Archives of “consequences” tag

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Super Rich: The Greed Game

  
Education, Video
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The luxurious lifestyle of those at the top of the world of finance inspires awe, disgust, and ambition. With the mind boggling salaries of the hedge fund traders in the millions and even hundreds of millions of dollars, it’s no wonder people are growing curious about how they made their money.

Robert Peston, the BBC’s Business Editor, talks with investment bankers, hedge fund managers, and top managers from private equity firms on how the super rich have made their money. It offers an eye opening look into how the big earners operate, and some of the potential consequences of their greed driven pursuit of more and more money and success. 

Taleb's aphorisms

  
  Education
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Just in time for holiday sales Nassim Taleb is back with what The New York Times dubs a “happily provocative new book of aphorisms,” The Bed of Procrustes. If you are among the unwashed who don’t understand the reference, “the Procrustes of Greek mythology was the cruel and ill-advised fool who stretched or shortened people to make them fit his inflexible bed.” It’s easy to understand why Taleb invoked this fool: “we humans, facing limits of knowledge, and things we do not observe, the unseen and the unknown, resolve the tension by squeezing life and the world into crisp commoditized ideas, reductive categories, specific vocabularies, and prepackaged narratives, which, on the occasion, has explosive consequences.”

The book is short and inexpensive. I will undoubtedly succumb and buy it even though it evokes mixed memories of exchanged aphoristic barbs with a titan in his (very different) field. Academic cleverness can easily turn ugly. But then why should the battles for intellectual capital be any different from those for other forms of capital?

The James Bond Method To Stock Trading

  
  Education
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So you want to be high flyer? Drive fast cars, attract the hot women, and travel the world? What sounds like the James Bond way of living, isn’t actually too far off that of a successfully wild stock trader?

While this approach might not be the most risk-adverse style of trading , we can all learn a thing or two from James Bond when it comes to making big bucks in the stock market.

Don’t worry about the consequences

While he may get himself into some crazy situations, James Bond never lets fear get in the way of getting the job done. Bond will walk straight into dark hallways and rooms filled of bad guys, confident that he has the upper hand.

Just like Bond, you too can block out potential consequences of stock trading. Don’t let the fear of losing money or a failed trade scare you away. Head into any situation, confident in your trading strategy.

Never get stressed out

For as great as Bond is, no other action hero gets caught into messy situations as much as Bond does. From the initial capture to just seconds before he finds his way out, Bond never loses his cool.

He stays calm under pressure and focuses on what to do next, rather than what might happen.

Just like Bond, you too can learn to keep cool under difficult situations. Understand that you don’t necessarily need to sell at the first sign of red or throw more money at the stock. Simply stay calm, asses the situation, and find your way out.

Don’t stick around too long (more…)

Three Motivations for Traders

  
  Education
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There are three motivations behind taking a trade: monetary reward, educational reward, and/or psychological reward. The first pays the bills, the second will pay the bills, and the last will prevent you from paying the bills.

Whenever I feel the pull of psychological reward, I have the voice saying “do you want to be a trader?” Letting go of the psychological need to take a trade or be right, is hard. Our brain does not know what money is. It listens in terms of chemical releases. Letting go of psychological reward is not easy. It is the most instantaneous form of reward.

The best way I know to give psychological power to money is to make a habit of seeing money as opportunity. Opportunity for financial freedom and opportunity to make another trade. The brain understands opportunity. This needs to be in balance as well.

If you are feeling the psychological pull, take a few seconds and answer the following.

Do I want to be a trader?
Did my last trade affect the thought process in an irrational way for this trade? (Need to be right, need to make my money back, I am invincible, etc.)
Can I get a better price or is this my best opportunity?
Am I seeing the whole picture?
As always, am I willing to accept the consequences of my action or inaction?

Warp Speed or Turtle Speed?

  
  Education
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A lot of statistics are published about the number of traders that are ’successful’ even though we don’t always receive their definition of successful.

Whether it is 70% or 95% of new traders that are said to lose all of their capital in the first 30-60 days, the real question is WHY??

In almost every case that I hear about when a person states that they quit trading because they lost all of their money in the first 30-60 days so they got discouraged and said that trading was not for them, these individuals attempted to move too fast when they started. They had acquired very little, if any, type of training and then jumped into a live account without any direction or plan.

Anyone who steps into the trading world (or any endeavor) without training to acquire the skills needed to approach the new program is setting themselves up for a very challenging situation and generally more failures than successes.

You can approach a new situation in life at warp speed and take the consequences or at the speed of a turtle and build your skills and experience so as to eventually acquire warp speed movement, but with turtle-like results, which is what the turtle always experienced when he raced the rabbit….. Success!!

Expectation vs Acceptance

  
  Education
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Take a second and think about those two words?  What do they mean to you?  To me there is a distinction.  I do not expect to lose, I accept a loss.  By accepting a loss I can focus forward.  I cannot worry about what I cannot control.  I cannot control if I lose, I can only control how much I lose (except in the rare case as stated above).

Many people stumble on the difference between expectations and acceptance, I know that I did.  Acceptance means I will take whatever my trading plan and ability allows me to take from the market.  Doing the work and following the plan, I expect to get the most of that acceptance.

