Archives of “speculation” tag

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20 Trading Wisdom Lines

  
  Education
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(1)  Those who work their plan will prosper, but those who chase fantasies lack judgment.

(2)  Those who want to do right will get a rich reward. But those who want to “get rich quick” will quickly  fail“.

(3)  Trying to “get rich quick” is wrong & leads to poverty.

(4)  Wealth taken from gambling quickly disappears; wealth from diligent effort & hard work grows“.

(5)  Follow the rules & keep your financial life intact; ignoring them means financial ruin.

(6)  A person without self-control is as defenseless as a city with broken-down walls.

(7)  The wise control their temper.  They know that anger causes mistakes.

(8)  The intelligent are always open to new ideas, in fact they look for them.

(9)  Get all the advice that you can & be wise all the rest of your life.

(10)  Fools despise advice; ‘the wise’ consider each suggestion.

(11)  Fools think they need no advice, but ‘the wise’ listen to others.

(12)  To learn, you must want to be taught.  To refuse correction is stupid.

(13)  Anyone willing to be corrected is on the path to success. Those who refuse correction have lost their chance.

(14)  Hard work brings prosperity; playing around brings poverty.

(15) If you love sleep, you will end up in poverty.  Stay awake, work hard, & there will be plenty to eat.

(16)  The foolish will lose in the end, ‘the wise’ will end up with the winnings.

(17)  The wise save up for the future, but the foolish spend whatever they get”.

(18)  Truth stands the test of time; lies are soon exposed.

(19 Be faithful & honest with yourself in your trading, bediligent & consistent & it will bring you Prosperity.
(20) Steady plodding brings prosperity; hasty speculation brings poverty.

Think carefully about each one of these quotes.  I think you’ll find out a little something about yourself you didn’t already know.  For example, your “strengths” and “weaknesses” in your trading should be clearly pointed out be analyzing each one of these phrases.  These simple and short phrases should help you become a better trader — and hopefully a better person in general!

20 Wisdom Points for Traders

  
  Education
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(1)  Be faithful & honest with yourself in your trading, be diligent & consistent & it will bring you Prosperity.
(2)  Those who work their plan will prosper, but those who chase fantasies lack judgment.
(3)  Steady plodding brings prosperity; hasty speculation brings poverty.
(4)  Those who want to do right will get a rich reward. But those who want to “get rich quick” will quickly  fail“.
(5)  Trying to “get rich quick” is wrong & leads to poverty.
(6)  Wealth taken from gambling quickly disappears; wealth from diligent effort & hard work grows“.
(7)  Follow the rules & keep your financial life intact; ignoring them means financial ruin.
(8)  A person without self-control is as defenseless as a city with broken-down walls.
(9)  The wise control their temper.  They know that anger causes mistakes.
(10)  The intelligent are always open to new ideas, in fact they look for them. (more…)

9 Secrets for Successful Speculation

  
  Education
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As you read the list below, think about how you can learn more about each secret and adapt it to your own most effective use.

Secret #1: Contrarianism takes courage.

Everyone knows the essential investment formula: “Buy low, sell high,” but it is so much easier said than done, it might as well be a secret formula.

The way to really make it work is to invest in an asset or commodity that people want and need but that for reasons of market cyclicality or other temporary factors, no one else is buying. When the vast majority thinks something necessary is a bad investment, you want to be a buyer—that’s what it means to be a contrarian.

Obviously, if this were easy, everyone would do it, and there would be no such thing as a contrarian opportunity. But it is very hard for most people to think independently enough to risk hard-won cash in ways others think is mistaken or too dangerous. Hence, fortune favors the bold.

Secret #2: Success takes discipline.

It’s not just a matter of courage, of course; you can bravely follow a path right off a cliff if you’re not careful. So you have to have a game plan for risk mitigation. You have to expect market volatility and turn it to your advantage. And you’ll need an exit strategy.

The ways a successful speculator needs discipline are endless, but the most critical of all is to employ smart buying and selling tactics, so you don’t get goaded into paying too much or spooked into selling for too little.

Secret #3: Analysis over emotion. (more…)

Meet the market with an empty mind

  
  Education
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empty_mindYou know you are a daytrader when you go to the movies with loved ones and a line in the movie becomes you next daytrading blog post.

The movie was 2012. A movie about the end of the world and the preservation of the human race. the entire movie is filled with moments of natural disasters, crashing buildings, people meeting their end, and people who are trying to survive and perserve the human race.

Amongst the mass destruction where the south pole becomes located someplace in Wisconsin, it is not surprising that religion comes into play. Once scene includes a wise old monk speaking with a young monk who obviously has not attained the wisdom of the old man. As they are speaking the wise old man pours a cup of brown tea until it is overflowing. The young monk tells him to stop as the cup is overflowing. The old man stops pouring and explains,

 ”like this cup a man’s mind is overflowing with opinions and speculation.

You must empty  the cup in order to fill it with wisdom” (more…)

Germany Ban Short Selling

  
Analysis, Economy, Education
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Germany’s financial-markets regular said it is banning naked short-selling of certain euro-zone debt and credit default swaps as well as some financial stocks effective at midnight local time, saying “excessive price movements” could endanger the stability of the financial system.

The ban will remain in effect through March 31, 2011. (more…)

Risk & Chance

  
  Education
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Here are some interesting quotes from ‘Risk & Chance’ (Dowie and Lefrere) that have a relevance to trading and speculation more generally:

Henslin (1967) notes …dice players behave as if they are controlling the outcome of the toss.  One of the ways they exert this is to toss the dice softly if they want a low number, or hard for a high number.  Another is to concentrate and exert effort when tossing.  These behaviours are quite rational if one believes that the game is a game of skill. 

