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Positive words carry less information than negative words

  
Analysis, Education
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Intriguing new paper showing the higher signal in negative words.

Positive words carry less information than negative words

We show that the frequency of word use is not only determined by the word length [1] and the average information content [2], but also by its emotional content.We have analysed three established lexica of affective word usage in English, German, and Spanish, to verify that these lexica have a neutral, unbiased, emotional content. Taking into account the frequency of word usage, we find that words with a positive emotional content are more frequently used. This lends support to Pollyanna hypothesis [3] that there should be a positive bias in human expression. We also find that negative words contain more information than positive words, as the informativeness of a word increases uniformly with its valence decrease. Our findings support earlier conjectures about (i) the relation between word frequency and information content, and (ii) the impact of positive emotions on communication and social links.

WILLIAM O'NEIL'S STOCK TRADING COMMANDMENTS

  
  Education
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Last Night ,Completed reading  Trade Like An O’Neil Disciple by Gil Morales and Dr. Chris Kacher. One of the chapters, with a wealth of information, is “Our Bill of Commandments” wherein the authors discuss William O’Neil’s (think IBD) stock trading commandments. I thought it would be worthwhile to list them here.

1.  Never Get Carried Away With Yourself.  “The basic idea is that one should remain impervious to the illusions and trappings of wealth, as they often lead one to become carried away to the point where excess of one sort or another ultimately leads to one’s demise” (265).

2.  Never Operate From a Position of Fear.  “If you are fearful in the markets, either as a result of taking a recent loss or some other mistake, or even as a result of being nervous about the level of risk you are taking, then you are putting yourself in the position of making and unclear and hence incorrect decision” (265).

3.  You Learn More From Your Enemies Than You Do From Your Friends.  Make sure you take the criticism’s of others and use them to your advantage by recognizing that the more others criticize the more you value your own beliefs, trading or otherwise.

4.  Never Stop Learning and Improving. Always focus your mistakes and searching for ways to correct them.  That way you will not be as tempted to make the same mistake again. 

5.  Never Talk About Your Stocks.  This is purely an ego taming exercise.  While I personally believe it is ok to discuss technical analysis and stocks that may be on a watchlist there is really no benefit in bragging about success and hiding your failures.  It is ok to be wrong. 

6.  Don’t Get Giddy at the Top.  Bigger charts (such as the WEEKLY) are the best barameters for giddiness.  By watching over extended big charts, the trader’s emotions can be better managed thereby avoiding jumping on the caboose as the train is set to take a break from its recent trip.

7.  Use Weekly Charts First, Daily Second, and Ignore Intra-day Charts.  No need to focus on the noise at the expense of listening to the still, small voice of Mr Market. 

8.  Find The Big Stock.  Look for stocks under accumulation and then begin buying in preparation for distribution.

9.  Be Careful Who You Get Into Bed With.  Although not a trading rule per se, keeping good, solid company outside the charts, can help you be the best trader inside the charts.  “Trust and integrity between two people are the most important variables in life and in business” (269).

10.  Always Maintain Insane Focus. Focus “is what makes life worth living, and by relentlessly pursuing our passions we attain the state of insane focus that in turn drives high levels of success” (269).

No matter what you think of O’Neil and his trading strategy, one thing is for certain his commandments are applicable to all of us both in and outside the charts. 

101% ,Buy this Book too …..Read Trading/Pyschology Books it will be good for u !!

Fear

  
  Education
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  fear-daytrading
 

One of my favorite bits of trading advice was given 85 years ago by Jesse Livermore in Reminiscences of a Stock Operator: 

“The speculator’s chief enemies are always boring from within.

“It is inseparable from human nature to hope and to fear. In speculation when the market goes against you, you hope that every day will be the last day and you lose more than you should had you not listened to hope… to the same ally that is so potent a success-bringer to empire builders and pioneers, big and little. And when the market goes your way you become fearful that the next day will take away your profit, and you get out too soon. Fear keeps you from making as much money as you ought to.

