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Trading Psychology, Primal urges & embedded mentality in price action
nebo
post Posted: Apr 1 2011, 06:14 PM
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In Reply To: mrbear's post @ Apr 1 2011, 09:26 AM

i trade to fulfill my urge to "do something".
Especially now I have sold the bricks and mortar business.
My father was a gambler and deep down i believe i probably am.
But i trade no more than 10% of my holdings.
That is my business brain, which wont allow me to trade away to nothing as he did. hehe
I have always kept my winnings as a share pile rather than cash which i would have traded away.
Not much of a plan, but is my personal observation and why i dont day trade but still watch the market.
So i trade shares i like that give me income (mostly).
And scalp any extras along the way while hopefully not degrading the pile too much.
We all have different demons and trading satisfies different things in all of us.
Happy Trading to all wink.gif
Nebo

 
mrbear
post Posted: Apr 1 2011, 09:26 AM
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In Reply To: jwlkr's post @ Mar 31 2011, 11:20 PM

You are learning fast jwlkr soon you will be able to make money out of the market.

Strange though i'm sure you have read plenty of books on the subject but until you really trade the market they count for nothing.

Years ago i realised that i was the only cause of bad trading decisions no one else,so you are well on the right path with your observations.
A lot of my style of trading involves banking stocks and trading the cycles between div payments and most times you can expect to make around 20% annual return.

Leverage is one of the worst things i feel newcomers to the market do and we all know the costs are huge so little room for profit.

Some traders are skilled enough to make money this way and good luck to them though i know many that have made huge amounts over a few years only to lose it all and more on a few really bad trades.

I notice the proliferation in ads for stockmarket courses over the last year or 2 and it always amazes me that people will go to these thinking that they will benefit from someone else who spruiks that their course will make you money when of course it always only makes money for the spruiker.

Averaging down again is the WORST possible thing to do as i see you have experienced though i do trade stock i own that have dumped because i treat then as each individual trade and always with the intent to sell the losing trade when the stock rallies and take the loss (fmg recently springs to mind).

The golden rule is no one who can gain from you gives you good advice and if they are such good traders why do they have to work ,as in stockbrokers, spruikers,superannuation advisors,and the list goes on.

People sometimes find this train of thinking hard to fathom though in my case i have found that to be very true and have never had any good advice this way,this train of thought is why my nickname of mrbear.

The best advice i have had came from friends and acquaintances that have made their money themselves and a proven track record and are not trying to profit from me.

Only more ramblings on this subject but i still like the thrill of closing a winning trade that worked to perfection,nothing better(except for fishing) ,cheers mrbear


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jwlkr
post Posted: Mar 31 2011, 11:20 PM
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In Reply To: mistagear's post @ Aug 15 2010, 11:19 AM

Instead of creating a new thread, I'm just going to dump this here.

I would like to use this space to discuss some of my observations tried and false assertions in the course of trading the All Ords.

The learning curve and lessons from the armchair arbitrageur.

1.
Averaging down - This has its merits but not when you don't know dick$h!t about what you're actually buying. It's surprising how resilient human optimism is...the belief that one could successfully catch a falling knife even after getting both stabbed in both eyes after the first two attempts.

2.
Yield chasing - In uni, they told us that div policy is an indication of stability and financial robustness since divvys paid out of profits. The Macquarie model of high yield infrastructure funds and running assets into the ground disproved that. How's BXB doing?

3.
Price to Book ratio - PB<1 does not mean you've found a bargain. It almost always results from D/E ratio > 1 so you are really paying to bail other equity holders out. Go check out interest coverage and cashflow from ops. They're probably terrible and declining.

4.
Hedging - It is often quite difficult, within the ASX environment, to find the right long put to offset your equity longs. Unless the stock is an ASX25, you'd need a proxy. And good luck with trying to offset some of the long short premiums paid with receipts from short calls. Illiquidity is bane.

5.
Leverage - How can you pay back the lender if you can't even afford to pay back yourself? It requires air tight capital management, the discipline of which does not seem forthcoming.


That's all I care to think of for the time being. Other's wanna add their experiences to this list?

 
mistagear
post Posted: Aug 15 2010, 11:19 AM
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Hi,,

Interesting video, follow the link to see if you trade like a monkey


http://www.ted.com/talks/laurie_santos.html



From Wikipedia

Financial risk is often defined as the unexpected variability or volatility of returns and thus includes both potential worse-than-expected as well as better-than-expected returns. References to negative risk below should be read as applying to positive impacts or opportunity (e.g., for "loss" read "loss or gain") unless the context precludes this interpretation. In statistics, risk is often mapped to the probability of some event seen as undesirable. Usually, the probability of that event and some assessment of its expected harm must be combined into a believable scenario (an outcome), which combines the set of risk, regret and reward probabilities into an expected value for that outcome


Now,, where did I put my Monkey Nuts..

