M6 - Man, Mind, Money, Markets, Method & Madness

[DSM]

Some more thoughts for reflection. Collection of gems from TJ/elsewhere. Credit for the same is due to the original authors.

The best poker players in the world fold over 90% of the starting hands they receive. Likewise, a trader shouldn't necessarily trade everytime, but wait for the best opportunities to win.

A method is a general philosophy of trading. A system is a set of rules for implementing a method. A technique is a specific rule for entering or exiting trades.

Traders can overreact to volatility in stock markets, and often make poor decisions based upon short-term stock movements. Savvy traders base their decisions on trends.


Theoretically every one trading should be comfortable on each and every trade taken by him /her, even if it turns out to be a loss or profit, whatever, basically you should be confident enough about yourself that you would be able to do the right thing as and when the markets require you to do so

Don't believe news events cause the move... big guys just use big events to plan their move.

More money is to be made on the longer timeframe, and being positioned at the turning point.


Good players go through all mental process and are mentally engaged. Weaker players really don't do any of that and make purely emotional decisions. In general, there are strategic breakthroughs and emotional ones. The strategic ones are complicated; the emotional ones come with personal development. I remember exactly where I was the first time I lost $50 but I have no idea where I was the first time I lost $5000. Getting over the money is a huge part of breaking through as a successful player.

The market timing from 09:15:00 till 15:30:00 is practically for "Earning Money" and not wasting this "Divine Opportunity"

There is a huge psychological appetite for robust solutions, whereas for trading, the idea should be to execute the strategy - ideas based on higher probability and edge providing a high RR ratio. One should be quick and flexible to accept when it is not working. Having that degree of flexibility to look at a slightly longer time frame to reap high RR.

 

[amitrandive]

Some more thoughts for reflection. Collection of gems from TJ/elsewhere. Credit for the same is due to the original authors.

The market timing from 09:15:00 till 15:30:00 is practically for "Earning Money" and not wasting this "Divine Opportunity"

[/COLOR]

:clap::clap::clap:

 

[DSM]

Travel beacons again..... Have quite a few work related as well as social travel plans scheduled right upto end of next month, starting from next week on.... And for the same reason, will be taking a break from trading as well.

 

[DSM]

The Deadly Art of Stock Manipulation - George Chelekis Part III

Major Axiom 7 :- On Intuition
A hunch can be trusted if it can be explained.

Though intuition is not infallible, it can be a useful speculative tool, if handled with care and skepticism.

If you are hit by strong hunch - put it to the test. Trust it only if you can explained it. That is only if you can identify within your mind a stored body of information out of which that hunch must reasonably be supposed to have arisen.

Be wary of any intuition that seems to promise some outcome you want badly.

Minor Axiom Xl
Never confuse a hunch with a hope.

Major Axiom 8 :- On Religion and the Occult
It is unlikely that god's plan for the universe includes making you rich.

Assume you are on your own. Rely on nothing but your own wits.

Minor Axiom Xll
If astrology worked, all astrologers would be rich.

Minor Axiom Xlll
A superstition need not be exorcised. It can be enjoyed, provided it is kept in its place.


Major Axiom 9 :- On Optimism & Pessimism
Optimism means expecting the best, but confidence means knowing how you will handle the worst. Never make a move if you are merely optimistic.

Optimism can be a speculator's enemy. It feels good and is dangerous for that reason. It produces a clouding of judgment. It can lead you into a venture with no exits. Even when there is an exit, optimism can persuade you not to use it.


You should never make a move if you are merely optimistic. Before committing your money to a venture, ask how you will save yourself if things go wrong. Once you have that worked out, you've got something better than optimism. You've got confidence.


Major Axiom 10 :- On Consensus
Disregard the majority opinion. It is probably wrong.

Probably wrong. Figure everything out for yourself.

Minor Axiom XlV
Never follow speculative fads. Often, the best time to buy something is when no-one else wants it.

