- Psychological state of uncertainty.
- Engulfing / Outside bars
- This pattern must appear after a preceding trend in the price.
- An outside bar would have taken out the stops of both the bulls and the bears, with no follow-through. Hence both sides become less confident and this leads to range-trading behavior.
- Hammer bottom
- After a downtrend, the market opens near to the previous close, drops a lot, before closing the period up towards the level at which it opened.
- Signals an end of the downtrend where the next period will be characterised by range trading.
- Shooting star
- After an uptrend, the market opens near the previous close, rallies a lot, but closes the period down towards the level at which it opened.
- Signals that that supply and demand have become more balanced, and this balance can mean range trading.
- Hanging man
- After an uptrend, market does not rise much but falls a lot, before closing back up near to the level at which it opened.
- This is bearish, and represents the last buyers getting into the uptrend.
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The idea behind “every loss is a learning lesson” is that even when we experience setbacks or failures, we can use those experiences to gain valuable insights and learn from our mistakes.
When we adopt this mindset, we can see failure as an opportunity for growth and improvement, rather than a reason to give up.
“No failure is final unless you give up” reinforces the idea that failure is not the end of the road. As long as we keep pushing forward and persisting towards our goals, we have the opportunity to overcome our challenges and achieve success.
Together, these two ideas promote resilience and perseverance, encouraging individuals to keep learning from their experiences and to stay committed to their goals, even in the face of setbacks.
The “Wolf of Wall Street” is a movie based on the true story of Jordan Belfort, a former stockbroker who became involved in fraudulent activities and ultimately went to prison. While the actions portrayed in the movie are not to be emulated, there are several lessons that can be learned from the film:
- The importance of ethics and integrity: Jordan Belfort’s unethical behavior ultimately led to his downfall. It is important to conduct business with honesty and integrity, both for legal and moral reasons.
- The power of persuasion: Belfort was able to use his charisma and sales skills to convince people to invest in his company. While persuasion can be a valuable tool in business, it must be used ethically and responsibly.
- The risks of greed and excess: The characters in the movie engaged in excessive spending and drug use, which ultimately led to negative consequences. It is important to manage one’s finances and avoid excessive risk-taking.
- The importance of risk management: Belfort’s disregard for risk management ultimately led to the collapse of his company. It is important to have a solid risk management strategy in place when investing or trading.
- The consequences of breaking the law: Belfort and his associates engaged in illegal activities, which led to legal consequences. It is important to understand the legal and regulatory environment in which one operates and to conduct business within the bounds of the law.
- A well-crafted message that resonates with the electorate and communicates a clear vision for the future.
- Strong relationships with key supporters, stakeholders, and allies that can provide support, advice, and assistance during difficult times.
- A solid understanding of political strategy, including how to navigate political obstacles, build coalitions, and engage in effective communication and negotiation.
- A reliable team of experienced advisors, including campaign managers, strategists, and policy experts who can help the politician make informed decisions.
- A clear plan for fundraising and financial management, including strategies for attracting donors and managing a budget effectively.
- A strong grasp of the media landscape, including how to engage with journalists, manage crises, and use social media effectively.
- A commitment to ethics and integrity, including transparency in financial matters and a commitment to serving the public interest.
- The ability to handle stress and pressure, including developing strategies for self-care, managing competing demands on time, and maintaining a healthy work-life balance.
- The ability to build and maintain relationships with opponents and adversaries, including finding common ground and engaging in respectful dialogue.
- A willingness to adapt and learn, including a commitment to ongoing education and professional development, and a willingness to listen to feedback and incorporate it into decision-making.
“Ikigai” is a Japanese concept that refers to the intersection of four elements: what you love, what you are good at, what the world needs, and what you can be paid for. Applying this concept to trading, here are some potential elements of an “ikigai” for traders:
- Passion for financial markets: Many traders have a strong interest in financial markets, whether it’s a fascination with the way prices move, a desire to understand the underlying economic forces, or a love of the intellectual challenge of trading. This passion is often the starting point for a successful trading career.
- Expertise in analysis and risk management: To be a successful trader, you need to have a deep understanding of financial analysis and risk management. This expertise comes from years of study and experience in the markets, as well as a natural aptitude for math and statistics.
- Contribution to the economy: Trading can have a significant impact on the economy, providing liquidity, improving price discovery, and facilitating capital allocation. Traders who see their work as contributing to the health and efficiency of the financial system may find a sense of purpose and fulfillment in their work.
- Financial rewards: Of course, traders are typically motivated by the financial rewards of their work. By generating profits for themselves and their clients, traders can achieve financial independence, provide for their families, and pursue their other goals and passions.
By finding the intersection of these four elements – passion, expertise, contribution, and financial rewards – traders can identify their ikigai and build a fulfilling and successful career in the financial markets.
This is a commonly held belief among successful traders and investors. The idea is that while some people may have a natural talent or affinity for trading, the vast majority of successful traders are made, not born. In other words, trading is a skill that can be learned and developed over time through practice, study, and experience.
