Saturday, January 29, 2011
Monday, January 24, 2011
RBI warns on sustained inflation risk.........
MUMBAI |
MUMBAI (Reuters) - The Reserve Bank of India (RBI) said inflation may stay high for longer than anticipated earlier due to a rise in global commodities prices and domestic supply side pressures that have recently pushed up food prices.
"Upside risks to inflation have increased, suggesting the need for sustained anti-inflationary policy focus," the RBI said in a report a day before its quarterly monetary policy review, when it is widely expected to raise interest rates by at least 25 basis points.
"Since a lower inflation regime is essential for sustainable high growth, containing inflation becomes the dominant policy objective in the current environment," the report said.
After raising rates six times since March to tame inflation, the central bank paused in December but indicated further rate hikes were possible, with inflation remaining well above its comfort zone.
"As a result of newer factors and increased risks, the inflation trajectory is likely to show some persistence and moderate only gradually," Monday's report said.
A sharp rise in food prices, a key driver of inflation in India, has been putting upward pressure on broader prices.
The wholesale price index , the most widely watched gauge of prices in the country, rose 8.43 percent in December from a year earlier, compared with 7.48 percent in November and well above the RBI's March-end projection of 5.5 percent.
The RBI's perceived comfort zone for inflation is 5-6 percent in the short term and 3-4 percent in the medium term.
(Reporting by Suvashree Dey Choudhury and Tony Munroe)
WHAT WILL BE THE MAGIC NUMBER: 25 or 50?
Be Practical......
A wise man once sat in the audience and cracked a joke..
all of them laughed like crazy..
after a moment he cracked the same joke again & a little less people laughed this time.
He cracked the same one again & very few laughed this time.
When there was no laughter in the crowd then he smiled and said ''when you can't laugh on the same joke again & over again then why do you keep crying over the same thing over & over again''
FORGET THE PAST AND MOVE ON.
all of them laughed like crazy..
after a moment he cracked the same joke again & a little less people laughed this time.
He cracked the same one again & very few laughed this time.
When there was no laughter in the crowd then he smiled and said ''when you can't laugh on the same joke again & over again then why do you keep crying over the same thing over & over again''
FORGET THE PAST AND MOVE ON.
Technical Confirmations....
Confirmation is necessary to validate a break of important support and resistance levels such as price patterns, moving averages and trend lines. Technicians and traders define Confirmation in various ways. While market situations vary, below is a guideline of three forms of Confirmation:
- Percentage Confirmation: Confirmation is present when there is a 3% or greater break of a support or resistance level. Volume attached to the break, while not necessary, lends confidence to the confirmation. The 3% rule is commonly used by long term traders and investors. Short term traders use a lesser requirement to complement trading objectives, keeping risk/reward in line.
- Time Confirmation: If there are at least three closes above or below a resistance or support level, then confirmation exists. A close varies based on ones trading time frame. Again, volume attached to the break adds significance to the confirmation. (We always write Three Consecutive close +Weekly close must for major upmove or down move )
- Heavy Volume Confirmation: Volume confirmation presents when there is a substantial surge in volume relative to recent volume, combined with one close above or below a resistance or support level.
- Combination: If percentage and time confirmations fall short of the minimum requirement, yet are accompanied by substantial volume (e.g. 1.5% close above resistance with substantial volume), that could be accepted as confirmation.
Traders can use this guideline to develop their own requirements for confirmation as individual investment objectives and time frames vary.
An egotistical trader is more likely to argue with the markets, potentially leading to huge losing days or possible account blow-outs. You don’t need to win on every trade, or even every trading day, or every trading week.
A humble trader is able to admit that his trading is creating nothing but losses that day, and stop trading until the markets are better suited to his/her style. A humble trader is less likely to double-up into excessively risky trades, in order to ‘get back even’ on the trade or on the day. A humble trader has nothing to prove, to anyone, and can freely admit mistakes to themself and others, enabling them to quickly and easily react to what the market is telling them, with little regard for it’s contradiction to what he/she may have expected only minutes earlier.
