Archives of “reassurance” tag

rss

Typical Symptoms of Egotizing Trading

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

 . Not putting in stops. The ego doesn’t want to be proven wrong. 
· Hesitating before putting on a trade. The ego wants reassurance before it begins. 
· Overtrading. The ego wants to prove itself big time. 
· Getting stuck in a trade. The ego has intertwined itself with a trade and is holding on for dear life. It cannot cut out. The ego doesn’t want to be wrong. 
· Adding to a losing trade. The ego digs its hole deeper in a massive effort to crawl out. 
· Grabbing a profit too soon. The ego wants a pat on the back.

How do we separate our ego from our trading? How do we keep from personalizing a trade? How do we avoid personalizing all of our trading?

One way to separate your ego from your trading is to build healthy boundaries between yourself and your trading. Not only do good fences make good neighbors, good boundaries make good traders. 

A boundary sets limits, makes distinctions, informs you as to what is you and what is not you, makes clear the distinction between you and others, tells you where one thing ends and another begins. It distinguishes between past, present, and future. It lets you know that another’s ideas, values, and feelings are not necessarily yours. A boundary is flexible and permeable. It lets information flow back and forth. It allows you to listen actively without having to take on someone else’s opinions and without having to force your opinions on another person. In trading it draws a distinction between yourself and your trading, between one trade and another, between one trade and all of your trading.

One trader would see the signal to take a trade and before she could put the trade on, she’d hear a voice saying, “What if I’m wrong?” Immediately she’d feel small and diminished. The next step was simply to let the trade go by as she sat there stalled by her vulnerable ego. She needed a boundary between her self-esteem and the outcome of a trade. She needed a boundary between self worth and being wrong. With such a boundary she could give herself permission to not always have to be right. (more…)

Trend Following Lessons from Jesse Livermore

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

Remember, you do not have to be in the market all the time.
Profits take care of themselves – losses never do.
The only time I really ever lost money was when I broke my own rules.
Throughout all my years of investing I’ve found that the big money was never made in the buying or the selling. The big money was made in the waiting. (more…)

Mark Cuban On Story Stocks

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

Don’t Miss to Read :
Different catalysts matter for the different time frames. In short-term perspective, price momentum is the most powerful catalyst. Short-term could sometimes be a couple years in the market. Here are a few wise words, written in 2004, by someone who has been on both sides of the table – as a shareholder and company owner:

For years, a company’s price can have less to do with a company’s real prospects than with the excitement it and its supporters are able to generate among investors. That lesson was reinforced as I saw the Gandalf experience repeated with many different stocks over the next 10 years. Brokers and bankers market and sell stocks. Unless demand can be manufactured, the
stock will decline.
If the value of a stock is what people will pay for it, then Broadcast.com was fairly valued. We were able to work with Morgan Stanley to create volume around the stock. Volume creates demand. Stocks don’t go up because companies do well or do poorly. Stocks go up and down depending on supply and demand. If a stock is marketed well enough to create more demand from buyers than there are sellers, the stock will go up. What about fundamentals? Fundamentals is a word invented by sellers to find buyers. (more…)

THE BEST OF JESSE LIVERMORE

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

On emotions: 

The unsuccessful investor is best friends with hope, and hope skips along life’s path hand in hand with greed when it comes to the stock market. Once a stock trade is entered, hope springs to life. It is human nature to be positive, to hope for the best. Hope is an important survival technique. But hope, like its stock market cousin’s ignorance, greed, and fear, distorts reason. See the stock market only deals in facts, in reality, in reason, and the stock market is never wrong. Traders are wrong. Like the spinning of a roulette wheel, the little black ball tells the final outcome, not greed, fear or hope. The result is objective and final, with no appeal.
I believe that uncontrolled basic emotions are the true and deadly enemy of the speculator; that hope, fear, and greed are always present, sitting on the edge of the psyche, waiting on the sidelines, waiting to jump into the action, plow into the game.
Fear keeps you from making as much money as you ought to.

On herd behavior:

I believe that the public wants to be led, to be instructed, to be told what to do. They want reassurance. They will always move en masse, a mob, a herd, a group, because people want the safety of human company. They are afraid to stand alone because they want to be safely included within the herd, not to be the lone calf standing on the desolate, dangerous, wolf-patrolled prairie of
contrary opinion.

On cash:

First, do not be invested in the market all the time. There are many times when I have been completely in cash, especially when I was unsure of the direction of the market and waiting for a confirmation of the next move….Second, it is the change in the major trend that hurts most speculators. (more…)

Indian bank stress tests expected to provide only superficial reassurance

  
Analysis, Economy, Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

It seems that bank stress tests are catching on. In the wake of the US tests, whose results were published in May 2009, and the less exacting European ones, whose results came out on July 23, India is poised to embark on stress tests too. However the Indian bank tests are likely to be more opaque than the recent European ones – and their results will have to be taken with a bigger pinch of salt, according to a recent guest blog post in FT Alphaville.

 

On July 27 the Indian Reserve Bank confirmed its intention to carry out stress tests on Indian state-owned and privately-owned banks in the hope of providing reassurance about the resilience of the country’s banking system. On the same day the IRB raised interest rates more sharply than expected – to 4.5%-5.75% – for the fourth time in a year, largely in response to higher inflation and a potentially overheating economy (GDP growth is expected to be 8.5%-8.6% this year and next).

 

Incidentally, as Stephanie Flanders pointed out in a recent BBC blog post, Indians no longer see their nation’s closed financial system as a source of weakness. It is increasingly preferring to cut itself off from internatonal markets.

 

RBI governor Duvvuri Subbarao admitted that India would be “learning on the job” as it seeks to review of capital, liquidity and leverage standards of the nation’s banks, the majority of which remain state-owned.

 

India’s banks emerged remarkably unscathed from the global financial crisis of 2008-09 despite suffering a liquidity squeeze. Only ICICI, India’s largest privately-owned bank, needed explicit liquidity support during the mother of all crises.

 

However, in a that FT Alphaville post mentioned above, Hemindra Hazari, head of research at Hyderabad-headquartered Karvy Stock Broking warned that the government’s proposed tests may end up being more spin than substance.

 

He painted a disturbing picture of the state of Indian banking, adding that New Delhi has good reason to keep both the results and the methodology of the tests under wraps.

 

According to Hazari, India’s banks have widely used accounting jiggery-pokery to disguise their true bad debt position and suggestedthat they are in a far worse state than they are likely to let on to the stress testers.

 

Hazari said that while India’s banks may have the trappings of strength – having avoided the “cancers of subprime lending and investments in dodgy sovereign paper” – hidden dangers lurk beneath the surface.

 

In particular, he noted that the quality of their asset bases is “extremely mixed” and that their non-performing assets surged by 23% in the fiscal year 2009 and by 28% in the subsequent year.

 

Hazari does not regard non-performing assets as a reliable gauge of asset quality. This is because from 2009-10, the RBI allowed Indian banks “to classify dubious assets as restructured standard loans which are not classified as non-performing assets and which require minimal additional provisioning.”

 

Hazari added:

 

 

It is this nebulous category of assets, which bankers insist are of sound quality but are having “temporary” cashflow problems that have suddenly surfaced and rest innocuously in the notes to accounts on bank balance sheets. (more…)

Go to top