One of the reasons that trading is a skill that can be learned is that there is a wealth of information and resources available to aspiring traders. There are countless books, courses, and seminars on trading strategies, technical analysis, risk management, and other aspects of the market. Additionally, there are many successful traders who are willing to share their knowledge and experience with others, whether through mentoring, online communities, or other forms of networking.
Ultimately, becoming a successful trader requires a combination of hard work, discipline, and a willingness to learn from both successes and failures. It’s important to approach trading with a mindset of continuous improvement, and to always be looking for ways to refine and improve one’s strategies and approach. With dedication and persistence, it is possible for anyone to become a successful trader, regardless of their starting point or natural aptitude.
Trading can be challenging precisely because it involves more than just money. As you noted, there are a range of emotions and psychological factors that can impact a trader’s decisions and performance. These can include everything from ego and self-esteem, to hopes and dreams, to deeply held beliefs about the market and one’s own abilities.
When traders are emotionally attached to their trades, it can be difficult to make rational and objective decisions. Fear and greed can lead to impulsive or irrational behavior, while overconfidence can lead to excessive risk-taking. At the same time, losses can trigger feelings of frustration, anger, or despair, which can lead to further mistakes and poor decisions.
The key to success in trading, therefore, is to learn to manage these emotional factors and to cultivate a disciplined and rational approach to decision-making. This means developing a trading plan that is grounded in solid analysis and risk management principles, and adhering to that plan even when emotions run high. It also means being willing to accept losses and to learn from them, rather than letting them dictate future behavior.
In short, trading is more than just a matter of making money. It requires discipline, emotional intelligence, and a deep understanding of oneself and the market. By recognizing the emotional factors at play and developing strategies to manage them, traders can increase their chances of success and achieve their financial goals over the long term.
That is a commonly held belief among many traders and investors. The idea is that a trade should be judged based on the quality of its decision-making process and execution, rather than the outcome of the trade. This is because many factors beyond a trader’s control can influence the outcome of a trade, including unexpected news, market volatility, and other unforeseen events.
Focusing on the thought process and execution of a trade can help traders identify areas for improvement, even when a trade doesn’t go as planned. By analyzing what they did well and what they could do better in future trades, traders can refine their strategies and increase their chances of success over the long term.
It’s important to note, however, that focusing solely on the thought process and execution of a trade isn’t always sufficient. In order to be successful, traders also need to have a well-defined trading plan and risk management strategy in place. This means setting clear entry and exit points, using stop-loss orders to limit losses, and managing risk effectively across a portfolio of trades.
Ultimately, the best traders are those who are able to combine a well-crafted trading strategy with a disciplined and consistent approach to execution. By continually refining their strategies and processes, and by staying focused on their long-term goals, traders can achieve success in even the most challenging market environments.
I can say that taking a loss is an inherent part of trading and investing. No trader or investor can be right all the time, and losses are inevitable in any market. The key to success is managing risk effectively, and ensuring that losses are controlled and contained.
In order to manage risk, traders and investors need to have a well-defined strategy that includes clear entry and exit points, as well as a stop-loss plan. This means setting a limit on how much you’re willing to lose on any given trade, and sticking to that limit even if things don’t go as planned. By limiting losses, traders can ensure that their capital is preserved, and that they’re able to stay in the game long enough to reap the rewards of their successful trades.
Ultimately, the willingness to take a loss is a sign of discipline and good risk management. By accepting that losses are a normal part of trading, and by having a plan in place to manage them, traders can ensure that they’re able to stay in the game for the long haul and achieve success over time.
- Think independently: It’s important to have your own unique perspective and not just follow the crowd. Being able to think independently can help you identify opportunities that others might not see, and avoid common pitfalls that can arise from groupthink.
- Stay engaged: Keep a close eye on the markets, stay informed about news and events that can impact prices, and be ready to act when opportunities arise. This means staying up-to-date on relevant financial information, monitoring market trends and indicators, and being prepared to act on your analysis.
- Learn to recognize risks and opportunities: Identify opportunities where others see only risks, and understand when risks may be too high to justify taking a particular position. This requires a good understanding of market dynamics, as well as an ability to analyze and interpret relevant data.
- Systemize your hard decisions: Emotions can interfere with sound decision-making, so it’s important to have a clear set of rules or guidelines to follow when making trades. This can help you avoid making impulsive decisions based on fear, greed, or other emotions, and ensure that your trading is driven by a well-defined strategy.
- Develop discipline: Successful trading requires discipline and consistency. This means sticking to your trading plan, managing your risk effectively, and avoiding emotional reactions to market movements. It also means being patient and waiting for the right opportunities to arise, rather than forcing trades when the conditions aren’t right.
- Remain a student: The markets are constantly evolving, and there is always more to learn. By staying curious and continuing to learn about new developments and strategies, you can adapt to changing conditions and stay ahead of the curve. This means seeking out new information and insights, testing and refining your trading strategies, and continuously improving your skills and knowledge.