Conversely, and egotistical trader might confidently tell his friends ‘what is going to happen’ and is unwilling or unable to subsequently change his mind when the market tells him otherwise. Once he’s made a public proclamation, he can’t go back on his ‘call’ or he might appear to be wrong.
The successful trader can’t tie up their self image or self worth on a single trade, or a single trading day. Keeping your attitude humble enables you to simply treat each and every trade as individually irrelevant, and allows you to focus on doing what’s right, and not being right.”
I’ll close with the questions I ask myself about each trade at the end of the day:
1. Was it a valid setup?
2. Did I wait for confirmation of the setup and follow my rules for entry?
3. Did I implement my risk management plan?
4. Did I manage the trade according to my rules, taking profits at or beyond the initial target, never earlier unless a valid stop-and-reverse signal appeared?“A successful trader is humble, not egotistical. The trader that knows it all, will typically quickly be proven wrong by the market. The humble attitude leads a trader to be willing to admit mistakes quickly, close out losing trades, and move on without loss of confidence.
FightsStarted ..... but How???
One year, I decided to buy my mother-in-law a cemetery plot as a Christmas gift…The next year, I didn’t buy her a gift.When she asked me why, I replied,”Well, you still haven’t used the gift I bought you last year!”And that’s how the fight started….. ______________________________My wife and I were watching Who Wants to Be a Millionaire while we were in bed.I turned to her and said, ‘Do you want to have Sex?”No,’ she answered. I then said,’Is that your final answer?’She didn’t even look at me this time, simply saying, ‘Yes….’So I said, “Then I’d like to phone a friend.”And that’s when the fight started… ________________________________I took my wife to a restaurant.The waiter, for some reason, took my order first.”I’ll have the rump steak, rare, please.”He said, “Aren’t you worried about the mad cow?”"Nah, she can order for herself.”And that’s when the fight started….. ________________________________My wife and I were sitting at a table at her high school reunion, and shekept staring at a drunken man swigging his drink as he sat alone at a nearby table.I asked her, “Do you know him?”"Yes”, she sighed,”He’s my old boyfriend…. I understand he took to drinking right after wesplit up those many years ago, and I hear he hasn’t been sober since.”"My God!” I said, “Who would think a person could go on celebrating that long?”And then the fight started… ________________________________When our lawn mower broke and wouldn’t run, my wife kept hinting to methat I should get it fixed. But, somehow I always had something else to takecare of first, the shed, the boat, making beer… Always something moreimportant to me. Finally she thought of a clever way to make her point.When I arrived home one day, I found her seated in the tall grass, busilysnipping away with a tiny pair of sewing scissors. I watched silently fora short time and then went into the house… I was gone only a minute, andwhen I came out again I handed her a toothbrush. I said, “When you finishcutting the grass, you might as well sweep the driveway.”The doctors say I will walk again, but I will always have a limp. ________________________________My wife sat down next to me as I was flipping channels.She asked, “What’s on TV?”I said, “Dust.”And then the fight started… ________________________________Saturday morning I got up early, quietly dressed, made my lunch, andslipped quietly into the garage. I hooked up the boat up to the van, andproceeded to back out into a torrential downpour. The wind was blowing 50 mph, so Ipulled back into the garage, turned on the radio, and discovered that theweather would be bad all day. I went back into the house, quietlyundressed, and slipped back into bed… I cuddled up to my wife’s back, now with adifferent anticipation, and whispered, “The weather out there is terrible.”My loving wife of 5 years replied, “And, can you believe my stupid husbandis out fishing in that?”And that’s how the fight started… ________________________________My wife was hinting about what she wanted for our upcoming anniversary.She said, “I want something shiny that goes from 0 to 150 in about 3 seconds.”I bought her a bathroom scale.And then the fight started…… ________________________________After retiring, I went to the Social Security office to apply for Social Security.The woman behind the counter asked me for my driver’s License to verify my age.I looked in my pockets and realized I had left my wallet at home.I told the woman that I was very sorry, but I would have to go home and come back later.The woman said, ‘Unbutton your shirt’.So I opened my shirt revealing my curly silver hair.She said, ‘That silver hair on your chest is proof enough for me’ and sheprocessed my Social Security application…When I got home, I excitedly told my wife about my experience at the Social Security office…She said, ‘You should have dropped your pants. You might have gotten disability, too.’And then the fight started… ________________________________My wife was standing nude, looking in the bedroom mirror.She was not happy with what she saw and said to me,”I feel horrible; I look old, fat and ugly.I really need you to pay me a compliment.’I replied, “Your eyesight’s damn near perfect.”And then the fight started……..
