Archives of “clean slate” tag

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Democracy Failure Follows Market Failure

  
Economy, Education
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Some very spicy comments from the Hungarian prime minister who basically tells the world to get lost (please admire effort to remain polite on his part). In so many words it’s not his fault, it’s the previous administration’s fault. Sounds familiar? Obama has used it at will, Greece has used it, I heard Sarkozy use it, and just about everybody else! Even Republicans who campaigned to “Drill baby drill!” now blame the BP fiasco on Obama. Needless to say political courage is something that no longer exists, and populism has been the only political program offered to us for now a solid 40 years. The natural extension is for a Prime Minister to just walk in and say: “You know what screw you guys, we will default, I am not taking back tax cuts that got me elected, I am not telling people who were promised early retirement that really it’s not feasible, I’m just not going to deal with any of this. Let’s just default and keep doing what we were doing”. In the same line of thought the French PM declared this morning that there is nothing bad about EURUSD at parity.

If you think it’s bad to sell someone a mortgage they can’t pay, how about promising them a lifestyle they can’t afford! Washington has some nerve to blame the financial industry: “a house for every American” was their idea. Granted there is plenty of blame and jail time deserved at many financial institutions but it is true also for Congress. I used to think that over the past 40 years the commodity that was most devalued was human labor but I have changed my mind. A man’s word no longer has any value in most cases. Should the law be changed so that it holds our leaders accountable for their words? Why not, we would get a hell of a clean slate and something to be finally hopeful about. That is change I would believe in for sure. (more…)

Take the knocks

  
  Education
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I’ve identified recently that one of the most important internal abilities a trader needs is a seemingly endless supply of resilience to take daily knocks in the market and get back up. For me this shows up as a “not happening day”…

Some days its happening, but some days its not. As soon as I realize I’m in a not happening day the most important thing to do is quit right now and start again tomorrow completely fresh. Just forget it, start over tomorrow.

Each day in the market has no connection for the trader to the one before, its a clean slate. You need to just bounce back like a ball, fresh as a daisy. The sins of yesterday are completely forgiven, but you will be judged on how you act today.

Strangely I notice that these days also often line up to some degree with market behavior. My not happening days can sometimes be accompanied by a daily print that whipsawed in an ugly confused fashion.

This is not always the case, sometimes the market trends cleanly but I just didn’t get what was going on, I was in the wrong state to be doing this. Other days my head is clear but the market is a nervous wreck.

It is a strength though to be able to realize quickly that today its just not happening for what ever reason and to leave it for another day. If I’m in a position and i feel like this, I’ll just cut it, start flat tommorow. Usually these are positions that are going nowhere or else going bad anyway.

Paralysis By Analysis

  
  Education
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When too much information is amassed, a person is unable to internalize pertinent data necessary for rapid fire decision making. When one is unable to process the mass amounts of information, inaction occurs.

Common Problems:

  1. Not prioritizing
  2. Confusion
  3. Postponement of decision making
  4. Bad judgement
  5. Time mismanagement
  6. Lack of critical thinking
  7. Feeling psychologically stressed and overwhelmed
  8. Working hard, but feeling behind

Common Causes:

  • The delusion of a infinite range of possibilities to make money.
  • Insistence on completing all analysis before initializing action.
  • Too many variables all at once causing incessant revisiting of original signal.
  • Lack of daily objectives.
  • Choosing quantity over quality
  • Increasingly conflicting trading methods.
  • Creative speculation, that is, you can outguess the guessers.
  • Big Project Syndrome: this system will do it all, will use the latest tools, will use a new paradigm, will start with a clean slate.
  • Risk avoidance, fear of making a mistake.

Viable Solutions:

  • Keep trading system simple. Never integrate varying styles. Building a bigger model doesn’t add clarity – it creates confusion.
  • Do enough analysis to convince yourself the odds are in your favor – and then stop!
  • Refuse to review technical complexities, instead, review working functionality. If you’re not seeing simplicity in trading system design, move on.
  • Start your system design with one requirement based on sound principles, i.e, an architectural prototype. A trading system without a prototype is like a candle without a wick, which is how analysis paralysis really happens.
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