Financial Occultist

There are some things we can control as traders and some things that we can not. We need to learn the difference to limit our frustration and win in this game.

We can control:

How much we risk per trade.

How big a position size we take.

What time frame we trade.

What market we trade.

Our style of trading.

Whether we stick with our trading plan or go off of it.

If we honor our stop losses and trailing stops.

How we react to a winning or losing trade.

We can not control:

Whip saws when the trend reverses on us.

Gaps in opening prices both up and down.

Headline risk.

Natural disasters.

Whether a trend continues or reverses the moment we open a position.

Whether any individual trade wins or loses.

How many winning or losing trades we have in a row.

The battle for your long term trading success is won or loss in your head. The decision to whether keep going after losing money or to quit is made at the point of maximum frustration with the markets. To keep going you have to keep positive, and keep trading. Knowing the difference between you making a mistake or the market simple not matching your style will go a long way in keeping down your stress and negative self talk.

Domestic flows vs foreign flows into India's stock market

03-Jan-19 10:39 pm

Anirudh Sethi

The best investors (and traders) are modest

03-Jan-19 10:37 pm

Education

Anirudh Sethi

Let’s face it you suck at investing. Your advisor sucks at investing too. You have all seen where monkeys picking stocks or throwing darts at a list can do better than many if not all advisors.

But Quartz is out with their annual analysis of just how bad you suck at this game. If you had picked the best stock to buy every day you could have turned $1000 into $179 billion by mid December. That is a 17.9 billion percent return.

Did you even get a 1 billion percent return? How about 1 million percent? 1000%? 100%? If you did not hit a 100% return then you did not get even 4/10 millionths of what was out there. Translation: You suck at stock picking. People like Jack Bogle will use this type of data to tell you that you are wasting your time even trying and that you should just index your portfolio.

Coincidentally he runs a few dollars in an index fund. I find it more interesting when some manager makes a killing and convinces themselves that they are geniuses. No one in this game is a genius. 100% return sucks remember? (more…)