Latest Posts

rss

Trading Wisdom

  
  Education
#  #  #  #  #  #  #  #  #  #

The stock market, just like life, can change on a dime.  In the market, just as in life, we must learn to adapt to change.  What separates the great trader from the rest of the crowd is his or her ability to change based on current market conditions.  In other words, NO EGO ALLOWED.  Mark Douglas, in his first book entitled The Disciplined Trader writes,

“There must be a difference between these two types of traders-the small majority of winners and the vast majority of losers who want to know what the winners know. The difference is that the traders who can make money consistently on a weekly, monthly, and yearly basis approach trading from the perspective of a mental discipline.  When asked for their secrets of success, they categorically state that they didn’t achieve any measure of consistency in accumulating wealth from trading until they learned self-discipline, emotional control, and the ability to change their minds to flow with the markets.”

We trade the current market conditions as they unfold with a plan to trade one way or the other.  To do otherwise would be to fight an undefeated foe.

Buffett builds Munich Re stake

  
Analysis, Education, Global Indices, LINKS
#  #  #  #  #  #  #  #  #

Munich_ReWarren Buffett, the US investor, has expanded his reinsurance holdings by becoming one of the largest shareholders in industry giant Munich Re. Buffett has built a stake worth €660m ($934m) in the German reinsurer, according to a market announcement triggered when his stake rose above 3%. It makes him the second-largest investor in Munich Re, after US asset manager BlackRock with almost 4.6%.

The two best predictors of long-term trading success are

  
  Education
#  #  #  #  #

1)  Originality – Traders who develop their own, unique approach to markets are more likely to succeed that traders that employ generic methods.  My common impression when I meet a promising trader is, “Wow…why didn’t I think of that?”  I quickly recognize that the trader has achieved an insight that others have not.  That original thinking is more likely to generate distinctive results than run-of-the-mill thinking you could hear from any of a dozen market participants.
2)  Flexibility – The worst traders I know are perma-bulls or perma-bears.  They fit markets to their own thinking, rather than adapt to changing markets.  The best traders work with a kind of anti-confirmation bias:  they actively scan for information that does not fit with their views.  That enables them to be flexible and adapt quickly to new market conditions.    
If I were to place these two predictors of success under one umbrella, it would be “real-time creativity.”  The successful trader sees and approaches markets in fresh ways–and continually refreshes those perceptions and methods.  

12 Reflections on Life and Markets

  
  Education
#  #  #  #  #  #  #  #

I’ve never seen a trader succeed whose explicit or implicit goal was to not lose. The trader who trades to not lose is like the person who lives to avoid death: both become spiritual hypochondriacs.

No union was ever destroyed by a failure of romance. It is the loss of respect, not love, which ends a relationship.

Love, once present, never dies. It must be killed.

Sometimes we select markets–and trading styles–much as we choose romantic partners: by their ability to validate our deepest-held images of ourselves. Our choices generally succeed, for better or for worse.

Many a trader fears boredom more than loss, thereby experiencing the two in sequence.

(more…)

1+14 Mental Behavior of Traders

  
  Education
#  #  #  #  #  #  #  #  #  #

  1. Boredom: The trader wants some “action” so they put on a trade. Trades are for when entry signals are hit not to alleviate boredom.

  2. Pessimism: The trader starts to have a negative attitude about losing money. Be positive if you are learning form losses becasue you are paying tuition for this education.
  3. Frustration: Frustration comes from expectations not being met. Don’t focus on your P& L, focus on executing your trading plan.
  4. Overwhelm: Focus and simplicity are the keys to profits, complexity and lots of information are the road to be overwhelmed and unprofitable.
  5. Disappointment: Disappointment should not come from losing trades, disappointment should only come because of a lack of discipline in trading your plan.
  6. Doubt:Only trade a system AFTER you have thoroughly researched, back tested, or studied it in real time. Trade only with proven faith in a system, naive hope quickly leads to doubt and failure. (more…)
Go to top