Archives of “confidence” tag

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The Power of Regret

  
  Education
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Everyone knows that chasing price is usually not beneficial, we either end up catching the move too late, or we get poor trade location, which makes it more difficult to manage the trade.

However, there are other forms of chasing that are just as common, maybe more common, and just as counter-productive.   As a trading psychologist I see these all the time.

Traders who are not profitable are often too quick to chase after new set-ups and indicators, or a different chat room, if that’s your thing.  Obviously, we need to have a trading edge, whether it is from the statistical perspective of a positive expectancy, or simply the confidence in a particular discretionary strategy such as tape reading, following order flow, market profile, etc.

Chasing a trade is the fear of missing out. The fear of missing out is associated with various emotions, including regret. In my work with traders and in my own trading, I’ve seen the incredible power of regret. There’s a lot of talk about fear and greed in trading, but the power of regret is often overlooked. Some of my own worst trades, and those of my clients, often have a ‘regret from missing a prior opportunity’ component. When I finally finish my book on the psychology of financial risk taking, I will include much about this overlooked but very powerful emotion.

Somewhat related to chasing a trade, is impulse trading.  They both have in common the underlying feeling of the fear of missing out.  It’s tempting for me to talk about impulse trading here, but it really deserves its own piece.

Do it once.

  
  Education
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Trading is about proving to yourself you can do things. As you get over these barriers you realize that you were holding yourself back for no reason. This will give you confidence to defeat the next one.

The first step is to recognize it. This is where it is important to see outside yourself. You can do this by writing, taking a break, talking about it, reading about trading, reading something completely opposite of trading, etc.

Here are a list of some of the barriers:

Making twice your goal. (more…)

  
  Education
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101% U all Should Buy this Book and 101% u should read…………..!!

Just completed reading this Book (Already read 3 times and everytime …..Something NEW…..I learn )

Here are 10 Lessons from the Book :

1. The Process and the Practice:  “Confidence doesn’t come from being right all the time: it comes from surviving the many occasions of being wrong” (27). 

2. Stress and Distress:  “Thinking positively or negatively about performance outcomes interfere with the process of performing.  When you focus on the doing, the outcomes take care of themselves” (56). 

3.  Psychological Well-Being:  “We can recognize the happy trader because he is immersed in the process of trading and finds fulfillment from the process even when markets are not open” (72).

4.  Steps Toward Self-Improvement:  “Your trading strengths can be found in the patterns that repeat across successful trades” (105).

5.  Breaking Old Patterns:  “Many trading problems are the result of acting out personal dramas in markets” (133)

6.  Remapping the Mind: “When we change the lenses through which we view events, we change our responses to those events” (168)

7.  Learn New Action Patterns: “Find experienced traders who will not be shy in telling you when you are making mistakes.  In their lessons, you will learn to teach yourself” (203)

8.  Coaching Your Trading Business:  “Long before you seek to trade for a living, you should work at trading competence: just breaking even after costs” (230)

9.  Lessons From Trading Professionals:  “If you don’t trust yourself or your methods, you will not find the emotional resilience to weather periods of loss” (267)

10.  Looking For the Edge: “The simplest [trading] patterns will tend to be the most robust” (311).

And a final admonition:  “Know what you do best. Build on strengths. Never stop working on yourself. Never stop improving. Every so often, upset the apple cart and pursue wholly new challenges.  The enemy of greatness is not evil; it’s mediocrity.  Don’t settle for mediocre” (341).

Technically Yours

Anirudh Sethi/Baroda

Characteristics for successful trading

  
  Education
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successfultraders-charctersticsA) absolute trust in myself to do what’s necessary when it’s necessary, B) discipline to follow my rules/method even when it’s going through a rough period (which all methods do), C) the unquestioning belief that I don’t know what’s going to happen next and that trading is just a probabilities game, D) that my success isn’t about the system/method – it’s about me and my attitude toward the market and trading, and E) the complete confidence that I really can make consistent profits from my trading over time.

Confidence

  
  Education
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ASR-CONFIDNCEMany times, you won’t feel quite right about a buy or sell decision. If this feeling persists after you have done all your research and you have followed the rules to this point, don’t take the trade. Too many times, individuals try to rationalize a decision. Don’t try to find a good reason for making a bad decision. Your decision must be made with confidence.

