN THE ZONE BY MARK DOUGLAS

  
  Education
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1.) When it comes to trading, it turns out that the skills we learn to earn high marks in school, advance our careers and create relationships with other people, turn out to be inappropriate for trading.  Traders must learn to think in terms of probabilities and surrender all of the skills acquired to achieve in virtually every other aspect of life.

2.) Within 9 months of moving to Chicago, I had lost nearly everything I owned.  My losses were the result of both my trading activities and my exorbitant lifestyle, which demanded that I make a lot of money as a trader.

3.) You don’t need to know what’s going to happen next to make money.  Anything can happen.  Every moment is unique, meaning every edge and outcome is truly a unique experience.  The trade either works or it doesn’t.

4.) More or better market analysis is not the solution to his trading difficulties or lack of consistent results.  It is attitude and “state of mind” that determine his results.  A winner’s mindset means learning how to think in probabilities.

5.) The edge means there’s a higher probability of one outcome than another.  The greater your confidence, the easier it will be to execute your trades.

6.) Do you ever feel compelled to make a trade because you are afraid that you might miss out?

7.) People , expressing their beliefs and expectations about the future, make prices move- not models.  The fact that a model makes a logical and reasonable projection based on all the relevant variables is not of much value if the traders who are responsible for most of the trading volume aren’t aware of the model or don’t believe in it.  In other words, people who trade don’t always act in a rational manner.

8.) Price movement could be so volatile that it would be very difficult, if not impossible, to stay in a trade in order to realize the fundamental analysts’ objective. (more…)

The Path to Greatness

  
  Education
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There is much wisdom in the following and I wish these were my words, but sadly they are not. This particular speech doesn’t even pertain to trading, but reminds me so much of what Mark Douglas teaches. However, I always seem to find ways to relate just about everything in my life to trading, as I’m sure most who read this blog. Therefore I thought you would find as much value here as do I.

You are where you are…you have a goal
As you move towards that goal, things will happen
Some of those things will eventually, trigger in you an emotion that is counterproductive to your goal
It will cause you to act in a way, that will take you away from where you were heading, and towards something more familiar in your life that has plagued you your whole life
We all have these areas of vulnerability

Those who master this vulnerability are the people who master their craft. The people who master that moment in time, where that reaction occurs, are the people who do extraordinary things with their life. Who overcome things that others can’t even imagine confronting. It’s because at that moment, they manage themselves through that triggered state in an effective way, rather than defaulting to their old system they developed at a very young age, that does nothing but protect them, but not advance them. If you can master those moments, your life will be catapulted into extraordinary experiences beyond anything you can imagine. 

Admit Mistakes

  
  Education
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“To be a successful trader, you have to be able to admit mistakes. People who are very bright don’t make very many mistakes. In a sense, they generally are correct. In trading, however, the person who can easily admit to being wrong is the one who walks away a winner. Besides trading, there is probably no other profession where you have to admit you’re wrong. In trading, you can’t hide your failures. Your equity provides a daily reflection of your performance. The trader who tries to blame his losses on external events will never learn from his mistakes. For a trader, rationalization is a guaranteed road to ultimate failure.”

7 actions

  
  Education
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Perception-Action7 actions I do :
1) Enter a trade that doesn’t take off – cut it. I don’t care if it takes off after that.
2) Get a gut feeling that I’m on the wrong side of the market – cut it and reverse.
3) Stopped out twice on the same pair – stay flat and don’t trade until tomorrow.
4) In a trade that’s running well – only look at it towards end of current session and make a decision to stay into the end of the next one or not. (more…)

GERALD M. LOEB on GAINING PROFITS BY TAKING LOSSES

  
  Education
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One of the many books on my desk right now is a classic written over 70 years ago by the stock market legend Gerald M. Loeb.  Loeb was a well respected Wall Street broker, not because he possessed some magic investing genie lamp but because of the following nugget of wisdom, one of many from The Battle For Investment Survival in a section entitled Gaining Profits By Taking Losses:

Accepting losses is the most important single investment device to insure safety of capital.  It is also the action that most people know the least about and that they are least liable to execute.  I’ve been studying investments, giving investment advice and actually investing since 1921.  I haven’t found the real key yet and don’t ever expect to, as no one has found it before me, but I have learned a great many things.  The most important single thing I learned is that accepting losses promptly is the first key to success.
 

Some things never change.

Why do 90% get washed out?

  
  Education
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They say that 90% or more of new traders get washed out of the market in six months – why would that be? I just had an insight into my own current state and the implications of it long term if it were left as an unconscious process…

The fact is that learning to trade is hard; very hard – but on top of that, it is a zero feedback learning curve. You don’t get marked or a pat on the back for your efforts; the only feedback you get is:

You lose…
You lose…
You lose…

You think you are building up knowledge and skill in your conscious mind, but unbeknownst to you, in the dark invisible depths of your subconscious, you are slowly training yourself to HATE TRADING…

It is like constantly sticking your hand in the fire and going “Ouch! Ouch! Ouch!”

Your interest and passion for it is being quietly eroded. There eventually comes a day where you would rather do something else than trade that day; your instincts are telling you to avoid the pain.

It eventually becomes a DRAG…

Attracted by more pleasurable pursuits you realize one day that you haven’t traded for a week or two, but the very thought of it gives you a pain in the solar plexus… You brush the whole thing aside as an old hobby that was a large expensive waste of time.

You’ve been washed out. You are a statistic, but by now you couldn’t care less!

Speculation drives human progress

  
  Education
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Speculation, in all its forms, is what drives human progress. This is the core message behind Michael Bigger’s recent post, “The Desire to Speculate”.
An excerpt from Michael’s essay: 
“It is said that the desire to speculate is very strong in the American people. That is why our country has made greater progress than any other country in the world, because progress is the result of speculation. We are not referring merely to stock speculations, but to the word in its broadest sense. Every new undertaking is a speculation.

An inventor speculates on what he is going to invent. Often such speculations result in losses, because many inventors, or would-be-inventors, never accomplish very much. They spend their money, time, and efforts, and probably live years in poverty, and then if the invention is not profitable, they are heavy losers.

It is the same thing with every new business. It is purely a speculation…”  (more…)

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