Guest View
User: Pass: | become a member
Posts Tagged ‘Trading psychology’

Thrilling Thursday – Dow Hits Record Highs on Lower Earnings!

Why should we worry?

The Dow is at 16,580 so all must be well, right?  The fact that we're up here on low volume and even lower earnings is just one of those nit-picky things that won't matter a year from now, when TA people use the movement to draw new, bullish trend lines.

That's what the Fed is controlling, they are painting charts in broad strokes to keep things moving along – even when they aren't.  

Sure the US economy is only growing at a 0.1% annual pace and sure that's down shockingly from 2.6% last quarter but, hey, we EXPECTED to only grow at 1% – so it's ONLY a 90% miss – what, us worry?

The Fed says it's just bad weather slowing us down and, whether or not you believe that, they also promise to continue to stimulate the economy long after it is necessary.  The Fed is like Santa Claus, only they don't have to put in any effort to make their toys, so Christmas comes 365 days a year for the top 0.01%.  For the bottom 99.99% – well, it's 0.1% growth on the "trickle down" effect.  

4-30-2014 6-22-17 PM Corp CashIn fact, if you take out the Banksters, who are piling up the Fed's free money in their vaults and using it to manipulate the stock and commodity markets (and higher costs for Energy, Food and Health Care were the only reason our GDP wasn't -1% instead of +0.1%), then you can see that those companies not protected by the Fed are in big trouble

Not since 1999 has there been less cash relative to debt in Corporate America.  Yes, money is cheap, so why not borrow some but that money isn't being used to invest in plants, equipment or, God forbid, hiring and training more people – it's being used to buy back stock and pay out dividends to give the ILLUSION that earnings are improving, when it's actually only the share count that's being reduced.  

As you can see from this chart of the S&P, earnings are up just 25% from where they were in 2009, when the market…
continue reading


Tags: , , , , , , , , , , , , ,




How to Get Off the Performance Roller Coaster

How to Get Off the Performance Roller Coaster

Munich Oktoberfest Preparations

By Brett Steenbarger 

Do you find yourself on a performance roller coaster? This is a situation in which you make money for a while, begin to think you have it all figured out, only to fall back, lose money, and feel like a rookie all over again. 

A while back, I wrote about the performance roller coaster and some of the emotional factors that sustain it. The gist of that important post was that how we process wins and losses affects our subsequent trading--and sometimes contributes to winning and losing streaks.

I just finished an enjoyable interview with Mark Wolfinger of the Options for Rookies site. One topic that came up was the way in which traders identify with their P/L. Once a trader’s sense of identity and esteem becomes caught up in profits and losses, the trader begins an emotional roller coaster simply due to the natural ups and downs of markets.

Continue here.>>

See also: Addictive Trading: When Trading Becomes a Problem


Tags: , , ,




Educational Videos

The following is a collection of podcasts and videos from the Options Clearing Corporation and selected others.

The cover a lot of ground and new ones are occasionally added to their site.  They are not as good as the coursework from MarketTamer, who are Option Sage’s excellent group but these are free (as opposed to $99 a month with Sage’s PSW special) so take a peek at the subjects that interest you:

First up is a very good introduction to options basics from Adam Lass, a very good overview.  His next episode is the basics of call options – hopefully he’ll do more.  Then we have the podcasts from OCC: 

 

 
  Introduction to Financial Markets and Options Basics  View
 
 
  An Exploration of Basic Options Terminology  View
 
 
  Options Basics  View
 
 
 


continue reading


Tags: , , , , , , , , , ,




The Eight Beliefs of Successful Traders

For a free subscription to Phil’s Stock World, click here (it’s easy, no credit card needed)

The Eight Beliefs of Successful Traders

Courtesy of Dr Janice Dorn at Minyanville

Editor’s Note: For those interested in both winners and losers, the 8 beliefs of unsuccessful traders can be found here.

One bright day in the middle of night, 2 dead boys rose to fight. Back to back they faced each other, drew their swords and shot one another. A deaf policeman heard the noise, and saved the lives of the 2 dead boys. If you don’t believe this lie is true, ask the blind man, he saw it too.

