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There is No Such Thing as Information Overload

The information dietJust as too much junk food can lead to obesity, too much information can lead to stupidity.

Clay Johnson’s book, The Information Diet, shows you how to thrive in this information glut, but you must accept that there is no such thing as information overload.

Once we begin to accept that information technology is neutral and cannot possibly rewire our brains without our consent or cooperation, something else becomes really clear: there’s no such thing as information overload.

It’s the best “first world problem” there is. “Oh, my inbox is so full,” or “I just can’t keep up with all the tweets and status updates and emails” are common utterances of the digital elite. Though we constantly complain of it—of all the news, and emails, and status updates, and tweets, and the television shows that we feel compelled to watch—the truth is that information is not requiring you to consume it. It can’t: information is no more autonomous than fried chicken, and it has no ability to force you to do anything as long as you are aware of how it affects you. There has always been more human knowledge and experience than any one human could absorb. It’s not the total amount of information, but your information habit that is pushing you to whatever extreme you find uncomfortable. (more…)

18 Trading Wisdom Thoughts for Traders

1. You will be tested mentally and emotionally this is not for the weak minded.

 2. Master Traders are detached emotionally from profit or loss. 
3. Boredom is the enemy of the master opportunist.

 4. Haste is the enemy of great entry points.

5. Doubt is often followed by a lost opportunity.

6. The Trend will give you direction on your path.

 7. Having an exit strategy prevents unnecessary pain.
8. The laws of probability give strength to your fingers.

 9. Going against momentum brings forth the fools reward.

 10. Better the bad trade that is unrewarding.

 11. Habit is built on the principles of probability.

12. Know your exit point in the worst case scenario first.
13. The master trader is an escape artist.
14. When one knows the present they master the futures.

 15. Set realistic goals and let the good times role.
16. A loss can be turned into a win when one is swift.
17. A master in day trading trades in an egoless state.

 18. Times of great probability are like diamonds falling from the sky.

DISCIPLINE IN TRADING

Discipline: “Habit of Obedience”

 Have a trading plan or system is essential to the exercise of good discipline, as it normally imposes certain parameters and sets out certain criteria which dictate how trading decisions should me made and what needs to be done in certain situations. Habitually following your plan is what is meant by the exercise of good trading discipline, which, in turn, will help you realize the best expected results possible from your plan. If you find that your trading plan or system is not meeting your expectations, despite habitually following it for a reasonable period of time, good discipline requires that you be prepared to review it and make any adjustments or fine tuning necessary for future use.

 Lack of Discipline

Day traders who suffer from lack of discipline often allow their emotions to rule their trading decisions, which often leads to bad decisions and unacceptable trading losses. Never allow your emotions to rule your trading. In order to trade successfully, you must develop a trading plan. (more…)

Observation, Experience, Memory and Mathematics

“Observation, experience, memory and mathematics – these are what the successful trader must depend on. He must not only observe but remember at all times what he has observed. He cannot bet on the unreasonable or the unexpected, however strong his personal convictions may be about man’s unreasonableness or however certain he may feel that the unexpected happens very frequently. He must bet always on probabilities – that is, try to anticipate them. Years of practice at the game, of constant study, of always remembering, enable the trader to act on the instant when the unexpected happens as well as when the expected comes to pass.

“A man can have great mathematical ability and an unusual power of accurate observation and yet fail in speculation unless he also possesses the experience and the memory. And then, like the physician who keeps up with the advances of science, the wise trader never ceases to study general conditions, to keep track of developments everywhere that are likely to affect or influence the course of the various markets. After years of the game it becomes a habit to keep posted. He acts almost automatically. He acquires the invaluable professional attitude that enables him to beat the game – at times! This difference between the professional and the amateur or occasional trader cannot be overemphasized. I find, for instance, that memory and mathematics help me very much. Wall Street makes its money on a mathematical basis. I mean, it makes its money by dealing with facts and figures.” (more…)

Priceless Wisdom from Reminiscences Of A Stock Operator

“His name was Partridge, but they nicknamed him Turkey behind his back, because he was so thick-chested and had a habit of strutting about the various rooms, with the point of his chin resting on his breast. The customers, who were all eager to be shoved and forced into doing things so as to lay the blame for failure on others, used to go to old Partridge and tell him what some friend of a friend of an insider had advised them to do in a certain stock. They would tell him what they had not done with the tip so he would tell them what they ought to do. But whether the tip they had was to buy or to sell, the old chap’s answer was always the same.

