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OVERCONFIDENCE

  
  Education
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It is common for traders to complain of a lack of confidence in their trading, but very often it is overconfidence that does them in. Overconfidence results from a lack of appreciation of the complexity of markets and an underestimation of the challenges of trading them successfully. In a sense, overconfident traders lack respect for the markets. They think that reading about a few setups or buying the newest software will prepare them to make money. Overconfident traders don’t want to work their way up the trading ladder: they resist the idea that screen time is the best teacher. They also chafe at the idea of growing their account. Rather than start with one contract and wait until they’re profitable before trading larger size, they want big positions—and profits—right away. Because they’re so eager to make money—and so sure they can make it—overconfident traders generally trade impulsively. They won’t wait for the setup to form; they’ll jump the gun—and get whipsawed in the process. Instead of being patient and waiting for short-term patterns to align with longer-term patterns, they will take every trade, enriching their brokers in the process. (more…)

No More Fingers! 'Brainprints' to Be the Passwords of the Future

  
Analysis, Education
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BrainPeople can be accurately identified by their unique brain wave pattern, a new study has revealed.

A team at Binghamton University found that each of us has a personal “brainprint” that can be detected with particular techniques. In an experiment reported in the journal IEEE Transactions on Information Forensics and Security, the researchers, led by Dr Sarah Laszlo, explained how they selected 50 volunteers and showed them various images. 

These included photos of “a slice of pizza, a boat, Anne Hathaway, [and] the word ‘conundrum,’ ” the paper explains. As each subject looked at the images, an electroencephalogram (EEG) machine was picking up the way their brain behaved. 

The scientists found that each participant’s brain reacted in a different and specific way to the images shown. Building on that, the researchers managed to developed an algorithm which was able to match every person with their “brainprint” with high accuracy.

According to Laszlo and her colleagues, “brainprints” could become the passwords of the future. One could first be plugged to the EEG machine to record his or her particular “brainprint” as they look at some specific image, effectively setting a “brain pin code.” Then, every time that person sees that given image again, another EEG machine would cross-reference its brainwaves with a vast database to confirm their identity beyond any doubt. (more…)

The Timeless Wisdom Of Jesse Livermore

  
  Education
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Why is stock investing hard?

Take a step back to think, and you realize that stock trading is the intersection of many realms of knowledge. Business. The economy. Finance. Innovation and technology. Government policy. The market. And don’t forget psychology.

The more an investor knows about each of these fields, the more likely he or she will excel in the task of buying and selling stocks properly.

In the field of psychology alone, you have multiple topics to ponder. The psychology of the herd is important. So is the psychology of the self.

Jesse Livermore, whose life spanned the 19th and 20th centuries, didn’t get a master’s degree in macroeconomics or a Ph.D. in cognitive behavior. But his experience, hard work, failures and successes across many bull and bear cycles make him one of the most respected stock and futures traders of all time. (more…)

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