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Five Principles of Growth and Development for Traders

  
  Education
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five principles1) The Bodybuilding Principle – You only grow and develop when you work against significant resistance, lifting more than you can comfortably handle. Hard workouts, then rest: a formula followed by all fine athletes.

2) The Process Principle – Work on doing things well and the outcomes take care of themselves. Focus on outcomes and you interfere with doing things well. Process goals spur improvement; outcome goals create pressure.

3) The Feedback Principle – Turning feedback about how you’re doing into concrete goals for further work channels your development. Work without goals is like exploring without a map: you spend much time wandering aimlessly.

4) The Strengths Principle – You reach your greatest potential by making the most of your distinctive strengths, not by incrementally improving your weaknesses. What you’re good at will fuel your greatest passion and stimulate your highest efforts. (more…)

Tips For Mental Toughness of trading psychology

  
  Education
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1. Be aware of what is going on in your mind, body and feelings. Slipping into an internal focus seems automatic because we aren’t fully aware of it as it is happening. Being aware of what the mind is saying and how we are feeling is the first important step in mental toughness. You can catch yourself before things spiral out of control.
2. Know what trading actions are important to take. These are high-value actions (HVAs) under the trader’s control. HVAs are relevant to trading and include identifying sound trade setups and solid entry triggers. You must know these cold and be ready to execute them.
3. Commit to high value actions regardless of how you feel. This means being willing to accept unwanted thoughts and feelings because trading well is more important than feeling good. Maintaining an external focus and initiating positive trading actions may not be easy when feeling down, but it’s certainly not impossible. Like all skills, it takes practice.

Hedge Fund Managers' Vernacular

  
Analysis, Education, Life
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As there is a considerable amount of industry-specific jargon used in Hedge Fund Managers’ monthly reports, please see the below glossary to explain some of the more arcane terminology.

* Challenging conditions = double-digit down month

* Cautiously optimistic = single-digit down month

* Constrained risk profile = we bottled it at the bottom

* Alpha = imaginary friends

* Beta = punting

* Alternative Beta = punting in stuff we can’t spell

* Negative gamma = we lost money, but it wasn’t our fault

* Positive gamma = we lost money, but it wasn’t our fault

* Theta/Kappa = our research department has been on a junket

* Negative correlation = everyone else made money

* Prudent cut in leverage = we went to Antigua for our holidays

* Liquidity issues = “Thank-you for calling XYZ International Capital Markets. Unfortunately all our sales operatives are receiving their P45s at present. Your call is important to us, so please try again later, perhaps if there is ever another bull market in this rubbish…”

* Re-optimised portfolio = we threw out the baby, bathwater and the bath

* With hindsight… = ouch

* Healthy growth in AUM = how bad must the opposition be?

* Modest outflows = they wanted to redeem the lot, but our small print is world-class

* Material outflows = would anyone like to re-invest in my new minicab venture?

How To Make Your Own Luck in Trading

  
  Education
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The only place luck has in trading is that you will hopefully be on the right side of unexpected moves due to surprises. In trading you should trade in such a way that good luck will benefit you and bad luck will not destroy you. In my trading luck has little to do with my profits. I trade when the probabilities are on my side based on what the chart is saying about the current action of buyers and sellers in a stock. New traders hoping for luck belong in Las Vegas not the stock market. Trade the trends, play the odds, manage the risk, have faith in yourself that you have the discipline to trade your winning plan.

  1. I do not trade on luck I trade with probabilities being on my side.
  2. I manage my risk carefully so bad luck on one trade does not blow up my trading account.
  3. I trade in the direction of the markets current trend to enable me to stay on the right side of strong moves.
  4. I trade in the direction of the markets current trend so the odds are on my side of being right.
  5. I buy the strongest stocks  and sell short the weakest stocks.
  6. When I am wrong I do not hope for luck I just get out of a losing trade.
  7. When I buy options I buy the in the money options with the odds in my favor not the far out of the money ones that require some luck.
  8. I primarily buy options instead of selling them so I can get big moves for small fees instead of small fees for big risks.
  9. I only risk 1% of my capital per trade so I do not blow up my account with a string of bad trades.
  10. I trade with confidence in my myself and my method not hoping for luck.

Milton Friedman's Brilliant 2 Minute Defense Of Capitalism

  
Analysis, Education, Video
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Nobel prize winning economist Milton Friedman would’ve turned 101-years-old today.

And there are plenty of people who would’ve loved to have him around today to witness how the Federal Reserve is running monetary policy.

Friedman, who is famous for his ideas on monetarism, was against the idea of a Federal Reserve.  However, he did support the expansion of money supply. (more…)

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