Archives of “February 11, 2019” day

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Hope Quotes for Traders

  
  Education
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hope-trader“The speculator’s chief enemies are always boring from within. It is inseparable from human nature to hope and to fear… The successful trader has to fight these two deep-seated instincts. He has to reverse what you might call his natural impulses. Instead of hoping he must fear; instead of fearing he must hope. He must fear that his loss may develop into a much bigger loss, and hope that his profit may become a big profit.”

– Reminiscences of a Stock Operator 

“Hope is not a strategy.”

– Rigo Durazo

“There is no worse course in leadership than to hold out false hopes soon to be swept away.”

– Winston Churchill

“It is not enough to rely on luck or hope to carry us past the weak parts of our game. These parts must be attended to. The system must be whole and complete.”

– Zen and the Art of Poker (more…)

7 dirty words you can’t say while trading

  
  Education
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Should– Phrases include: “The market should have” and “I should have”. Those phrases are often used to socialize losses. They are a strong signal something is off. They should be used to aid you in correcting your vision not make you feel better.

Must– Phrases include: “The market must…”, “I must make money”, or “I must trade”. The market does not have to do anything and neither do you. When you use the word “must” it is hardly ever from a position of strength. The market knows when you are desperate and will take full advantage of you. Keeping your expenses as low as possible will make it easier to not make those statements.

Will– Phrases include: “The market will..” and “I will make money”. Once again the market does not like to be told what to do. It is the bratty kid screaming at the tops of his lungs. The word “will” relaxes your mind, similar to “should”, people use it to be lazy instead of a dark background in an otherwise light picture. You can do everything right and still lose money. That is why trading is so effective at diminishing confidence. In most every activity, if you do everything right you are going to get the desired result. Doing the “right” things is bare minimum. Of course, over time you will get paid for doing the right things but it is never when you think it should be and hardly how much you anticipated.

Won’t– Phrases include: “The market won’t…” or “I won’t make money”. Notice a theme here? You are part of the market, you are not the market. Not getting what you expect, even if it is positive, confuses the brain. If you expect to lose and don’t it is still a bad outcome. Your brain is going through enough as it is. The market is a one way walkie talkie, you listen, it talks. (more…)

You Don’t Need to be Right to Make Money

  
  Education
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You have to do the mental work to let go of the need to know what is going to happen next or the need to be right on each trade. In fact the degree to which you think you know, assume you know, or in any way need to know what is going to happen next, is equal to the degree to which you will fail as a trader. Mark Douglas The most successful traders have found a way to inoculate themselves from the stress of trading, and from the outcome of their most recent trades. Here’s how they do it: They have an unshakable belief in the fact that 1) While the outcome of any given trade is uncertain they believe in their edge over a series of trades. In other words they know the expectancy of their method and have confidence that over a series of random outcomes, the odds are in their favor. 2) Anything can happen! In other words they have learned to think of every trade like tossing a coin – they don’t need to know what will happen. They don’t expect to either win or lose. This firm belief in the uncertainty of any given trade, while knowing that over a series of trades you will be profitable, is very liberating. When you learn the mental discipline of letting go of the result of any individual trade you keep your mind in a state where it can easily perceive the opportunities that the market is offering. It is not distracted by focusing on your expectations of what you think should happen – it can perceive what is most likely to happen. The Body/Mind Connection

The 10 Most Read Books In The World

  
Analysis, Education
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Given all the hype surrounding E.L. James’s “Fifty Shades Of Grey,” you might think that’s the most popular book in the world. But you’d be wrong.
The most read book in the world is the Bible.
Writer James Chapman created a list of the most read books in the world based on the number of copies each book sold over the last 50 years.
He found that the Bible far outsold any other book, with a whopping 3.9 billion copies sold over the last 50 years. “Quotations from the Works of Mao Tse-tung” came in second with 820 million copies sold, and “Harry Potter” came in third with 400 million copies sold.
Designer Jared Fanning created an infographic (below) on the most read books in the world, based on Chapman’s research.

8 Key cognitive biases to be aware of…

  
  Education
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  1. Loss Aversion… A preference for avoiding losses over acquiring gains
  2. Sunk Cost Effect… Treating money already spent as more valuable than money that may be spent in the future
  3.  Disposition Effect… A tendency to lock in gains and ride losses
  4.  Outcome Bias… A tendency to judge a decision by its outcome rather than the quality of the decision at the time it was made
  5.  Recency Bias… A tendency to weigh recent data or experience more than earlier data or experience
  6.  Anchoring… A tendency to rely too heavily or anchor on readily available information
  7.  Bandwagon effect… A tendency to believe things because other people believe them
  8.  Belief in Law of Small numbers… The tendency to draw unjustified conclusions from too little information

Day Trading Methodology

  
  Education
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I have been reading the latest book from Van Tharp, Super Trader and I want to highlight this passage about daytrading methodologies:

“For example, if you are a daytrader, open up a position and either take a small loss or get out at the end of the day. When you do that, you are not tied to the market all day, and you may find that you take small losses and get huge profits. Simplify your entry technique and concentrate on exits”

Now, lets cross this with Jesse Livermore remarks on the speculative line of least resistance:

“It sounds very easy to say that all you have to do is to watch the tape, establish your resistance points and be ready to trade along the line of least resistance as soon as you have determined it.”

So, we have a powerful daytrading methodology in these two market generalizations. But JL added, “But in actual practice a man has to guard against many things, and most of all against himself – that is, against human nature.”

Rings a bell? Maybe we should all print this post and have it by the trading desk.

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