Thought For A Day
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rssMetaphors and Similes
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.
Some traders choose to relate trading to fighting a war, conducting scientific research, or any number of analogous endeavors. The best metaphors and similes are those with which the trader can most easily identify. These easily identified intellectual aids, when utilized to enhance trading and the trader’s sense of control, in the end, will increasable productivity, and most importantly, profitability.
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Expectations vs Reality
expecˈtation – noun
1. belief about (or mental picture of) the future
2. anticipating with confidence of fulfillment
3. the feeling that something is about to happen
I think all of us initially come to this subject with expectations (or as stated above, confidence in the fulfillment of our mental pictures of the future). Obviously having goals is one thing, but expectations are another – the problem is the time lines we set and the source of our expectations.
For instance, what if you expect to make money trading in two years, but in actuality (and unknown to you) it will take five? Surely after two years a thought will enter your head such as “this is not working out how I hoped…”
No wonder – your hopes had no connection to reality.
Even more bizarre, considering the above, is that I imagine almost everyone that gets involved in this subject expects to make money immediately. If you expect to make money immediately, but in reality it takes five years to learn to trade with consistency, then of course blown accounts and negative emotions are virtually guaranteed.
Non of us that wash out are smart – we are dumb. If we were smart, we would demo trade (or make use of facilities such as micro accounts) UNTIL we could actually trade profitably, no matter how many years it took.
Are you able to demo trade for five years? I can hear you now – “no freekin’ way!!!”
Why not? Of course, because you have PLANS don’t you? You have OTHER THINGS that you need to press on with that are dependent on your success in trading; in fact these plans of yours are already LATE due to the unexpected delays you hit with this little ‘ole thing called the Stock Market.
What was it? Quit your job, pay off a debt, new car, beach house by the sea, exotic holiday, help your parents in their old age, total financial freedom from the wage slave arena?
These two things combined, unrealistic expectations + unrelated desires are pure poison to any chance of success you have. I can see that now – I have actually looked within and SEEN the cobwebs of unrelated desires and unrealistic expectations that in fact have nothing to do with the reality of trading. Thats the truly amazing thing; these issues are actually NOT CONNECTED to the subject, they are things that are hanging around it in your head like moths around a flame.
So what to do? Somehow, this subject and this practice of trading needs to be mentally separated out into its own space and be unconnected to anything else, otherwise we are dragging all of this dead weight behind us. The term “mental purity” was a phrase coined by the West Coast trading desk by the Enron traders used to describe the state whereby they have nothing unconscious infecting their trading decisions (such as morals and a conscience in their case! See the book Smartest Guys in the Room – a brilliant read).
Its a good term – somehow we need to achieve mental purity (be free from murky motives and unconscious unrealistic expectations).
Only two people in world can do this.
Shaolin Monk Balances On 2 Fingers
Are You A Subjective or Objective Trader?
Subjective: Based on or influenced by personal feelings, tastes, or opinions.Proceeding from or taking place in a person’s mind rather than the external world.
Subjective traders they are intertwined with their trades.Their signals are generally entering out of greed and exiting based on their own internal fear. The believe in their opinions more than the actually price action. They base trades off of whether they are feeling good or bad about a particular trade. A subjective trade comes out of the imagination of the trader, from their own beliefs, opinions, and what “should” happen in their view. Many times reality is not even cross checked as a reference, and if it is the subjective traders sees what they want to see instead of what is really going on. Their compass is their emotions and they have internal goals other than making money.
Objective: (Of a person or their judgment) not influenced by personal feelings or opinions in considering and representing facts. Having actual existence or reality.
Objective traders have a quantified method, a system, rules, and principles they trade by. They know where they will get in based on facts, and where they will get out based on price action. Objective traders have a written trading plan to guide them. The guides of the objective trader is historical price action, charts, probabilities, risk management, and their edge. They react to what is happening in reality in quantifiable terms that can be measured. They go with the flow of price action not the flow of internal emotions. (more…)
Thought For A Day
Summing up trading in 4 words. Odds, statistics, probabilities and avoiding the risk of ruin.
Trading is like SEX
- -Some like it long, some like it short.
- -You can study the market as much as you like, but it all comes down to luck.
- -Those who talk about it the most, have the least experience.
- -One simple mistake could lead to 18 unprofitable years.
- Some prefer to sit back and watch it grow.
- -Low confidence can keep you out of the market.
- -Everyone tends to focus on performance.
- -Some do it alone, others do it with a group, and some hire professionals.
- -and the number one reason….Some positions are better than others and the best position is always up for debate!
-And remember, past performance is not necessarily indicative of future results.
Per capita income in India is Rs 46,492
Per capita income of Indians grew by 14.5 per cent to Rs 46,492 in 2009-10 from Rs 40,605 in the year-ago period, as per the revised data released by the government today. The new per capita income figure estimates on current market prices is over Rs 2,000 more than the previous estimate of Rs 44,345 calculated by the Central Statistical Organisation (CSO).
Per capita income means earnings of each Indian if the national income is evenly divided among the country’s population at 117 crore.
However, the increase in per capita income was only about 6 per cent in 2009-10 if it is calculated on the prices of 2004-05 prices, which is a better way of comparison and broadly factors inflation.
Per capita income (at 2004-05 prices) stood at Rs 33,731 in FY10 against Rs 31,801 in the previous year, the latest data on national income said.
The size of the economy at current prices rose to Rs 61,33,230 crore in the last fiscal, up 16.1 per cent over Rs 52,82,086 crore in FY’09.
Based on 2004-05 prices, the Indian economy expanded by 8 per cent during the fiscal ended March 2010. This is higher than 6.8 per cent growth in fiscal 2008-09.
The country’s population increased to 117 crore at the end of March 2010, from 115.4 crore in fiscal 2008-09.