The customer would finish the tale of his perplexity and then ask: “What do you think I ought to do?” Old Turkey would cock his head to one side, contemplate his fellow customer with a fatherly smile, and finally he would say very impressively, “You know, it’s a bull market!” Time and again I heard him say, “Well, this is a bull market, you know!” as though he were giving to you a priceless talisman wrapped up in a million-dollar accident-insurance policy. And of course I did not get his meaning.

One day a fellow named Elmer Harwood rushed into the office, wrote out an order and gave it to the clerk. Then he rushed over to where Mr. Partridge was listening politely to John Fanning’s story of the time he overheard Keene give an order to one of his brokers and all that John made was a measly three points on a hundred shares and of course the stock had to go up twenty-four points in three days right after John sold out.  (more…)

Universal Laws of Success

Universal Laws of Success(1) Law of LOVE – It says in essence – “LOVE ALL PEOPLE AS YOURSELF”. All other rules are subordinate to this one Law – they must NOT conflict with it. It’s biblical. It applies to everything we do – as individuals – families – business teams – organizations – countries. It is Global in its reach.
(2) Law of CAUSE & EFFECT – This is an orderly universe. There are no accidents. Everything happens for a reason. For every effect there’s a cause or a set of causes.
(3) Law of MIND – Thoughts objectify themselves. We ‘become’ what we ‘think about’.
(4) Law of MENTAL EQUIVALENCY – To achieve success in any area, we must have a ‘clear image’ of that success in our mind a mental picture of our idea of success – a vision. (more…)

Books on short-selling

1) How to Make Money Selling Stocks Short by William O’Neil (Wiley, 2005) – [Technical, Swing & Position Trading]
2) Sell & Sell Short by Dr. Alexander Elder (Wiley, 2008) – [Technical, Day Trading]
3) The Art of Short Selling by Kathryn Staley (Wiley, 1997) – [Fundamental]
4) Sold Short by Manuel Asensio (Wiley, 2001) – [Fundamental]
5) Sell Short: A Simpler, Safer Way to Profit When Stocks Go Down by Michael Shulman (Wiley 2009) – [Macro]

The best way to become an effective short seller is by making it a habit of studying hundreds and even thousands of charts every week. Train your eye to see the setups, the accompanying volume, how the MA’s line up, etc. The only way to do this is with practice. Short-selling can become very profitable due to the simple fact that stocks drop faster than they rise (in most cases) and for me, it typically only takes about 1-3 days to make a decent profit of 10% or more.

Trade only the best setups to increase your odds. I do recommend the use of stop losses above key resistance areas due to the fact that losing short positions can cause serious damage if left unattended.

Overcoming fear

 I recently read a few simple quotes on overcoming fear that I wanted to share:

“I have not ceased being fearful, but I have ceased to let fear control me.” — Erica Jong

“Your fears are not walls, but hurdles. Courage is not the absence of fear, but the conquering of it.” — Dan Millman

“The key to success is for you to make a habit throughout your life of doing the things you fear.” — Brian Tracy

7 Points to Bulid Trading Confidence

1. Frequently visualize a successful trading process. What goes into good trading for you? Make sure you see the preparation required, the focus you have during the trading day, and the continous learning from both winning and losing trades to keep getting more effective.

2. Increase your level of physical fitness, as this will enhance both your trading alertness and give a boost to your self-image simultaneously. Both of these elements make you a more confidence trader.

3. Make a list of your strengths. Review this list regularly to remind yourself of how successful you really are.

4. Eliminate negative thoughts and memories. When they occur, replace them with positive self-statements (for example, “I create my own luck” or “I have a good written plan of how I will execute my trades”).

5. Have a general strategy going into each trading day. When you prepare the day before, you position yourself to be proactive and gain confidence as you implement your plan. How aware are you of what you’re experiencing in your mind, body and soul at any moment?  You need to set up a monitoring system at the end of each trading day, to summarize what you executed according to your rules and what you did not.  Look for patterns in your behavior, that you can copy if they work for you, or minimize if they are costing you.

6. Create positive body language regardless of the gain or loss on that trading day. The way you act will often influence the way you feel for future trades. The more confident you feel, the more confidence you will show in your trading.

7. Improve on areas of weakness during preparation time and you’ll create more confidence and belief during the trading day. 

Focus on one of these seven tips at a time, until you can build that area as a habit in your routine.  This will service to greatly improve your trading confidence over time.