Knowledge n Paitence.... 2 faces of a Coin>>>>
Knowledge – A trader must put in the time and effort to study and learn the proper skills in order to be successful. Whether that is through technical or fundamental analysis, one must invest in their education. They must completely understand their market, and its ideal as a beginner to focus on one market and be a specialist. A part of the knowledge and education is devising a game plan or strategy for trading. Writing down your rules and sticking to your trading plan is a key to success.
Patience – A successful trader can sit on the sidelines for days waiting for the proper setup. They don’t jump into a trade just for the sake of trading. Yes there may be opportunities, but the smart trader waits for trades that meet their trading rules and system. Over trading by beginner traders is a big obstacle to overcome. A need to always be in the market will lead to taking trades that are likely too risky. Learn patience, it’s a key to success. A winning trader usually has an extraordinary amount of self control, and often the best trade is no trade.
Jim Rogers says oil will hit $200....
Here is a partial transcript from the BBC.
Jim Rogers: Well, the only asset bubble I see potentially in China is in urban coastal real estate, but real estate is not nearly the entire Chinese economy as it was in America and the U.K. Sure, they will have setbacks.
Justin, in the 19th Century, America had a horrible civil war. We had 15 depressions with a ‘D.’ We had very few human rights. We had massacres in the streets regularly. We had very little rule of law. You could buy and sell – you can still buy and sell congressmen in America, but in those days they were cheap. America had horrible problems, but they came out of that and had a pretty good 20th Century.
Justin Rowlatt: So what does that imply about where people should put their money; where are the sensible investments in Asia?
Jim Rogers: Well, the best way to invest in Asia in my view is to buy commodities, because the Chinese have to buy cotton, they have to buy zinc, they have to buy oil, they have to buy natural resources because they don’t have enough.
If you want to invest in China and you own cotton, they are going to be very nice to you Justin. They are going to pay the bills, they are going to take you to dinner, they are going to pay you on time. If you want to invest in stocks, you have to do a lot of homework and know what you are doing. Another way is to invest in the currency. I own the renminbi. I expect the renminbi to go up a great deal over the next decade.
Justin Rowlatt: But commodities are already at relatively high prices, aren’t they? I mean hasn’t that horse bolted already?
Jim Rogers: No, no, the only commodity I know which is making an all time high is gold. Some commodities are up, yes. Sugar is up a lot, but Justin, sugar is still 50% below its all time high. How can you say that’s bolted? Silver is going up, but silver is 40% below its all time high. Yes, commodities have been going up recently, but they are still extremely depressed on a historic basis.
Justin Rowlatt: So what about oil? I mean oil prices are pretty high, aren’t they? Almost $100 a barrel. Are they really going to go higher do you think?
Jim Rogers: Well, the surprise is going to be how high the price of oil stays and how high it goes, because Justin we have had no major elephant oil discoveries in over 40 years. The International Energy Agency is going around the world pleading with people to listen. Known reserves of oil are declining. It is not good news. Unless somebody discovers a lot of oil very quickly, prices are going to go much higher over the next decade.
Justin Rowlatt: How high do you think the oil price could go then?
Jim Rogers: Justin, the price of oil is going to make new highs. It will go over $150 a barrel. It will probably go over $200 a barrel.Justin Rowlatt: Do you really believe the Chinese boom can continue, because lots of people are saying there are all sorts of asset price bubbles that are going to trip the Chinese up in the coming years?
Limiting Factors Rogers Misses
Not many people have investment timelines of a decade. Moreover, there are a lot of things that can happen along the way. If oil were to drop to $60 and stay there for a number of years I would not want to be in it praying for $200 at some time in the future.