Trading Quotes from Way of Turtle by Curtis Faith

  
  Education
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Dont spent all your time admiring the fancy tools in the magazine.
First learn how to use the basic ones well. Its not the size of your tools that counts but how you use them.
Keep it simple. Simple time-tested methods that are well executed will beat fancy complicated method every time.
Trading with poor methods is like learning to juggle while standing in a rowboat during the storm. Sure, it can be done, but it is much easier to juggle when one is standing on a solid ground.
Trading is not a sprint; it is boxing. The market will beat you up, screw with your head, and do anything it can to defeat you. But when the bell sounds at the end of the twelfth round, you must be standing in the ring in order to win.
The market does not care how you feel. It will not prop up your ego or console you when you are down.
Therefore, trading is not for everyone. If you are unwilling to face the truth about the markets and the truth about your own limitations, fears and failures, you will not succeed. (more…)

Trading quote

  
  Education
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“The word ‘trading’ is not the way I think of things. I may be a trader in the sense that my frequency of transactions is relatively high, but the word ‘investing’ would apply just as much, if not more. In my mind, trading implies an anticipation of a sale at the time of purchase. Good trading is a peculiar balance between the conviction to follow your ideas and the flexibility to recognize when you have made a mistake. The balance between confidence and humility is best learned through extensive experience and mistakes. There should always be respect for the person on the other side of the trade. Always ask yourself: Why does he want to sell? What does he know that I don’t? All great traders are seekers of truth. The markets are always changing, and the successful trader needs to adapt to these changes.”

Effectiveness Is the Measure of Truth

  
  Education
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In trading as in life, effectiveness has to be the measure of truth. If something doesn’t work, there is no point in continuing to do it. Misperceptions, false unconscious or conscious beliefs, and unhelpful behaviors can contaminate and desecrate your most sought after results.

Imagine the frustration of a trader who perceives that a market is changing direction when in fact it is persisting in its original thrust. Or consider, for further example, an investor who bought into the belief that buy and hold is a valid investment strategy. That investor had to have experienced devastating losses over the past year. Or ponder the trader who repeatedly fails to utilize stop losses and experiences numerous outsize losses because he won’t accept a loss. (more…)

Overconfidence

  
  Education
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The perfectionist may never be really convinced that a certain market setup is right to enter into a position and the overconfident trader may neglect certain signals that the setup is not worth trading on.

A trader may become overconfident after a few successful trades. It’s very hard to fight the ‘I am the market God’-emotion. Making a number of consecutive successful trades is not necessarily a sign you have figured out how the markets work, the same way a losing streak is not a sign you’re a bad trader.

After a huge success it’s tempting to trade a larger size or accept more risk. The general idea is that simply because of the huge profit in the previous trade, more size and/or risk is acceptable in the next. But when you think about it, a realized profit is part of your account now, it’s no different than money made on earlier trades, it is money you worked hard for. There can be good reasons to increase trading size or risk, but that should be part of a plan, not just an impulsive decision based on a feeling of being ‘invulnerable’.

Ask yourself, which feeling is worse: losing yesterday’s profit, or losing the profit made 10 days ago? If that feels different, the first one being less worse, then it may be wise to stop trading for a few days after a good trade. During those days, the profit will slowly change from being ‘an extra’ to being ‘part of your trading account’. In other words, you get used to it and handle it with more care.

Overconfidence can also come from a (strong) conviction that the market has to go a certain direction based on a personal opinion about the economy, politics, the FED, interest rate, unemployment numbers etc etc. This kind of confidence has been discussed before. The remedy is simple: don’t trade the news.

BP= Bankrupt Petroleum?

  
Analysis, Education, US Market
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Above is the Monthly chart of

It was a bad day for most stocks , but it was a bloodbath for embattled oil giant BP.

Shares of BP dived 16 percent , driving the stock price to below $30 per share, the worst drop on record for the company. The British energy giant closed at $29.20 per share. More ominously, investors and traders rushed to dump their BP: Trading of the stock occurred at four times normal volume today.

As a result, the asset-rich company is now trading for less than its book value, which is essentially all the assets it has — oil fields, oil rigs and so forth — minus intangible assets and liabilities.

In English, this means that investors and traders think that the company is now actually worth less than all the hard assets it owns. That’s a confidence trade.

Today, BP is worth $91.4 billion. In mid-April, the company was worth $180 billion.

BP will be forced into a pre-packaged bankruptcy hit the markets like a torpedo into a well head.

What is interesting is that companies are usually very quick to respond to market rumors. So far BP has been silent and has yet to issue any statements regarding the speculation of a bankruptcy filing.

I have no other information than what is being reported on the wire services. If BP is to make a statement dispelling the speculation they had better do it soon.

 

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