When it comes to market timing, you’ve got to UNLEARN responses that you’ve spent your whole life learning. Market timing isn’t about you. It is just a strategy that works over time. In other fields, probability plays little if any role. You put in effort, make sure you meet the expectations of the people who pay you, and you’re a success. In the traditional workplace, it makes sense to put a little ego and pride into your work. Your effort and talent often have a direct payoff. But with market timing, the odds can go against you, no matter how much work you put in. The perfect trade can go wrong. That’s hard to accept for most people because it means that being a successful (profitable) market timer or trader, to some extent, is just a matter of the odds randomly working in your favor. But there is good logic behind this randomness. And a successful timing or trading strategy uses this logic to profit. A successful timing strategy will exit losses quickly. It will not stay with a bullish or bearish position to sooth the ego of the strategy’s designer. It will also stay with a successful trade and not exit quickly to lock in a profit. That may feel good for a day, but if the profitable trend lasts two, three, five times longer, you have lost out on a huge profit. Recognizing that odds are part of trading takes some of the glory out of it. But on the other hand, understanding odds helps you cope with inevitable drawdowns.
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rssHope Quotes for Traders
“The speculator’s chief enemies are always boring from within. It is inseparable from human nature to hope and to fear… 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.”
– Reminiscences of a Stock Operator
“Hope is not a strategy.”
– Rigo Durazo
“There is no worse course in leadership than to hold out false hopes soon to be swept away.”
– Winston Churchill
“It is not enough to rely on luck or hope to carry us past the weak parts of our game. These parts must be attended to. The system must be whole and complete.”
– Zen and the Art of Poker (more…)
Ignorance, Greed, Fear and Hope
In the book “Reminiscences of a Stock Operator,” Edwin Lefevre writes:
“The speculator’s deadly enemies are: Ignorance, Greed, Fear and Hope.“
In today’s commentary we will take a look at “Hope” and see why it is one of the four deadly enemies of successful market timing.
Each of us has a desire for success. That is why we use market timing in our investing. Not only to increase our gains in both bull and bear markets, but importantly to protect our capital against loss.
But that same desire for success can stand in the way of our ability to recognize reality, even if it is right before our eyes. All of us have a survival instinct that typically causes us to focus on good news. Bad news is avoided, or at least put on the back burner.
When we take a position in the market, whether bullish or bearish, we hope it will be successful. Hope can be such a powerful emotion, that when the same trading plan that told us to enter a position originally, reverses and tells us to exit immediately, our emotions may very well focus on the possibility that if we just hold on a bit longer, any loss may be erased. (more…)
Financial astrology targets August 6th
The Grand Cross of the Cardinal Climax is a rare event. This is the incredibly rare event that astrologer Arch Crawford is also warning about (see this article).
The same Mr Crawford ranked #1 Stock Market Timer for the period October 1 2007 through October 31, 2009.