Archives of “newton” tag

rss

False Beliefs About Trading the Markets

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #

1) What goes up must come down and vice versa.

That’s Newton’s law, not the law of trading. And even if the market does eventully self-correct, you have no idea when it will happen. In short, there’s no point blowing up your account fighthing the tape.

2) You have to be smart to make money.

No, what you have to be is disciplined. If you want to be smart, write a book or teach at a university. If you want to make money, listen to what the market is telling you and trade to make money — not to be “right.”

3) Making money is hard.

Nope. Sorry. Making money is actually easy. Statistically, you’re going to do it about half the time. Keeping it, now that’s the hard part.

4) I have to have a high winning percentage to be profitable.

Not true. How often you are right on a trade is only half of the equation. The other half is how much do you make when you’re right and how much you lose when you’re wrong. You can remember that with this formula:

Probability (odds of it going up or down) x Magnitude (how much it goes up or down) = Profitability

5) To be successful, I have to trade without emotions.

That is both wrong and impossible. You are human so you have emotions. Emotions can be a powerful motivator to your trading.

When you feel angry or scared in trading, take that emotion and translate it into something more productive. For example, if you’re feeling angry because you just got run over by the market, view that anger as a reason to be more focused and disciplined in your entry and exit levels on the next trade.

5-False Beliefs About Trading the Markets

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #

1) What goes up must come down and vice versa.

That’s Newton’s law, not the law of trading. And even if the market does eventully self-correct, you have no idea when it will happen. In short, there’s no point blowing up your account fighthing the tape.

2) You have to be smart to make money.

No, what you have to be is disciplined. If you want to be smart, write a book or teach at a university. If you want to make money, listen to what the market is telling you and trade to make money — not to be “right.”

3) Making money is hard.

Nope. Sorry. Making money is actually easy. Statistically, you’re going to do it about half the time. Keeping it, now that’s the hard part.

4) I have to have a high winning percentage to be profitable.

Not true. How often you are right on a trade is only half of the equation. The other half is how much do you make when you’re right and how much you lose when you’re wrong. You can remember that with this formula:

Probability (odds of it going up or down) x Magnitude (how much it goes up or down) = Profitability

5) To be successful, I have to trade without emotions.

That is both wrong and impossible. You are human so you have emotions. Emotions can be a powerful motivator to your trading.

When you feel angry or scared in trading, take that emotion and translate it into something more productive. For example, if you’re feeling angry because you just got run over by the market, view that anger as a reason to be more focused and disciplined in your entry and exit levels on the next trade.

False Beliefs About Trading the Markets

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #

1) What goes up must come down and vice versa.

That’s Newton’s law, not the law of trading. And even if the market does eventully self-correct, you have no idea when it will happen. In short, there’s no point blowing up your account fighthing the tape.

2) You have to be smart to make money.

No, what you have to be is disciplined. If you want to be smart, write a book or teach at a university. If you want to make money, listen to what the market is telling you and trade to make money — not to be “right.”

3) Making money is hard.

Nope. Sorry. Making money is actually easy. Statistically, you’re going to do it about half the time. Keeping it, now that’s the hard part. (more…)

False Beliefs About Trading the Markets

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #

1) What goes up must come down and vice versa.

That’s Newton’s law, not the law of trading. And even if the market does eventully self-correct, you have no idea when it will happen. In short, there’s no point blowing up your account fighthing the tape.

2) You have to be smart to make money.

No, what you have to be is disciplined. If you want to be smart, write a book or teach at a university. If you want to make money, listen to what the market is telling you and trade to make money — not to be “right.”

3) Making money is hard.

Nope. Sorry. Making money is actually easy. Statistically, you’re going to do it about half the time. Keeping it, now that’s the hard part.

4) I have to have a high winning percentage to be profitable.

Not true. How often you are right on a trade is only half of the equation. The other half is how much do you make when you’re right and how much you lose when you’re wrong. You can remember that with this formula:

Probability (odds of it going up or down) x Magnitude (how much it goes up or down) = Profitability

5) To be successful, I have to trade without emotions.

That is both wrong and impossible. You are human so you have emotions. Emotions can be a powerful motivator to your trading.

When you feel angry or scared in trading, take that emotion and translate it into something more productive. For example, if you’re feeling angry because you just got run over by the market, view that anger as a reason to be more focused and disciplined in your entry and exit levels on the next trade.

Why Does Trend Following Work?

  
  Education
#  #  #  #  #  #  #  #

  • It is a statistically valid concept to have a “bias” in the otherwise random drift or a series of numbers.
  • It is as simple as Newton’s Law of Physics, a body in motion tends to stay in motion, a body at rest tends to stay at rest. A trend is nothing more than a momentum in a series of price movements.’
  • The markets only allow a few people to make money, and the majority of traders, regardless of what they might think, or say, do not know how to do it correctly (trend following). 
  • The markets exhibit maximum perversity. This means that the trends will only come about after most of the people have lost most of their money and have already given up in disgust. Then, when they do come, and nobody believes it anymore, eventually these people have to start chasing the market, and that’s what makes the trend continue.

    • 25 Unwritten Rules of Management

      
      Education
    #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

    1. Learn to say, “I don’t know.” If used when appropriate, it will be often.
    2. It is easier to get into something than it is to get out of it.
    3. If you are not criticized, you may not be doing much.
    4. Look for what is missing. Many know how to improve what’s there, but few can see what isn’t there.
    5. Viewgraph rule: When something appears on a viewgraph (an overhead transparency), assume the world knows about it, and deal with it accordingly.
    6. Work for a boss with whom you are comfortable telling it like it is. Remember that you can’t pick your relatives, but you can pick your boss.
    7. Constantly review developments to make sure that the actual benefits are what they are supposed to be. Avoid Newton’s Law.
    8. However menial and trivial your early assignments may appear, give them your best efforts.
    9. Persistence or tenacity is the disposition to persevere in spite of difficulties, discouragement, or indifference. Don’t be known as a good starter but a poor finisher.
    10. In completing a project, don’t wait for others; go after them, and make sure it gets done.
    11. Confirm your instructions and the commitments of others in writing. Don’t assume it will get done!
    12. Don’t be timid; speak up. Express yourself, and promote your ideas.
    13. Practice shows that those who speak the most knowingly and confidently often end up with the assignment to get it done.
    14. Strive for brevity and clarity in oral and written reports. (more…)

    Go to top