Images for options traders

I had just started reading David L. Caplan’s book The New Option Secret: Volatility. But today I merely want to share two powerful images from the book that might make it easier for beginning option traders to understand the impact of time on their position. More experienced traders can empathize.

Let me quote Caplan.

“The short premium trader thinks like a troubled adolescent who cannot wait for the time to pass, and move on to the next stage of life. . . . Each day presents the possibility of a major tragedy. The adolescent thinks, ‘When will it be over?’

“The long premium trader worries like an old man who has not yet left his mark on life, but is still trying to. He knows his days are numbered. . . . He says to himself, ‘If I only had more time.’”

A trading image

Images can be powerful. Here is one I particularly liked from Robert Koppel’s Bulls, Bears, and Millionaires (Dearborn Financial Publishing, 1997), p. 55, compliments of Timothy McAuliffe.

“You have to be prepared and disciplined whenever you walk on the trading floor. You also have to remind yourself that you’re just a fly on a rhino’s back, and the best you’re hoping for is a peaceful ride. If you get swell-headed, the tail’s going to get you. The trick is not to end up one dead fly!”

If you look at pictures of rhinos, their tails aren’t terribly long. So, however distasteful and ego-deflating it may be to think of yourself as a fly, the good news is that if you’re properly positioned you have a decent chance of surviving the ride.

Dream world of the compulsive gambler

This is a question that is standard in all the Gamblers Anonymous websites around the world. Reading this can be a shocking reminder of how close to the edge trading can be to gambling. We really need to know what the difference is. Are you a trader or a gambler? Notice once again it is pychology that means the difference, and not just following a system. Many gamblers have a system. Read on:

What is the dream world of the compulsive gambler?

This is another common characteristic of compulsive gamblers. A lot of time is spent creating images of the great and wonderful things they are going to do as soon as they make the big win. They often see themselves as quite philanthropic and charming people. They may dream of providing families and friends with new cars, mink coats and other luxuries. Compulsive gamblers picture themselves leading a pleasant and gracious life, made possible by the huge sums of money they will accrue from their “system”. Servants, penthouses, nice clothes, charming friends, yachts and world tours are a few of the wonderful things that are just around the corner after a big win is finally made. Pathetically, however, there never seems to be a win big enough to make even the smallest dream come true. When compulsive gamblers succeed, they gamble to dream still greater dreams. When failing, they gamble in reckless desperation and the depths of their misery are fathomless as their dream world comes crashing down. Sadly, they will struggle back, dream more dreams and of course suffer more misery. No one can convince them that their great schemes will not someday come true. They believe they will. For without this dream world, life for them would not be tolerable.

Implicit memory and Decisions

brain_power_bigImplicit memory is comprised of unconscious emotional patterns of relating to ourselves and others. It’s the kind of memory you access without thinking. It’s what makes you feel characteristically you.

These are the types of behavioural patterns laid down implicitly in the brain:

How do you feel about yourself?

Are you good at self-care? Do you accept all aspects of your personality? Or do you tend to deny yourself, or verbally beat yourself up?

How are you with others?

Do you naturally gravitate towards others and enjoy their company? Or do you prefer being on your own?

Implicit memory guides our behavior automatically, without thought or effort. You can think of implicit memory as a set of instructions or procedures encoded in the brain. However, a procedure can’t easily be described in words or contained in images. These procedures are nonconscious and nonverbal. (more…)

Keeping Perspective – You’re Not “A Trader”

  One of the things everyone who trades needs to do is to keep things in perspective. Trading is something we do, but it’s not the only thing we do. There are a great many other parts of our life and what makes us who we are. Trading needs to account for that and be incorporated into your life in a compatible, supportive fashion.

Be cautious about identifying yourself as “a trader”. I say that because when you label yourself in that way you automatically create an association in your mind based on what you have come to think of as a trader. That association will have been built up from all the things you have seen, read, heard about, and experienced in that regard – much of which probably has absolutely nothing to do with you specifically.

That last part is the key. Trading is a very personal thing. No two people are going to trade exactly the same way. When you think of yourself as “a trader”, though, you associate yourself with actions and perceptions and images which come at least in part from other traders. That image in your mind may create internal conflict which hampers your performance.

So thing of yourself as “someone who trades” rather than as “a trader”. It could help to release you to trade the way you are capable.

Paper Plane Launched Into Space – British team achieves world first

A team of British amateurs successfully launched—and recovered—a spacecraft made of nothing but paper and straw. The paper plane, which had a 3-foot wingspan, was sent 17 miles into the atmosphere using a helium balloon, the BBC reports. It captured images from space with a miniature camera as it glided back to Earth, landing almost completely undamaged just 25 miles from the launch site.Team members say the only point of the exercise, which ended up costing them $12,000, was to see if they could do it. “We wanted a daft project but we were amazed by how successful it was. We are absolutely delighted,” said one of the amateur space explorers. “I never thought we would find the plane at all. It could have ended up anywhere and I thought it would be smashed to pieces.” The operation is the latest in a recent string of impressive space endeavors involving relatively inexpensive equipment from balloons to an iPhone.

Einstein's Brain Holds Secrets Of His Extreme Intelligence

A new analysis of photographs of Albert Einstein’s brain has revealed special features that could be what gave him his amazing smarts.

 The researchers compared 14 pictures of Einstein’s brain to 85 brain scans from “normal” people.”Although the overall size and asymmetrical shape of Einstein’s brain were normal, the prefrontal, somatosensory, primary motor, parietal, temporal and occipital cortices were extraordinary,” study researcher Dean, of Florida State University said in a statement. “These may have provided the neurological underpinnings for some of his visuospatial and mathematical abilities, for instance.”

Falk’s findings were published today Nov 16 in the journal Brain. Here are some of the images: (more…)

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