-Author Unknown

We’re hard-wired to believe — and to hold on to our convictions — often in the face of contradictory evidence. In life outside the markets, this may actually be a source of strength. However, it doesn’t usually serve a trader well. One of the most important questions for the trader to ask every day is: What do I believe that’s not true? 

So how do we know the truth? The markets tell us. It really is that simple — and yet, it’s so difficult for most to accept and practice on a daily basis.

It’s important for traders to be able to assess their beliefs regularly, because — at any given market moment — they’re a composite of those principles. Fortunately (for some) and frustratingly (for others), beliefs about the markets are fungible and fluid; they can change from minute to minute.

The successful trader is in the flexible flow with this — and changes accordingly.

Beliefs of Successful Traders

1. The markets provide a constant stream of opportunities.

2. If I miss an opportunity, another will come along.

3. If my position is stopped out, the hypothesis that got me into the trade was incorrect.

4. I take one trade at a time, and stay in the moment with it.

5. I strive for excellence, not perfection.

6. I maximize profits by losing small.

7. I am not my trade.

8. I take complete responsibility for my thoughts, feelings, and actions in the markets.
 

 


Tags: ,




The Eight Beliefs of Unsuccessful Traders

The Eight Beliefs of Unsuccessful Traders

Courtesy of Dr Janice Dorn at Minyanville

Editor’s Note: For those interested in both winners and losers, the 8 beliefs of successful traders can be found here.

Beliefs of Unsuccessful Traders

1. I must be trading something all the time.

2. If I lose on a trade, I feel angry, frustrated, sad, or sick. If I win on a trade, I’m a happy camper.

3. If I don’t get on board with the hot tip of the day, I’ll miss out.

4. The markets are out to get me.

5. I’m unwilling to take the stop-out, so I’m turning this trade into an investment.

6. If I just keep studying, looking, and reading, I’ll find the magical formula/indicator/guru to lead me to riches.

Buddha, trading philosophy7. Everything has to be perfect for me to get into a trade

8. If I win, I was skillful. If I lose, I was unlucky.

It’s only through daily assessment of convictions — and with radical honesty -- that a trader grows, develops, and thrives. Diligent examination of beliefs and the courage to change them is an ongoing challenge that must be conquered if the trader is to move to higher levels of success.

Buddha says:

"Believe nothing just because a so-called wise person said it. Believe nothing just because a belief is generally held. Believe nothing just because it’s said in ancient books. Believe nothing just because it’s said to be of divine origin. Believe nothing just because someone else believes it."

 


Tags:




 
 
 

Phil's Favorites

Three and a half years since the last 10% correction

If the S&P 500 does not have a 5% correction this year, it will be the first time in 20 years. And it's been 3.6 years since the last 10% correction. And trailing and forward PEs are relatively high. In the low interest rate environment, higher-than-normal stock prices are the new normal, but how much higher? And should we expect a reset with the Fed's plans to ease the interest rate higher?

Three and a half years since the last 10% correction

Courtesy of 

Deutsche Bank is out with a piece of research this weekend mentioning the fact that the S&P 500 has just broken a record high thanks to a median trailing PE ratio of over 18 – the highest we’ve seen since...



more from Ilene

Zero Hedge

Grexit "Disaster" Looms As Greek Hospitals Run Out Of Sheets, Painkillers

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

The default countdown is about to go under 10 days and it is becoming increasingly apparent that both Greece and its creditors have had enough.

Months of tense negotiations have gone nowhere and yielded exactly nothing and it now looks like PM Alexis Tsipras and FinMin Yanis Varoufakis may be willing to miss a June 5 payment to the IMF if it means proving they are serious about keeping their campaign promises and forcing the troika to the bargaining table. The implications of a missed payment aren’t entirely clear but Athens is keen to predict the worst as it tries to squeeze concessions from creditors. ...



more from Tyler

Chart School

eToro Review

Courtesy of Declan.

763 followers 76 copiers A solid jump in both followers and copiers from the start of the month. This was in large part to my top-10 ranking in their People screener. Having said that, last week finished very poorly for me. Overtraded and wa...

more from Chart School

All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

more from David

Kimble Charting Solutions

King Dollar & Crude Oil reversing ST trends, says Joe Friday

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

King Dollar and Crude Oil have been have had little correlation over the past year, as each has traded in pretty much opposite directions.