The successful trader has to fight these two deep-seated instincts. He has to reverse what you might call his natural impulses. Instead of hoping he must fear; instead of fearing he must hope. He must fear that his loss may develop into a much bigger loss, and hope that his profit may become a big profit. It is absolutely wrong to gamble in stocks the way the average man does.” (more…)

Trading Wisdom – Andrew Gordon

  
  Education
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Legendary stock trader Jesse Livermore had it right: The big money is in the big moves … and the trick to making the big money is knowing how to sit tight and ride the trend for all it’s worth. As obvious as that may seem, many investors have trouble doing it.

They are, as cognitive psychologists like Daniel Kahneman and Amos Tversky would say, “risk-averse.” The pain they experience in losing money is far greater than the pleasure they experience in making it. As a result, these investors typically sell their investments too soon for fear of incurring a real or even a paper loss.

To profit the most from an investment, you need to be able to wait long enough for it to achieve its full potential. So if you’re “risk-averse” by nature, it might be a good idea for you to avoid paying too much attention to the news. If you’re watching television and the nightly business report comes on, change the channel. Set aside the business section of the paper to read on a rainy day. Ignore cocktail chatter about investing. That way, you’re more likely to stick to your trading plan instead of letting your emotions overpower your better judgment. 

10 Things that Great Traders have Declared Independence From

  
  Education
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10 Things that Great Traders have Declared Independence From

  1. Great traders do not have to be right about any one trade, their success is based on winning more than they lose on a large amount of trades.
  2. Great traders do not need trade ideas from other traders, they trade a system and method independent of others opinions.
  3. The best traders are independent of holding on to losing trades stubbornly trying to prove they are right, they cut losses.
  4. The best traders are not prisoners of their emotions they can make clear headed decisions due to trading like it is a business not an ego trip.
  5. Rich traders became rich because they had systems that allowed winning trades to be free to run as far as they would go. They are independent of price targets.
  6. Rich traders trade independently from Blue Channels sentiment.
  7. Great traders trade charts independently of market sentiment.
  8. Great traders trade independently of talking heads on financial television.
  9. Winning traders are independent of market gurus they have proven systems and methods.
  10. Great traders are free from the risk of ruin because they never risk more than 1% to 2% of their total capital on any one trade.

Ten Questions to ask Yourself Before Every Trade

  
  Education
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If you are just randomly trading what you like with no real underlying system, method or planning then unfortunately your odds of success in the long term are slim. Trading a winning methodology is what creates an edge in trading.

Consistently trading a robust system or methodology enables you to trade in a way that historically wins, controls risk, and does not bring your ego and your emotions into your trading in a destructive way.

Ten questions to ask yourself before every trade:

  1. Does this trade fit my chosen trading style? Whether it is:  swing trading, momentum, break out, trend following, reversion to the mean, or day trading?
  2. How big of a position do I want to trade? How much capital am I going to risk? Am I limiting my risk to 1% or 2% of my trading capital?
  3. What is my risk of ruin based on my capital at risk?
  4. Why am I entering the trade here? What is the trigger to trade?
  5. How will I exit with a profit? A price target or trailing stop? (more…)

40 Rules for Traders

  
  Education
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1. Trading is simple, but it is not easy.
2.  When you get into a trade watch for the signs that you might be wrong.
3.  Trading should be boring.
4.  Amateur traders turn into professional traders once they stop looking for the “next great indicator.”
5.  You are trading other traders, not stocks or futures contracts.
6.  Be very aware of your own emotions.
7.  Watch yourself for too much excitement.
8.  Don’t overtrade.
9.  If you come into trading with the idea of making big money you are doomed.
10.  Don’t focus on the money.
11.  Do not impose your will on the market.
12.  The best way to minimize risk is to not trade when it is not time to trade. 
13.  There is no need to trade five days a week.  
14.  Refuse to damage your capital.
15.  Stay relaxed.