Rogers compares China to the US but fails to point point out (figure out), that one reason the US was able to grow fast was cheap oil prices. Other factors supportive of growth are strong personal property rights and a rule of law.
From my point of view, peak oil is a limiting constraint on the China’s growth. Thus, on a fundamental basis, the higher oil and commodity prices go, the less bullish one should be on China.
Near-term Rogers clearly misses property bubbles and rampant unsustainable credit growth, over three times China’s GDP growth. When that credit bubble pops, and China’s property bubble with it, the Yuan will likely take a plunge as well.
Four Steps to Taking Bigger Risks.......
1. Create an information edge so that you are ahead of the curve.
2. Have a thesis that you can support with data.
3. Assess the sources of the data.
4. Trade on the basis of this data against others in the marketplace.
The trader who understands risk will pay attention to corporate numbers and guidance and will try to analyze the relevance of these numbers to where the company stands relative to its major competitors. He is also able to differentiate between companies and does not simply trade noise or daily movement.
The best traders focus on the company balance sheet, earnings reports, and an assessment of the growth prospects of the company. They also compare the company on a relative valuation basis to other companies in the same space. They consider the state of the economy and any significant macroeconomic variables, such as Federal Reserve interest rate cuts, the cost of energy, and the cost of doing business, and try to assess the nature of the market at the time.
To improve your data, ask yourself: Is this a market that is trading on fundamentals, or is it trading on macroeconomic variables and market sentiment? Then try to get a handle on relevant short-term catalysts — fresh earnings news, changes in top executives, new technology, for example — that may influence the market’s perception of the value of a stock. Once you take these steps, you can try to make a calculated bet on the impact this data will have on the price of the stock.
Master traders are likely to factor all these things against their past experience in trading the stock, and may buy or sell some of the stock to get a feel as to how the stock is trading. Here they are also interested in the price action and what that tells them about the supply and demand characteristics of the stock — how it is trading based on an interest in buying or selling it among other investors and traders.
With all this data analysis, they then try to determine the risk/reward profile of a particular trade in terms of its upside versus the downside of the trade. To the extent that it fits within their parameters (say a 3:1 risk/reward ratio) they enter into the trade, all the time being careful to balance the trade in terms of their net long or short exposure. Oftentimes they hedge a bet by making a comparable trade in the opposite direction or by holding options,
which they use to leverage their bet and protect their downside risk.
Food for Mind Body n soul....
What’s the one thing limiting your success? (Steve Tobak)
7 lies you’re wired to believe (Pick The Brain)
Freedom, money, time and the key to creative success (Mark McGuinness)
How do you find a balanced life when you’re overloaded with work? (Zen Habits)
How to stay motivated to work out (Blonde & Balanced)
To really learn something, stop studying and take a test (New York Times)
People drive to reach round-number goals (Scientific American)
8 reasons to drink more water (WiseBread)
Snowbound? How to clear your driveway (WSJ)
Your immune system, and infections that stimulate it, can influence your mood, memory and ability to learn (New Scientist)
The effect of too much time in front of screen (Paul Kedrosky)
Understanding procrastination (YANSS)
Beat procrastination with a stopwatch (Work Awesome)
Why my reply emails are always short and sweet (The 99 Percent)
Do you want to survive the next disaster? Live with me in Cedar City (Survival Prep)
Entry & Exit Points>>>>>
1. Forget the news, remember the chart. No one is smart enough to know how news will affect price in every case. The chart already knows the news is coming.
2. Execute positions based on numbers, time, and volume, not emotions. This discipline forces the trader to distance himself from reckless gambling behavior.
3. Remember that participants in the markets echo similar patterns over and over again based on the infallible rules of human behavior allowing the trader to take advantage of potentially profitable trades while minimizing losses.
USA- Debt crosses $14 trillion mark.....
