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A Cognitive Self-Appraisal for Traders

  
  Education
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PATIENT . . . . . . . . . . IMPATIENT
FOCUSED . . . . . . . . . . DISTRACTED
OPEN-MINDED . . . . . . . . . . CLOSED-MINDED
PREPARED . . . . . . . . . . UNDER PREPARED
CLEAR HEADED . . . . . . . . . . CONFUSED
ALERT . . . . . . . . . . FATIGUED

Your mind, not your hardware or software, is your ultimate trading tool. The quality of your thought and perception will be reflected in the quality of the actions you take. 
And those are likely to affect the trades you take, how you take them, and whether you take them.

2 Different Types of Entry Signals

  
  Education
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Momentum Signals:

  1. This is buying into price strength.
  2. You buy high trying to sell higher or sell short low trying to cover even lower.
  3. You are buying a breakout of a range with the possibility that the break out level you bought becomes the new support.
  4. You are trading a trend of higher highs or lower lows.
  5. You are trading an asset under accumulation and the price is rising higher and higher as a trend continues.

Buying Support:

  1. You are buying weakness on the possibility that the low is in.
  2. You are buying oversold levels and believe that a snap back is imminent.
  3. You are buying pullbacks to key support levels in an uptrend.
  4. You are buying fear looking to sell it higher when an asset reverts to the mean.
  5. You are buying at technical levels that history shows presents a great risk/reward ratio and limited downside.

Money can be made buying dips and buying break outs. The keys to profitability lie in the winning percentage and the risk/reward ratio.

20 Signs That The Global Economic Crisis Is Starting To Catch Fire

  
  Education
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If you have been waiting for the “global economic crisis” to begin, just open up your eyes and look around.  I know that most Americans tend to ignore what happens in the rest of the world because they consider it to be “irrelevant” to their daily lives, but the truth is that the massive economic problems that are currently sweeping across Europe, Asia and South America are going to be affecting all of us here in the U.S. very soon.  Sadly, most of the big news organizations in this country seem to be more concerned about the fate of Justin Bieber’s wax statue in Times Square than about the horrible financial nightmare that is gripping emerging markets all over the planet.  After a brief period of relative calm, we are beginning to see signs of global financial instability that are unlike anything that we have witnessed since the financial crisis of 2008.  As you will see below, the problems are not just isolated to a few countries.  This is truly a global phenomenon.

Over the past few years, the Federal Reserve and other global central banks have inflated an unprecedented financial bubble with their reckless money printing.  Much of this “hot money” poured into emerging markets all over the world.  But now that the Federal Reserve has begun “tapering” quantitative easing, investors are taking this as a sign that the party is ending.  Money is being pulled out of emerging markets all over the globe at a staggering pace and this is creating a tremendous amount of financial instability.  In addition, the economic problems that have been steadily growing over the past few years in established economies throughout Europe and Asia just continue to escalate.  The following are 20 signs that the global economic crisis is starting to catch fire…

#1 The unemployment rate in Greece has hit a brand new record high of 28 percent. (more…)

Perfection in Trading :Anirudh Sethi

  
Analysis, Education
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Image result for perfectionBeing perfect is certainly not easy. Perfection is debatable, and needless to say, as challenging as can be. Matters become increasingly difficult when this is attributed to a trading environment or situation. Many traders end up setting their trades by focusing on what they want the results to be. They focus on the outcome of the trade, and do not give a lot of attention to the actual execution of that trade. This is in fact one of the main reasons why trading is so difficult. A trader can never hope to be perfect in his or her decisions. And, one can never hope for a perfect scenario, where any decision that is made results in a favorable result. Therefore the general rule of thumb that traders need to appreciate and get used to is that they need to perfect the decision making process and the execution of the trade, rather than hoping to make the results perfect. The choices, research, knowledge and information discerned are the steps that need to be perfected in the hope of perfecting the results of the trade in question.

Perfection also revolves around another issue in trading. The vast majority of traders worry a great deal about the outcome of their trading decisions. They experience a fear of losing out, and they do not want to risk a lot of their money either. They realize that in trading it is practically impossible to be perfect, and no matter how many years pass, and how many trades they do, they are still going to end up being imperfect.

Moreover, especially in the case of novice traders, it is normal to think that being a trader is a somewhat simple way to make money. They see the future as being rewarding and profitable – typically, a perfect way to become rich. Yet, they tend to underestimate the risks involved in trading and the various issues that revolve around making sound trading decisions and choices. (more…)

Intuition

  
  Education
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A hunch can be trusted if it can be explained.

Though intuition is not infallible, it can be a useful speculative tool, if handled with care and skepticism.
If you are hit by strong hunch – put it to the test. Trust it only if you can explained it. That is only if you can identify within your mind a stored body of information out of which that hunch must reasonably be supposed to have arisen.
Be wary of any intuition that seems to promise some outcome you want badly.

Never confuse a hunch with a hope.

Metaphors and Similes

  
  Education
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Similes and metaphors play an important role in both the internal thought-process of a day trader as well as in communication between two traders.  To describe the emotional reactions coupled to the movement of a stock in likeness to a rollercoaster, or to compare averaging down in hopes of breaking even to digging one’s self out of a hole is to use simile to quickly illustrate a particular situation as clearly and succinctly as possible.  Every trader uses these analogies, each having his own favorites, and they are used to add structure to an environment that often lacks useful tools for explaining particular occurrences. 

Sports metaphors also play an important role in quickly passing information to another trader with a small chance for confusion.  Traders use base-hit as a metaphor to describe a solid but ultimately small-scale win in the market, and home run for when a trade is “out of the park”.  

Ultimately, metaphors and similes can be used by a trader to keep his mind in the right place, and maintain emotional control.  By metaphorically comparing trading to baseball or basketball, the Michael Jordan truism about never missing a shot he didn’t take or Babe Ruth’s statistical record for strikeouts helps the trader keep in the back of his mind the inalienable reality that he won’t get a hit every time he swings the bat.  (more…)

Three Wishes

  
  Education
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Indian_Post_BoxQ:  Genie has granted you three wishes to help you improve your trading/investing skills. What would you ask the Genie?

A:  I would ask for three things: 1) better statistical analysis skills, 2) more time to devote to mechanical strategy development and research, and 3) straightforward guidance on what I need to do to improve the performance consistency of a few of my stock screens. The good thing with all three of these is that I don’t really need a “genie” to give it to me as each are within reach as long as I devote the time and effort.

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