16.  Never let a day trade turn into an overnight trade.17.  Keep winners as long as they are moving your way.
18.  Don’t overweight your trades.
19.  There is no logical reason to hesitate in taking a stop.
20.  Professional traders take losses because they trust themselves to do what is right.
21.  Once you take a loss, forget about it and move on.
22.  Find out what loss parameters work best for your setup and adjust them accordingly.
23.  Get a feel for market direction by “drilling down” (looking at multiple time frames).
24.  Develop confidence by knowing and executing your trade setups the same way every time.
25.  Don’t be ridiculous and stupid by adding to losers.
26.  Try to enter a full size position right away.
27.  Ring the register and scale out of your position.
28.  Adrenaline is a sign that your ego and your emotions have reached a point where they are clouding your judgment.
29.  You want to own the stock before it breaks out and sell when amateurs are getting in after the move.
30.  Embracing your opinion leads to financial ruin.
31.  Discipline is not learned until you wipe out a trading account.
32.  Siphon off your trading profits each month and stick them in a money market account.
33.  Professional traders risk a small amount of money on their equity on one trade.
34.  Professional traders focus on limiting risk and protecting capital.
35.  In the financial markets heroes get crushed.
36.  Stick to your trading rules and you will never blow up your trading account.
37.  The market can reinforce bad habits.
38.  Take personal responsibility for each trade.
39.  Amateur traders think about how much money they can make on each trade.  Professional traders think about how much money they can lose.
40.  At some point all traders realize that no one can tell them exactly what is going to happen next in the market.

I Promise I Will Never Do That Again!

  
  Education
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Have you ever experienced doing well for a period of time and then something just snaps and you end up losing a significant amount of money? It happens in a variety of ways and for different reasons, but what typically follows is a self beating-up process, and/or a promise that you will never do THAT again!

Sound familiar? It’s a very common phenomenon.

Unfortunately, the promise you make to yourself typically gets broken again…and again…..and again.  As the pattern continues, the potential for more psychological damage becomes very real.

Over many years as a clinical psychologist people have come to me who are struggling with repetitive problem behaviors. Many of them previously tried various forms of ‘willpower’ without any long-lasting success.

As a trading psychology coach and consultant I can tell you that most traders see the solution as an act of willpower or “trying harder next time”. But I have news for you.  Although willpower is certainly necessary to be a good trader, it alone will not break a deeply rooted problematic pattern. If it was simply a matter of  ‘doing it differently next time’, then many traders would of already done that and the pattern would never appear again.

So, how does one break the pattern? I suggest that the ‘promise’ you make to yourself is not only about willpower, but also a promise to learn about what makes you tick, such as your emotions and your sub-conscious process.

I Trade In The Zone.

  
  Education
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  1. I Trade In The Zone’. I Trade IN The Moment, IN The Present, With Total Disregard For What Others Think & Feel About Me.
  2. ‘I Trade In The Zone’. I Ignore ALLEmotions & Defensive Perspectives. I Trade; I Do, I Act From An Entirely Detached & Impartial Perspective.
  3. ‘I Trade In The Zone’. Only In The Zone Do I See The Market As It Truly Is.
  4. ‘I Trade In The Zone’. I Block Out ALL Bad Habits & Self-Limiting Beliefs Attained From My Past, My Environment & Their Surrounding Noise.
  5. ‘I Trade In The Zone’. My Mind Is Pure, Clear, Focused & Yet Empty. The product Of‘Choice’ Means I ALWAYS Can; At Will, ‘Trade In The Zone’.
  6. ‘I Trade In The Zone’. I Trade Without Ego, Never Reacting To Pain, Sorrow Or Fear. I Just Trade The Market As It Truly Is. I Am A Super Trader, I Am The Master Of My Emotions, & So I Can Trade In The Zone. ‘I TRADE IN THE ZONE’.
  7. ‘I Trade In The Zone’. Trading In MY Zone Means I Distinguish Actual Reality From My Interpretations & Projections Of Reality. I Control The Zone!
  8. ‘I Trade In The Zone’. Only In The Zone, My Centred State, Can I ‘Super Trade.’ I Flow With Trends, I Spot Reversals & Breakouts; I Cut Losses Without Hesitancy & Let My Profits Run Perpetually. ‘I Trade In The Zone’.
  9. The Zone Is Where I Live; It’s My Nirvana, My Sanctuary, My Paradise, My Heaven.
  10. I LIVE & TRADE In The Zone. The Zone Is In Me; & The Key To Enter Is Within Me Forever!

In Search Of Emotional Discipline

  
  Education
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 emotional-discipline
 
 
 
 
 

  • An intra-day watch list keep you organized, focused, and ready to ACT
  • Trading specific candlestick patterns forces you to be consistent in your observations
  • Trading 15 min bars allow the market enough time to marinate and develop patterns
  • 15 min timeframe give you the opportunity to calmly stalk your prey and not rush to judgement (more…)
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