For me, the worst thing that can happen is that I do not follow my plan because that is what I control.

Please note I am saying to just go crazy and not think about the consequences of trading. I cannot speak for every traders situation, the trader does.  I always hesitate in writing a post like this because it has the potential of being taken the wrong way. Once the work is done you should want to perform. The purpose of all the hard work is to find a way to be successful.

What Stays Behind Your Intuition As A Trader

  
  Education
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There are about 7 billion people currently living on the Earth. Each and every single one of us has a different perspective regarding anyone and anything. Do you know why? Because everyone has slightly different past experiences and the way we see the world is determined by our memories. Without them, we don’t have a basis to compare to and without a basis to compare, we are lost. We don’t know how to feel. We perceive through association. We associate based on something already experienced.

I distinguish two types of intuition – inherent and acquired. Inherent is the one you were born with and it is the end product of hundreds of thousands of years of evolution aka trying to survive in the fields. We are wired to seek instant gratification without a deeper thought about the future consequences, we are loss averse and stubborn.Intuition

While the inherent (core) intuition is the pre-installed software, each and everyone of us is born with, the acquired intuition is the upgrade we get through life as it is based on everything we experienced. Your brain remembers everything, even if you don’t realize it. Of course you can easily recall only the most vivid memories as depending on your everyday activity the brain has prioritized what is important and what is not. (more…)

Black Belt Trading

  
  Education
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Black BeltJust like you shouldn’t practice your basic martial-arts forms in the ring where your mind is more focused on pain avoidance then executing the tactic correctly, a novice shouldn’t begin trading with real money and real consequences. Only once you’ve amassed significant practice in a safe environment where you can conduct your technical and fundamental analysis without being emotionally distracted should you begin to trade with real money. And when you finally start, don’t jump straight into the ring with Bruce Lee. Begin tentatively, gradually, slowly increasing your trading exposure over time as you become accustomed to the increasing levels of risk. How do you know you’ve moved too far, too fast? If you are finding it’s becoming harder to sleep at night, either because you are worrying about your trades or you are excited about your gains, then you have moved into the realm where your emotions are going to have too strong an effect. You are going to start making poor, emotionally-clouded decisions and so it is time to scale back.

Ray Dalio Principles

  
  Education
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  • I remained wary about being overconfident, and I figured out how to effectively deal with my not knowing. I dealt with my not knowing by either continuing to gather information until I reached the point that I could be confident or by eliminating my exposure to the risks of not knowing.
  • While most others seem to believe that learning what we are taught is the path to success, I believe that figuring out for yourself what you want and how to get it is a better path.
  • How much do you let what you wish to be true stand in the way of seeing what is really true?
  • How much do you worry about looking good relative to actually being good?
  • The most important qualities for successfully diagnosing problems are logic, the ability to see multiple possibilities, and the willingness to touch people’s nerves to overcome the ego barriers that stand in the way of truth.
  • Know what you want and stick to it if you believe it’s right, even if others want to take you in another direction.
  • In a nutshell, this is the whole approach that I believe will work best for you—the best summary of what I want the people who are working with me to do in order to accomplish great things. I want you to work for yourself, to come up with independent opinions, to stress-test them, to be wary about being overconfident, and to reflect on the consequences of your decisions and constantly improve.

The James Bond Method To Stock Trading

  
  Education
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So you want to be high flyer? Drive fast cars, attract the hot women, and travel the world? What sounds like the James Bond way of living, isn’t actually too far off that of a successfully wild stock trader?

While this approach might not be the most risk-adverse style of trading , we can all learn a thing or two from James Bond when it comes to making big bucks in the stock market.

Don’t worry about the consequences

While he may get himself into some crazy situations, James Bond never lets fear get in the way of getting the job done. Bond will walk straight into dark hallways and rooms filled of bad guys, confident that he has the upper hand.

Just like Bond, you too can block out potential consequences of stock trading. Don’t let the fear of losing money or a failed trade scare you away. Head into any situation, confident in your trading strategy.

Never get stressed out

For as great as Bond is, no other action hero gets caught into messy situations as much as Bond does. From the initial capture to just seconds before he finds his way out, Bond never loses his cool.

He stays calm under pressure and focuses on what to do next, rather than what might happen.

Just like Bond, you too can learn to keep cool under difficult situations. Understand that you don’t necessarily need to sell at the first sign of red or throw more money at the stock. Simply stay calm, asses the situation, and find your way out.

Don’t stick around too long

Just as fast as the actual characters who play Bond shift, Bond himself never stays in one place too long. One second he could be in Russia and the next minute he is in Las Vegas. Even the time he spends with a woman is never too long to get him into any trouble.

Like Bond, you too should never stay around a stock too long. For quick action, jump from stocks to stocks finding the ones with the most momentum and skipping out on the stale ones.

Indulge

While Bond maybe running to stop a nuclear bomb from going off, there is always enough time for a drink or a romantic night with a lady friend.

While stock trading is a serious matter, it doesn’t have to all be about facts and figures. Make sure to set time aside and enjoy the fruits of your labor. It keeps the game interesting. (more…)

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