As a trader I wish I could figure out what portion of my trading results can be attributed to luck, and what portion to skill. The problem is that trading seems to be a game of both skill and luck, so we spend half our time figuring out just how hard we should be throwing the dice. Splitting skill from luck is a problem for all speculators, but high frequency traders can find out much sooner than low frequency macro traders, who only take a few positions each year. In the latter case, it may be close to impossible to look back to a macro trader’s career and make this determination with any reasonable level of certainty.  

De Charms(1968) stated that “Man’s primary propensity is to  be effective in producing changes in his environment.  Man strives to be a causal agent, to be the primary locus of causation for, or the origin of, his behaviour; he strives for personal causation.

The polar opposite of mastery is helplessness.

In the markets, those with an ‘edge’ over the market can be thought of as masters, while those who don’t believe in outperformance of the averages can be thought of as helpless. Of course, in this case the helpless are not truly helpless; they may accept they have no influence on the outcome but provided they accept the proven long-term upward drift of the market, they can choose the path of the low-cost index fund, saving time and money against the perceived masters (on average, the indices outperform).  This doesn’t apply to the foreign exchange market.

Lefcourt (1973)… concluded that “the sense of control, the illusion that one can exercise personal choice, has a definite and positive role in sustaining life.” Thus, people show a preference for controllable over uncontrollable events.The distinction between skill and chance situations is further complicated by the fact that positive outcomes are most often attributed to the actions that precede them.

Think of many of the individuals who have made big gains in the housing market, founders of certain successful businesses, and some flavour-of-the-month fund managers. Positive results, especially those associated with a large monetary gain, often imbue individuals with a false sense of superiority and foresight, or even control, over events that are actually largely outside of their control.  

BP= Bankrupt Petroleum?

  
Analysis, Education, US Market
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Above is the Monthly chart of

It was a bad day for most stocks , but it was a bloodbath for embattled oil giant BP.

Shares of BP dived 16 percent , driving the stock price to below $30 per share, the worst drop on record for the company. The British energy giant closed at $29.20 per share. More ominously, investors and traders rushed to dump their BP: Trading of the stock occurred at four times normal volume today.

As a result, the asset-rich company is now trading for less than its book value, which is essentially all the assets it has — oil fields, oil rigs and so forth — minus intangible assets and liabilities.

In English, this means that investors and traders think that the company is now actually worth less than all the hard assets it owns. That’s a confidence trade.

Today, BP is worth $91.4 billion. In mid-April, the company was worth $180 billion.

BP will be forced into a pre-packaged bankruptcy hit the markets like a torpedo into a well head.

What is interesting is that companies are usually very quick to respond to market rumors. So far BP has been silent and has yet to issue any statements regarding the speculation of a bankruptcy filing.

I have no other information than what is being reported on the wire services. If BP is to make a statement dispelling the speculation they had better do it soon.

 

50 Trading Rules

  
  Education
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1. Plan your trades. Trade your plan.
2. Keep records of your trading results.
3. Keep a positive attitude, no matter how much you lose.
4. Don’t take the market home.
5. Continually set higher trading goals.
6. Successful traders buy into bad news and sell into good news.
7. Successful traders are not afraid to buy high and sell low.
8. Successful traders have a well-scheduled planned time for studying the markets.
9. Successful traders isolate themselves from the opinions of others.
10. Continually strive for patience, perseverance, determination, and rational action.
11. Limit your losses – use stops!
12. Never cancel a stop loss order after you have placed it!
13. Place the stop at the time you make your trade.
14. Never get into the market because you are anxious because of waiting.
15. Avoid getting in or out of the market too often.
16. Losses make the trader studious – not profits. Take advantage of every loss to improve your knowledge of market action.
17. The most difficult task in speculation is not prediction but self-control. Successful trading is difficult and frustrating. You are the most important element in the equation for success.
18. Always discipline yourself by following a pre-determined set of rules.
19. Remember that a bear market will give back in one month what a bull market has taken three months to build.
20. Don’t ever allow a big winning trade to turn into a loser. Stop yourself out if the market moves against you 20% from your peak profit point.
21. You must have a program, you must know your program, and you must follow your program.
22. Expect and accept losses gracefully. Those who brood over losses always miss the next opportunity, which more than likely will be profitable.
23. Split your profits right down the middle and never risk more than 50% of them again in the market.
24. The key to successful trading is knowing yourself and your stress point. (more…)

How I Look At The Markets

  
  Education
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The markets are a science. Plain and simple. Some like to look at fundamentals and guess what will happen next. I like to look at the numbers. The facts. The only thing you can trust. Billion dollar hedge fund manager David Harding views the markets similarly:

Our approach to markets is a science. It is an unpublished science, but it is a real one. You would have thick leather-bound volumes of papers on it if there were a willingness to “open the kimono,” as the horrible modern expression has it. The process of trading our system is like repeatedly drawing different colored balls from the statistician’s apocryphal bag. As we draw out a ball it becomes part of the track record, and we put it back in the bag, but there is no guarantee that the balls will come out in the same order in the future.

Trend following is speculation in its purest form–find an edge and exploit it consistently over time. That attitude is critical for any entrepreneurial success. Throw the lottery mentality away. Forget the one hit wonder luck the press propagates to the masses of lemmings

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