Over the past 9 months King Dollar has had a historical rally and the opposite is true for Crude Oil.

Of late Crude hit its 23% Fibonacci resistance line, based upon last summers weekly closing highs and weekly closing low on 3/13/15.

Joe Friday just the facts….Crude oil is making an attempt to break short-term steep rising support this week and King Dollar is attempting to break short-term steep falling resistance.

Crude oil just experienced its 7th largest 2-month rally in its...



more from Kimble C.S.

Pharmboy

Big Pharma's Business Model is Changing

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Understanding the new normal of a business model is key to the success of any company.  The managment of companies need to adapt to the changing demand, but first they must recognize what changes are taking place.  Big Pharma's business model is changing rapidly, and much like the airline industry, there will be but a handful of pharma companies left at the end of this path.

Most Big Pharma companies have traditionally done everything from research and development (R&D) through to commercialisation themselves. Research was proprietary, and diseases were cherry picked on the back of academic research that was done using NIH grants.  This was in the heyday of research, where multiple companies had drugs for the same target (Mevocor, Zocor, Crestor, Lipitor), and could reap the rewards on multiple scales.  However, in the c...



more from Pharmboy

Sabrient

Sector Detector: Bullish technical picture appears to trump cautious fundamentals

Reminder: Sabrient is available to chat with Members, comments are found below each post.

Courtesy of Sabrient Systems and Gradient Analytics

By Scott Martindale

Stocks closed last week on a strong note, with the S&P 500 notching a new high, despite lackluster economic data and growth. I have been suggesting in previous articles that stocks appeared to be coiling for a significant move but that the ingredients were not yet in place for either a major breakout or a corrective selloff. However, bulls appear to be losing patience awaiting their next definitive catalyst, and the higher-likelihood upside move may now be underway. Yet despite the bullish technical picture, this week’s fundamentals-based Outlook rankings look even more defensive.

In this weekly update, I give ...



more from Sabrient

OpTrader

Swing trading portfolio - week of May 18th, 2015

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



more from OpTrader

Digital Currencies

Nasdaq's bitcoin plan will provide a real test of bitcoin hype

 

Nasdaq's bitcoin plan will provide a real test of bitcoin hype

By 

Excerpt:

Bitcoin, the virtual digital currency, has been called the future of banking, a dangerous fad, and almost everything in between, but we're finally about to get some solid data to help settle the debate.

On Monday, the Nasdaq (NDAQ) stock exchange said it would ...



more from Bitcoin

Market Shadows

Kimble Charts: US Dollar

Which way from here?

Chris Kimble likes the idea of shorting the US dollar if it bounces higher. Phil's likes the dollar better long here. These views are not inconsistent, actually, the dollar could bounce and drop again. We'll be watching. 

 

Phil writes:  If the Fed begins to tighten OR if Greece defaults OR if China begins to fall apart OR if Japan begins to unwind, then the Dollar could move 10% higher.  Without any of those things happening – you still have the Fed pursuing a relatively stronger currency policy than the rest of the G8.  So, if anything, I think the pressure should be up, not down.  

 

UNLESS that 95 line does ultimately fail (as opposed to this being bullish consolidation at the prior breakout point), then I'd prefer to sell the UUP Jan $25 puts for $0.85 and buy the Sept $24 call...



more from Paul

Mapping The Market

An update on oil proxies

Courtesy of Jean-Luc Saillard

Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself. 

Since...



more from M.T.M.

Promotions

Watch the Phil Davis Special on Money Talk on BNN TV!

Kim Parlee interviews Phil on Money Talk. Be sure to watch the replays if you missed the show live on Wednesday night (it was recorded on Monday). As usual, Phil provides an excellent program packed with macro analysis, important lessons and trading ideas. ~ Ilene

 

The replay is now available on BNN's website. For the three part series, click on the links below. 

Part 1 is here (discussing the macro outlook for the markets) Part 2 is here. (discussing our main trading strategies) Part 3 is here. (reviewing our pick of th...

more from Promotions

Help One Of Our Own PSW Members

"Hello PSW Members –

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 jennifersurovy@yahoo.com 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.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




FeedTheBull - Top Stock market and Finance Sites



About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

Learn more About Phil >>


As Seen On:




About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

Market Shadows >>