The amount of U.S. debt subject to the country’s legal maximum has topped $14 trillion for the first time. On Wednesday, the amount of debt subject to the cap hit $14.001 trillion at the close of trade, according to the daily Treasury statement released on Thursday.That means the country is less than $300 billion away from the $14.294 trillion debt ceiling, which is a cap on how much the federal government can legally borrow.The debt ceiling has become a focal point of the debate over spending and debt. Even though congressional leaders say the cap will be raised, Republicans are vowing to use the issue as leverage to force spending cuts.The Treasury Department estimates that borrowing could reach the cap sometime between March 31 and May 16, according to a letter Treasury Secretary Timothy Geithner sent to Congress earlier this month.If U.S. borrowing hits the ceiling and lawmakers fail to raise it, Treasury would be prohibited from borrowing more money. Barring immediate and draconian policy changes, the country would be unable to pay its bondholders or fund programs and benefits in full. That’s because there wouldn’t be enough tax revenue coming in to cover all of the country’s bills.Experts say the cascade effect would be crippling not only to the U.S. economy but very likely to economies and markets worldwide.At a minimum, a default could pummel U.S. bonds, the dollar and U.S. investors’ portfolios.
Trading Tit-Bits.....
1. Heart/Courage – Trading is a business necessitating that one does things causing some degree of consternation from time to time. Trading is an institution yielding few victors at the end of the day. As a result, having the ability to buck the crowd is something that can help you achieve great things.
2. Intuition – A qualitative virtue recognized by few and held by even fewer. Our intuition is the byproduct of the analysis performed by our subconscious. It acts much like a muscle and requires exercise to develop and grow. Like a muscle, Neglect can cause atrophy. Traders with strong intuition built on a strong trading
strategy are in an ideal position to achieve consistent success in the market.
3. Vision – While clairvoyance as to future price movement is unrealistic. It is my goal as a trader to assimilate as much information as possible with the goal of playing out scenarios that tie in together. It is not always easy to do, but understanding that
trading does not occur in a vacuum and that markets do not always behave as expected prepares you mentally to deal with the outlier events.
We have heard many times of leaders who saw an industry trend before it happened. This was no accident. It came as a result of their understanding of their field and what could change it for the better. Traders who gain an understanding of how things can potentially play out and factor that into their trading strategy go a long way to keeping their objectivity when things unfold in a fast and volatile market.
Self-Discipline is the Key to success........
“Discipline in executing each and every trade according to your trading methodology is the secret to your success. If you want to improve your trading, what you need to do is very simple. Before you enter any trade, imagine that you will have to explain this trade to a panel of your peers, by explaining to them the reason for your entry, your money, trade, and risk management guidelines, and why you exited the trade. Imagine having to explain why you chose this particular market and this particular time frame, along with how you set objectives for the trade, and how you determined where your initial protection would be. If you can truly do this, I strongly believe that you can be successful.
Just prior to entering every trade, try to imagine yourself executing the trade perfectly. Imagine how it will feel when you enjoy having made money with your trading.
Yes I know, you don’t have time to do that. Why? Because you never plan your trades ahead of time. You probably don’t have a strategy, and instead of waiting patiently for trade that meets your well-defined parameters and your thought-out plan, you just jump in the minute you think you see something that looks good.
You need to take a lesson from a spider. The spider waits patiently in his web until some unsuspecting insect flies into the spider’s trap.
Have you been flying into any of my traps? I wait for trades that meet my expectations, trades that fit my plan. I wait patiently, and being kind-hearted I don’t want any of my readers to land in my web. I’d rather the unsuspecting are readers of someone else’s newsletter. But it’s amazing how often I get to feed.”
Control self......No Control over the market>>>>>
Don’t think about what the market’s going to do; you have absolutely no control over that. Think about what you’re going to do if it gets there. In particular, you should spend no time at all thinking about those rosy scenarios in which the market goes your way, since in those situations, there’s nothing more for you to do. Focus instead on those things you want least to happen and on what your response will be
Monday, January 17, 2011
Insanity
Insanity -- by Bill Kraft
Copyright 2011, Makin' Hay, Inc., All Rights Reserved
Bill Kraft
Editor
It is not unusual for traders who contact me for assistance to tell me exactly what they are doing. I normally start by asking three questions. The first question is: "What is your exit strategy at the time of entry?" I am no longer surprised when this question is met with silence and if we are face to face, a very blank look. I then ask: "How are you doing?" All too often the response is that they have not been doing very well. I then ask about how long they have been using that particular methodology or strategy and the answer often is that they have been doing the same thing for quite some time.
