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…
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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


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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
 
 
 


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The Eight Beliefs of Successful Traders

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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.
 

 


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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."

 


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Politics

Trump's Coup Runneth Over

 

Trump's Coup Runneth Over

The president fancies himself a strongman. He's not.

Courtesy of Greg Olear at PREVAIL, author of Dirty Rubles: An Introduction to Trump/Russia

THERE ARE DAYS when a second Trump term—which would beget a third Trump term, followed by a few Ivanka Trump terms—feels inevitable. When the optimism of commentary like mine—“pseudo-sophisticated reassurance,”&...



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Phil's Favorites

Mapped: The Uneven Recovery of U.S. Small Businesses

 

Mapped: The Uneven Recovery of U.S. Small Businesses

Courtesy of Nick Routley, Visual Capitalist

 

Mapped: The Uneven Recovery of U.S. Small Businesses

Small businesses are the backbone of the U.S. economy, employing nearly half of the private sector workforce.

Unfortunately, lockdown and work-from-home measures brought about by COVID-19 have disproportionately affected small businesses – particularly in the leisure and hospitality sectors.

As metro-level data from ...



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ValueWalk

Tesla quality is ranked dead last among 31 brands, Stock Headed To zero: Shortseller

By Jacob Wolinsky. Originally published at ValueWalk.

Excerpted from Stanphyl Capital’s September 2020 letter to investors.

We remain short the biggest bubble in modern stock market history, Tesla Inc. (TSLA), which currently has a fully diluted market cap of approximately $445 billion, roughly equal to those of Toyota, VW, GM, Daimler, BMW and Ford combined despite unprofitably selling fewer than 500,000 cars a year to their nearly 40 million. The core points of our Tesla short thesis are:

  • Tesla has no “moat” of any kind; i.e., nothing meaningfully proprietary in terms of electric car technology, while existing automakers—unl...


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Kimble Charting Solutions

Gold Price Breakout Facing Critical New Support Test!

Courtesy of Chris Kimble

It’s been a heck of a year for Gold. But the year isn’t over yet and precious metals investors are hoping it will close the year out strong. That may depend on what happens in the coming days/weeks.

In today’s article, we feature a “weekly” chart of the Gold ETF (GLD), highlighting its strong up-trend channel and summer breakout to new all-time highs at (1), from Marketsmith.com.

Recently, I provided an update on why ...



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Zero Hedge

We've Reached "The Endpoint" - Monetary And Fiscal Policy Won't Help

Courtesy of ZeroHedge View original post here.

Authored by James Rickards via The Daily Reckoning,

Remember all those “green shoots?”

That was the ubiquitous phrase used by White House officials and TV talking heads in 2009 to describe how the U.S. economy was coming back to life after the 2008 global financial crisis.

The problem was we did not get green shoots; what we got was more like brown weeds.

The economy did recover, yes, but it was th...



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Chart School

RTT browsing latest..

Courtesy of Read the Ticker

Please review a collection of WWW browsing results. The information here is delayed by a few months, members get the most recent content.



Date Found: Friday, 01 May 2020, 11:47:29 PM

Click for popup. Clear your browser cache if image is not showing.


Comment: In 2008 the Central banks were newbies, now there locked and loaded .. its going to be a great show



Date Found: Saturday, 02 May 2020, 12:21:35 AM

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Comment: The Fed has done everything it poss...



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Digital Currencies

The Great Unbanking: How DeFi Is Completing The Job Bitcoin Started

Courtesy of ZeroHedge View original post here.

Authored by Paul De Havilland via CoinTelegraph.com,

While most of us will prefer to forget the horrors of 2020, DeFi may well prove to be the guarantee of a better, more liberated future...

...



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Biotech/COVID-19

How and when will we know that a COVID-19 vaccine is safe and effective?

 

How and when will we know that a COVID-19 vaccine is safe and effective?

How much longer must society wait for a vaccine? ANDRZEJ WOJCICKI/Getty Images

By William Petri, University of Virginia

With COVID-19 vaccines currently in the final phase of study, you’ve probably been wondering how the FDA will decide if a vaccine is safe and effective.

Based on the status of the Phase 3 trials currently underway, it i...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

...

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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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...

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