Mistaking luck for skill.

good-luckAre you lucky? Napoleon was once asked whether he preferred courageous generals or brilliant generals. Supposedly, his response was “neither”, for he preferred lucky generals.
You may or may not agree, but there are some things we can’t explain (just yet), and luck is one of them. Some people have the instinct — or luck — to get out of bad trades at the right time. Others simply just don’t have it. Although some people may actually have the instinct or ability to make the right market moves; most of us probably just rely on luck to get on the winning side of a trade. So, the question here is: how lucky are you?

How Does the Brain Work?-Video

Dr. Neal DeGrasse Tyson & NOVA science NOW delve into magic and the brain, artificial intelligence, magnetic mind control, and the work of neuroscientist and synesthesia researcher David Eagleman. Can we really believe our own eyes? Will machines one day think like us? Can magnetic wands effectively control brain functions and treat depression?

BP downgraded to AA from AA+ by Fitch

The first of many to come? The outlook would suggest so, after Fitch cut BP’s credit rating in response to its Deepwater spill dilemmas on Thursday — watch negative.

As Fitch’s release suggests, it’s a further headache for BP:

Fitch Ratings-London-03 June 2010: Fitch Ratings has today downgraded BP plc’s (BP) Long-term Issuer Default Rating (IDR) and senior unsecured rating to ‘AA’ from ‘AA+’, respectively, and placed the ratings on Rating Watch Negative (RWN). At the same time, Fitch has affirmed BP’s Short-term IDR at ‘F1+’. The ratings of BP Capital Markets plc’s senior unsecured issues, which are fully and unconditionally guaranteed by BP, have been downgraded to ‘AA’ from ‘AA+’ and placed on RWN. BP Capital Markets is BP’s wholly-owned indirect subsidiary.

The downgrade of BP’s ratings reflects Fitch’s opinion that risks to both BP’s business and financial profile continue to increase following the Deepwater Horizon accident in the US Gulf of Mexico. The company has so far repeatedly failed to stop the resultant oil leak and has instead reverted to containment methods that are yet to be fully implemented and are subject to potential weather related disruption. Fitch notes that the drilling of relief wells also poses risks and additional time may be required for them to be fully effective. An additional factor supporting the downgrade is the 1 June 2010 announcement by US Attorney General, Eric Holder, that both a criminal and civil investigation has opened with respect to the oil spill that could have potential negative implications for BP’s financial profile. Continue reading »

Uncoupling your EGO

your_egoIf you think that you are God and you go into the financial markets ,you are going to come out broke.The fact that Iam not broke proves that I don’t think Iam God “-George Soros on Sixty Minutes.

Make no mistake about it.A traders’s self concept has to be separate from his trading.Who you are as a person began before you ever thought of trading and who you will be as person will extend beyond your trading.When personal self -worth entwines with trading ,it not only damages self-esteem ,it sabotages the trading.

“Authentic freedom cannnot be experienced untill one learns to tame the ego and move out of self-absorption.”

 

Cut Your Losers

A big debate among traders is whether to sell your losing stocks or hold onto them. Obviously, dependent on both the short and long-term outlook of a stock each side could have a winning argument.

Whether there is a right or wrong answer, when solely using technical analysis for your stock picking analysis, YOU MUST ALWAYS SELL YOUR LOSERS.

The great thing about technical analysis is that it takes emotion out of trading; however, emotion will always be there for other traders. That is why stocks can easily dip or jump higher in a single day – generally it is a reaction to a tangible action that just happened.

When executing trades through the signals of technical analysis, there are always stop points or places where the trade is consider a failure . For the most part, that point of interest is determined by recent price action of a stock. Learn more about the art of stops.

Technical analysis all about using the setup that gives the trader the highest probability of success. Once that setup is broken, your original probability is out the window. Get it?

Basically once your stock dips below the “failure” point the criteria that you essentially bought the stock on no longer stands. Now you are just swinging into the wind hoping for the stock to come back.

Instead I recommend you cut your losses and move on to the next trade. It’s all about keeping the odds in your favor.

10 Reasons Trading is So Difficult ,Why Only 5% Traders Across Globe Mint Money

  1. You can back test a system as much as you want but when you start trading it the profitability will be determined by the market conditions not past price history. What looks great on paper can lose on a lot of consecutive trades right at the start.
  2. Your stop can be hit and then the market go in the direction you were positioned for.
  3. Sometimes that pullback that you are waiting for to buy never comes until the trend is over.
  4. Sometimes every momentum signal you buy will be a loser for a long time.
  5. Many times the market whipsaws you in a position for absolutely no reason you can understand.
  6. Sometimes your biggest position sizes are losing trades and your smallest position sizes are the winners.
  7. There is no ‘market’ you are trading against a herd of people all making decisions for many different reasons, and they are not predictable.
  8. You can feel foolish under performing buy and holders during straight up bull markets when you’re trading in and out.
  9. Some trading lessons can’t be learned they have to be experienced with real money.
  10. Money is made and kept based on the math of probabilities, risk, and reward not because a trader is the smartest but because they are the most flexible and adaptable.