Have a nice day peoples
Cheers, M



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arty
post Posted: Jul 4 2010, 05:34 PM
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In Reply To: nipper's post @ Jul 3 2010, 08:25 PM

Hi nipper,

that thought had crossed my mind on a few occasions; not so much in relation to Macus Padley, who, in spite of everything he does right, is not a broker I'd employ for my trading; but on several seminars, I have heard lecturers from broking firms bang the drum -
  • "you have to trade a wide variety of shares" and
  • "you have to always hold a position in certain stocks - if not Long, then Short."
Both benefit brokers more than the trader, and I view such general claims with utmost caution.

IMHO, Padley doesn't fall into that broker category; he doesn't have to drum up business in those syndicated columns, I'm sure they pay quite handsomely for his efforts. I rather like reading his musings as a no-nonsense, sober, and always sound advice that contrasts so highly with much od the hype and hoopla we read elsewhere.



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I trade daily, but I am not a licensed adviser. Whether you find my ideas reasonable or not: The only person responsible for your actions is YOU.
I follow two rules: (1) There are no sacred truths. All assumptions must be critically examined. Arguments from authority are worthless. (2) Whatever is inconsistent with observed facts must be discarded or revised. We must understand the Market as it is and not confuse how it is with how we wish it to be. (inspired by Carl Sagan)
 
nipper
post Posted: Jul 3 2010, 08:25 PM
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In Reply To: arty's post @ Jul 3 2010, 07:11 PM

remember Padley is a broker and makes money on both sides of the transaction - care factor whether it a Buy or Sell would be minimal, I would suspect.

- liked his column on CFDs the other week; one of his stronger efforts



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 


flower
post Posted: Jul 3 2010, 07:53 PM
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In Reply To: arty's post @ Jul 3 2010, 07:11 PM

Agreed arty, he has something for everyone, might get to hear him in the flesh one day, often wonder how he is viewed by those "on high"--beginning to wonder if he isn't more a journo pending book writer rather than Broker.

Anyway--in one bit to today he talks about not needing to be "in the market" being regularly in 100% cash---recall once he was extolling the virtue about trading one stock time after time--something about "getting to know the company fundamentals" and another when he talked about TA and FA going hand in hand.

He is certainly very good Saturday value.



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Combining Fundamental comments with Fundamental charts.
 
arty
post Posted: Jul 3 2010, 07:11 PM
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In Reply To: db76's post @ Sep 16 2009, 11:38 PM

Since Marcus Padley has been mentioned here before, this is probably as good place as a any - better than creating a new topic.

His syndicated weekly musings make good reading; my weekends usually start with his column in the Saturday's West Australian.
Today's article is about stop losses, even selling in general. May not appeal to everybody, may even rile some, but I reckon he's got the right idea: http://www.theage.com.au/business/to-stop-...00702-zu91.html



--------------------
I trade daily, but I am not a licensed adviser. Whether you find my ideas reasonable or not: The only person responsible for your actions is YOU.
I follow two rules: (1) There are no sacred truths. All assumptions must be critically examined. Arguments from authority are worthless. (2) Whatever is inconsistent with observed facts must be discarded or revised. We must understand the Market as it is and not confuse how it is with how we wish it to be. (inspired by Carl Sagan)
 
kelt
post Posted: Sep 17 2009, 10:43 AM
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An email I just got from EWI:-


It's unanimous: The bear market is over, and a new bull market is back!

At least that's the conventional wisdom of the top 55 U.S. economists, who predict that the economy will grow in the fourth quarter through the first half of 2010. (All but one of them expect growth this quarter.)

Rewind to February-March of this year ...

... When those same economists reported that the economy was in "the worst recession since the Great Depression."

That's also precisely when stocks and commodities rallied.

Now, six months later, even the Fed chairman has declared the worst is over.

What's changed?

In a word: psychology.

The natural flow of investor psychology has traced out a recognizable pattern. As optimism builds, so does the perception of a recovery. It's to be expected -- even predictable. After all, the simple truth is that investors, advisors and analysts alike herd. Positive price action -- in their minds -- begets other positive action. It's all-too similar to the optimism we observed in late 2007, when various markets stood at or near their all-time highs.

But today not even the so-called fundamentals support the notion of a recovery:

  • Large pockets of the U.S. real estate market, including metro Atlanta, are still racking up record monthly foreclosures.
  • The global shipping industry has slowed to a crawl; thousands of ships around the world sit empty and idle.
  • Bank credit and the M3 money supply have been contracting at rates comparable to the onset of the Great Depression.
  • And believe it or not, reports are surfacing of lending institutions returning to their old tricks from two years ago.
It's time to debunk the recovery hype. Robert Prechter anticipated the bear-market rally and the shift toward optimism that drove it. He even offered recommendations that helped nimble traders take advantage of it. But now the rally is waning. A downside reversal is imminent.

Regards,


Robert Folsom




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"Money is being taken from the competent and given to the incompetent."

Jim Rogers
 
db76
post Posted: Sep 17 2009, 10:21 AM
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In Reply To: arty's post @ Sep 17 2009, 09:49 AM

how many books have been written about the stockmarket ?

here it is - Marcus



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the Market is usually Right

I want to say what I think but I shouldn't

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