The old saying is that the definition of insanity is repeating the same thing over and over and expecting a different result. While most of the folks I mentioned in the first paragraph are not insane, it seems that their approach to trading may have some elements of insanity. A first step in that direction may be that they have no overall trading plan and no plan for any specific trade. That frequently can translate into letting losses run and/or cutting profits; precisely the reverse of the desired performance. The trades lack discipline and are controlled by emotion. At some point, one would hope that the trader catches on that his approach isn't working and needs revision.
As many long time readers already know, I advocate paper trading as a way to learn specific strategies and methods. It seems whenever I suggest that paper trading may be helpful I get responses from some subscribers who argue that paper trading doesn't help and is a waste of time because it does not incorporate the same emotions as real money trading. I completely agree that the emotions of real money trading are not present in paper trading but I disagree with those who contend it is not worthwhile. For those who take it seriously and do it properly there is a lot of helpful knowledge to be gained. For example, an option trader who enters a debit spread without understanding how the trade might be adjusted with price movement over time may well see his trade fail while someone who has learned and practiced adjustments on paper could wind up with a very successful trade even though both started with the same trade.
One comment I often hear from the unsuccessful is that they do not use stops because they have been stopped out in the past only to see the play reverse directions after they exited. That is something that does happen to traders sometimes, but is it better to let losses grow because they had no stop? Could it be that with practice they could get better in placing their stops? That has been the case in my own trading. Practice and observation has helped me place much better stops than when I began. Even if one is stopped out of a position, there is no law against re-entry if the position turns back in a positive direction.
One very helpful practice, it seems to me, is to keep some kind of a trading journal that includes information as to the reason for entry, exit strategy, entry price, exit price, profit or loss and what actions, if any, the trader took during the course of the trade. Once the journal entries are made it seems like a good idea to look back on them at regular intervals to see what one has done wrong and, at least equally importantly, what one has done right. It is a way to help end the insanity.
For those who persist in doing the same thing over and over and expecting a different trading result, ultimately the result will be different. Those people eventually will run out of money and the trading career will end.
Good Trading!Bill Kraft
Editor of $10 Trader, Option Trader and Trend Trader
Tuesday, January 11, 2011
Trading Wisdom.....
Everything in this world involves risk but by far the greatest risk is staying in your comfort zone because this involves the risks of lost opportunities. The secret to risk lies in knowing how to minimise its impacts on you. If you want to be a successful trader you must become passionate about the learning process. You must become totally focused on trading well as opposed to making money. You must learn from someone who can show you how to trade successfully rather than rely on machines and promises of “golden eggs”. You must become absolutely disciplined in the activity of trading.
Magical thinking.....
Magical thinking describes subjective speculation about how markets will act. It is difficult to know for sure how significant a role intuition about the likelihood that investments will do well or poorly plays in peoples? decisions to invest. We are trying to assess innermost thoughts about money and self worth which most people feel they do not have to explain or justify to anyone. However, we can label these patterns of thought as magical thinking. Most investors have occasional feelings or intuitions that certain trading actions will bring them luck even if they know logically the actions can have no effect on their fortunes. Playing a hunch just because it feels right seldom makes traders rich. Yet proof that it’s human nature to indulge in magical thinking abounds:
It has been shown that people will place larger bets on a coin that has not yet been tossed than on a coin that has already been tossed, but the outcome of the toss has yet to be revealed.
If asked how much money they would demand to part with a lottery ticket they already hold, most ticket holders give a figure over four times greater than if they themselves chose the lottery number on the ticket. Apparently, at some magical level people think that they can influence a coin that has not yet been tossed and influence the likelihood of winning the lottery by choosing the number.
