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Addictiveness

AddictivenessTrading is also highly addictive. When behavioral psychologists have compared the relative addictiveness of various reinforcement schedules, they found that intermittent reinforcement – positive and negative dispensed randomly (for example, the rat doesn’t know whether it will get pleasure or pain when it hits the bar) – is the most addictive alternative of all, more addictive than positive reinforcement only. Intermittent reinforcement describes the experience of the compulsive gambler as well as the future trader. The difference is that, just perhaps, the trader can make money.” However, as with most affective aspects of trading, its addictiveness constantly threatens ruin. Addictiveness is the reason why so many players who make fortunes leave the game broke.”

10+10+10 Trading Rules

1.    Be flexible and go with the flow of the markets price action, stubbornness, egos, and emotions are the worst indicators for entries and exits.
2.    Understand that the trader only chooses their entries, exits, position size, and risk and the market chooses whether they are profitable or not.
3.    You must have a trading plan before you start to trade, that has to be your anchor in decision making.
4.    You have to let go of wanting to always be right about your trade and exchange it for wanting to make money. The first step of making money is to cut a loser short the   moment it is confirmed that you are wrong.
5.    Never trade position sizes so big that your emotions take over from your trading plan.
6.    “If it feels good, don’t do it.” – Richard Weissman
7.    Trade your biggest position sizes during winning streaks and your smallest position sizes during losing streaks. Not too big and trade your smallest when in a losing streak.
8.    Do not worry about losing money that can be made back worry about losing your trading discipline.
9.    A losing trade costs you money but letting a big losing trade get too far out of hand can cause you to lose your nerve. Cut losses for the sake o your nerves as much as for the sake of capital preservation.
10.    A trader can only go on to success after they have faith in themselves as a trader, their trading system  as a winner, and know that they will stay disciplined in their trading journey.

Bring your risk of ruin down to almost zero. (more…)

The Power of Habit: Why We Do The Things We Do

 

The notion that success is a simple matter of following routine and sticking to good habits isn’t exactly new. But in his just-released book, The Power of Habit: Why We Do What We Do in Life and Business, Charles Duhigg explains why. An investigative reporter at the New York Times who also has an MBA, Duhigg taps into insights from biology, sports, consumer products marketing and manufacturing.

How do people kick smoking? How did Procter & Gamble turn Febreze into an also-ran into a big seller? How did Tony Dungy turn his National Football League defenses into champions? How did Paul O’Neill (the executive, not the baseball player) succeed at Alcoa? It all comes down to understanding the power of habits, Duhigg argues. “In the last ten years, our understanding of how habits work has been totally transformed, and companies take advantage of that,” he said.

People, like animals studied by scientists in laboratories, tend to see a feedback loop in their behavior. They are cued or prompted to act in a certain way, respond with a routine behavior, and then receive a reward for the behavior. “If you identify the cues and rewards, you can change the routine,” Duhigg writes. (more…)

The SEC Unanimously Votes to Ban “Flash Trading”

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In a breaking news, it would appear that one of the greatest cause for irritation among retail traders, notably that some big institutions used “flash” computer systems to front-run their client’s orders will be ended shortly, as the Securities and Exchange Commission voted unanimously to ban the practice, accused of allowing among others GS to pocket its enormous trading gains. More also here.

FLASHTRADING