Probably the most important thing to think about when trading (who’s playing the space and at what times?). very good knowledge to have. I’ve said this in past posts many times buy I HIGHLY suggest everyone read this book: Mind over Markets (by James F. Dalton).
Not a holy grail or system trading, just a methodical approach to understanding the players in the market and when they’re in it. Even if you don’t use the CBOE Market Profile, you’ll learn a lot about who’s in the market when with this book.
As a useful add-on to the book, member Alfred Toy adds:
Dr. Brett Steenbarger (psychiatrist) who wrote "The Psychology of Trading" (which is a book club selection)list’s just 3 (although I can think of a few more) "negative behavioral patterns" that get in the way off good trading. I very much agree with his statement:
"Remember, observing and interrupting your patterns are the first steps in altering them! Your patterns lose control over you as you become better at not identifying with them. When you become an observer to your patterns, you are separating yourself from them. What great progress that is!"
Perfectionism: Perfectionism is often the chief culprit when the pain of losing exceeds the pleasure of winning. Even when there’s a profit on a trade, perfectionists will look for the portion of the move that they did not participate in. If they caught most the move, they will reprove themselves for not trading a larger position. By focusing on the portion of their performance that doesn’t match their ideals, perfectionists transform successes into defeats, losses into failures.
“Beating myself up” is how many perfectionists describe their self-talk. The way to beat perfectionism is to make a concerted effort to talk to yourself the way you would talk to a good friend in a situation where things went wrong.
Ego: When traders invest their feelings about themselves in their trading, they are operating with maximum emotional leverage. It inevitably affects decisions about cutting losses, letting profits run, and entering and exiting in a timely fashion. The successful trader wants their trades to work out; the ego-involved trader needs them to be profitable.
If trading has us truly depressed, we know that it’s not just our trading account that’s hurting. Market success can be the frosting on the cake of your successful life, rarely can it substitute to the cake itself.
Overconfidence: Because they’re so eager to make money – and so sure they can make it – overconfident traders generally trade impulsively. They won’t wait for the setup to form; they’ll jump the gun – and get whipsawed in the process. Instead of being patient and waiting for short-term patterns to align with longer-term patterns, they will take every trade, enriching their brokers in the process.
Overconfident traders overtrade. They fear missing opportunities more than they fear…
This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible. Feel free to contact me directly at firstname.lastname@example.org with any questions.
Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts. After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.) Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.
My title above is only half-kidding. Because everytime Wall Street pronounces “The Death Of” anything, that’s pretty much when it starts working again. But there is an important point being made in a new article at the Wall Street Journal about the current state of some of our biggest stalwart stocks and their underlying businesses, a point I made two days ago here…
Here’s the Journal:
A third of the companies in the Dow Jones Industrial Average have posted shrinking or flat revenue over the past 12 m...
After a one-day pause, the S&P 500 returned to rally mode. The index opened at its 0.20% intraday low, vaulted upward and then drifted to its 1.81% mid-afternoon high. It closed ninety minutes later with a trimmed gain of 1.23%. The popular financial press touted strong pre-market earnings (most notably from Caterpillar and 3M) as the rally trigger and blamed the afternoon fade on renewed Ebola worries (a doctor being tested in NY).
Looking ahead ... will Amazon's post-close earnings disappointment trigger a market struggle at tomorrow's open? Stay tuned!
The yield on the 10-year Note closed at 2.29%, up 4 bps from yesterday's close. The weekly average for the 30-year fixed mortgage was announced today at 3.92%, the lowest rate since early June of last year.
Here is a 15-minute chart of the past five sessions.
There is lots of action in Southwest Airlines Co. November expiry call options today ahead of the air carrier’s third-quarter earnings report prior to the opening bell on Thursday. Among the large block trades initiated throughout the trading session, there appears to be at least one options market participant establishing a call spread in far out of the money options. It looks like the trader purchased a 4,000-lot Nov 37/39 call spread at a net premium of $0.40 apiece. The trade makes money if shares in Southwest rally 9.0% over the current price of $34.32 to exceed the effective breakeven point at $37.40, with maximum potential profits of $1.60 per contract available in the event that shares jump more than 13% to $39.00 by expiration. In September, the stock tou...
Last week brought even more stock market weakness and volatility as the selloff became self-perpetuating, with nobody mid-day on Wednesday wanting to be the last guy left holding equities. Hedge funds and other weak holders exacerbated the situation. But the extreme volatility and panic selling finally led some bulls (along with many corporate insiders) to summon a little backbone and buy into weakness, and the market finished the week on a high note, with continued momentum likely into the first part of this week.
Despite concerns about global economic growth and a persistent lack of inflation, especially given all the global quantitative easing, fundamentals for U.S. stocks still look good, and I believe this overdue correction ultimately will shape up to be a great buying opportunity -- i.e., th...
Now that bitcoin has subsided from speculative bubble to functioning currency (see the price chart below), it’s safe for non-speculators to explore the whole “cryptocurrency” thing. So…is bitcoin or one of its growing list of competitors a useful addition to the average person’s array of bank accounts and credit cards — or is it a replacement for most of those things? And how does one make this transition?
With his usual excellent timing, London-based financial writer/actor/stand-up comic Dominic Frisby has just released Bitcoin: The Future of Money? in which he explains all this in terms most readers will have no tr...
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What do falling energy prices mean for the US consumer? Sober Look writes a brief yet thorough overview of the consequences of the correction in the price of crude oil. There are good aspects, particularly for the consumer, bad aspects, and out-right ugly possibilities. For more on this subject, read James Hamilton's How will Saudi Arabia respond to lower oil prices? In previous eras, Saudi Arabia would tighten the supply to help increase prices, but in this "game of chicken," the rules m...
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Well PSW Subscribers....I am still here, barely. From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.
First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices. Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment. Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer. For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...
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