Archives of “observation” tag

rss

A million fragments

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

My definition of learning is that it is the slow accumulation of a million fragments of experience that begin to connect to form understanding. Understanding occurs when a piece of acquired information connects directly to a relevant experience.

For instance you may read about support and resistance (the intake of information), but only when you attempt to trade based on that knowledge will you begin to generate what are firstly disjointed fragments of understanding.


When approaching any subject as a newbie we may start off knowing literally nothing, and then this accumulation begins. The fragments we collect are small; the reading an entire book on trading may yield perhaps two or three definite single connections and the rest appears to vanish into the “realm” of the subconscious.

If we persist, we make more and more connections and our understanding begins to grow exponentially as we verify and counter verify previously experienced fragments of knowledge. It is my belief based on observation that real learning occurs when the mind recognizes a link between two pieces of information (usually something new plus something remembered) and then generates a third. These “aha” moments seem to bond something in the mind that is more permanent – the information then becomes OURS. Due to this it is also possible to make new connections from the same information, thus it never hurts to read a book twice or more, as you may often see deeper and deeper meaning in it.

In time we reach a point where the mind contains enough understanding on a subject to be able to generate new information and connections within itself. The critical components in this process are of course the constant intake of information (study) married to real life experiences (practice) over a long enough period (time) to build up the result (understanding).

There you have the formula for mastery :

Study, Practice, Time = Understanding

Does Religion Serve a Purpose?

  
Analysis, Education, Video
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

This lecture by professor Paul Bloom of Yale starts with the observation that religion serves no obvious adaptive purpose. I find that a little surprising since it is well documented that people who have a make generally accurate appraisals of themselves and their environment are depressed (notice it is not clear which way causality runs). Since optimism is considered to be adaptive, and most religions have a point of view as to what death is all about and what if anything happens afterwards, I would think that giving people coping strategies about the inevitability of death would be adaptive. As I wrote last year:

In the Indian epic Mahabharata, Yudhisthira goes looking for his missing brothers, who went searching for water. He finds them all dead next to a pond. In despair, but still parched, he is about to drink, but a crane tells him he must answer some questions first. The last and most difficult: “What is the greatest wonder of the world?” Yudhisthira answers, “Day after day, hour after hour, countless people die, yet the living believe they will live forever.”

And as Americans have become more and more work focused, and as job tenures become shorter and people often have to move in search of gainful employment, the idea of community as a place seems quaint. As this video suggests, houses of worship may be the only place most people find community these days. I doubt that is a healthy development.

And this DOES relate to the Super Bowl! The Center for Public Religion has found that 1/3 of Americans think God decides the outcome of sporting events. He does not do so directly, by having favorite teams (too tacky!) but by favoring teams with more God-fearing athletes.

Words of wisdom from Jesse Livermore

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

No trader can or should play the market all the time. There will be many times when you should be out of the market, sitting in cash waiting patiently for the perfect trade…. ” – Jesse Livermore

“It is foolhardy to make a second trade, if your first trade shows you a loss…. As an ironclad Livermore rule, never average losses. Let that thought be written indelibly and forever upon your mind….” – Jesse Livermore

“Remember that it is dangerous to start spreading out all over the market carrying several positions. Do not have an interest in too many stocks at any one time. It is much easier to watch a few than many….” – Jesse Livermore

“As long as a stock is acting right, and the market is right, be in no hurry to take a profit…. ” – Jesse Livermore (more…)

Developing A Method is Hard Work

  
  Education
#  #  #  #  #  #

MgmtLesson

Shortcuts rarely lead to trading success. Developing your own approach requires research, observation, and thought. Expect the process to take lots of time and hard work. Expect many dead ends and multiple fail-ures before you find a successful trading approach that is right for you. Remember that you are playing against tens of thousands of profession-als. Why should you be any better? If it were that easy, there would be a lot more millionaire traders.

Developing a method is Hard work

  
  Education
#  #  #  #  #  #

HARD-WORKShortcuts rarely lead to trading success. Developing your own approach requires research, observation, and thought. Expect the process to take lots of time and hard work. Expect many dead ends and multiple fail-ures before you find a successful trading approach that is right for you. Remember that you are playing against tens of thousands of profession-als. Why should you be any better? If it were that easy, there would be a lot more millionaire traders.

Observation

  
  Education
#  #  #  #  #  #  #  #

observation2

  • -If you find yourself holding a winning position, adding up your profits, and confidently projecting larger gains on the horizon, you are probably better off exiting the trade. The odds are that the trade has run its course.
  • -When entering a trade with a market order and your fill is clearly better than expected, odds are it will end up being a losing trade. Good fill, bad trade. Get out!
  • -If all your ‘trading buddies’ agree with your expectations regarding the next big move, it probably will not work out. If everyone’s conviction level is as strong as the consensus, do the opposite.

Trade what you Observe – Not what you Believe

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

One of the hardest lessons to learn in your quest to become a true trader is to susobservationpend your beliefs and to trade that which you have learned through hours of observation.

How many times have you stated that company x is overvalued only to watch it go higher? Or undervalued only to watch it continue lower? How many times have you thought that the “market” can’t go any higher and yet it did day after day? Or lower? How many times have you been scratching your head because the “market” is rising on such low volume? When is the last time you were in disbelief because company y has closed higher for 10 days in a row (after shorting it on the third day)? And have you ever acted on a recommendation from Jim Cramer only to watch in disbelief because as soon as you entered it reversed course?

Bottom line – trading what “you” believe is a recipe for disaster.

Eventually most folks figure out that the market is so chaotic that they are lost and admit they don’t know how to trade. Many quit in disgust. A few of you press on and begin a journey of real study. (more…)

Go to top