Major Axiom 11 :- On Stubbornness
If it doesn't pay off the first time forget it.

Perseverance is a good idea for spiders and kings, but not always for speculators. Don't fall into the trap of trying to squeeze a gain out of any single speculative entity.
Don't chase any investment in a spirit of stubbornness. Reject any thought that an investment owes you something. And don't buy the alluring, but fallacious idea that you can improve a bad situation by averaging down.

Minor Axiom XV
Never try to save a bad investment by averaging down.

Major Axiom 12 :- On Planning
Long-range plans engender the dangerous belief that the future is under control. It is important never to take your own long-range plans, or other people's, too seriously.

React to events as they occur in the present. Put your money into ventures as they present themselves and withdraw it from hazards as they loom up. Value the freedom that will allow you to do this. Don't ever sign that freedom away.
There is only one long-range financial plan you need: the intention to grow rich. The how is not knowable or plan-able. All you need to know is that you will do it somehow.

Minor Axiom XVl
Shun long-term investments. (Note : While this is contrary to common wisdom, which I personally disagree, have posted it as a part of - Axioms as they are. The reason is quite simple - i.e we GENUINELY consider and reflect on all propositions and arguments that are placed before us, and accept only those that make sense, and discard the rest)

The Deadly Art of Stock Manipulation - George Chelekis Part II

http://iasw-after-all.blogspot.in/2010/06/deadly-art-of-stock-manipulation.html

"RULE NUMBER FOUR: ANY STOCK THAT TRADES HUGE VOLUME AT HIGHER PRICES SIGNALS THE DISTRIBUTION PHASE." (??? My Note : This is ofcourse contrary to conventional wisdom)

When there was less volume, the price was lower. Professionals were accumulating. After the price runs, the volume increases. The professionals bought low and sold high. The amateurs bought high (and will soon enough sell low). In older books about market manipulation and stock promotion, which I've recently studied, the markup price referred to THREE times higher than the floor. The floor is the launchpad for the stock. For example, if one looks at the stock price and finds a steady flatline on the stock's chart of around 10 cents, then that range is the FLOOR. Basically, the markup phase can go as high as the market manipulator is capable of taking it. From my observations, a good markup should be able to run about five to ten times higher than the floor, with six to seven being common. The market manipulator will do everything in his power to keep you OUT OF THE STOCK until the share price has been marked up by at least two-three times, sometimes resorting to "shaking you out" until after he has accumulated enough shares. Once the markup has begun, the stock chart will show you one or more spikes in the volume -- all at much higher prices (marked up by the manipulator, of course). That is DISTRIBUTION and nothing else.

Example: Look at Software Control Systems (Alberta:XVN), in which I purchased shares after it had been marked up five times. There were eight days of 500,000 (plus) shares trading hands, with one day of 750,000 shares trading hands. Market manipulator(s) dumping shares into the volume at higher prices. WHENEVER you see HUGE volume after the stock has risen on a 75 degree angle, the distribution phase has started and you are likely to be buying in -- at or near the stock's peak price.

Example: Look at Diamond Fields (TSEFR), which never increased at a 75 degree angle and did not have abnormal volume spikes, yet in less than two years ran from C$4 to C$160/share.

Example: Look at Bre-X Minerals (Alberta:BXM), which did not experience its first 75 degree angle, with huge volume until July 14th, 1995. The next two trading days, BXM went down and stayed around C$12/share for two weeks. The volume had been 60% higher nearly a month earlier, with only a slight price increase. Each high volume and spectacular increase in BXM's share price was met with a price retreat and leveling off. "Suddenly," BXM wasn't trading at C$2/share; it was at C$170/share.... up 8500% in less than a year!

In both of the above cases, major Canadian newspapers ran extremely negative stories about both companies, at one time or another. In each instance, just before another share price run up, retail investors fled the stock! Just before both began yet another run up! Successful short-term speculators generally exit any stock run up when the volume soars; amateurs get greedy and buy at those points.

