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Spiraling Growth in Understanding

  
  Education
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It seems to me that growth in understanding of any subject happens in upward spirals. The X factor in this equation is passing time. The result is that you can study the SAME materials you studied during the last period, yet now these very same words contain a whole new level of meaning.

This is why it is good practice to go back and re-study the basics again after a certain chunk of time has passed. I’ve been doing this for the last week or so, going over the basics again – and it is like I never really READ it before. The very same material now contains whole new layers of meaning for me… But what’s really happening is that my understanding has increased over passing time and I’m in a new learning cycle, seeing it all again with the eyes of the experience I gained since the round.

What is the probability of…

  
  Education
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  • A sideways market?
  • A trending market?
  • A trend continuing;
  • A trend reversal?
  • Getting stopped out of a trade?
  • Winning a trade?
  • Breaking even?
  • Losing a trade?

All questions that need to be answered if you are to have confidence in your trading system.  For it is confidence that allows you to profit from the markets.

Ridiculous notion?  Perhaps.  But true nonetheless. 

You see, despite our civilized veneer, we are still animals that react to fear, the most powerful of emotions.  And it is fear that supercedes our thoughts when we trade.

To circumvent fear, you should develop trading plans, trade according to plan, and analyze your trades in a trading journal.  As do this, you will build a database that will create statistical patterns of your trades.  This can be studied and help you to predict the outcome of future trades. (more…)

24 Mistakes done by 90% of Traders

  
  Education
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  • EGO (thinking you are a walking think tank, not accepting and learning from you mistakes, etc.)MISTAKE-UPDATE
  • Lack of passion and entering into stock trading with unrealistic expectations about the learning time and performance, without realizing that it often takes 4-5 years to learn how it works and that even +50% annual performance in the long run is very good
  • Poor self-esteem/self-knowledge
  • Lack of focus
  • Not working hard enough and treating your stock trading as a hobby instead of a small business
  • Lack of knowledge and experience
  • Trying to imitate others instead of developing your unique stock trading philosophy that suits best to your personality
  • Listening to others instead of doing your own research
  • Lack of recordkeeping
  • Overanalyzing and overcomplicating things (Zen-like simplicity is the key)
  • Lack of flexibility to adapt to the always/quick-changing stock market
  • Lack of patience to learn stock trading properly, wait to enter into the positions and let the winners run (inpatience results in overtrading, which in turn results in high transaction costs)
  • Lack of stock trading plan that defines your goals, entry/exit points, etc.
  • Lack of risk management rules on stop losses, position sizing, leverage, diversification, etc.
  • Lack of discipline to stick to your stock trading plan and risk management rules
  • Getting emotional (fear, greed, hope, revenge, regret, bragging, getting overconfident after big wins, sheep-like crowd-following behavior, etc.) (more…)

Zen Story

  
Education, Life
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enlightenmentThere is a Zen story about a poor man walking through the woods reflecting upon his many troubles.
He stopped to rest against a tree, a magical tree that would instantly grant the wishes of anyone who came in contact with it. He realized he was thirsty and wished for a drink. Instantly a cup of cool water was in his hand. Shocked, he looked at the water, he decided it was safe and drank it.
He then realized he was hungry and wished he had something to eat. A meal appeared before him. “My wishes are being granted,” he thought in disbelief.
“Well, then I wish for a beautiful home of my own,” he said out loud. The home appeared in the meadow before him. A huge smile crossed his face as he wished for servants to take care of the house. (more…)

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