People are capable of thinking, at least on some intuitive level, If I buy a stock, then it will go up afterwards or If I buy a stock, then others will probably want to buy the stock, too, because they are like me or I have a hot hand lately; my luck is with me. Such magical thinking is likely, in a subtle way, to contribute to the overconfidence that may help the propagation of speculative bubbles.
Trading Wisdom Not Heard Often...
- Buy from the scared, sell to the greedy.
- Buy their pain, not their gain.
- Successful traders are quick to change their minds and have little pride of opinion.
- I made my money because I always got out too soon. (Bernard Baruch)
- Don’t try to buy at the bottom and sell at the top. It can’t be done except by liars. (Bernard Baruch)
- 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. (Jesse Livermore)
- The faster a stock has climbed, the quicker it will fall.
- The more certain the crowd is, the surer it is to be wrong. (Menschel)
- Bear markets begin in good times. Bull markets begin in bad times
- Never confuse genius with a bull market.
- Always sell what shows you a loss and keep what shows you a profit
7 Ways to Become an Unsuccessful Trader....
If you’d prefer to become an unsuccessful trader, you can start by making the following common trading mistakes.
-The first big mistake is the flawed logic of extrapolation. Many traders and investors assume that a trend will remain in force until an “event” comes along to change it. But market trends are not like billiard balls on a pool table. This false assumption will put you on the wrong side of the market more times than not, especially at major turning points.
-The second big mistake is to suppose that news events drive market trends. In fact, the opposite is true: economic, political and social events lag market trends.
-One common mistake is to buy puts or calls that are way “out of the money,” with no other transactions to compliment them. Unless your timing is absolutely perfect — and who has perfect timing? — your chance of success is low. It’s like buying a lottery ticket.
-Another common mistake is to buy options with too little time left to expiration. With less than one month to expiration, the time decay begins to accelerate and the chances of success diminish.
-In the middle of a corrective pattern, it’s common to run out of patience while waiting for confirmation of a trend change. You have to give corrective patterns time to unfold before you jump in. This requires discipline, and a solid understanding of the many ways corrective patterns can unfold.
-Too many traders think Elliott wave is a trading system that tells you exactly where to enter and exit a particular market. That’s the biggest misconception. The reality is that it’s an analytical and forecasting tool, which helps you develop and use your own trading system, based on your own personal risk tolerance.
-Traders tend to over-rely on momentum indicators such as RSI, Stochastics and MACD to precisely spot turning points. But to paraphrase Mark Twain, markets can stay overbought or oversold a lot longer than either you or I can remain solvent.
GAMBLING ADDICTION with trading......
how many of you never seem to win consistently?
how many of you hold on because you did have some winning days which means you have potential?
how many of you tell yourselves that its not an addiction,its just a passion you have?
how many of you keep on replenishing your trading accounts because just like any business,you always lose money at the start?
how many of you tell yoursleves your losses are the BEST THING that ever happened because thats the best way to learn?
how many of you think of crafty ways to get some extra money wired into your trading accounts?
how many of you say you would have won if you only “stuck to your discipline”?
how many of you are just waiting FOR THAT SPECIAL DAY WHEN EVERYTHING FINALLY CLICKS AND YOU’VE FINALLY FOUND THAT EDGE?
how many of you fall into a depression and feel as if someone has hit you in the heart with a hammer aftr a big loss.
how many of you cannot wait for the next day to make some money back?
my favorite: “tomorrows a new day and i will start fresh, a new trading style that will be disciplined”.
there are many guys that make lots of money trading for a living..really,you seriously believe that?
Observing emotions to trade well
While trading You all just watch emotional state of mind more than the price action. This will help u to trade better
Here are some of the emotions I feel from time to time and what they mean to me in context of trading
1) hesitation to pull the tigger – something is not right – don’t take the bet
2) anger – start of revenge trading – stop ASAP
3) uncomfortable while watching or not watching the price – non aligned with the market, trading with too much size – reduce size or quit
4) ignoring the little voice and gut feeling – trust the inner voice and take action
5) trading on hope – quit asap
6) thinking after hours or during market hours of money you can make = greed, impatience to make money – focus on how much you can lose
7) stress = wrong side of the market
feeling joy = right side of the market
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