"RULE NUMBER FIVE: THE MARKET MANIPULATOR WILL ALWAYS TRY TO GET YOU TO BUY AT THE HIGHEST, AND SELL AT THE LOWEST PRICE POSSIBLE."

Just as the manipulator will use every available means to invite you to "the party," he will savagely and brutally drive you away from "his stock" when he has fleeced you. The first falsehood you assume is that the stock promoter WANTS you to make a bundle by investing in his company. So begins a string of lies that run for as long as your stomach can take it.

You will get the first clue that "you have been had" when the stock stalls at the higher level. Somehow, it ran out of steam and you are not sure why. Well, it ran out of steam because the market manipulator stopped running it up. It's over inflated and he can't convince more people to buy. The volume dries up while the share price seems to stall. LOOK AT THE TRADING VOLUME, NOT THE SHARE PRICE! When earlier, there may have been 500,000 shares trading each day for eight out of 12 trading days (as in the case of Software Control Systems), now the volume has slipped to 100,000 shares (or so) daily. There are some buyers there, enough for the manipulator to continue dumping his paper, but only so long as he can enlist one or more individuals/services to bang his drum.

He may continue feeding the promo guys a string of "promises" and "good news down the road." (Believe me, this HAS happened to me!) But, when the news finally arrives, the stock price goes THUD! This is entirely orchestrated by a market manipulator. You'll see it in the trading volume, most of which is CONTRIVED. A market manipulator will have various brokers buying and selling the stock to give the APPEARANCE of increasing volume and price so that YOU do start chasing it higher.

At some point during the stall stage, investors get fed up with the non-performance of the stock. It drifts for a while, in a steady retreat, with perhaps a short-lived spike in price and volume (the final signal that the manipulator has finally offloaded ALL of his paper). Then, the stock comes tumbling down -- having lost ALL of the earlier share appreciation.

Sometimes, with the more cruel manipulators, they will throw in a little false hope... giving you a little more rope so they can better hang you. Just after a severe drop, there will be a "bottom fishing" announcement which sends the share price up a bit on high volume, rises a little more after that and then continues to drift. Meanwhile, you keep getting "shaken out" through a cruel drip-drip water torture of the share price's slow retreat. Again, virtually every movement is completely orchestrated.

"RULE NUMBER SIX: IF THIS IS A REAL DEAL, THEN YOU ARE LIKELY TO BE THE LAST PERSON TO BE NOTIFIED OR WILL BE DRIVEN OUT AT THE LOWER PRICES."

Like Jesse Livermore wrote, "If there's some easy money lying around, no one is going to force it into your pocket." The same concept can be more clearly understood by watching the tape. When a market manipulator wants you into his stock, you will hear LOUD noises of stock promotion and hype. If you are "in the loop," you will be bombarded from many directions. Similarly, if he wants you out of the stock, then there will be orchestrated rumors being circulated, rapid-fired at you again from many directions. Just as good news may come to you in waves, so will bad news.

You will see evidence of a VERY sharp drop in the share price with HUGE volume. That is you and your buddies running for the exits. If the deal is really for real, the market manipulator wants to get ALL OF YOUR SHARES or as many as he can... and at the lowest price he can. Whereas before, he wanted you IN his market, so he could dump his shares to you at a higher price, NOW when he sees that this deal IS for real, he wants to pay as little as possible for those same shares... YOUR shares which he wants to you part with, as quickly as possible.

The market manipulator will shake you out by DRIVING the price as low as he can. Just as in the "accumulation" stage, he wants to keep everything as quiet as possible so he can snap up as many of the shares for himself, he will NOW turn down, or even turn off, the volume so he can repeat the accumulation phase.

In the mining business, there seems to always be another "area play" around the corner. Just as Voisey's Bay drifted into oblivion, during the fourth quarter of 1995 and early into 1996, the same Voisey Bay "wannabees" began striking deals in Indonesia. Some even used new corporate entities. Same crooks, different shingles. The accumulation phase was TOP SECRET. The noise level was deadingly silent. As soon as the insiders accumulated all their shares, they let YOU in on the secret.

