Archives of “February 2019” month

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Goals for Consistency

  
  Education
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Consistency, consistency, this is one of the most important quality I wanna achieve. Here I have a set of goals pertaining to consistency. I got the material from an article sometimes ago. I have no idea who is the author. Anyway, here is the abstract and I have added my own ideas.
I want to consistently..

  • Visualize myself in tune with the market

Seeing oneself in tune with the market and apart of the ebb and flow. Great athletes constantly visualize themselves performing at their peak. In trading, which is purely a mental game, is just as incumbent upon us to do this as well and even more often.

  • Be as professional as possible.

Trading is not a pastime activity. It has to be treated seriouly , and professionally. We have to do the best job ,possible leaving no regrets at the end of the day.

  • Record my trades for review and analysis

By recording our trades and thoughts, we allow ourselves to internalize the markets actions even more and objectively analyze our own actions.

  • Look to be the agressor and proactive

Looking for setups and taking a dynamic approach to the market is critical in succedding. Those that can consistently seek out great opportunities and then execute on them are usually rewarded.

  • Following my trading plan

Having a plan is important. Being able to execute the plan is the key to success. Stick to it.

  • Be patient and hit the same high quality spots

By executing on the same game plan, we remove a great deal of the emotional turmoil that trading can bring.

At last, consistency in our approach leads to consistency in our profits!

The Psychology Of Market Timing

  
  Education
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The biggest enemy, when market timing the stock market via mutual funds, ETF’s, even individual stocks (or in any trading for that matter), is within ourselves. Success is possible only when we learn to control our emotions.

Edwin Lefevre’s “Reminiscences of a Stock Operator” (1923) offers advice that still applies today:

Caution Excitement (and fear of missing an opportunity) often persuades us to enter the market before it is safe to do so. After a down trend a number of rallies may fail before one eventually carries through. Likewise, the emotional high of a profitable trade may blind us to signs that the trend is reversing.

It is important to follow a tried and true timing strategy that puts you in the right position for established trends, and also gets you out of failed trends quickly to protect capital. Excitement results in losses more often than not.

Patience Wait for the right market conditions. There are times when it is wise to stay out of the market and observe from the sidelines. (more…)

What's the difference between winning traders and losing traders?

  
  Education
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Well, first, there are a few similarities. Both are completely consumed by the idea of trading. The winners as well as losers have committed to doing this, and have no intention of ‘going back’. This same black-and-white mentality was evident in their personal lives too. But what about the differences? Here’s what Williams observed:

The losing traders have unrealistic expectations about the kind of profits they can make, typically shooting too high. They also debate with themselves before taking a trade, and even dwell on a trade well after it’s closed out. But the one big thing Williams noticed about this group was that they paid little attention to money management (i.e. defense).And the winners? This group has an intense focus on money management, and will voluntarily exit a trade if it’s not moving – even if it’s not losing money at that time! There is also very little internal dialogue about trade selection and trade management; this group just takes action instead of suffering analysis paralysis. Finally, the winning traders focused their attention on a small niche in the market or a few techniques, rather than trying to be able to do everything. Hopefully the second description fits you a little better, but if the first one seems a little too familiar, you now at least know how to start getting past that barrier.

A GLASS OF WATER

  
  Education
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A young lady confidently walked around the room with a raised glass of water while leading and explaining stress management to an audience.  Everyone just knew she was going to ask the oft repeated question, ‘half empty or half full?’   But she fooled them all…

“How heavy is this glass of water?” she inquired with a smile.

Answers called out ranged from 8 oz. to 20 oz.

She replied, “The absolute weight doesn’t matter. It depends on how long I hold it. If I hold it for a minute, that’s not a problem. If I hold it for an hour, I’ll have an ache in my right arm. If I hold it for a day, you’ll have to call an ambulance. In each case it’s the same weight,but the longer I hold it, the heavier it becomes.”  She continued, “and that’s the way it is with stress. If we carry our burdens all the time sooner or later, as the burden becomes increasingly heavy, we won’t be able to carry on.”

“As with the glass of water, you have to put it down for a while and rest before holding it again. When we’re refreshed, we can carry on with the burden – holding stress longer and better each time practiced. So, as early in the evening as you can, put all your burdens down.  Don’t carry them through the evening and into the night… pick them up tomorrow. Whatever burdens you’re carrying now, let them down for a moment. Relax, pick them up later after you’ve rested. Life is short.” (more…)

10 Points to increase Profitability

  
  Education

  1. Think of trading as a business and have a trading plan.
  2. Make sure that the strategies you select, match your personality so you can follow them.
  3. Have a realistic expectation of what your returns are. Include all the costs associated with your trading business.
  4. Have an idea for your risk/reward ratio. Don’t confuse trading with gambling. If you are increasing your position, make sure that your strategy warrants it.
  5. Have trading rules and follow them. Think about them as contingency plans. Because when your emotions are very high, the tendency is that you make very poor decisions that can cost you your account!
  6. Be flexible to the market conditions. When you see the market as it is, you have a much better chance of managing your portfolio and increasing your profits.
  7. Take responsibility for your results. Taking responsibility does not mean that you have control of everything that happens. It means that you have a choice of how to react to the things that happen.
  8. Find out why you are in the trading business. If it is for the excitement of it, find other hobbies or activities that you can get your excitement from.
  9. Keep track of your performance. This is a way of objectively looking at how you are doing, what you did right and what you learned. Be gentle with yourself.
  10. One of the most important things that people don’t handle is their Emotional Risk. When emotions run high, the quality of decisions goes down. It is very important to learn how to react to your emotions and thus increase your profits.

Remember These 13 Points

  
  Education
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  1. Predictions do not work as tomorrow is uncertain. We will only boast about things we have predicted right and talk nothing about the other half we got wrong.
  2. Skills can bring us moderate success. However, luck is needed to be a big success. (credit to Jon)
  3. We tend to credit our successes to good skills and blame our failures on poor luck.
  4. Some of us rely on luck (most unknowingly) by investing for high returns (and losses). A few of us will make big money but most of us will end up much poorer.
  5. Some of us deliberately limit the luck factor by choosing investment products with capital guarantee and guaranteed returns. None of us will make big money but none of us will be very much poorer.
  6. We need to know how much we can afford to lose (financially and emotionally) before deciding to be No. 4 or No. 5, or somewhere in between.
  7. We have many biases. The degree of success in investing or trading depends on how much we can keep our biases in check. No, we cannot remove our biases totally.
  8. Confirmation bias – we see what we want to see. We seek out evidence to validate our investment decision and ignore those that suggest otherwise.
  9. Availability bias – we are influenced by the things we observe. If people we knew made a lot of money through property investment, we will think that properties are the best investments in the world and develop a preference for it.
  10. Loss aversion bias – we want to be compensated for high returns before we decide to take the risk to invest. We often wait for markets move and show high returns before we want to invest. We are not interested if markets are not moving.
  11. Hindsight bias – we tend to say “I knew it” after an event has happened.
  12. Survivor-ship bias – we only get to hear stories of successes but many stories of failures were untold.  See No 2 and No 3.
  13. Most us do not know what we want in life. We think we will be happier with more money.
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