 

[DSM]

Was reading up on Magnus Carlsen, as I follow Chess. Here's some insightful comments as well as how much importance is given to overall well being and fitness (physical, as also having peak energy) - for a game that is entirely mental. Something to learn from the world chess champ - as trading too is quite mentally taxing just alike chess, and being able to maintain focus and energy while trading is just as important as in chess.

An excerpt :

For chess fans the interview didn't contain many surprises, but some of Carlsen's answeres were quite interesting. For example, he once again stated that he studied Vladimir Kramnik's games when he was young : “I don't think there was any particular grandmaster of the past or the present that I wanted to model my game after. I think if you try to be like someone then it's hard to be the best – at some point you have to create your own style, your own identity. But one of the players I studied the games of when I was young was Vladimir Kramnik, the strongest Russian player. His play when he was young impressed me quite a bit, when I was little. I think also both for him and for others it would be useful to study the games when he was young.”

Carlsen likes to do other sports (more on that below), and, interestingly, even for his chess career he fears getting injured physically: “One of my first coaches, Simen Agdestein, who is a Norwegian grandmaster and the best Norwegian player for a long time, he was a football player who played for the national team. When he got injured in his knee and had to end his football career he also said that his chess career also went wrong after that, because he didn't have the same energy when he could not play football every day. I have heard the same about Hungarian grandmaster Peter Leko, who was a world championship finalist some years ago, he also injured his knee playing football. He loved to do sports every day, and once he could not do that he did not have the energy anymore to play chess well. So I think that maybe for me as well to injure something would not be so good.”

 

[DSM]

Some simple trading setups..... Excerpts

http://www.trading-strategies.info/node/1154

Inside Bar trading method

This trading method involves four simple steps.
Identify a trading opportunity
Select a direction
Place your trade
Manage your trade later – at a specific time

Example 1: A Standard Trade

Example 2: A Swing Trade

Example 3: A Multiple Trade

Example 4: 60 Minutes Trades

 

[amitrandive]

 

[Somatung]

Published on Apr 15, 2014

Our lead story: Lawmakers are looking to crackdown on high frequency trading. In the European Union, regulators are poised to approve some of the toughest restrictions yet. Meanwhile, here in the U-S. The world's largest futures market, the Chicago Mercantile Exchange, is being sued by three of its users who allege that the company sold high speed traders access to information ahead of other market participants. Erin takes a look.

https://www.youtube.com/watch?v=eqqaZVfiOSw

 

[amitrandive]

Published on Apr 15, 2014

Our lead story: Lawmakers are looking to crackdown on high frequency trading. In the European Union, regulators are poised to approve some of the toughest restrictions yet. Meanwhile, here in the U-S. The world's largest futures market, the Chicago Mercantile Exchange, is being sued by three of its users who allege that the company sold high speed traders access to information ahead of other market participants. Erin takes a look.

https://www.youtube.com/watch?v=eqqaZVfiOSw

Good News .Hope this happens in India soon !!!
:clapping::clapping::clapping:

 

[amitrandive]

7 Principles of Trading consistency
http://eminimind.com/think-like-a-trader-7-principles-of-consistency/

Mark Douglas talks about 7 principles which help beginning traders develop into consistent winners over time. The following are his list of guiding principles…

1. I objectively identify my edges
2. I predefine the risk of every trade
3. I completely accept the risk or I am willing to let go of the trade
4. I act on my edges without reservation or hesitation
5. I pay myself as the market makes money available to me
6. I continually monitor my susceptibility for making errors
7. I understand the absolute necessity of these principles. I never violate them.

So to think like a trader means to think in terms of probabilities, identify your edge, execute your trades the same way each and every time and take every setup that fits your criteria. Look to analyze your trades in sample sizes and not individually. Doing these things (over time), can help develop a level of confidence and consistency in your trading.